as supply bottlenecks ease and import price inflation falls. i don't want you to comment on that as it gets political i think it's important we keep some foot on the plane of facts. i want to ask you a question mr. chairman because i always worry about risks but we see and risks we do not see. i want to use the remainder of my time to talk about a risk you are conscious of which is the overhang in the commercial real estate market. the financial stability oversight council identified commercial real estate as perhaps the most salient risks of the financial system, 6 trillion roughly in loans. half of that on bank balance sheets. you characterize distress in the commercial real estate market is sizable but manageable. do you still feel like that risk is manageable?

do you feel like you've got the visibility and transparency and tools to address it. it makes me nervous because this has echoes of 2008-2009 when vacancy rates were declined rapidly. how do you feel? does that risk continue to be manageable? chr. powell: i would say yes to that. i think it is manageable and we've been working hard for some time now really and what it really is is it's a lot of downtown real estate where there's too much office-supply because of work from home and also the downtown retail that is no longer as profitable. things like that are at the heart of it. so what we have done is we've looked at banks that have significant concentrations and we've been in touch with them to make sure they have a plan to deal with that. there will be losses by some banks.

it's really medium and small sized banks that have these higher concentrations. it's good to be this problem we work through for several years and the idea is you have to have enough capital and liquidity and a plan to take the losses you are probably going to take. so that's what we are doing we are very active in this space. >> sorry to interrupt but let me ask you about that. silicon valley bank with responsibility inside the bank agreed his errors on the part of corporate treasurers, the fed also had some self-examination to do because the examiners and supervisors of the bank were not doing what they should have been so we might be forgiven for being skeptical of claims being on this. what has changed in the context of silicon valley bank gives you the confidence that they will be on top of this? chr. powell: i see it with my own eyes.

frankly there's a risk that we would overreact to something as significant as that. it's not like we wouldn't have reacted strongly to what happened silicon valley bank and we have. so i know our supervisors are out there we are hearing back from media reports that we have been engaged with medium and small sized banks principally on this so i'm confident we are doing the right things there. and i do believe it is a manageable problem if that changes i will say so. >> thank you mr. chairman, i yield back. >> thank you for being here today. i would like to associate mayor marx with the remarks earlier with regards to the fbi see proposal on long-term debt requirements based on assets. it's a thought out proposal and hopefully the position you be able to advise them and guide

them that this will be held up until we get a rule. in october of 23, the board issued a proposal on the debit interchange fee cap and regulation. this is very concerning given the data with the own study shane -- saying there was significant harm access to other services for countries poor citizens. it would perhaps a rulemaking until the fed and among other things for the impact of the proposed rule completes a quantitative impact analysis as it relates to affordable banking services for low income americans and reports those findings to congress. you feel you are facing -- i urge the board to proceed with extreme caution with any type of price control proposals especially since the first iteration was harmful. knowing of the hardship caused by this on low income consumers

does it give you pause to continue down this road? chr. powell: as you know this rule is up for comment. we accepted -- extended the comment period, we will evaluate them carefully. and make an assessment. the law does a sinus a specific job which is to assess whether that received by large debit issuer for processing transaction is reasonable and proportional. this is the obligation congress has bestowed upon us not something we thought we sought but that's our obligation under the law. that's all we think we are doing and i think the concerns that have been raised will be things that we -- >> hopefully you will study this and i understand from the previous types of rules along this line they were very detrimental to a lot of lower income folks.

as you know the price reduction's promised, prophets actually went to the largest retailers rather than the consumers as they were talked about. 98% was one of the studies showing to cap their money instead of lowering prices as they were telling us what happened. so i'm very concerned about that. what is the legal basis for upending regulation? you believe there something in the law which says you need to be doing this or should you be studying before you propose a rule? >> again i think our reading of the law is it's not something you do once and leave it there. it's supposed to be reasonable and proportional to the certain issue of cost implication if those costs change then this should change.

