That pushes down Interest Rates in many parts of the world that spills over to the United States so there are many channels that it affects the u. S. Outlook but all in all two factors those into account while there are risks positive and negative stemming from Global Development we still think that the risks for the u. S. Outlook to have sufficient a strong growth by consumers and businesses that the recovery looks to be on solid kid ground but just as i mentioned in my testimony to have day strong growth to analyze the factors to impact spending we california not as strong as as we just had but nevertheless growth that factors the global consideration. But they will affect your decision. They will. With the comments to be sure that we deal with currency manipulation but that appears from one to another. Monetary policy oriented toward domestic goals like price stability or price stability and maximum employment, this is a very valid use of a domestic tool for a domestic purpose. It is true that the use of that tool can have repercussions on exchange rates, but i think it it is not right to call that currency manipulation and to put it in the same bucket as intervention to the Exchange Market that are really geared toward changing the Competitive Landscape to the advanthehehehes i want to make the. That one of the things that has been absent from this discussion today has been we have talked a lot about your work, not as much about our work and need to still address our own fiscal policies. I i would simply. Out that because of the extraordinary remittances from the expanded Balance Sheet we see north of 420 billion in netitional revenue that has diminished our deficit which is not something that can be projected onto the future. As we talk about the times of raising Interest Rates i simply. Out the hundred basis. Increase in Interest Rates adds a hundred and 20 billion a year on debt service. Even cbo projections we will show that debt service with our current 18 trillion in debt we will exceed total defense spending or total domestic Discretionary Spending in ten ten years which is not a Good Business plan for our country. Absolutely true. Thank you, mr. Chairman. Thank you, mr. Chairman. Thank you for being here. Here. As you no wall street banks could profit handsomely if they knew about the fed plan that is why any leak of confidential nation results in serious penalties for the people responsible. Apparently theyre have have been no consequences for the most recent week. According to recent reports got out perez was put in charge of investigating leak from the september 2012 meeting of the federal of the markets committee nearly two and a half years later the results of this investigation have not been made public and know action has been taken. On february 5 congressman cummings and i sent a letter to mr. Alvarez requesting a briefing in advance of your appearance hear today. So far we have not received one. Can you assure us congressman and i we will get a briefing soon . If i might by way of background. I just want to be able to get a briefing on what has happened . Weird trying to work with your staff. Of take that as a yes as we successfully blew a whole in dodd frank by attacking the appeal to must pass Government Spending bill , that repeal written by lobbyists we will allow the biggest banks in the country to continue to receive Taxpayer Protection for some of the riskys derivatives and swaps. Now, a month before the repeal mr. Alvarez mr. Alvarez spoke at a conference of the American Bar Association command organization that includes many lawyers who represent the banks affected by the feds enforcement of dodd frank. Mr. Alvarez openly criticized the swaps push out role saying you can tell was written credit waiting agency is more constraining and is helpful. As mr. Alvarezs criticism of these two rules reflect your view with a view of the federal board of governors . Let me just say that over the years we have had feedback that we have given on various aspects of dodd frank. These are specific criticisms he has made of dodd frank rules that govern the largest Financial Institutions in this country do his criticisms reflect your criticisms or the criticisms of the federal board . I think i personally consider dodd frank to be a very important piece of legislation that has provided a roadmap for us to put in place regulations. I appreciate that mdm. Chairman, but i just need a yes a yes or know. Do his criticisms reflect yours . I am not speak not seeking in any way to alter dodd frank at this time. Let me bring up the question differently. Do you think it is appropriate that mr. Alvarez mr. Alvarez to public positions that do not evidently reflect the public position especially before an audience that has a direct a direct financial interest in how the fed enforces its rules . I think the feds position in my position is that we are able to work very constructively within the framework of dodd frank to tailor rules that are appropriate to the institutions we supervise and are not seeking to change that. I appreciate that. You know, we know that the fed staff plays a a Critical Role in shaping dodd frank rules and enforcing them. In the case of the swaps push out, Congress Passed the law in 2010. The fed and the occ delay the Effective Date until 2016 giving and other big banks time to get the ball repealed before it ever went into effect. Did mr. Alvarez provide input into the fed decision to delay the Effective Date . I do not no. We usually have complicated rules that