Banks are get out of certain communities and countries and they are also denying services to millions of lower income americans, not because the risk is too high, but simply because the profit margin are not considered high enough. There have been serious consequences on vital Correspondent Bank relationships that are critical to bier flows also. Another Major Property in several communities here, including in a district like mine, is that banks are closing branches. In fact economists from the Federal Reserve bank of new york released a report entitled banking debit. Branches closing and soft information. Showing that u. S. Banks have shut nearly 5,000 branches since the financial crisis as a result. Residents of low income neighborhoods have become somewhat more likely to live in a banking desert. That is why i have called to revamp the Community Reinvest amount act in a letter mailed to banking regulators and cosigned by some of my colleagues. But chair yellen, its obvious that cr is it not working as it was meant to work when it was pass oh 40 years ago. Strongly believe that part of the solutionses in enabling greater collaboration betweenf large banks and cdfis, including Minority Institution so is the institutions can take over assets and branches before theyve close and more importantly preserve Banking Services in low income communities of color. So, the comptroller and i are in constant dialogue on this and ii would love to get your thoughts on this matter. Lor. I am concerned about Banking Services in lowincome communities and we are working with minority depository institutioned to provide support to them in enhancing the very important and valuable role that they play in ensuring the provision of services to these communities. You believe that we should oh ho 40 years there was one view of banking and cra was put in 0 to make sure you had institutions and you believe theres ways we can revitalize or revamp cra to deal with the institutions and what is taking place today so these communities are not neglected and then become part of banking deserts . Well, we are having to look at cra and the agencies who have put out additional gyppeddans in recent years that is meant to address Additional Guidance in recent years that has meant to address review and well look at what further guidance might be appropriate. Dime of the gentleman has expired. I the chair now recognizes the gentleman from wisconsin, mr. Duffy, chairman of the oversight and investigations subcommittee. Madam chair, look. Obviously looking back to 2008, the crisis had a huge impact across the country and many of the families we represent. And i would argue that this massive doddfrank bill was passed in a time of fear, where people were concerned about the future of our country and the future of their family, and a 2,300 page bill was passed before the dust had insetledded and we had a full analogies whats caused the crisis. We were told by our friends across the aisle, who i would e argue openedunder their cabinets, the file cabinets and dumped in every wish bag issue that they had for probably decade. But they made a promise to the American People that when they passed that bill they would be ending too big to fail because people were concerned not just about the economy but the fact the tax pair their money was going to bail out large Financial Institutions. Do you agree now, almost a decade on, that we have ended too big to fail . Well, think we have taken very significant steps , no. Thats not my question. We were promised that we would end too big to fail. Wasnt here. They would end too big to fail. So i think the American People have a right to know what you think, had we ended too big to fail, yes or no . So, as i said, i think too big to fail is lessigant problem now than it was before. Youre saying its still a problem. We havent eve radicated the threat, have we . Too big to fail still exists, yes. I think weve made very, very important and meaningful strides madam chair, these are simple questions. Dont think its a black or white thing. Ng i can tell you congressman duffy we have ended too big to fail. America is better off with doddfrank and the fact im the chair of the fed, or, frankly, no, we havent end too big to fail health made progress but have not ended it. We have done a great deal toe make it possible for a systemic institution to resolve successfully im going to talk t accomplishing mutt are much better if game together clear the smock. Youre saying we made progress but have not ended too big to fail and i think youre in safe zone because Elizabeth Warren even admit wed have not ended too big to fail. They admit we have not end toad big to fail. So my question for us is a 2,30i page bill, giving and you other potential regulators significant authority, that had a huge impact on the Financial Sector and our economy. Or if we havent ended too big to fail, is it a failure of doddfrank or is it a failure of the fed. Im sorry. Im not willing to describe it as a failure because we havent ended too big to fail. Im sorry. We have method great progress in trying to achieve that and is it not a black or white issue. When guy home and say this was a devastating crisis, had a huge impact on your family, were ten years on. Hat a 2,000 page you. Ant get a loan you were credit union or Community Bank and chairman yellen said we have made progress. We have a system that is much safer and sounder. It is much more resilient. Has much more capital. Mir much more liquidity and better also certainly not perfect i wholeheartedly disagree on many issues with Elizabeth Warren at