that's our reading. i think we do a lot of work, we waited a long time to change it. we do quite a bit of work on this assessment and we will review the comments in the data we get. >> even though it is supposed to be on $10 million and up it rolls downhill and is the last study showed the smaller banks, community banks are feeling the effects of this so consider that when you think about this. i appreciate that. one of the things yesterday i had two different bankers ceos and they just won the brought the subject to me which is concerning with a gross artificial intelligence been able to impact financial institutions in this country and our banking system. i tell people i said think about this for a second. you find some individual who is a well-known individual perhaps a larry kudlow or dave ramsey, someone with credibility and you

see an artificially produced advertisement or facebook focused -- post and this person says look here we have a problem today. that individual did not do this. i've seen a commercial already where you could not tell the difference between the individual and the real thing. we've just come through the silicon valley situation. if you have real-time payments where they can transfer money and you have people scared to death by some well-known individual through the artificial intelligence situation. china is watching this like a hawk. they are ready to pounce on the situation. do you think there's some issues here worth taking a look at? >> i think we are very focused on aai like many government agencies and law enforcement agencies in particular. it's very challenging. >> the gentleman's time is expired. >> thank you. >> we will now go to the

gentlewoman from texas for five minutes. >> thank you mr. chairman and chairman powell thank you for being with us this morning. chair powell the february congressional report estimated the u.s. economy will grow an estimated 7 trillion over the next decade thanks to in large part to the surge in immigration creating a larger labor force. immigration also increases demand for goods and services. i know you mentioned in your report that the growth during covid was held down due to some restrictions in covid research is in immigration, and you detail have immigrants have been fueling our national growth and did you consider this report from the cbo in this current report? chr. powell: i am familiar with

the cbo report. i read that demographic projections and economic projections. >> so you agree with the 7 trillion growth in the next decade? chr. powell: i have no judgment on that. i am familiar with the assessment. what they are doing is saying more people working, bigger economy. and it makes the economy bigger. it's just arithmetic if you say a couple million people to economy and a them will work and there will be more output. i just want to be very clear that we do not make immigration policy, we do not comment on immigration policy indirectly or directly. >> i'm not asking you to do that i'm asking if you agree that the immigration surge has added to a strong labor force which is necessary.

we expect it continued growth at a solid pace so to be able to continue at a solid pace we need that labor force wouldn't you agree? chr. powell: last year we got big increase in workers and it came from two sources. one was participation increase for people who are already here and in addition we got a significant increase in immigration. many of those people take part in the working economy so there was a big increase in labor supply that will have increased output. it will have made more people and all kinds of economic effects. i'm not an essay anything is needed for the future or what policy indirectly or directly. it's a reporting of facts to say immigration and labor force participation contributed to the strong you cannot output growth.

>> is it possible for the fed to conduct a formal assessment into the positive impact immigrants have on the economy and report back to congress? chr. powell: not really, no. i think that's a job for the cbo. that's precisely what the congressional does now. >> the other question you've not addressed is did you consider the cbo's assessment that the growth in the next 10 years would be 7 trillion at about one trillion in added revenue sprayed was that considered in this report? that was the february report. this is from february 29. >> the answer to your question is tenure growth projections by the cbo don't have a big implication for the current stance of monetary policy. i will say the immigration that we saw was a notable factor of the 2023 and 2024 economic

outcomes. of course we are aware of that and it plays a role in thinking about appropriate policy and the path of the economy. >> thank you for that. i know the last time you were here you and i talked about diversity inclusion efforts both at the fed and i applaud you and the president for his appointment, i expect to visit with her this week. what strategies and programs are you using in the fed not only in here but in all the branches to ensure that there is diversity inclusion? chr. powell: in terms of intake of people when we go to hire, when the reserve banks go to hire a new president those processes are focused on a diverse applicant pool and we see the results of that over the

years. we do not have any rule in appointments of governors so that's not our job, the administration does that. internally we are focused on having an open and inclusive place to work and also in hiring we work hard to have diversity. >> thank you mr. chairman. >> mr. isaiah is now recognized. >> good to see you in person. i've got to make a comment here. it is stunning to me that equating an underground economy which is very different and not a healthy alternative to the regular economy and basing that on any legal workforce that's not legally able to work ultimately will fail. that is not a strategy to my colleagues on the others. just ask any farmer who has a regulator come in and find them for employing people who are not

