Capital requirements, not just, i mean certainly the surcharges but how will you assess the effectiveness of those . There are, you know, studies of an attempt to estimate what the too big to fail subsidy is in the market. While there are a lot of question marks around those studies we can look to see whats happening there. You believe there is a subsidy as will the senator wrap it up . That is my next question. Do you believe there is subsidy as bloomberg pointed out, some others, 10 of billions of dollars a year for the largest banks . I think there are different methodology that is are used in different studies and its hard to be definitive, but yes most, i would say most sudden did is point to on some sub is i did i that subsidy that may reflect too big to fail although other factors may account for part of the reason that larger firms tend to face Lower Borrowing costs. Thank you. Im sorry, mr. Chairman. Senator. Thank you, mr. Chairman, thank you dr. Yellen. I want to pick up where my colleague left off because as you know i share his and many other concerns about too big to fail being a life and well. As you both of you noted there are many study that is document, even try to measure too big to fail and the market subsidy or advantage that the megabanks have. Another is coming out today. Gao is releasing its first study that senator brown and i asked for and again confirms this in general. It focuses on the huge discount that the Federal Reserve offered the megabanks during the financial crisis. And the huge market advantage that they got. And specifically, this gao report coming out today said, quote, it recommended, quote, the Federal Reserve board finalize policies and procedures related to its emergency lending authority. And establish internal timelines for developing those procedures to insure timely compliance with doddfrank act requirements, close quote. What that means really doddfrank gives you the ability to wind down that emergency lending authority. The board has not acted on that or even established as far as i know internal timelines to do that. So, one obvious question related to this study coming out today, will you do that as chairman and when will you do it . Senator, i think that guidance is in, is in the works and, we will try, we will try to get it out soon. Do you have a general time frame in mind . Im not certain just what the time frame is but i will, i will try to make sure that that happens. If i could ask you to just supplement the record following the hearing with more specifics about the feds plan to act on doddfrank with regard to that. Thank you. You also mentioned increased leverage ratios for the biggest banks. I agree that the action you supported in july in terms of supplementary leverage ratio for larger banks was very positive. I do not agree that its enough. I think even when you consider the sifi surcharge and other things more needs to be done. Would you support going further in terms of leverage ratios for the largest banks or not . So, i think we will have a very meaningful improvement in capital standards by going the approach that doddfrank has recommended which is higher riskbased capital standards. It will be a sifi surcharge. Were contemplating a countercyclical capital surcharge that would add to that we are contemplating additional ways of dealing with problems of reliance on shortterm wholesale funding that could take the form of a capital charge thats related to reliance on that kind of funding or it could take the role of margin requirements. I think a belt and suspenders kind of approach in which we have a leverage requirement that serves as a backup because there are potential issues with riskbased capital requirements. Remember that we also have stress tests which are yet another approach to assessing whether or not the largest systematically important institutions have the where with all to be able to to lend. I dont mean to cut you off but if i can follow up before my time is up. I understand those other categories including the sifi surcharge. But considering all those including the sifi surcharge i personally and others think you should go further with the supplementary leverage ratio. Would you support that as we speak today or not . Oh, i would want to see where we are when were, when weve implemented all of the doddfrank requirements that we need to put in place. Okay. Final question, youve said in the past, quote, like chairman bernanke, i strongly believe that Monetary Policy is most effective when the public understands what the fed is trying to do and how it plans to do it, close quote. A lot of us would agree with that and, many of us think that the best way to get there is through true openness and transparency of the fed, not just a better, sort of managed p. R. Campaign, but real openness and transparency. Would you publicly support s209 . Im sure youre familiar with that . If not, what specific changes to that would be required to earn your public support . So, i strongly, as i have indicated support transparency and openness on the part of the fed. And i think with respect to Monetary Policy, in terms of the range of information and timeliness of that information, we are one of the most transparent Central Banks in the world. What i would not support is requirement that we, any requirement that would diminish the independence of the Federal Reserve in implementing and deciding on implementing a Monetary Policy . For 50 years, congress has recognized that there should be an exception to gao ability to audit the fed, to avoid any political interference in Monetary Policy. I believe it is critically important to the Economic Performance of this