you can see the members filing into the chamber. following her testimony they will be questioning janet yellen. we will bring you the questioning live as a gets underway. we also have breaking numbers on existing home sales in may. julie: that number just coming out. million is the annual piece of existing home sales just shy of what analysts had been anticipating. month was revised lower to a gain of 1.3%. the housing market still in focus for invest years. it looks like the absolute number is still at the highest in february of 2007. interesting that we are getting this number. janet yellen's testimony continuing for the second day.

we are not seeing much movement in stocks today. it is a mixed picture with the nasdaq trading slightly lower even as the other major averages are on the rise. to find outiting the results of the u.k. vote tomorrow, which we will be reacting to on friday. we have financials in terms of the most heavily weighted groups. materials and on the bottom energy and utility shares pulling back. hp andto point out fedex. profitame out with a that was in line with analyst projections. also fourth-quarter earnings beat estimates. but analysts appeared to be concerned about the company not offering much clarity on its acquisition of tnt and what that's going to contribute to the business. hp raising its forecast for the

full year. it is also divesting some assets. it's going to use the proceeds to reduce buildup inventory in the printing business. optimism among analysts that it will improve. that may be what is weighing on the shares today. we are seeing the dollar decline .5% going into the brexit vote. the 10-year note, we are also seeing a little bit of a decrease. another big corporate story. tesla trying to buy solarcity. how are investors reacting? julie: not very positively. there are a lot of criticisms of this deal. analysts are questioning the timing. they are looking at the debt load of solarcity.

and both companies, the biggest shareholder is elon musk and he is chairman of both of these companies. his first cousin is ceo at solarcity. investors are not too pleased about this. take a look at the bloomberg here. we have both of these companies that have relatively high debt loads. tesla is trying to move on to the next phase of production. there have been questions about its ability to meet production targets. tesla's cash flow is the white car and solarcity is the blue bar. and here's the net debt to shareholder equity. for each of these companies it is more than 150%. heavily indebted. some analysts have talked about this acquisition, if it is approved, it's going to push byk tesla's profitability

perhaps even as much as a couple of years. mark: we are 90 minutes away from the end of the session. final day of official campaigning before the big one, the u.k. referendum on eu membership tomorrow. the feeling is the markets and the bookmakers think there will be a remain victory. the polls are in the balance. stocks are rising for the fourth consecutive day. the biggest four-day advance since february the 17th. britainan 80% chance of to stay in the eu. the odds of a brexit at 25% today. i have made a lovely chart showing how the big assets have fared in the u.k. since david oneron called the referendum february 20.

starting with the bloomberg british pound index. it has risen by just .5%. the big rally has been in the last few days. since the 14th it has jumped by 3.6%. the bloomberg u.k. sovereign bond index is up by 2.1% through last wednesday. the yield on the 10 year fell for eight consecutive days. yields forrd low eight consecutive days as well. classst-performing asset in the u.k. since february 20. of. stocks, the ftse of -- -- up by 5.2%. on sterlingeck dollar volatility. weeku can see, one

volatility is gaining after two days of losses. on friday we saw a record high for volatility. this is expectations of volatility over the next week. two weeks volatility is rising for the second day to a record high last tuesday. one month volatility is gaining .or a second day it has a seven and a half year high on june 14. it has doubled in the last month. volatility is on the rise today when you look at the pound. and this is my favorite chart of the day because it highlights the performance of gold versus the odds checker probability of a brexit. what you will see in recent days is the white line, gold, has been in decline with the odds -- oddson survey brexit of a brexit.

janet yellen yesterday was more dovish in her outlook. gold has been on a tracking run. last week it reached as high as level since january 22. since thursday it is down by 2.5%. this year it is up by 19%. along with the odds checker probability of a brexit. favorite chart of the day for me. vonnie: clearly you have battle of the charts withdrawal symptoms. we will be getting back to our battle of the charts later on in the week along with all the normal things we used to do before all of this brexit nonsense. we are monitoring of beginning -- opening statements. janet yellen will be answering questions from lawmakers shortly after. that is the chair of the financial services committee. it will be the same statement. the questions will be different