least she is truthful on that. Ss Larry Summers said that capital information is at least superficially inconsistent withr the view that banks are far safer today than they were before the crisis and some support for the notion that risks have actually increased. Larry summers. You disagree. I do. I disagree significant live with that conclusion because it is based on the notion that markets properly evaluated the risks in banking organizations before the crisis, noel nothing could be further from the truth. Ill give you one clothe, in 1788 james mass madeson worried that laws war be so volume now and cannot be read or so incoherent they cannot be understood. A 900 page voelker rule, and you cant tell me with all that rules and regulations you havent eradicated the threat of too big to time. Time of the gentleman has expired. This chair now recognizes the gentleman from massachusetts. Thank you, mr. Chair. Thank you, madam chair for being here again. Just want to clarify a few things some of my colleagues e im not aware of anybody who doesnt want to amend doddfrank, including me. Want to amend it. Just dont want to gut it. Good amendments, thoughtful amendments, all for them. Gunfighting it . Totally against. Ra and thats pretty much the only bill wet have been offered. Bills that would dish. Will the gentleman yield . Not right now, no, but thank you. A too big to fail . Too big to fail . I agree. He we should do more on it. N thats why i offered the bill to bring back glasssteagall. All my colleagues are welcome to join the bill. That it why offered hr888 that the Community Bankers support. All my colleagues are welcome to join the bill and thats why i joined my colleague on the other side, mr. Garrett, now, mys god, ifover not paying attention when garrett and i can agree, on hr2625, that directly relates to the feds ability to bail out banks. I all my colleagues are welcome to join that bill as well. Know miss yellen wouldnt like bill and i appreciate that. But doesnt kill you, just squeezes harder. There are bills that are out there to do more. All you do is read them and join us. If garrett and i can do it, you sure as hell can find a way to do it. Dont get used to me and garrett working together either but thats a different issue. Ms. Yellen. It. Lets assume for the sake of discussion we had a large bank, big one youre keeping a very close eye on. That over the last five years, has had 16 enforce actions against them. As including one from the fed. Lets assume the bank had a fed fine of 85 million. And in that agreement, the consent agreement they signed with you they said, or you said, internal controls are not adequate to detect and prevent when certain of its sales personnel in order to meet sales performances and received incentive compensation altered or falsified documents that inflated borrowers incomes to qualify the borrowers for loans they would not have otherwise been qualified to receive. E. That was 2011. Hypothetical, of course. And since that time we have had 15 other violations across the board with pretty much every Alphabet Agency you can find, doj, cfbb, occ, fha, ftc, ncua and pretty much every state in the nation. Totaling 10, almost 11 billion in fines. Those actions including defrauding student loans. To mortgage holders, credit unions, identity protection, kickbacks, insider trading, defrauding freddie and fannie. Worker health issues, drum senating against africanamericans and hispanics. Defrauding investors, foreclosure abuses and on and on and on. And then just this year, earlier, when you rejected their living will, your letter cited concerns about quality control, Senior Management oversight, accuracy, the consistency of financial and other information reported, even though the firms Leadership Steering Committee had input to the plan. And now we have the same bank, same bank, just defrauded 21 2 million of its own customers. Its own customers. Im sorry, a million and a half. Dont you think its time the fed does something . How long does this stuff go on before you get outraged and take action . Well, as you pointed out we have done something. The action that you described in 2011 you know that an 85 million to this fine is laughable. You know that. Know you know that. Its a lot of money to me and everybody know but is to thank bay theyd 23 billion last year. God bless them. Very successful bank. O in 85 million bank is barely a footnote in their annual report and you know that. Well, as you point out, many regulators have been involved in im going to have my fun with them task. Its just your turn today. So were in the case of this institution, were the supervisor of the Holding Company. We have already instituted a review of all of the largest banking organizations because w are very concerned with all of the compliance problems and violation office laws dish jew know theyre laughing at you. Theyre laughing at you. Tee time of the a gentleman from mas has expired. The chair now recognizes the gentleman from New Hampshire. Thank you, mr. Chairman. Chair yellen, to your right. Thank you. Thank you for being here today. I want to talk a little bit about Community Banks. You and i know the importance and role they play in our financial ecosystem. H my state of New Hampshire is a small state, yet a resilient state. 1. 