2-day testimony. she is speaking with lawmakers and saying she expects to raise rates as soon as september plus that it will remain dependent on the economy and the health of the economy. she has been answering questions related to dodd frank legislation, transparency at the federal reserve am a and now monetary policy, even one on predatory lending practices to minorities. responding to questions from maxine waters, democrat from california. we will continue listening to her testimony and response to questions but i want to look at helm markets are responded to the testimony. >> basically, the major indices are all hugging the flatline as speak. seen janet yellen the nasdaq is up the highest. the dow and the snp are up by about 2/10 of 1%.

the investors are clearly watching to see what she might say or imply. let me take you over to the tenure treasury yields -- it's similar to equities. it has been staying close to the baseline this morning. . percent at about 2.41 also the dollar is trading higher. there it is. day, near its highs of the it's just off the highs of the day and it's a 2-week high. the dollar jumped when janet yellen started speaking. pimm: thank you very much. let's continue listening into testimony from federal reserve askinganet yellen who is -- answering a question directed by carolyn maloney about international financial conditions and the effect they would have on u.s. monetary

policy. >> if the fed waits longer than currently forecast to start raising rates, will that mean a steeper path of rate increases? longer, itit certainly could mean that when we begin to raise rates, we might have to do so more rapidly. an advantage to beginning arlier is that we might have more gradual path of rate increases. as i indicated, the entire path of rate increases does matter. there are many reasons why the committee judges and appropriate path of rate increases. it's likely to be gradual. at zeroat we have been for over six years, it has been a long time since we have raised

rates. doing so when we finally begin in the deliberate and gradual way, looking at what the impact of those decisions are on the economy, strikes me as a prudent approach to take. >> as you know, the markets have been anticipating a rate increase for quite some time. it would follow one of the fomc meetings that has a press conference afterwards. there is currently a press conference after every other meeting. as a result, the fed only has two more chances to raise rates this year in the markets of you even though there is a meeting later this month and one in october. feduestion is -- would the feel comfortable raising rates for the first time at an fomc meeting without a press conference scheduled afterwards? are the july and october

meetings on the table, so to speak, for rate increases? >> i have tried to emphasize that every meeting is a live meeting. we could make decisions at any meeting of the fomc. we have emphasized that if we were to make such a decision, we would likely have a press briefing afterwards and we recently conducted a test to make sure that members of the media and the press understand how technically they would participate in such a press briefing. the chair recognizes the gentle man from missouri. >> thank you. here, thank you. ago, we met and had a long discussion about a number of different topics and one of them was operation show point. i asked if that point or made mention that i was concerned from the standpoint that

government oversight reform had this report that they put out with regards to the internal fdic wast showed the going well beyond their statutory authority and duties and trying to limit the ability of certain legal business to do legal business and was impacting a lot of thanks in a negative way. the fact that you oversee some of those banks as well, i felt you should be pushing back. i asked you to do that. have you done that? >> yes, i have done that. i have discussed with chairman gruber operation chokepoint. our views about what appropriate policy is on the part of the banking agencies with respect to deal withaminers

banks and the services they offer. we both certainly agree on the thattance of making sure examiners and our policies don't discourage banks from offering services to any business that is operating within state and federal law. that appropriate policy. to you how hecate is going to stop operation choke point within his own agency? abouton't want to speak his -- >> it's important you make the point to him that he has to stop. report, his own e-mails within his department, he he is implicated as being part of the problem. and therefore it's important, i believe, that you have discussions that he has to cease and desist those kind of activities and get an insurance

he will make sure that is done. >> he explained to me a number of policies he has put in place to be absolutely certain that his examiners are abiding by the policies i indicated which is --t the banks we supervise that the examiners examining them do not -- >> if you find this is still continuing, will you you confront him about this? this to bey we find operational and therefore you need to stop? will you stop him from doing that? if you see it. >> i will continue to discuss with him this issue and make sure our policies -- >> with regards to another issue we discussed with regards to cipi designation, one of the concerns i have especially with