and we will bring those to you live. mark: let's get back to tomorrow's u.k. referendum. financial markets and opinion polls at odds. sterling surging to a five-month high today. european stocks of posted their biggest gain -- polls show a race that is too close to call. i want to bring in lars, chief equity strategist at sweden's largest asset manager. thank you for joining us on this pivotal day, the last day of campaigning in the u.k. would it be fair to say that investors are pricing in the eventuality of a remain vote right now? say probably 75%-20 5% chance that we will get a

stay in vote tomorrow. there is still some uncertainty. what i think we could expect over the next couple of days is a lot of volatility. thanbly more downside risk potential right now. if we get a stay in vote we could get a continued rally. a brexit vote i think there could be a lot of downside. due to the uncertainty and do to the expectations seem to be skewed to the remain vote. mark: could you put some figures on it? i know it's tricky but people love their figures. we have had all sorts of calls on how big a decline we could see in european equities. how big a decline we could see in the pound. just give us some round numbers on what could happen if we see a brexit eventuality. toi wouldn't be surprised see a plus-minus 5% move over the next week or so and a lot of

volatility. however, it depends on what will happen after brexit vote. i would guess that central banks will come back -- come out with guns blazing trying to add liquidity. that would mitigate some of the near-term problems. thehould also remember that u.k. will still remain a member of the union among there regardless. we have a two-year grace period where new trade agreements will be negotiated and so on. the world will probably continue to turn. a 5% move is what i would guess at this stage. rising.10 year yield you are looking at almost 20 basis points of again. what does that signal to you? with the bank of england have to think about raising rates sooner if the u.k. does indeed go to

leave? >> i think generally central banks both on this and the other side of the atlantic are quite dovish right now and i think on theuld prefer to err upside rather than the downside. i don't see any near-term interest rates on the european side of the atlantic. i could see something happening in the u.s. over the next couple of months. people willpe, mainly stay on hold. i don't think the cycle is strong enough to warrant any upward motion in interest-rate for the time being. vonnie: you talked about getting back to the u.s. what peopleumably start to think about again next week when the vote is over. do you anticipate volatility will continue all summer? or should we settle down and consolidate here? equitiesic view on

both in sweden where i am based and in the eurozone is that we will probably have a range bound market once the event risks are behind us. provide that we get the outcomes that we think. we still don't have much earnings growth for equities this year. people are expecting a quite big pickup in earnings in 2017. if i remember it correctly i earnings are expected about 30% year-to-year. in sweden we are talking about 9% or 10%. there is still not very good visibility about those numbers. if we can handle these event risks and manage to get through the rest of the summer toward september, october it's time to

take a good serious look at if these numbers are really credible. -- then i think we could make a constructive move to the upside for equities. until then, more or less range bound and a lot of volatility. mark: global investors are holding the most cash for 15 years. what's going to put that cash to work? what are investors waiting for? i think the basic problem is the lack of growth worldwide. we are seeing quite sluggish growth both in the u.s. and the eurozone. we are seeing major problems in emerging markets. china's slowdown continues. looking at russia and brazil. negative growth and so on. we need more topline growth, more earnings growth in order to get more money back into risk

assets. i think also that these event risks, the u.k. referendum, the spanish elections, the u.s. presidential elections. if we have positive outcomes in these events, that might get some money back into risk assets. we really need more earnings. vonnie: you are very constructive on financials. where would that change in the event of a brexit vote? financials has been the thing to short. leading -- are the leading sector today. we are seeing a higher probability of a remain vote. if we get a remain vote tomorrow, financials will probably be the thing to beat.

looking at nordic financials, low valuations and high dividend yields. dividend yields between 5% and 8% for these nordic banks. it could either be a great value trap or a great buying opportunity. i think it's a great buying opportunity. vonnie: lars, thank you. monitoring the house financial services committee hearing. fed chair janet yellen's appearance is taking place today. she will be giving her testimony in just a few moments. we will take you there live once the q&a session begins. looking at opening statements from the leader of the house financial services committee. let's check in on our newsroom. >> north korea has launched more ballistic missile.