country and weve seen this around the world, that allowing a central bank to be independent in formulating Monetary Policy, is critical to assuring markets and the public that we will achieve price stability. And i would be very concerned about legislation that would subject the Federal Reserve to shortterm political pressures that could interfere with that independence. Thank you, mr. Chairman. Senator tester. Thank you, mr. Chairman. I want to thank you for being here, vicechair yellen. At the end of october the Federal Reserve formally applied for application in the insurance association. International association of insurance supervisors, for membership. The United States already has membership on that through the federal insurance office, created by doddfrank. Can you tell me why the fed should have membership, its own membership on that board . And furthermore, why there should be a focus on that when domestic oversight challenges seem to be a much higher priority . Well my understanding, senator, is that now that the Federal Reserve has been charged with supervising some of the Largest Insurance Companies that have been designated by fsoc as systemic, that we want to be in a position to work with regulators in other countries as we have in the case of banking rules to make sure that we have internationally compatible and fio, excuse me but the fio can not fill that need or you . Im not certain. I think we felt it would be beneficial to participate in that group. Okay. In our conversations about insuring capital standards appropriately tailored to insurers ive raised concern in the same vain with the fsoc who i encouraged to develop industryspecific guidance and metrics for systematically important Financial Institutions. Do you agree that the fsoc has and should exercise its authority to develop industryspecific guidance and metrics rather than forcing insurers or asset managing firms, for example, into a bankcentric regulatory model . So, senator, i do believe that one size fits all should not be the model for regulation and that we need to develop appropriate models for regulation and supervision of different kind of institutions. Insurance certainly has some very unique features that make them very different from banks and were taking the time to try to study what the best way is to craft regulations that would be appropriate for those organizationing. Sew what im hearing you saying that a bankcentric regulatory model would not work for Insurance Companies in this country . Well there certainly are critical differences in terms of their Business Models that we want to understand and respond to. Okay. I want to express serious disappointment with a recent decision by fsoc not to release for Public Comment a study produced by the office of Financial Research regarding the Asset Management industry. While the council is probably indicated it would release any metrics or guidance on this industry for Public Comment, it declined to release this study which i will presumably form basis for future consideration. If you are confirmed as chairman of the fed and member of fsoc will you insure the council is up to its commitment of transparency and will the fed support efforts to make any potential evaluation and metrics and studies they are based available for Public Comment . Senator, i have not participated in fsoc but if i do so, i will try to take those concerns seriously. If youre confirmed, you will be participating in fsoc. I will. The question ask about transparency and transparency of metrics that will be used that people need to have the ability to comment on before theyre applied. I guess my question to you is, will you be willing to make that commitment, to transparency as it applies to the fsoc. So i will need to study this issue more closely in terms of what fsocs procedures are but i feel it should, you know, should be clear why a particular firm has been designated if that occurs. And the metrics that theyre using for that designation . Okay. In closing i want to say, thank you for your willingness to work on the end user issue we discussed last week. I very much appreciate it. Thank you, mr. Chairman. Senator kirk. Technical question on behalf of large insurance employers in illinois. To extract a commitment from you to do a cost benefit analysis if we are to require them to switch from sap to gaap accounting which they warned me could cost couple hundred million dollars. So, senator, im aware that there is an issue around different accounting standards in Insurance Companies. I havent had a chance to study that myself but i would certainly agree this is something we need to look into and to consider very carefully and pledge to do so. Thank you, dr. Yellen. Mr. Chairman, thank you. Senator warner. Thank you, mr. Chairman and thank you, dr. Yellen for being here. I got a series of quick questions. One i would like to make a comment. I understand our colleagues concerns about some of the extraordinary measures the fed has had to take on, quantitative easing. I guess i would simply make a comment and ask for a short response on this, part of our political dysfunction in this town in terms of grappling to get our countrys Balance Sheet right in terms of a grand bargain or actual budget in place, if we were able to actually perform our functions, wouldnt that allow you to move out of these extraordinary measures in a quicker manner . Well, certainly, it is certainly the case that the economy has suffered over the last year a substantial drag from fiscal policy. Cbo estimates that the drag amounts to Something Like one 1 2 on growth and as we commented in our fomc statement, most recently, taking account of