legally allowed to be here in the country. that's one of their greatest fears. that's a fallacy of growth within this economy that is not sustainable. chair powell, last fall i sent vice chairman bar a concern on the cumulative impact on consumers. this morning there's been a fair amount of time spent on basel three but among the agencies here including the fed, fdic and the number of pending or final rules is frankly just staggering. regulators finalized rules for community reinvestment act, the fed is also looking at what would unintentionally undermine recent significant progress in bringing low and moderate income consumers into the mainstream banking system. just yesterday the cfpb unveiled a rule that would cap late fees for banks and i walked out of a

meeting with my credit unions who are concerned about those things that may be in their future as well. i think it's critical we do not look at any of these rules in a vacuum and we need to consider the total impact and full scope on that so i will ask a question i've asked other regulators, how much do u.s. the fed personally consult with other agencies on their own rulemaking agenda. chr. powell: i don't leave that area of our business but i know there's a lot of talking, a coordination i'm not sure there's coordination. >> we're in government there's always a lot of talking. let me ask you this way. when a rule is finalized under another regulator are you mandated or have any kind of policy to go back and look at your other pending rules under your purview and see if changes need to be made because of these agencies rules?

>> i think where it made sense to do that. >> there is some sort of review of that? >> i've heard repeatedly that elements of this overlap with the feds annual stress tests read what are you going to do to address that overlap? chr. powell: we are in the middle just the beginning actually of deciding what to do and part of that may be the interaction with stress test so i don't have anything for you on that today but it is an issue. >> i would like to continue that conversation. i want to touch on the bank failures of last year. do you think the banks that ultimately needed the government bailout lacked sufficient capital or was it more of a management problem? chr. powell: with silicon valley bank could they have use more capital? they were actually raising

capital they announced the trigger the run and everything so you could argue it needed more capital but i would not say that was the proximate cause it was a funding structure that was all about too much concentration. >> many of us are very concerned that those failures are being used as an excuse to raise capital standards across the board. because the sec just released its climate disclosure rule this morning and touched on the climate related question for you, fsoc's chair has said climate change is an existential threat. presumably a threat that is existential effects banks and financial institutions of all sizes. why then have member regulatory agencies including the fed limited their guidance on climate-related risks only to large financial institutions

prayed why not everybody? chr. powell: it is a new thing. we are not climate change policy makers. the sec handled by elected representatives so we are starting this very carefully with large institutions who are already doing it. they are doing this because to remain active internationally they have to. we started with them because they understand imposing on smaller banks is not something i am for. >> the gentleman's time is expired. the gentlelady for michigan is recognized for five minutes. >> thank you so much chairman. thank you for being here. do you agree with the april federal reserve report that compensation incentives contributed to silicon valley's bank failure? the april federal reserve report said that compensation incentives contributed to the

silicon valley bank's failure. do you agree with that? >> i would say at best it is a tertiary factor but it probably had something to do with it. >> do you agree the appropriate rules on incentive compensation could've reduced the likelihood of silicon valley's failure? >> i really don't think so. i don't think it's a first-order question for silicon valley. a lot went wrong there. >> they actually blame you guys. they blame the oversight even though they did not respond to your correspondence. chr. powell: we took our medicine. >> do you think it has to do with the facts section 956 of the dodd-frank rule hasn't been finalized by you? chr. powell: i do not. >> you don't think it's because people made money off of the failure? you don't think money drove them to do what they did? chr. powell: there were lots of

-- >> they made money from it. it was a lottery fund. chr. powell: compensation arrangements were at the heart of the silicon valley bank failure, no. >> -- >> do you support robust rulemaking for executive compensation? do you believe in section 956? >> section 956 is the law. the agencies are looking at doing something. it's been 12 or 13 years. it's been hard to get it done. >> do you believe in a robot -- robust rulemaking process? >> i do. >> that's awesome. will you commit to helping finalize the dodd-frank section this year? chr. powell: --

it's been 12 years chairman. it played a role in the bank failure. so you don't want to do it this year? i'm being serious. you are saying no. >> if the member will allow the witness to answer the question. we've had a good day today the gentleman is trying to answer the question. >> i would like to understand the problem we are solving and then like to see a proposal that addresses that problem. >> do you believe people should profit off of bank failure? the executives that made those decisions? chr. powell: i would say exec's who are responsible for a failed bank should not profit from the failure. >> so they get to walk away with compensation based on their failure. chr. powell: you are asking me about a different rule that would have clawback and things like that? that's something i know you've been looking at for a while.