launched 10 more missiles capable of hitting japan. the first missile failed in flight. japan called the launches a violation of un security council resolutions. american bombers most associated with the vietnam war are increasingly being used against islamic state target. air force chief of staff says b-52s have flown almost 140 missions since the beginning of april. the first time b-52s have been in the region for 26 years. at least 90 people, mostly farm laborers, have died in lightning strikes in india. 56 of those were killed overnight. dozens more were injured. commonng strikes are during india's monsoon season which runs from june to september. government and unions

reached a compromise. it will allow a new labor market in paris. police in paris had and tomorrow's march because of concerns it could turn violent as happened last week. the dispute between unions and francoise hollande's government have led to stocks in garbage collection. -- pollution is killing 48,000 people a year. ambitious air improvement policies could prevent up to 75% of those deaths. vonnie: we are monitoring janet yellen's appearance before the house financial services committee. she is giving those repeat remarks now on the economy. we will bring you the q&a

session just as soon as it begins. you can follow it along on your bloomberg. ♪

vonnie: you're watching bloomberg markets. we are monitoring fed chair janet yellen's testimony before the house financial services committee. we will take you to capitol hill as soon as the q&a session begins. the s&p 500 hitting its intraday high. what's happening in the european session? mark: we are one hour and 10 minutes away from the wednesday and. end. it's the final day of campaigning for the u.k. referendum. stocks are up for the fourth

day. shares are gaining. there's a feeling among investors and bookmakers that the remain camp will be victorious in this referendum. the polls aren't so clear-cut. tomorrow will prove to be whichever case is correct. as it is, the biggest four-day event in february -- advanced since february -- advance since february. we have seen a sea change in sentiment since last thursday since the tragic murder of the labor mp jo cox. have a look at the currencies today. interesting moves in the pound against the dollar. highest level since january. it has clawed back all its losses against the dollar. at one point since february

after the referendum was announced, sterling fell to a 2009 low against the dollar. how far it has come back. there is the bloomberg pound index which measures sterling against its major peers. volatility is rising today. in recent days has been falling. -- in recent days it has been falling. i look at what's happening in the bond markets today. the move we saw last week in the bond market was for the yield in the u.k. 10 year. interesting because we are higher but it's a more muted kind of gain here in u.s. markets. about .3%. dow off

and the nasdaq is barely in the green. it has its own stories going on. we are anticipating more movement next week once people turn their attention back to the u.s. and managers start to look for more opportunities. let's head to another set of data to look at. the vix today is above 18. the dollar yen today is a little weaker. you are seeing crude futures rising. 0.20. crude is at $5 $50.91. also at we are seeing gold futures drop as well.

mark: i suppose it's significant. this is probably the last time at least on this show we will brex go function. let's use it for the last time before fed chair janet yellen addresses questions. it has been a magnificent function gauging the movement in the polls. you can see the latest poll showing the remain camp of 44%. that poll was taken on the 20th of june. that was two days ago. we are neck and back when you look at the -- neck and that -- neck and neck when you look at the polls. this is the odds checker survey.

they look at the bookmakers and the odd and they come out with this implied probability of a brexit. the implied probability since the end of last week has come down from 44% to 25%. which is why the bookies almost have shut up shop. they are saying it's more than likely a remain camp will win. but it has seen a massive swing only in the two weeks before then. of may, brexit probability was at 20%. we moved to 44% and now we are back at 25%. brex go has been our brother and our sister. vonnie: you are making the sentimental. time for a quick business flash. the merger of two of abu dhabi's

largest banks will be unlikely to be structured as a takeover. dhabi andank of abu the other banks are in talks to have a combined market value of almost $30 billion. deal talks are ongoing. the ceo of volkswagen is trying to appease unhappy shareholders at today's annual meeting. he apologized to investors at their first gathering since emissions testing scandals corrupted last year -- erupted last year. continue watching bloomberg markets. we will be going live to janet yellen's q&a's russian with the house financial services committee next. most fomc participants based on their projections prepared for the june -- ♪

vonnie: you're watching bloomberg markets. we are heading to capitol hill where janet yellen is answering house financial services committee questions on the

economy. let's listen in. >> the number of testimonies over many years. >> i agree. i just want to know, did you have a memory of -- thatthink the fed silk there were difficulties in managing short-term interest rates using our standard -- >> but do you have any memory of the fed thing anything else besides a rate floor? because if you don't, my point is this. i believe congress granted ior for one purpose and it appears the fed is using it for another purpose. my son could ask me -- my 12-year-old for a louisville slugger to improve his batting practice. it doesn't mean i approve it for the use of chasing his sister around the house. i'm not sure that anybody in saw the toole being used in such a way. section 201 of the financial services regular release says payment cannot exceed the general level of short-term interest rates.

