Highrisk countries like spain or portugal, should they receive the same risk weight. The extraordinarily careful look back over the greatly ballooned bubble and subsequent bust that was developed as a result of housing policy and law of the actions taken. Title two of the path act has several provisions meant to allow fha to play that countercyclical. Legal obviously is to really expand eligibility. Which you agree to play an expanded role in times of crisis will help ensure continued access to the mortgage learned from the great majority of borrowers regardless of conditions. I not advocating as sufficient land but not pointing out that we need something to think about the situation with as a backdrop. I have to sleep never started this proposal. That we will we have the government provide a backstop. We will grow to be in consultation. Certainly. The chair recognizes the journal of vortexes. Thank you, mr. Chairman. Thank you, mr. Bernanke, for appearing again. I trust that this would not be your last visit. I believe that our country has benefited greatly from the service. I would like to for just a moment as to talk about this. You may do a lot of things, if Consumer Confidence or theyre is a lack of confidence, and of a Significant Impact on longterm growth. Confidence is important to growth, and i read through your paper. Im fairly excited of us will the things he said. I didnt it quite enough on the question of confidence. Would you please elaborate . The home builder confidence, Consumer Confidence is important. Try to create a framework. The basic macroeconomics stability, it is a difficult thing. To some extent its a political talents to be able to us create confidence in your constituents. So nobody has the magic formula. Clearly the more we can demonstrate that were working together to try to solve, the more likely will instill confidence that it will pay off in economic terms. Well, i compliment you. I would like to focus on one aspect of what use of a working the other. I contend that this is an important element in instilling confidence. I believe that the American Economy is quite resilience. It is strong and notwithstanding some of the weaknesses that have been exposed. The reason i know its strong this because it has survived congress. If the economy can survive congress im confident that it will thrive eventually. But seeing what we do come over pealing continually over attempting to repeal some of the significant aspects of bills that have passed that will impact the American People, im not sure how much confidence these things in july. More than 30, 40 attempts to repeal the Affordable Care act, but tend to reveal repealed doddfrank without replacement, a tempter repeal the see of bbc without a good sense of what their plans will be. It seems to me that some point we in congress have to do more to in gender the confidence level across the American People to want to buy, to want to invest, to want to produce. And i think that congress has a significant role to play. Unfortunately we have not. The American People are confident that we are moving toward a broader economy. Very focused on jobs. We have not been as focused on jobs. Legislation that can produce jobs, much of it as lynyrd and has not had an opportunity to move forward. I just believe that in the final analysis art could york will be lot of them applauded and will need some help from the policy makers in terms of working together to us instilled confidence. Confidence is needed. Think this economy is ready to blossom. But when i talked to a Business People they say to me, when we need confidence. Many to have of the rules will be static. Consumers take a minute conference. I will buy a house. I am confident that the system is going to remain static in not dynamic. I think you for your service and buttress the we will be a will to help instill the confidence to augment and supplement the good work you have done. Thank you. The time of a gentleman has expired. The chair recognizes the gentleman from virginia. Thank you. Mr. Chairman, thank you for being here to it. We thank you for your hard work. I represent a rural district in virginia, one that has not seen the same Economic Growth that other places in this country have seen. We still have places in our district jobless rates of the will digits and recently look to washington to adopt policies that will make it easier for businesses to succeed, families to succeed as opposed to making things more difficult to read and listening to your remarks you talk about systemic adopting policies that coats the systemic importance. Obviously bonds will carry it seems to me in disgust in terms of what is systemically important. Tip your hat to main street talking about that the fed has adopted policies to support main street, jobs, consumers, things of we are care about. In the aftermath of the rules there were adopted earlier this month related to basel three, Frank Keating with the American Bikers Association said that asked the question, are we making things i teach your job easier or more difficult . Essentially severe making them harder. That is now well when the for our economy. Then as now or are recovering economies. As i think about all we need in my rural south side virginia district, that community and what an important life pau they are to our mainstream economy. And i wonder if you could talk a little bit about the reasoning behind not just exempting Community Banks from the application of the rules that you will have adopted. And why you did that. Well, i mean, i agree with you about the importance of Community