that is certainly appropriate to look at. >> it's just can continue to happen is my opinion. it sure could have helped here if they knew they were going to walk away and could walk away with not the bonuses, the compensation. they made money, a significant amount of money for there failure. last question chair powell. do you believe the impacts of climate change pose a risk? have you been talking about that? chr. powell: i certainly believe climate change is real and poses risks over the long term. >> there have been some that say higher interest rates actually makes it more difficult ill doubt the renewable energy projects and other investments required to prevent climate impacts? you believe that to be true? >> i believe that we need to do our job that you have assigned us which is maximum employment and price stability and we do

that through interest rates. it's not our job to consider the effect on climate change. any effect on climate change of that would be minuscule. >> who do you see as the major winners and losers from high interest rates and terms of income groups, age groups and racial or other demographics? >> the point of high interest rates in the current environment is to bring inflation under control. the people hurt the most by inflation as you know our people on a fixed income who right away are in trouble and the cost of transportation, food and energy when those things go up they don't have financial resources to deal with. we are accountable to provide price stability to the american people. those people benefit the most from stable prices. >> we will go to the gentlelady from missouri for five minutes. >> thank you chairman and i think you chair powell for your service.

i am concerned about banks commercial real estate exposure and i do hope that the fed is doing everything it can to ensure the exposure these banks have will continue to be in your words manageable because this is a looming crisis out there. given the changes in dynamics. in remarks on bloomberg larry summers, the former secretary -- treasury secretary stated it would be much more productive for a central bank to be focused on the question of real estate portfolios in the banks they supervise than some of the more abstract and politically driven arguments about various kinds of capital charges on the largest banks. do you agree that it would be more productive for fed supervisors and regulators to keep their eye on the ball in

this case commercial real estate and other real estate investments? chr. powell: i absolutely think we need to keep our eye on the ball on commercial real estate and i think we are doing that. >> according to your semiannual report the median of members on your monetary policy committee estimate that your target overnight interest rate will average 4.1 percent in 2024. does that mean the median number of members anticipate that you will be cutting interest rates sometime this year by as much or more than a full percentage point? chr. powell: it does not mean that. the summary of economic projections showed in december fomc this is now three months old showed three rate cuts this year so that would be 75 basis points. you were quoting the next year's numbers so you would add that on.

that was through 2025 i believe. >> are you anticipating that there would be more cuts? chr. powell: we are making economic projections so we write down path of growth, and what goes with those forecasts is an appropriate monetary policy and interest rates. we expect inflation to come down and the economy to keep growing. if that's the case it will be appropriate for interest rates to come down significantly over the coming years. it's not a plan. what will happen is what the economy needs. the economy will do something different from that and that's what will happen. >> 15 members of congress including myself, sent a letter to the regulators regarding the impact basel would have on market activities.

i want to highlight critical areas of our u.s. markets including securities underwriting, securitization and derivatives that will be severely impacted by the proposal. this was also a common theme represented throughout the comment filed on the proposal. over 95%. considering 75% of financing in the u.s. is done through our capital markets which are the deepest and most liquid in the world, why would the fed continue to pursue this flawed proposal instead of repurposing a ruling that would not have such a drastic impact on the u.s. economy? chr. powell: in fact the capital market concerns you raised are among those that i raised myself in our board meeting when we put this out for comment. >> obviously there was dissent among some of the governors, how are we counting on this and

recognizing -- reconciling? chr. powell: we are working our way through the comments and coming to the point where it will be appropriate for us to evaluate what changes are appropriate. i think those changes will be broad and material. and that's -- we've not made any decisions yet. >> i have seen the sec chair gansler push the envelope in terms of rules and regulations that go well beyond the congressional mandate even encroaching on the jurisdiction of others. what is the fed's response to another agency encroaching on its jurisdiction? >> we do not comment on other agencies regulations. if they were actually to take that at face value, if they were to -- we would react. >> i hope you do. i yield back. >> the gentlelady from new york is recognized for five minutes. >> thank you mr. chairman.