paying 50 basis points on excess reserves. fundraiser yesterday i believe is 38 basis points. is that correct. >> probably correct. >> so you are paying a 35% premium on excess reserves. you are paying a premium to some of the largest banks in america. is that correct? >> i consider a 12 basis point difference to be really quite small and in line with the general level of interest rates. >> ok. so you believe you have the legal authority to do this otherwise you wouldn't do it. is that correct? >> i do believe we have the legal authority to do it. >> madam chair, would it be legal for you to pay 50% premium? you are paying a 35% premium today. would it be legal to pay a 100% premium? >> interest on excess reserves

did not succeed as expected in setting a firm floor -- >> would it be legal under the statute for you to pay twice defense fund rate as a premium on interest on reserves? >> i believe the way we are setting it is legal and consistent with -- >> that's not my question. what is the legal limit on which you can pay? what does the phrase exceed the level of short-term interest mean? you are saying 12 basis points does not trigger the statute. at what point is the statute triggered? >> it depends on which short-term interest rate you are looking at. have an opinion on whether or not it would be legal to pay 100% premium -- madam chair, please. nedim chair, please. it's a simple question. would it be legal under the statute to pay a 100% premium? if you don't know the answer to the question you don't know the

answer to the question. >> my interpretation is it is legal. thet would be legal to pay -- twice the market rate. >> there is likely to be for quite some time in small number of basis point gap between interest on reserves and the fed funds rate. >> i would advise discussing that with the legal counsel because i think that frankly offends common sense. last question. you mentioned as part of your policy paying interest on reserves. part of the rationale is that you have sent roughly $600 onlyon back to congress possible because of a larger stock of reserves. hasyou aware that the gao opined, while a reserve bank transfer to treasury is recorded as a receipt to the government,

such transfers do not produce new resources for the federal government? and are you are that the congressional budget office has opined that transferring excess earnings from the federal reserve to the treasury has "no import on the fiscal status of the federal government." are you aware of those? >> i am. but i believe those opinions were rendered in connection with ill which capped federal reserve surplus in order to pay for the highway bill. what the opinion meant was that congress was not generating additional revenues in transferring federal reserve surplus to the congress. expired and i think the language is plain. the chair now recognizes the ranking member for five minutes. >> thank you very much.

last month's jobs report included an unusually steep labor force participation in 664,000 workers reporting that they had stopped looking for work altogether. you said recently that it's too soon to tell whether this drop was an aberration or a sign of a larger trend. and could caution in your testimony in the senate not to place too much emphasis on a single jobs report. that said, the drop was quite substantial. so i would like to better understand your current thinking on what could have caused such a deep decline in labor force participation. moreover, how are you reconciling the consistently positive job gains over the past 75 months with the state labor force decline? theto what extent has decline in labor force participation affected your thinking regarding the timing and pace of further rate increases? so taking a slightly longer

time perspective than just the last two months, labor force participation has been declining and is likely to continue declining in the coming years because we have an aging population. and as people move into the and refractions and population are increasing, they work less. even though more recent cohorts participate more. but there is a sharp drop-off in participation in the labor force so that will continue. felt or at least i have felt that labor force participation among other groups has been somewhat depressed by the fact that we have had a weak labor market. and a sign of strengthening labor market is to see people

who are discouraged brought back into the labor force. the laborast year, force participation rate has been essentially flat. it had increased for a bit. it has come down somewhat. over the last year in has been flat. with the declining trend due to an aging population, i take the flatness in the labor force participation rate over the last year as an indication that in fact we have seen some cyclical gains that people who are discouraged have come back into the labor force. if we just look at the last labor market report the last month, i would question these numbers. they are quite volatile. i don't think we should attach too much significance to a single month. as i indicated in my prepared remarks, when we have a month in which job gains are very low and

we see a decline in labor force and that reflects an increase in the number of people who had actively been looking for work and in the previous month had been categorized as unemployed, cease looking hard enough so they are now moved into the category of out of the labor force because instead of actively searching they are no longer actively searching, that's not a good sign. so we're watching that very closely. but i think we should not low the significance of a single report. i continue to believe this is likely to be a transitory phenomenon. toward the slowed end of last year and in the first quarter of this year. when gdp growth slowed, the labor market nevertheless continued to perform well with