--urers and asset managers as they are designated, there does not seem to be a way for them to become de-designated. say they need to change their business model but i would think it would be helpful whenever they are designated to be able to say if you do this and this and this, these are problems that of cause you to become designated. if you change these things, it would allow us to de-deed designate them. can you elaborate on that? ipsoc reviews the designations every year of firms and considers whether or not they are appropriate or no longer appropriate. designated areas

materials totailed enable them to understand the basis for the designation. >> i would encourage you every year to make sure you put something like this in so there is some certainty on the part of those folks designated. one quick question with regards to the lord is charged with adopting capital standards for insurers. these capital standards are of concern from the standpoint that this is the first time the fed has gotten involved in domestic capital standards for insurance companies. you are looking at international capital standards but my question is -- would you commit or prioritize a domestic capital standard will take priority out -- over international question mark >> any international capital standards would not become effective in the united states unless a regulation or rule were proposed to >> that is my concern. >> it has to go through full

debate. >> we want to make the to -- we want to make sure the domestic insurance industry is protected. >> the chair recognizes the gentle man from missouri, mr. clay. >> thank you, mr. chairman and welcome back am a chairwoman yellen. you were quoted in a june 17 american bankers article as stating that the federal reserve was examining ways to improve its implementation of the community reinvestment act amid concerns that regulators are letting too many poor communities go unserved by banks. reserved the federal efforts seeking to improve implementation of the community reinvestment act and courage investments in places like the ones our -- i represent like

ferguson, missouri and other communities throughout this country that are mired in poverty? >> we have been working to improve implementation of the cra regulations with other banking regulators. byhave been doing that trying to improve our guidance, adding a set of interagency questions and answers on the community reinvestment. q&aame out with additional in 2013 and we are working toward further additions. what this guidance does is try to clarify the ways in which basic ranking services can help to meet the credit needs of low and moderate income people in the context of cra and by doing

that, i hope what we will be doing is encouraging tanks -- banks to encourage the kind of banking services that people in these communities need to be an important part of their cra program. >> along those same lines of questioning, you stated in your aboutony, your concerns the limited availability of mortgage loans. supporter of dodd frank, has the law given us unintended down theces and tamped bank's ability to lend money in order for people to get mortgage loans? >> it's hard to say. thing is, one

standards are tighter than they were in the run-up to the financial crisis. i think most of us think appropriately so. we don't want to go back to lax lending standards. it may be that the steps we have taken our having some unintended consequences and that we need to work toward making sure credit is available. do we need to tweak the law in order to allow banks to really get money out into our economy and allow people to realize the american dream and purchase homes? >> there are a number of obstacles that banks have two lending and some have to do with putback risks which is a matter that the fhfa is working on with fannie mae and freddie mac.

there remains uncertainty about securitization and the rules around securitization so we have not really seen an active market come back for private residential mortgage backed securities. that could be part of what is happening. >> ok, the federal reserve released a report titled " strategies for improving the u.s. payment system. " it's a follow-up that signaled its intention to expand its presence in electronic payments. thisas the fed embarked on faster payment initiative? what does it hope to achieve and what is the federal reserve plan? >> our basic plan is that we want to see a faster and safer payment system in the united states.

that many steps can be taken to make that possible. the main rule we expect to play is as a convener, to bring private sector participants to the table, to talk through these issues and for them, we have set up task forces on faster payments and safer payments, hundreds of private sector participants are discussing what they can do in order to bring this about. we are trying to play the role of facilitator of bringing people to the table. >> thank you. >> the chair now recognizes the gentle man from wisconsin, mr. duffy, chairman of the oversight investigations subcommittee. >> thank you. know, i chair the committee and along with the chairman, we have looked into the 2012fomc leak.