Banks, particularly in rural areas which might not be served by larger institutions. It is also important, of course, to Community Banks to be wellcapitalized of the can continue to lend during difficult times and dont tell the reader want to be sure there wellcapitalized. But in terms of the final rule we just put out, we were very responsive to the concerns raised by Community Banks. A number of specific issues relating to of the waiting of mortgages, the treatment of a comprehensive income contrast preferred, a variety of things which we responded to. As part of the brought attempts throughout reach, through meeting with Advisory Councils and so on to understand the needs of Community Banks and to make sure that we do everything we can to protect them. I was just going to say that it is primarily aimed at the largest internationally active firms. Most of the rule was just not relevant in small firms. Clearly you will try to make some accommodations for Community Banks, and recognize that. My question is, is there reason that you all talk a little bit about why you all concluded that you could not exempt them entirely. And i guess the second question that i have is, do you think, do you think based on your studies or anyone elses, do you think that these rules will have a disproportionate effect on Community Banks . Obviously that is part of the concern. The Smaller Banks have a much more difficult time complying with regulations then obviously a largest banks. Again, i dont think that it is primarily aimed at Community Banks. The amount of bureaucracy and rules is not what theyre doing now. Terms of capital, the Community Banks are already typically holding more capital as a ratio that larger banks to. Our calculations are that Community Banks are already pretty much compliant with the basel rules. We dont expect them to have to raise substantial amounts of new capital. You dont believe there will be a disproportion affect on the Smaller Banks in complying . Smaller banks are disproportionately affected by the entire collection ovals that they face ranging from bank secrecy to a variety of consumer rules. I think that your constituents may not be distinguishing possible three from all the other different roles that they face. Of course a small bank is just fewer resources and people to do with the ranger regulatory and statutory requirements that the banks have to deal with. One of your earlier appearances, we talked about the regulatory structure of what is perceived among some as a micromanagement by Bank Examiners and regulators and the function of the Federal Reserve as an examiner. Are you able to give us any indication of what has been done in the last two years or so charts improve that . And of the you mentioned that there were some things that the Federal Reserve had in mind and was trying to work with the Smaller Banks on cards are one have time to go through all list, but we have a Community Depository Institutions Advisory council the beach with the board, gives us the perspective. My time is expired. Do you believe these efforts have been successful . I think we have made definite progress. Yes. The time of the chairman has expired. The chair now recognizes the gentleman from missouri. Thank you, mr. Bernanke, for being here. You have heard a lot of commons today. In my businesses call the eulogy. Im not trying to the time he came back. But i also want to thank you for your service. The stimulus, the fed stimulus is violently criticized by many. Can you come in as short express would you believe would be the consequences of easing quantitative easing prematurely . Again, it is important to talk about our overall Monetary Policy stance. Our intention is to keep Monetary Policy highly accommodative for the foreseeable future. The reason that is necessary is because inflation is below our target and unemployment is still quite high. In terms of asset purchases i have been very clear that were going to be responding to the data. If the data are stronger than we expect will move more quickly. The same time maintaining the accommodation through rate policy. If the data are less strong, have they dont meet the kinds of expectations we have about way economy is going then we would delay that process or even potentially increase purchases for time. So we intend to be very responsive to incoming data both in terms of the edge as asset purchase program, but its also important to understand our overall policy is going to remain highly accommodative. Thank you. One of your former colleagues has repeatedly warned that he has written that too big to fail is still a major threat to to the u. S. Economy. He suggests that in many instances, many of the huge Financial Institutions have gotten even larger. To you think that if we went through again what we went through a few years ago that we would be in a situation where we would almost be required to save the u. S. Economy and perhaps even the World Economy from oppression . Because we would have to step in again to bailout these major corporations, aig. Well, i think there is more to be done before we feel completely comfortable about systemic firms. The doddfrank act and other International Agreements provide a framework for working toward the day, which is not here yet, or we can declare too big to fail as a thing of the past. But we do have some tools now that we did not have in 20089, very importantly the Orderly Liquidation Authority of the fdic, the Federal Reserve supports the ftse in that which would allow us to do a much more orderly resolution of a failing firm that would take into account