200,000 jobs per month in the first quarter. this more recent decline in job growth may be a reflection of that earlier weakness in spending. as i pointed out, we are seeing a pickup in growth. there has been a sharp increase in consumer spending. to bek if that turns out the case. and i see the fundamentals as remaining essentially strong there. i'm very hopeful that we will see a pickup in job growth. we will be watching for that as we assess the economy. >> thank you very much. let me just say, you noted in your testimony that a u.k. vote to exit the european union would have significant economic economicions for activity, labor markets and inflation here in the u.s. and have previously indicated that the uncertainty posed by the referendum was a factor in the

fed's most recent decision to hold off on raising rates. republican colleagues have called for tying monetary policy decisions to a strict mathematical formula. and i wanted to just get your take on whether there is any such preset formula that you are aware of that takes into account the uncertainty associated with the chance that a member country could drop out of the european union. can you quickly comment on that? >> well, mechanical rules taken of that into account. they base changes in the stands two variables,st the rate of inflation and gdp or the unemployment rate. givendo think especially how low interest rates are and how long it has taken the u.s. economy to recover that it's important to look at the risks and to bring in risk management .onsiderations as we are doing

i don't know that they've brexit vote would have significant for us, but it could. and i think it's important to take that into account. >> the chair now recognizes mr. huizinga, chairman of the monetary and trade subcommittee. >> thank you mr. chairman. to clarify the quote that the chairman had read from the gao. such transfers do not produce new resources for the federal government as a whole. that had nothing to do with the highway trust fund. that was a quote from the gao in 2002 on page 16 of their report. i wanted to clarify that. i was hoping to cover two other issues. and riskce sheet situation and whether the fed has become a gzip. and monetary policy versus the

regulatory accountability, senator dodd when this was initially going through was talking about breaking out. but on page six of your testimony, i have to ask. "maintaining our sizable holdings of longer-term security should help maintain accommodated fiscal financial conditions and should reduce the risk that we might have to lower the federal funds rate to the effective lower bound in the event of future large adverse shock." theerday you said you have ability to go to negative rates. i'm assuming that's what you were talking about in your sentence. >> no. i said that we are not looking -- >> i know that. but in your written testimony, is that we were referring to? i don't know where else we go other than into negative interest rates. i'm curious by what authority do you have to go negative? >> i'm not thinking and i was not referring to the possibility of going to negative interest rate. that the higher

the level of the federal funds achieve as able to typing becomes appropriate for this economy, the more ability we will have to respond to some future negative shock like cutting the fed funds rate. >> i'm glad you could clarify that. former federal reserve officer has highlighted the fed exposure to the very type of carry trade that hasort lend long increased fragility before the panic of 2008. you have previously expressed support for stress testing banks using extreme worst-case scenarios. you just in reference to the ranking members question about brexit talked about risk management. given your belief in the value stress testing, would you believe it would also be appropriate to stress test the fed's balance sheet with $4.5 trillion portfolio to make sure the risk to the fed, the

treasury and the economy as a whole if the fed decides in the future it is best to shrink its balance sheet faster than it currently expected? >> it is very important to understand that the fed is not like a commercial bank. our balance sheet is very different and our liabilities are not runnable. so i do not think stress testing our balance sheet is something that's necessary. but nevertheless, we have done so and we have reported publicly the outcome of such stress tests. >> so if you didn't need to, why did you? >> because there is public interest in what would happen under such a scenario. it is worth it as an exercise to understand -- >> do you believe the fed is