we have asked you to produce documents for this leak and you have not complied. a subpoena was issued by which you fail to comply. authorityur legal that allows you to not comply with a congressional subpoena? >> first let me say that we have cooperated with the committee -- >> no, i have limited time but give me the legal authority you have not to comply with the subpoena. we asked for specific document and you have not given them to us. >> we fully intend to cooperate with you to provide the documents that you have requested. >> madam chair -- >> we are not going to provide ism now because this matter the subject of an open criminal investigation by the board's inspector general and by the department of justice. thathave indicated to us

it will compromise, likely compromised their investigation. >> you are the chair -- you can read the statement all day long but i would like to know the legal of doherty that you have. -- legal authority that you have. g requested you don't give it to a sprint you're not found by the doj. you said you will not give us the documents. you don't have any legal authority. do you have an exemption? >> we have said we planned to give them to you. >> just not now. >> when we are able to do so and not compromise and open criminal investigation. >we want to see this investigation succeed. >> let's talk about that. you want to see it exceeds a let's talk about the timeline. this happens in october of 2012. you don't follow your policy. the general council an extensive six-month investigation. after that, the general counsel

is supposed to make a referral to the ig. that doesn't happen. general counsel gives a report to the committee, right? when you get that report because you are concerned about justice, you're concerned about bringing the leaker to the forefront, what do you do? nothing. you did not make a referral to theig. you did not make a referral to the fbi or anyone. you did absolutely nothing. zero. you are trying to save it congress will obstruct or investigation when you had information? you did nothing to perpetuate an investigation that would lead us to the truth. eventually, the ig did their own investigation and then closed it to guess what, congress said this is important stuff. as a was say, we don't want to have those that are well-connected just have the information. we should know who the leaker is.

it was because we pressured the investigationed and we pressed at you and all of a sudden, there is now a second investigation. now you say you cannot give us the documentation because it is a pending investigation. we're concerned about you jeopardizing that. madam chair, it appears you are the one jeopardizing or the fed is the one jeopardizing this investigation. am i wrong? oc has a clear set of rules that are to be followed when there are allegations of a leak. >> you did follow them? >> they call for a review of the incident by the general counsel and the fomc secretary. we have described to you how that review took place. it took place before the review was complete. the inspector general -- counsel, perneral

your guidelines, talk to the fmi see -- talk to the fm -- fomc board? they did an initial review and solely determined whether they make a referral to the ig. they did not do that. >> before his review was complete, he was informed by the ig that the ig had undertaken his own investigation and therefore the ig was already looking at it before it was necessary for him to make a decision to refer to the ig. the ig was already involved. >> if anyone is trying to sweep this under the rug, it's the fed. congress is trying to bring light to this. i sent you a letter in response to your denial on the 17th of june and we have almost a full page of footnotes where congress has some oversight during an open, pending doj prosecution. we have the right to these documents and you have the duty to provide them to us and you

have cited no legal authority to deny that request. we are entitled to do. oversight in your required to give us the documents i hope you will reconsider your denial. i yield back. >> the chernow recognizes the gentle lady from alabama. >> thank you, mr. chair. thank you chair yellen for being here today. i want to bring your attention to the wages and what i see as income in equities going on and get your take on what we can do as far as monetary policies to close that gap. since the height of the financial crisis, the u.s. economy has made remarkable progress particularly compared to other parts of the world. in the united states, the unappointed rate fell from 10% to 5.3% in june. the president has pointed out in his budget over the past four years that we have put more people back to work in the united states than japan and other nations. employment overall

gains, there are still some districts, mine included, that have folks who want to work who have not been able to find work. the hourly labor compensation has been tending to lag behind growth. and the president's budget projects the share of national income going to labor rather than to capital will remain at historically for years to come. view, can and should be done to reverse this trend and ensure workers get more rewards and gains from our growing economy? i am interested in the disparities that exist among minority unemployment. alabama, district of while the overall nation is 5.3% unemployment, our median average unemployment in a district that is is proportionately african-american is at 9-10% which is vastly different. we would like to know how you think our monetary ologies can help change that trend.

aims atary policy trying to achieve a strong recovery in the job market. while we are not there yet, we have made substantial progress. as the economy improves and the labor market get stronger, i would expect to see the growth of wages pick up over time. at this point, i think we are seeing at least some first tentative signs where growth is increasing. it has been running at a slow pace. there are often lags between improvement in the labor market and a pickup and wage growth. ofis it more because structural changes or cyclical factors? >> both matter.