the impact on Financial Market stability, unlike 20089 when we had no such tools and were looking for ad hoc way to try to prevent these from for a trailing. In addition, these firms are now much better capitalized than the war, and were making other reformers and will make it much less likely that the situation will arise. I would not be telling you the truth to photo to the problem is gone. We need to keep falling through on various programs. I think we need to keep doing what is necessary to make sure that this problem is solved for good. The question, and i was here as we went through all this. You know, we did not have the time, we were told, and actually i believe, too, you know, rationally and thoughtfully consider all of the options and my fear is that if something happened, we tried to reduce the likelihood that this would happen. But what assurance do we have that we would have time for action by the fed and congress . We have the from workout. We have a liquidation authority. The time of the gentleman has expired. The chair recognizes the july from ohio. Thank you, mr. Chairman. Thank you for being here today. I appreciate your willingness to come and answer all our questions. Im going to try to get through questions and will see how much time goes. The First Airline to talk about is following upon the questions. All try to you. Not primarily in that Community Banks and it is clear that it is aimed at a larger financial cetaceans will create a financial crisis. I agree with you that it will result in most Community Banks having to raise capital because the capitals normally are higher. For a few Community Banks that dont have capital right now where they have not as much access to the Capital Market it actually could harm them. None of these banks are going to be too big to fail. No one will come in and bail them out and theyre not so interconnected. Im curious why given that it is voluntarily complied, would it not just exempt ducking many banks . I think its important to be wellcapitalized, will to protect the deposit insurance fund, to protect the local communities and the borrowers that depend on them, and we have seen in the past financial crises that were small firms like in the depression and the savingsandloan crisis. So on this issue that you mention, we are giving very long transitions. Us and you have to have this level of capital to more. So banks can raise capital through retained earnings and the mechanism as well. I appreciate that, and i dont think it is a burden on most Community Banks, but i do worry about a few and think it could result in a consolidation in the industry allows Community Banks. That troubles me. I agree with that concern. The second thing i want to recognize is that you appropriately recognized that activity off for example, International Activity increases the systemic risk. I was a little trouble that you continue to use artificial asset numbers. I am from ohio. We have a lot of regional banks that serve the middle market. You use the 10 billion number at the ball, the 50 billion up to the 250 billion. If you look at the size of fall the 50 largest banks of america there really are put years, the top banks about 2,000,000,000,003 of those im sorry, two of those. Two more of a trillion. And then there are three more above half a trillion dollars. Then it falls layoff. Use of that supplementary regional banks that to 50, and there are banks are essentially super Community Banks where above that. I guess a less where you pick that artificial number. Most people would recognize both as regional. We have met with middlemarket banks and try to understand their concerns. The basic philosophy is that took the capitol requirements and a supervisory requirements are sized. Be a failed to do it appropriately. We can go back and try to figure out. I would urge you to take a look at the major collapse in our asset sizes because they really do spell themselves out. The beja between 350 and 500, there are no banks between 350,000,500,000,000. There are two or three just above 350 and theres no one until you get to 550. So that is a big jump. I would urge you to take a look at that. The last question i would like to quickly ask is about stress testing. In your qe, in the way you judge your portfolio, would you be willing to submit the Federal Reserve qe2 the same kind of stress testing and the same kind of provisions to provide for the banks of potential Interest Rate spikes and inflation . Well, the stress test has a different purpose, and how much remains we send to the treasury. We have done various stress tests in that respect. Many of them are publicly available. We have a number of research papers. They have done this tests. The bottom line is that for any reasonable Interest Rate pass this is going to end up being a profitable policy for the taxpayer. The time of the gentleman has expired. The chair recognizes the jungle in from michigan. Thank you. And appreciate you being here today. Last week the bank of japan announced that they were going to maintain their current Monetary Policy which as you know includes significant devaluation of the end for the purposes of improving the competitiveness of japanese exports. The yen has fallen in value. Japan as you also know is joining the u. S. Led Transpacific Partnership trade talks. Ive raised a number of concerns about the japanese entry into the trade talks until they open their markets, particularly to the u. S. Of polk. Will they continue to manipulate their currency, this increases my concerns and could make our trade deficit even worse. Nl in 2011 you ex