require adjustments by financial firms. This is been through all the rules that we have put into effect. I think this might be worth looking into. The fed is our 1st line of defense against another financial crisis and the fed general counsel or anyone at the fed staff should not be picking and choosing which rules to enforce based upon their personal. We personal. We urge you to carefully review this issue same pages the Federal Reserve board. Always last, hopefully not least. I want to 1st thank you for your patience and your responsiveness, and i was tempted to ask one question. I wont do that today. I want to to look to the future. Senator warner really outlined one of the concerns that i have. We always simply fighting the last economic war in the you are a astute and respected student of the American Economy. I we will give you a chance. You have heard a lot of opinions and received a lot of advice the panel. I am going to give you a chance to give out some advice. When you look at leading and lagging indicators what troubles you and keep you awake at night that the American Economy in the next ten to 15 years . What advice would you give to the United States congress and addressing those concerns that you have looking right now that those in the caves . As i said in a number of occasions with the rise we have seen inequality in the United States its of great concern to me. We discussed is the last time you were hear and you offer know solutions. I think there are a variety of Different Things that the congress to consider in policy measures that might be appropriate. This really is a domain for congress to consider so that one of the concerns that i have. No advice . Im not going to weigh in on things that really are in your domain. I think it is important that would Say Something also is longer run issues with the federal budget. Congress has made painful decisions that have now really stabilized what brought down the death deficit from it stabilized for a number of years the debt to gdp ratio. Eventually debt to gdp will begin to rise and deficits we will increase again. As as the population ages and medicare, medicaid Social Security get to be a larger share a larger share of gdp theyre are a lot of ways in which is about all for a long time. I worry that if we were to again be hit by an adverse shock that theyre is not much scope to use fiscal policy. Its questionable how much scope we would now have to put in place even on a temporary multi year basis the expansionary fiscal policy and it is important to deal with these issues. What you are concerned about scope and it does not believe lead you to believe that Interest Rates should be adjusted at this. To give you the flexibility to use Interest Rates should we receive another shot . Well the fed would, of course, use course, use the tools that we have to try to achieve domestic ends. But i think having fiscal policy is important as well. If we look today at the American Economy and some of the challenges and you and i have spoken privately about this, the millennials and saving patterns and consumptive patterns, the shared economy, what concerns you about that now eight ill eight years of change behavior consumption do you see those changing longterm consumptive patterns that may present some interesting patterns for the American Economy . We are just beginning to understand how the millennials amazing. They are certainly waiting longer to buy houses, to get married. They have a lot of student debt and seemed quite worried about how to the housing. They have had a tough time in the job market and exactly as the economy strengthens i expect more of them to form households of their own in my home we have yet to see how this is going to affect the generation. Within may have experienced a change and consumptive patterns that we will present some unique challenges the whether sharing automobiles, in fact not buying homes doing the things that they have now done to accommodate there economic challenges is the longterm. And i think that that one of the things that we need to do much more carefully is begin to look at not just having a discussion about monitoring policy the looking at fiscal policy where it is tax reform or taking a look at what we were doing with the Mortgage Market to begin to develop an economy that the millennials we will fully participate in. I hope you continue to think and provide provide us the advice that is extraordinarily valuable. Thank you. Thank you, mr. Chair. The chair thank you for your service. I have had to go in and out of other committees and out of the subject is been brought up. The issue of wage stagnation that we have seen and the other piece of student debt when we look at the student debt and the numbers are so high and it is been a lot of time, when i graduated college you could basically work an entire summer wind up paying off half of your tuition. How big a drag but one of my great concerns is been in some areas of the country how you build of the Housing Market with the people who want to buy a house the money i saved up for that. In many cases go off the student loan and its a a box that you can never get out of. Its a little bit hard to tell. The Housing Market has not recovered in the ways that i wouldve anticipated. It has been slowly improving but household formation has been extremely low in the United States. Its hard to tell me you have many young people who are living with their families still student debt because of a weak job market. My guess is the economy continues to improve. Well