thank you for being here chairman powell. property insurance rates are becoming prohibitively expensive or inaccessible for homeowners and developers in my community. the annual report identifies property insurance rates as an increasing risk and i recently raised this issue with the secretary. is the fed monitoring the rising cost of insurance and its impact on macroeconomics? >> we will pause the clock. we'll have staff take a look at the microphone. the clock being frozen is out of

respect for miss velasquez. we will get staff to suspend for a moment. >> we need to invest in infrastructure for this. >> we are trying to do electronic voting. it's hard enough just to get the microphones to work. thank you. all the -- all the photographers laughed. so all the awkward photographs will be less awkward.

>> technical difficulties occurring when we have of course evidence being given by chair powell. semiannual testimony on the hill discussing the role of the federal reserve when it comes to the last question we heard about the encroachment perhaps, some other regulators but as we know the market has been reacting to what the fed chair has been saying. we see bond market rally more broadly and we had a lot of questions surrounding the world of technology. we are talking about silicon valley bank and the repercussions that came from rashida to leave a little bit earlier. but more generally the market has not seen much movement. we have seen bitcoin remaining on the higher side or broadly as have stocks across the board

just smaller moves in the bond market continuing to rally overall. commercial real estate a key area throughout the discussion and chair powell has been saying he will be continuing to focus indeed on commercial real estate. powell's microphone is not working across the board we are at the moment prayed we will continue to listen into what's happening. i think the microphone is working. >> you are recognized for five minutes. >> i was asking you about the property insurance rates becoming prohibitively expensive or inaccessible for homeowners and developers in our community. the report identifies property insurance rates as an increasing risk and i recently raised this issue with the secretary. is the fed monitoring the rising cost of insurance and its impact

on macroeconomics? >> we are very much aware of the increases in insurance including property insurance and it's been adding meaningfully to inflation. it's not something we have any control or authority over prayed same thing about auto insurance or insurance generally. prices of gone up a lot. >> so when we talk about the lack of affordability when it comes to housing, the insurance the rising cost of insurance is an important factor that is affecting the availability of affordable housing in our communities. i hope that there is some discussions among the fed because it is an increasing risk and is going to have a direct impact on our economy. chairman powell, i know you spoke with chairman mchenry a

little bit on inflation and interest rates. can you explain what evidence you are looking for before inflation has returned to 2% and interest rates can be caught -- cut? chr. powell: we are not looking for inflation to go all the way down to 2%. what we want is more evidence that will give us more confidence that inflation is on the path down to 2% sustainably. so that will come in the form of good inflation readings. we want to see a bit more evidence so that we can be confident. we don't want a situation where it turns out the six months of good inflation data we had last year if that didn't turn out to be an accurate signal of underlying inflation. we are just being careful because the economy is so strong in the labor market is so strong we think we can and should be careful as we approach that decision. >> when you say evidence?

what evidence? >> we would like to see more good relatively low inflation readings. we are not looking for better inflation readings than we've had. we are looking for more of them. what will happen is as we go forward the 12 month inflation will continue to drop. because it will be lower than early last year. >> thank you. mr. chairman i would like to pick up on where miss tlaib left off. reiterating the importance on section 956. this is an issue that i also raised with vice chair bar, the acting comptroller and i told them when they came before this committee that i would be asking for their status update on the rulemaking of every future hearing. because it is well past time, 12

years. if you're employed within a company and given a task i would think you would be fired if you did not get it done and it has taken 12 long years. you are the chairman of the fed, how is the fed working with other agencies to propose the rule? chr. powell: there's a lot going on in regulation right now. my understanding is there's been discussions between the regulatory agencies and i think it's more like six agencies that have to agree. i have not seen a proposal. i think something is under consideration but it is not something that's going to -- >> i'll ask the next time and believe me i'll be here. thank you. >> the gentleman from kentucky is now recognized for five minutes. >> mr. chairman good to see you.