as the labor market picks up, i think the pace of aggregate wage growth will pick up. structural factors are also very important. product to the growth matters over time to real wage increases in productivity growth in recent years -- pimm: you have been listening to speaking in testimony on her first day before the house committee. throwingman is jeb and -- hence are linked -- jeb hensarling. us as wellee is with as alisa abramowitz -- as well as lisa abramowitz. it seems as though chair yellen will get your gold award for not saying anything that disturbs market participation. lisa: she seems to be mailing that goal of saying nothing. pimm: which may take discipline considering we just heard

questioning from sean duffy who is the republican from wisconsin. lisa: julie hyman pointed out was once on "the real world" television show. pimm: can you explain about what he was trying to get at with her? lisa: i don't think anything. he is directly involved with a subpoena of the fed to get the information on who might have leaked the information that has been underway. they have been talking behind the scenes for quite some time. he knows the answers to the questions. you're not sure why he is beating up on her except to make a point that congress is on the job and we will not let the fed get away with anything. pimm: all of the congressmen and women we are hearing from today, as you noted, they are all up for reelection in 2016. michael: it is political.

it's 25 after 11:00 on wall street so we have been in this for an hour and 25 minutes and she is the first congressperson who is asked about monetary policy in her testimony. pimm: this is the three term democrat from alabama. all right, we will continue our coverage of chair yellen's testimony before the house subcommittee on financial services. this is the first day of her testimony and she will testify tomorrow before the senate and we will bring that to you live as well. my thanks a right now to be bloomberg economic editor michael mckee and bonds reporter lisa abramowitz. they will spend more time with me coming up. this is "bloomberg market day." ♪

pimm: welcome back. we will take you to janet yellen butestimony on capitol hill

first, let's take a look at the other top stories at this hour. the greek parliament votes today on it deal that would determine whether the country gets a new money.f bailout the prime minister will have to count on members of the opposition parties to get his plan for the parliament. the package includes pension cuts and tax increases and they have led to a revolt in the prime minister's coalition. it is obvious to most of you that this is the difficult part and it does come in fact, have many elements that will have a recessionary effect. there are many reforms that continue the neoliberal direction and will affect growth of many social groups in a questionable way. pimm: he is the finance minister of greece. the international monetary fund has warned of the eurozone that greece needs more debt relief. a new report questions whether

greece can deliver those economic reforms without a debt restructuring. the bank of canada has reduced its benchmark interest rate for a second time this year. the central bank lower the benchmark rate to 5/10 of 1%. it had been three quarters since the last rate cut in january in canada is dealing with the fallout from lower oil prices that shrank the economy in the first half of the year. a full recovery is on most two years away. families in the united states will not spend as much as usual on back-to-school shopping. the national retail federation predicts a 5.8% drop in spending. read taylor's usually do the back to desert view the back tackle season as an indicator for the holiday shopping rush. i wanted to bring your attention to the shares of macy's. they are jumping after jeff smith said he likes the company. he said the shares are worth $125 each. the stock is up more than 4.5%.

he is speaking at a conference here in new york and says the macy's owned properties are worth $21 billion and they could be spun off or split off into a separate real estate holding entity. talking about real estate, it is the end of an era in new york city. the famed toy store fao schwarz is closing its doors. that means the brands will not have a retail resins for the first time in 153 years. the stores lease was expiring in the landlord wanted a higher rent. fa or schwartz -- fao schwarz owner toys "r" us may open the store in another location later this year. those are your top stories of the morning. we are following janet yellen's testimony before capitol hill as she is speaking in response to questions from the house financial services committee. let's listen in to her testimony. >> would not have significantly

impinged on your ability to have accommodative monetary policy including quantitative easing in response to the downturn. my question to you is -- do you agree with that? specifically, in what ways would the imf definition of currency manipulation have prevented you accommodative monetary policy? i agree with the concerns that were expressed about currency manipulation. first let me make clear that i to the intervention and currency markets by governments for the sake of changing the competitive landscape and purposely trying to convert tray to a country is wrong. it is inappropriate behavior. our treasury department is deeply engaged with other countries -- >> i understand -- the question