improve. Well see an improvement in household formation will see many young people decide that they prefer to read rather than buy homes but that we will give rise to a boost in multifamily construction even if not somewhat singlefamily construction that the Housing Market has been very depressed. Nevertheless in spite of that the economy as a whole and the job market has had sufficient strength to recover. My other concern in that area is what you see a young person who looks up and is doing the hundred thousand and student that. Those dollars or dollars that are never used to go to a restaurant, never used to buy a car, never used to travel somewhere. Overall job wise it seems to hit and make it more difficult and all those areas. It is true, but it also remains true that a Higher Education boosts income and is tremendously important. It is not always the case for every individual that it is a good investment but certainly on average it has been a very important and worthwhile investment. To my mind, that is the other side of it. I completely agree what a wonderful investment it is. I just want to make sure that we can get that wonderful opportunity without basically settling herself for years and years. It has increased a great deal. One other area i wanted to ask you about is cyber security. I no that the fed has certain things i focus on. In the area of cyber security, it is from all all the Financial Organization one of the biggest concerns for the companies, how big a risk. Its on everyone topless the top of the list of concerns that we have that the Financial System the problems facing Financial Organizations. It is a top concern world given the importance of her own systems functioning of the patent system. Internally if a great deal of attention to make sure were addressing ever escalating threats to our operations. Debates the elusive prize very attentive experts to work with those banks to make sure they are attentive it is it is a larger problem is one where retailers others involved in the Financial System. I we will conclude with this. The state area because of currency manipulation among many other areas in the no this is been mentioned but i would like to make sure you keep a close eye on this the ability to be competitive and all that was said to be if it is a fairfield we will do fine but if the game is rigged i dont know how we win that. I have always have the same feel that my leg member right next to me in ohio has dealt with this a lot. Its been manipulated against the company. I would just ask that you keep that in mind thank you for your service. Thank you. Mdm. Chair. You mentioned that the current unemployment is listed at 5. 7 . However, one alternative measure that seems to fully capture a better sense of Labor Force Participation is the use six measure that lists total unemployment and underemployment is 11. 3 percent as of january 2015. This measure has not dipped below 10 percent unemployment since before the crisis. According to the bureau of labor Statistics Data there are now 12 million more americans no longer participating in the workforce. Do you agree that the unemployment number that you cited in your Opening Statement paints a rosy or better picture of the true Unemployment Rate . Sen. Senator, it is a broader measure of unemployment. It includes marginally attached and discouraged workers in also an unusually large number of individuals who are working parttime who would like. Like fulltime jobs. So it is a much broader indicator of underemployment or unemployment in the us economy and while it has come that it is become 12. 1 a year ago and has come down to 11. 3. It definitely shows much rosier picture. And i do mention that we dont at this. In spite of the Unemployment Rate has come achieved to achieve socalled maximal employment part of these very reasons. Labor force participation has come down has been trending down from the something we will continue for demographic reasons. I did i did not expect it to overtime, but i do think abortion of the Labor Force Participation reflects cyclical weakness stronger job market. But you basically concede that 11. 3 percent of underemployed people that is not good. That is an abnormally high level and signifies week weakness that would be good to address including completion of capitol framework for you to. The Federal Reserve is a a member of the Financial Stability board. Given the Financial Stability board is not accountable to congress or any branch of the Us Government to my knowledge where do these Financial Stability board reforms fit the us regulatory system . Does the Federal Reserve truth and resume data directives or suggestions or what . And what statutory basis does the fed have to implement the Financial Stability board form verbatim . Do you think further the decisions are important enough that they should be fully vetted by the fs oc before being implemented . You can see the participate, including the administration of the regulators. Nothing that is decided has a factor in the was relevant agencies proposals which are publicly that it to normal Public Comment process. Those recommendations have no force. Unless we go through old rulemaking process but theres a good reason for us to participate these international forms. Financial markets are global. If we take actions to stiffen supervision and regulation states and other Major Financial Centers that packets to get similar ways we just see activity out of our borders to other parts of the consistent systems so we do want to buy dis