you have said numerous times the caps on framework is about right and that banks are well-capitalized. do you still believe this? chr. powell: i do. >> given you believe that and the fact the proposal dramatically increases capital requirements on banks, would a reproposal that implemented basel three in a capital neutral way, could it do so without jeopardizing financial stability? chr. powell: hypothetically yes. >> according to latham and watkins, 97% of the letters either opposed called for a reproposal or expressed substantial concerns about the endgame proposal and those negative comments came from across the ideological spectrum from various interests. i would ask the chair to include that report into the record. without objection i would ask

national >> without objection. >> did you see that report? chr. powell: i did. >> does that concern you that 97% of the comments were negative. >> we did not do our own count so i cannot make an assessment. i would say it is unlike anything i've seen. >> the comment period ended on the same day of the feds collection which is an odd process since the data should've been collected far earlier, analyzed and the result should've been available for the public to comment on before that comment period ended. why did they choose to do a quantitative impact study during this for the proposal before closing any ability by the public to comment on the results of the study? >> the movie is not over. we are where we are in vice chair bar did commit to putting the q i.s. out for a comment. we will receive those comments

and those will be taken into consideration as we think about the path ahead. >> you got your excellent general counsel behind you there. i don't want to get into privilege here but have the lawyers at the fed raised any process concerns or administrative procedure act issues with the board? chr. powell: we are committed to doing transparent and reasonable databased rulemaking in compliance with the administration procedure. >> giving the public the ability to comment on the quantitative data that has been provided obviously is consistent with good process. governors bowman and waller, vice chair hill all dissented on the proposal read vice chair jefferson expressed concerns during a statement. under your tenure as chair can you identify any of the regulatory proposal which has elicited this much dissent? chr. powell: no.

>> have you in the past acknowledged in front of this committee that you will not move forward with proposals without consensus or you have acknowledge that in the past. we appreciate that commitment to consensus. have you achieved consensus yet? on that proposal? chr. powell: i am confident that we will but that is a process as i mentioned we are evaluating the comments we are just coming to the place we will start talking about the path ahead. i am confident we will achieve a broad support. >> do you agree the homogenate he and business diversity within the banking sector contributes to systemwide financial stability? chr. powell: i strongly do. >> do you agree it concentrate business model will present a potentially systemic risk? chr. powell: potentially

aspirated >> this is one of my major -- potentially yes. >> the fact of repealing and soon ejecting three and four's to one-size-fits-all standards that can only apply to large disparaging securitization which is the private sector solution for dispersing risk, limiting the use of internal risk models and transitioning the industry regulators towards only a standardized framework actually would push the industry into a smaller and more concentrated looking industry and as a result would increase systemic risk. do you share that concern? >> i think it is a real concern and that's part of what goes into my thinking about the proposal and where it needs to go. >> given these concerns we hope you can commit to repurposing the basel three endgame and we

strongly urge you to take that into consideration. with that -- >> good morning mr. chairman and welcome, good to see you again. i want to go deeper into the commercial real estate issue and the potential impact on regional banks. this morning scott who is a member of the new york fed board of directors released a white paper on cnbc this morning describing the trillions of dollars in commercial real estate loans in the next couple of years. he described it as a slow moving train wreck. for our regional banks. he went on to predict that it will force a little over 500 banks, thereabouts to either fail or consolidate. he also described what he termed as a loop were similar to silicon valley bank when people

lose confidence and depositors lose confidence in the bank they pull their money out and we end up in a bad situation. i don't believe everything that i read, but in congress we do tend to repeat it. i just wanted to get a sense from you. i am seeing in my own city a 20% vacancy rates in office space. we rely on that for the city. i'm just wondering your thoughts on that issue. is there a systemic concern here or is this isolated and might lowering the interest rates help some of the banks because i hear from my developers in the area, no one is lending. chr. powell: i have not seen that report so i cannot comment on it. i can comment on a commercial real estate. we had a secular change in the economy which has left office

rentals in many places building, demand for them is lower at least temporarily and perhaps for a long time. in the same is true for downtown that's associated with office workers. it's a shock to the system and we've known this for some time and we've gone through the commercial banks in the united states and so of the other regulators and identify the ones that have high concentration and are going to need to deal with that. we've been in contact with those banks and talking to them about how they will deal with this, how will they absorb these losses. if they have enough capital, do they have a plan to do this and are consistent with their lending and practices. it is going to be something we work through over a period of years. it is slow moving. i think part of it is right, you