the, that large amount of fiscal drag, the economy, even though it has only been growing around 2 , is showing greater momentum. So i think it is fair to say, and i would expect that if there were less fiscal drag and i hope there will be less Going Forward, that the economys growing rate is going to pick up. So that certainly has been a headwind on the economy and something that weve tried to offset. Obviously our tools to do so, it is not perfect, not obviously. Government shutdowns, which cost latest estimate, 24 billion, or potential default threats which result in spikes of Interest Rates sure as heck dont provide that predictability. I want to actually follow up as well where senator tester left off. I have to say someone, along with our friends senator corker were involved with title one and title two. Ive been certainly disappointed in the fsocs to be that inneragency arbiter around regulatory conflicts. Ive also been somewhat disappointed with the actions so far of the ofr and, i simply would say, i think it is, i hope as you move into this role on the fsoc, there will be Financial Institutions, nonbank Financial Institutions that will be, sifi as senator tester mentioned, Asset Management terms, it seems as if the ofr report did not have a lot of collaboration, a lot of clarity and i would hope in your role on the fsoc, again i think one of the reasons why i wish we would have an independent chair on the fsoc but you will clearly have an outsized role as the fed representative, we try to give some clarity that we dont think were going to view everything through a bankcentric regulatory prism. We realize as we look at nonbank institutions that maybe require that sifi designation that we give some clarity how were going to evaluate those nonbank institutions. I think that is completely fair and very reasonable and logical objective for fsoc to have. Our staff have been working very closely with fsoc and the ofr in trying to, you know, participate constructively to facilitate the work of those groups. I would just add my voice to senator testers that wed like to see that transparency as we strike to evaluate nonbank institutions for sifi designation so we all know the rules Going Forward. I think that would be helpful. One of the things as we think about Balance Sheets and stimulation of or getting more private capital lent, one of the things that i know that fed pays interest on excess reserves of the banks but i believe now youre holding about 2. 4 trillion of those banking asset reserves and i think we pay 25 basis points. Weve seen other Central Banks, denmark and others start to lower those payments. Would you consider that possibility of, in effect, incenting the banks to get this capital not on your Balance Sheet but back out into the marketplace to stimulate more loans and more private capital into the market . So, senator, that is something that that the fomc has discussed and the board has considered on past occasions and it is something we could consider Going Forward. It, i think our assessment weve worried if we were to lower that rate too close to zero, we would begin to impair money market function and, and thats, thats been a consideration on the other side but it certainly is a possibility, senator. I would say, that i ask you to look at this as well because it is one of the ways without necessarily growing your Balance Sheet as some of my colleagues expressed a concern with. Thank you, senator. Senator helloer. Thank you, senator and dr. Yellen, and spam family showing their support. I think that make as real difference. Question, do you follow gold prices . To some extent. Do you believe there is any economic indicate behind the rise and fall of gold prices . I dont think anybody has a very good model what makeses gold prices go up or down but certainly it is an asset that people want to hold when theyre very fearfulful about potential Financial Market catastrophe ore economic troubles and tail risks and when there is Financial Market turbulence, often we see gold prices rise as people flee into them. That was a better answer than i go from chairman bernanke last july. I asked him the same question and he said that nobody really understands gold prices. Then he went on to say, i dont pretend to really understand them either and, do you share that view or clearly with a few extra tidbits that you just shared with us . I think beyond what i shared i dont have strong views what i havent seen a lot of moddells that have been successful in predicting them. Thank you. You talked in your general statement at the beginning about the role of the Federal Reserve, promoting conditions to foster maximum employment, stable, low and stable inflation, safe and sound Financial System. Do you believe we have a safe and sound Financial System today . I think we have a much safer and sounder Financial System than we had precrisis but as i indicated, i think we need to do more. Were not at the end of the road in terms of putting in place regulations and enhanced supervision that will make the system safe and sound as it needs to be to contain Systemic Risk. The reason i raise the question is, we had this discussion when you were in my office about Community Banks and sitting as chairwoman of the San Francisco federal board you have a pretty good understanding what is going on out west, california, nevada, and as youre aware of, as i shared with you, we lost half the Community Banks and Credit Unions in our community, making it very, very difficult for choices. Making it very difficult for housing recovery. Getting loans for small businesses. And i guess the question is, what steps will you take to avert a culture