exposed with this 4.5: -- $4.5 trillion balance sheet leading to a loss of income as you unwind? >> our income is very very much higher. about five times higher now because of that large balance sheet. then around $100 billion a year. >> when you start unwinding you will lose money, correct? >> it is very unlikely that the fed would end up with native income -- negative income. >> not everybody believes that. there's a lot of people that believe it's inevitable that the fed is going to end up with negative income because of the amount of unwinding the need to be done. >> it is certainly not inevitable. but there is a scenario in which the u.s. economy grows very strongly. and in order to avoid overheating, the fed needs to raise short-term interest rates at a much more -- at a much

steeper pace than we consider likely to be appropriate. and in that scenario, it is conceivable that we would end up paying more for reserves then we earn on our assets. it's very unlikely. ad let me say this would be very nice situation for the united states to find itself in. because this would be a scenario with strong growth. >> madam chair, i'm -- my time has expired. >> coming into the u.s. -- >> ultimately my question is is the fed solvent? and are not sure that has been answered. recognizes the ranking member of the monetary and trade subcommittee for five minutes. >> thank you. i have some questions for you, madam chairwoman. i want a couple questions about

the living wills. as you know the chairman of this committee and our speaker have called for an end to it. so i definitely want you to explain how the orderly liquidation authority would work. confirm for us that it would be ond for with an assessment remaining firms and not on taxpayers. there seems to be some sort of notion that this would be a revenue raiser for us if we were to end it. but inside of the answer i also want you to talk about the firms that have failed and of course wells fargo who had passed the last time fail this time. uscan you just review for that once a bank passes the stress test, and the living wills test, do they need to keep

updating their wills? truthful --y stay fruitful? intends for the togest banking organizations structure themselves and to have in place processes that would enable them to be resolved if they were to fail under the bankruptcy code with the orderly liquidation authority. it would be used by the fdic. being a backstop that would be available if it were impossible to resolve these firms under the bankruptcy code. so we are insisting that firms put in place structural changes,

governance mechanisms. vonnie: you are watching bloomberg markets. we are stepping away from janet yellen's q&a session with the house financial services committee. at a livew looking speech being given by donald trump in lower manhattan. gop nomineeive expected to take verbal swings at hillary clinton and her record as secretary of state. he is hoping to recapture the voters attention. focused onntly been questions concerning his internal campaign staff and campaign fund-raising issues. once again, donald trump in lower manhattan. we will go back now to capitol hill for janet yellen's q&a session. to continue watching trump's speech, you can find it on your bloomberg. fdic and the fed did not find their initial present

living will a year ago to be non-credible. we did nevertheless identify a set of short comings that we wanted to see remedied. and in the last submission that we evaluated and we have put all this information out publicly -- >> my time is running short. i just really want to get to the point. there is a call for ending it. what be the consequences of that? >> for entering orderly liquidation? a veryve that's important backup authority for the fdic. >> what will happen if we don't have it? >> if you don't have it and a firm were to fail we don't know what the circumstances would be and they might be such that it will difficult to resolve under the bankruptcy code. >> with that be a bailout for the taxpayers? >> the orderly liquidation

authority -- >> if we did not have that. >> the taxpayers would be in a difficult situation. >> that's what i would like to know. on the regulatory capital, are there pros and cons to just simple leverage, but there are also risk waiting. can you provide information on what the right amount would be if we just went without other prudential protections? >> it would be a very bad idea to only have the leverage ratio. that would encourage banking organizations to take on risk by loading up their balance sheets with riskier assets. that happened prior to the financial crisis. it's why we went to risk weighting. i think it is useful to have as a backup measure but not sufficient. that stress firms testing which is a different and forward-looking capital exercise

is also necessary. >> thank you so much. >> the chair now recognizes the gentleman from texas. chairman of the financial institution subcommittee for five minutes. i haver yellen, you and had several discussions about the need for u.s. bank regulators to do a comprehensive regulationst process similar to what the eu is currently doing. i continue to be disappointed that we are in a mode right now where we implement first and study later. to continue that discussion, i wanted to have a little bit of a dialogue with you. is it correct that the total loss absorbing opacity -- capacity was created to strengthen the ability of the largest in mystic ranks to resolve without government report -- domestic banks to resolve without government support? >> yes. it to provide loss absorbing