ask about banks, i've no idea about that number. there are some banks that have these high concentrations. it's not the very large banks a manageable thing of the large banks. so i think that's what it's going to be. it's a serious problem and more serious than some locations in jurisdictions than others. we will be working through. i think that's how i would think about it. >> does the silicon valley bank situation, the money moves so quickly in those cases. it was instantaneous now. the velocity of money moving out of those banks i think in some ways contributed to their failures. are we looking at anything technologically that might be able to address or mitigate some of that? chr. powell: we also after

silicon valley bank, we got in contact and worked with financial institutions that have high concentrations of unmatured deposits. many of them have greatly improved their liquidity positions. as you probably know we are working on some liquidity rules which will strengthen our framework. that is something we have not proposed yet. >> let me ask you something off-topic. we know russia has about $300 billion, we have frozen assets, russian assets about $300 billion between the u.s. and european banks. do you want to comment on that? what i would like to see is us give that to ukraine. i know it's a simplistic idea but i'm wondering if there's any historic example that we could look to if congress has to take the necessary steps to direct that money to ukraine so they

can feed their people and fight their war. chr. powell: this area of sanctions in foreign assets is really controlled and directed by the administration, the elected branch of government. we are just the technical seat around in the back row to help. we don't make those decisions and i would not comment. >> the gentleman time is expired. >> i wonder if there were examples. >> mr. williams is now recognized for five minutes. >> thank you for being here. when i'm back in my district and hearing concerns on the fundamentally flawed basel three. these concerns are not only coming from my banking industry also from farmers and ranchers. small business owners who are concerned about how this proposal will impact the ability to access capital in the future and to all of us raising alarms on the 97% today of public

comments. across all sectors worried about disastrous implications on this proposal. and trying to make that known to banking regulators who continue to ignore them. it semper federal regulators take the seriously and i believe start over. i urge junior colleagues to rethink the misguided policy and do what's best for the american people. small business main street america and withdraw the proposal. given the concerns raised by financial institutions and farmers, ranchers, other communities across the country, can you elaborate on how the federal reserve is responding to end addressing these comments that are mostly negative and request modification, delay on the proposal. >> we are in the process of reviewing the comments. they were very detailed with a lot of data and analysis. we've got those and it's a lot. it's hundreds of them. we are going through them and just at the point where we are

about to begin then turning to the question of what changes made to the proposal we have not made any decisions. we have not gotten to that stage yet. we got the comments less than two months ago so it's -- we are looking at it as i mentioned. my own view is there will be material and broad changes to the proposal as we go forward. we have not really made decisions yet. >> we are glad you are looking at it. i want to bring up the long-term debt proposal. congress works to pass legislation on regulations to the size of financial institutions. this is meant to protect banks of all sizes and allow for families and businesses in my district to have options to meet their lending needs. so the fed's long-term debt proposal puts in a place a new long-term issuance requirements on regional banks that would

require them to issue long-term level. these regional banks will face increased costs and are already facing burdens from this administration. do you believe this proposal rule goes against the requirements of the economic growth regulatory relief and consumer protection act and will you commit to exploring this issue further with your colleagues? >> we are committed to implementing 2155. we believe the regulatory supervision of banks needs to reflect their size and activities and that something we will be considering as we go forward with this. >> americans continue to feel the pain from runaway inflation crated by the biden administration. cost continues to expand. we are -- inflation is just running rampant in our industry.

the plan forster democrats only made inflation more of a problem. american families and businesses have been forced to do with runaway inflation for three full years which is causing some major hard quick -- hardship sprayed injecting nearly $2 trillion to the already struggling economy. how does this type of inflated spending combined with economic supply chain shortages impact the economy? doesn't this reckless spending fuel the pressures of inflation? chr. powell: i think there are a lot of causes of the inflation we've seen. we saw this inflation everywhere in the world so the reopening of the economy after with very strong demand and constraint supplies saw inflation and all the advanced economies. it was a little sharper here at the beginning. i think there is a role for monetary policy and fiscal policy.