3 Million People and hey have very Close Relationships with our Community Banks. Weve got 10 federally charteret banks, 16 state chartered banks and ten out of state charter banks. So its not a significant number but they are very important and critical to consumers. But due to the severe regulations that Community Banks in my state are subject to, they are now limiting products and loans and services to their customers and my constituents. When Community Banks should be focused on providing access to credit for consumers, their focus and attention on meeting compliance with the boardsome regulatory requirements seems to take the priority of their time. I get reports from my Community Bankers on a regular basis that they can spend up to 25 of their and resources on compliance, and this has been increasing as a result of the growth in the regulatory requirements that continue to be placed on them. So, my first question would be, do you believe that there is a disproportionate impact of Regulatory Compliance on community financialgulato institutions, institutions that are smaller, that Service Customers in New Hampshire . So, we want to do everything welcome to reduce we can to reduce burdens on communityy banks and recognize theyre lab youring under a significant set of Regulatory Burdens. Wore going through the process and looking at a number of concrete ways in which we can reduce that burden, and we have taken a number of steps on our own to reduce the frequency and intrusiveness of exams to make more risk focused to do more work, not on the premises of the bank to try to reduce burden. You asked if the burdens had fallen disproportionately on Community Banks. The fact that theyre smaller means that these burdens can be significant relative to their budgets, but the most restrictive requirements have been focused on the larger their institutions, particularly these usg that are subject to much more stringent you think theres a dispromotion nat effect on Smaller Banks. Theres quite a bit of research taking place. In fact we have a conference that is taking place at the moment that is looking at thoseg burdens, but the reason i asked but they are significant burdens for vary small bank, with certain fixed costs involved in doing this. The reason im asking this we have had two mergers in the last six months in the the state of New Hampshire and my fear is thats going to continue. So i hope that you could identify very specifically and very quickly before the end of the year areas where we can reduce that Regulatory Burden. New hampshire bankers are going to be coming to washington tomorrow to meet on this very tt subject. Theyre very interested it. Because our economy requires and reryes on them. The different point i want too bring up in your writtenonomy testimony you recommended that congress consider carving out Community Banks from the volcker rule and the doddfrank acts incentive based Compensation Rule us. Regarding your recommendation that Community Banks be carved out of the volcker rule would you agree in concept that an approach worthy of consideratioe would exempt the role kerr rule no Banking Institution that dot not engage in the activities the volcker rule intends to regulate and keep those institutions subject to the volcker rule. We have said the thought smaller institutions should be exempt and the exact definition i would have to look at. Would have to look at more carefully. You also talked earlier about the 80,000 jobs per month this economy is generating. Can you tell me you said the labor par tis rate is changing. Can you tell me what percentage of the Labor Participation raith is is right now . Below 62 . I dont believe. So let me its currently 6 2. 8 . Time. My time has expired but i dont think that has changed over the next several months. Time of the gentleman has expired. The chair now recognizes the gentleman from texas. Thank you, chairman. And Ranking Member waters for for convening this hearing. Welcome, chair yellen and please accept my sincere gratitude for your leadership at the fed. Commend you in acting in the absence of a vice chair of supervision for regulation of Bank Holding Companies and knopu Bank Financial institutions. Im interested the safety some stability of our financial a institutions continues to strengthen even in the face of Global Market unpredictability and other emerging threats. We can attribute continued growth and stronger and moret resilient economy through your o leadership and the protectionsnu afforded by doddfrank act. My first question, chair yellen in your opinion do financial regulators currently have the discretion through need to correctly tailor regularlier to and supervisory standards or should we in Congress Take action . I think by and large we do have the scope we need tailor regulations, with point eda fewo areas where we have limitations. The volcker rule is one and the incentive Compensation Rules are another where we can do some tail loring but not as much at we would like. Congress did act to address our the restrictions we faced in the area of insurance inn designing an appropriate set of capital standards for insurance centered savings and loan Holding Companies, and we appreciate that and have used it to propose a set of capital standards for those companies that we think is appropriate. So, there are some areas where we have needed congress enbut s bay and large we have a good deal of scope to tailor. You need to know i continue to hear from banks of all sizes in my Congressional District that their burdened by regulations and costly stress tests. Several changes to the yearly stress test known as the comprehendingsive capital analysis and review were announced on monday. Can you tell us what changes are being made to this review process and how that is expected to help Community Banks that are not internationally active, nor participating in risky nonbank activities, and also, th