ancy. most of the large banking organizations indicated in their living wills -- >> it's designed to reduce the systemic footprint of usg zips. >> it's designed to create an orderly resolution. >> and the federal reserve proposal to impose single party -- on u.s. banks would reduce the systemic footprint? >> it is designed to do that, yes. in the surcharge rule, did the federal reserve states that it is designed to reduce -- it is designed to reduce gzip's probability to default such as s approximately equal to a large non-systemic holding company. surcharge and

calibration structure take into account these other steps you have taken to reduce systemic risk? >> i think it does. the idea here is that beijing's it failure would have systemic costcussions and result in to the economy even if it could be resolved. andefore it's appropriate dodd-frank was very clear on this. it's appropriate for those firms to be more resilient and less likely to fail. and by insisting that they hold more capital, that is a way of making them more resilient. and the capital surcharges take into account of not only their size but measures of interconnectedness with other parts of the financial system. >> it just appears to me, chair yellen, that we are painstaking here.

ncaking here. maybe we didn't go far enough. we are really not looking back. analysis of the impact of some of these other ones that we discussed earlier are going to have? and before you said let's look at a surcharge on top of that, did you do an analysis of the impact, basically a cost-benefit analysis? because i think when i look at, it's like going through a buffet. when i go through a buffet i have a hard problem. i take a little of this. that looks good. i'll take a little of that. when i get to the end of the checkout i've got more food than i probably should eat. i'm concerned here. i think that's what the eu is saying right now. before we layer more and more

regulations and prohibitions on the financial sector maybe we ought to look and see what the impact. are you all having those conversations? >> we have looked pretty carefully at what the impact is of these rules on the costs and benefits to society as a whole. and the overwhelming conclusion that comes from those studies is that a financial crisis is an immensely costly, takes an immensely costly toll on american household, workers and businesses. >> so is the goal here to make these institutions fail proof? or make sure the american taxpayers don't have to bail them out in the event they do fail? >> i think we are trying to reduce the odds that they get into trouble. and take a toll on -- u.s. economy. >> the question is -- i think the fed is trying to make these

entities fail proof. and i think it's kind of spilling over the entire financial community. so basically what we have now is economists trying to run banks. when we look at the anemic growth, you're trying to paint a rosy picture. but the economic data is not all that rosie. y. >> credit has been responding at a healthy rate. if you look at surveys, the national federation of independent business for example , small and medium-sized businesses are not reporting that lack of access to credit is among their most significant problems. we have had great improvement in the u.s. economy and most banks even though it's a challenging low interest rate environment remain profitable. >> the time from the gentleman

from texas has expired. the chair now recognizes the gentleman from connecticut. >> thank you, mr. chairman. make a quick statement as you here the scrutiny and criticism of the other side. a lot of us subscribe to the point of view held by much of the economic profession. which is that this place, the congress, abdicated its economic role in 2010 in favor of austerity giving up the opportunity to do a massive investment in infrastructure or any number of things that would have actually helped the economy in favor of austerity. theh while it reduce deficit fairly dramatically has been a drag on economic growth, leading the federal reserve to stand on its own on monetary policy. but manyeal situation of us appreciate the situation the fed was put into and many of us will go to the mat to defend the fed against the ideas that would damage the monetary policy independence of the fed. my question pertains to something you just closed on. there is a narrative developing

that while credit markets are as a whole robust, and the facts show that, credit markets are strong for corporate america, but that's not true for strong and medium-sized enterprises. and the narrative as it has developed is that that is true. and that's a question to you. you seem to believe that it's not. number two, the second part of the narrative is the reason for that is bank regulation. this report says new banking regulations have made bank credit more expensive and less available. this affect small firms disproportionately. so my question is, are we in seeing a supply problem in terms of credit to smaller businesses and is there any evidence that that is attributable to new bank regulations? small businesses often find it more difficult to get access to credit. frequently small

businesses or startup businesses, the owners will use their credit cards and personal credit worthiness in order to take out loans. they may have less access to capital that established as this. >> which has always been true. ms. yellen: i wouldn't say that i've seen any data -- >> we are stepping away for a moment from our coverage of janet yellen, chairman of the federal reserve. at alive feedg today being given by donald trump in lower manhattan, hoping to recapture the voter attention it's recently been focused on his internal campaigns and the campaign's fundraising issues. among the headlines out of this reach so far, trump saying that clinton ran the state department like a hedge fund