there's a starring role for the pandemic. our job is to deal with it and that's what we've been doing. >> thank you for always keeping small business and mainstreet america in your calculations. with that mr. chairman i yield back. >> mr. sherman is recognized for five minutes. >> i want to thank you for recognizing in your opening statement the importance of immigrants in keeping costs down. i want to thank you and the administration for what has been an excellent 2023 economic report. we've got 3.1% economic growth, by far the best in the developed world, headline inflation 2.4% and that's not a little blip. one-month number that's for the whole of 2023. and compares very favorably with the pre-pandemic portion of the trump administration when we had inflation of 3.5%.

my goal here is to convince you to cut more and sooner. because -- for a number of reasons. the first is if you had to ask a constituent they want zero inflation and zero unemployment. you know we can't have that. and have concluded the economy works best with a 2% inflation rate target. but i've looked at the history of that 2% number it seems to come from auckland from the 1980's. and there's a lot of arguments that your target should be just a little bit higher. larry summers recently produced a study arguing the cost of money is part of the cost of living. so we have this weird paradox you are trying to keep the cost of groceries down by raising interest rates but as the ranking member points out the big issue is housing.

and your measure of inflation seems to treat all americans as renters even though two thirds are homeowners. and so when interest rates go up that is an increase in the cost of living for anyone with an adjustable rate mortgage, anyone looking to buy a house, anyone with a home equity loan. obviously we would cut interest rates a little bit sooner and a little more if your target was something closer to 2.3%. so i will ask you is there substantial economic analysis that argues that your target rate in the economy would work better if we had a slightly higher target than 2%. chr. powell: not really. what's happened as you pointed out in new zealand, 2% has become the global standard and

the durable standard. i don't have any reason to think it's a problem for the united states to get to 2% inflation. we were at 2.4% now. >> i would ask leave to add to the transcript of this hearing numerous articles that argue for something between 2.3 and even 3%. let's look at basil. there's nothing free here if the standards are too high we lose economic growth. if they are too low we have bailouts and bankruptcies, but i think everybody agrees the standard should be well-crafted. you've got a system where everybody drafting this is well and focused on wall street and you've got rules that discriminate against mainstreet and for wall street. 65 percent if you're a public

traded company. you make -- they are not publicly traded that objection i would like to put their article into the record. so they are in effect having a tougher time getting a loan. the local pizzeria will have a tougher time getting a loan. you've got that ignoring mortgage insurance jobless he makes the loan more provincially sound for the bank. and is very necessary for first-time homebuyers. and you've got a system where if you make investments in long-term bonds on wall street you put them in the maturity category you don't have to recognize the losses in mark to market. i hope you will look at these in terms of the competition between main street and wall street for bank loans. we go to clean energy investment. can i count on you to look at

the paradox where basil three clean energy tax credits much more harshly than low income housing tax credits? for no ascertainable reason? chr. powell: yes. >> the gentleman from georgia is recognized for five minutes. >> thank you for being here today. i'm concerned with the small dollar credit for businesses. as a former business owner for over 20 years i can attest that is the small dollar business credit becomes more expensive and less convenient businesses will charge to credit cards and other alternative financing for business purchases. these inevitably result in even higher costs which go down with the consumer which means they will pay more for the services or products. in february of this year total credit card debt reached a record of $1.7 trillion.

according to intuit small business everyone -- in 2023 than they were in 2019. what do you view with the driving force behind his record high levels of credit card debt. chr. powell: part of it would be growth in the economy. i'm not sure what that is yet. people had lots of extra cash during the pandemic from savings, they spent that down and are now borrowing. i'm not sure. >> if there was a rule to force banks to tighten lending you think the rule would drive businesses and consumers to alternative forms of credit? chr. powell: i do. if you raise lending costs for banks than at the margin that will make non-bank lenders --

they will get some of that business. >> and if it becomes more complex or less convenient then businesses will turn to the alternative forms. i've called for the withdrawal of the basel three endgame proposal entirely. will you commit to an analysis of how bank proposals affect small business credit access and the small dollar lending before finalizing such proposals? chr. powell: will i commit to that. let me look into that, i do not want to make a commitment yet but we will look at the issue. >> you feel it's important we do have an understanding of the effect. small business is the backbone. if the business is the backbone. >> i do agree. >> the chairman asked you for your thoughts on withdrawing or repurposing. have you