is -- is it possible to make actionable objective criteria in currency manipulation without -- which would not have impinged what we would have them with the crisis? >> it is difficult because many factors influence the value of currencies that are traded in markets. >> the imf definition does not talk about the value of currencies.it talks about action . you have to be running a persistent trade surplus, acumen letting additional foreign-exchange reserves and you have to be holding excess foreign reserves. it's my belief that none of those three would have been triggered by all of our response. the administration's position was wrong and the imf definition would have prevented us from the economy date of -- from the accommodative monetary policy to rescue our economy. >> my concern with this is i think it's important for countries to be able to conduct

monetary policies that best pursue domestic objectives. those policies are not intended to impact currencies but because they do affect interest rates and interest rates affect global capital flows, they have impacts on currency values. all i have said about this topic is that i would worry about any type of legislation that could cripple monetary policy from achieving the objectives that congress has assigned us. question is -- is there anything you did that would have triggered the imf definition? >> i am not sure. i have not studied that carefully enough. >> ok, would it be possible for you to get back with an answer of the precise question? thank you, i appreciate that.

i'm a physicist. are you familiar with the albert einstein vote that any theory of the universe should be made as simple as possible but not in color? are you ever reminded of that when you talk about things like the taylor rule? maybe the entire universe can be reduced to a linear relation between a handful of variables. >> i think that is a good point apropos of theis taylor rule. it would be nice to be able to reduce appropriate policy to the current values of two simple variables but i think the world is more complicated than that. we cannot take everything into account but there are important things that need to be considered. thatis why we have an fomc has been asked to bring a great deal of information to the table. is a corollaryng

which is that if you have something that is a function of many variables and it is changing over it time in response to a single one of those variables, that obviously does not mean that the real response function is a single function of a single variable. the chair now recognizes the man from california, mr. royce. >> thank you. fedour first appearance is chair before this committee, you commented on the need to move forward with housing finance reform and do you continue to believe the current state of our secondary mortgage market poses a systemic risk and should congress and the fh fh take risk to share that public riskd by backed by taxpayers with the private sector? secretary lew suggested such an approach. it would have his support.

>> i have long said in my predecessors have as well that it would be desirable to see reform, todress gse decide explicitly and self-consciously what is the appropriate role of the government in the mortgage and to try to bring private capital back into the mortgage market. there are a number of ways, different strategies congress could take to a college that. i think it's important for congress to try to resolve these issues. wrote along with other members to treasury secretary lew and copied you with our concerns about the lack of a formalized process for reviewing non-bank financial institutions facing designation. we shared concern about the fsoc need to conduct a thoughtful

review of the industry before moving to designate individual insurers. since sending that letter, the fsoc has taken additional steps to understand the acid industry which was needed after the office of financial research report. specifically federal reserve governor carullo has engaged in a market wide analysis and review. taken steps tote understand the insurance industry. do you think it would be appropriate to conduct a thorough study and analysis of the insurance industry? shouldn't all non-bank financial institutions facing similar process for review? industryset management is one where fsoc thought it appropriate to focus on activities and to look at whether or not there are systemic risks associated with

some asset management activities. examples would include liquidity and redemption risk and use of off-balance sheet leverage. with respect to insurance -- this is not a matter of going from reviews of individual activities type of approach. it's not something that fsoc, to the best of my knowledge, has discussed. >> let me go to my last question -- in february of 2014 i asked you about the deepening economic crisis in the commonwealth of puerto rico. use of the federal reserve was monitoring developments and continued to analyze potential consequences for financial stability of these events. you also said it would be best to not have the federal reserve step in as a creditor of a state or municipality. in fact, you said it is more appropriate for congress and not the federal reserve to address financial issues faced by states

and municipalities. do you believe that the best outcome would be that puerto rico electric power authority and its creditors come to an agreement without any government intervention with respect to this issue? without government intervention. instead, work it out between the power authority on the creditors. >> this is not a matter in which i have an opinion. the federal reserve -- it is something the federal reserve can't and should not be involved in. i think it's appropriate for congress to consider what is best to do in this case. it is not a question on which i have formed -- in which i have an informed judgment. we have been monitoring developments in puerto rico which economically are very difficult.

we are looking to see if there are risks being transmitted to the broader municipal debt market and we are not seeing signs of contagion. that is another topic that is obviously important. be done int should this situation i think is a matter for congress to consider. >> in the past come you said it's best not to have the federal reserve step in as a creditor. >> and i continue to believe that strongly. >> thank you very much for you. >> the chair rick is the gentle lady from ohio. >> thank you, mr. chairman and thank you ranking member. thank you for being here today. let me just say we were very proud to have you last week in the great state of ohio. although it was not columbus, the capital, we would certainly come aer to having you

few miles north to visit us. my first question is to follow up on congresswoman waters' question when she asked about discrimination and the loss of wealth based on subprime lending. part of your answer, i'm not sure if you got to finish -- when you said that there were some other policies that congress could pursue to address discrimination and inequality. can you elaborate on what those policies are? >> i meant more broadly in terms of inequality among households in terms of wealth and income. there are many factors that affect inequality. they tend to be deeper, structural forces including technological change that is skilledngly upping the

demand for our workforce and the rates of return for skilled workers relative to those who are less skilled. certainly education, training or matters that are within the domain of congress to consider how to make sure that individuals have access to world-class education that is going to enable them to learn -- to earn a higher wage. policies affecting infrastructure and capital formation, entrepreneurship, other things also affect transient inequality. i was referring to all of those factors where congress could potentially play a role. >> thank you. when you were here in february, before this committee, the january unemployment rate was , about fourverall months after that, the rate decreased to about 5.3%.

in african-american communities, while it decline, it went from 12.1% to 9.5% over that same time. while african-american unemployment rates decreased, the number is still high. it is double the national unemployment rate. i think most would agree that that is unacceptably high. as you assess the health of the labor market, to what extent are you taking into account the fact that minority communities still face unacceptable high rates of unemployment. is there any outrage or anything that the federal reserve has engaged in to understand the extent and communities that i represent? >> so, there really isn't anything directly the federal reserve can do to affect the

structure of unemployment across groups. unfortunately, it has long been the case that african-american unemployment rates tend to be of most of these nation as a whole. it reflects a number of different sources of disadvantage that are operative there in our national monetary policy. we are trying to achieve a situation where jobs are broadly available in the economy to those who want to work. sustainablemaximum level of employment or we have to be careful not to try to push the economy to a point where we have to worry about inflation remaining under control. inflation,ocus on

there are certainly limits on what we can do for any particular group. >> thank you. let me continue on this theme is a talk about the office of minority and women inclusion. you know section 342 that created the office and part of the thing we have struggled with is the whole reporting authority and the standards for reporting back and what those federal regulation offices are doing. do you have any insight on this program? >> we make each of the federal agencies or entities covered by this, they make annual reports to the congress. the board is reported annually on her efforts and we are very committed to doing what we can to facilitate inclusion of minorities and women. we have many programs and try to

detail them in those reports. . >> the chair now recognizes the gentle lady from missouri, ms. wagner. >> thank you, mr. chairman. thank you for joining us today. i want to touch on some issue some of mike kelly's have also brought up. there is news coming out of greece for the past few weeks, i think it is important for countries to take a hard look at their own debt. it's time for us to look in the mirror. and address our own problems including the over $18 trillion in debt that we have accumulated. the federal reserve has employed and i will say exceptionally accommodating monetary policy since the financial crisis to spur economic growth. however, we are nearly seven years out with the federal funds bound.ill at the lower

quantitative easing and low interest rates have made on dancing of the nations deficit much easier and certainly has relieved the pressure to enact fiscal reform to solve our long-term debt problem. both you and your predecessor have argued that fiscal reform is important over the long-term. however, you've also stated that the school prudence can be ignored in the short term to not hamper the economic recovery. it has now been seven years. we can no longer say we are looking at the short-term when we are dealing with our country's debt problem. can we? so, i, like my predecessor, i believe the nation races a very serious debt problem in the years ahead. deficits, mainly because of congressional actions

and those by the administration, have succeeded in lowering deficits to the point where for the next several years, the debt gdp ratio is stable but over time under cbo projections, as the population ages and especially of health care costs has beene what historically typical, the country will face an unsustainable debt path in which debt to gdp ratio rises and that requires other actions. that is mainly related to retirement programs to social security and, even more important, to medicare and health care cost trends. we have known about this for decades. there remains a need for action on this front. >> there does remain a need for

action. budgetest cbo long-term outlook reports on the consequences of large and growing federal debt. it cites things like less income, savings, lower pressure for larger tax increases or spending, reduce ability to respond to domestic and international problems and a greater chance of a this go crisis. .- of a fiscal crisis p do you consider this along with monetary policy? >> i agree with a set of consequences that you just read to me. ultimately, when we see those things being manifest, those consequences -- in the years ahead, if deficits are not addressed and become very large, they will put pressure on the

economy. not right now but in future usrs, likely it will cause to have higher levels of interest rates than we otherwise would have come a diminished levels of investment, and productivity growth in this economy. we would have to offset those forces by having a tighter monetary policy. we are not in that situation now. >> relating to long-term let leading -- debt leading to a crisis, is this something you when yous part of fsoc look at systemic risk? >> i have not in part of an fsoc discussion of this but it is a significant issue for the long-term. long-term we get to a ? when are we there after seven years and adding eight trillion dollars in debt over the last

handful of years? when do we get to the long-term? >> the economy is recovering and i am pleased by the progress. my colleagues and i think if the economy progresses as we expect, we probably will begin to raise interest rates sometime this year. that takes a tour the long-term. >> how does that affect our current debt? >> in two ways - higher interest rates will raise the cost of servicing the debt but a stronger economy which is what will cause us to raise interest rates, a stronger economy improves tax receipts and is safer for the federal budget. pimm: you have been listening to fed chair jenna yellen offering her first day of testimony before the house financial services committee. she has been answering questions

from members of the committee. michael mckee is joining mess and lisa of romo it's -- and lisa abramowitz. what stands out to you? wagner was asking about the global financial situation. lisa: we all know she is going to try to say nothing and yet it is important to watch her because of how much control the fed has now over markets. when they do decide to raise interest rates, that could have substantial consequences on markets that are not clear on when they will move and are not clear at what pace they will move at and how much this could affect borrowing costs for everything from auto loans to mortgages to corporate debt. michael: there has been so much focus on regulation and things that don't have to do with monetary policy. frank.hey talked about.

they talked about the leak investigation but if you are a congressman with low security and coming up him you could make a name for yourself by pushing on what lisa was about. ask for more details on what it is the fed wants to see before it raises interest rates. you give the markets something they can focus on. . what their main fear is print is it really that they thinkthat they actually that the fed actually thinks that the lower interest rate now is continuing to stimulate the economy or is it that they are so nervous about the potential financial ripple effect that could happen if they raise rates now? rates,: if you raise some say it's good for the economy. that you'reignal are confident and it increases the return on investment not only for savers but for businesses and might stimulate some growth.

someone could ask her if it's better to leave rates at zero or would you get more by raising rates? that has been the debate in the market. lisa: paul krugman does not like that argument because he thinks that the economy is just too weak and that psychology is to week of an argument. there are many people who play into it.there is the question whether it is proving to be a benefit for the economy at this point. pimm: we will listen to more of the testimony that is scheduled to go on till 1:00 p.m. and they will adjourn at 1:00 p.m. and president obama will speak at 1:00 p.m.. my thanks to michael mckee and lisa abramowitz. this is "the bloomberg market a." ♪

betty: it is 9:00 a.m. in san francisco and 12:00 a.m. in hong kong. pimm: we have been following janet yellen's testimony from congress.

she says that she see's a number of encouraging signs that the economy is reviving. if the improvements continue, the said will likely raise interest rates this year. betty: that is why economists we will see see w this rate hike in september. we will get back to the testimony, but let us go to julie hyman for some of the highlights from the yellen testimony coul. julie: yellen has been queuing ofto what she said as late about the said raising rates, but not devoting went to that prospect in relatively an relatively optimistic. that if youion start liftoff in terms of beginning to raise interest rates earlier, that might allow for a more gradual path of increases. if