part of the pandemic and we didn't know how good things were going to be, how strong. we were very concerned. covid was still raging. we had a very strong wave into 2022. we didn't want to stop buying treasuries too soon because that has a stimulative effect on the economy, because we didn't want to provoke an unwanted tightening at a time when we thought the economy was still vulnerable. you look back in hindsight, we probably could have done that earlier and halted earlier. in any case, we turned around and started tricking the balance sheet. >> you moved it from 120 a month to 110. >> we have been tapering for two years now and we are now at more than $2 trillion, and we are still going. that is why we did what we did. >> tell me what that looks like in the longer term aggregate

versus what the chairman said, debt versus growth, because we believe that debt remains and the growth is not equaling that ability to pay back. >> what happens is we borrow money to cover the spending that congress has done. our purchases don't affect that. we are issuing reserves, which is cash, and we are retiring treasury securities. the effect of that is to drive down long-term rates. that is the whole reason for qe. >> what are you paying for those? >> market rates. >> and what would that market be? approximately a year? ago or two now >> >> that 10 year, we are going in the other direction. the 10 year was quite low during the pandemic, extremely low, because growth was slow. there was a lot of demand for treasuries.

so, we were pushing down rates to support economic activity. when you cannot lower your policy rate anymore and you want to do more stimulus, that is the main thing you can do. the forefather of that was milton freeman who came up with that thought way back in the past. but that is what we did. as i mentioned, we turned around as soon as we lifted off and started raising rates. we immediately started shrinking the balance sheet, and we have shrunk it a lot. $2 trillion and counting. >> you have shrunk it $2 trillion? >> that is correct. >> and what remains? >> we have ways to go. the reserves hasn't really changed. all of that has come out of the overnight first repo facility. i am happy to spend time with you on this. it is very complicated. >> i have tried to find new data on it and the last i found was

the report in 2020 two. >> very big changes since then. >> so the changes you speak of are important, and so i would appreciate that time. >> i would be happy to do that. >> great. i want to thank you for being here. the confidence that the american people have that we will turn not just the economics of their lives but of the country is very important, and i today spoke about the country, and i want to thank you for your service and time. >> the chair now recognizes the gentleman from georgia, mr. scott, for five minutes. >> thank you very much, mr. chairman. and welcome, chair powell. chair powell, i am worried about these tariffs. and i want you to kind of share with us your thoughts on these

tariffs. i think the president is wrong here. tariffs can cause a terrible situation to the economy. i am concerned about the inflationary impact on tariffs and where cost increases from the tariffs. there is a cost to these tariffs. and we need not move into this area blindly. and some of these costs will be observed by business companies, but there are other costs that will be borne by the american consumers. we don't even understand it. and now you have the president using these tariffs as a means of fighting.

everybody is not going to be mexico or canada. and while we've got a little time, i want your thoughts on the dangers of these tariffs. the stock market is anticipating rate cuts. what will these tariffs do about that? does the fed see market stability as a factor in its decision-making process when considering the rate cuts? and here is specifically what i want you to get to. in light of the president, and politely i will say his ill crafted tariff strategy, do you foresee future rate cuts as the result of inflationary issues or due to a weaker labor market? and what do you consider to be

promising inflation data. that is our big fight. and these tariffs are just going to add to inflation like a rocketship. your thoughts. and share with us, give us your opinion of the danger of these -- there is a cost here. tell us what you think about this. >> the president has certain authorities over tariffs. congress has authorities over tariffs. the commerce department is involved in some ways. the fed has no role in setting tariffs, and we don't comment on decisions made by those who do have that authority. we try to stick to our own knitting. in this particular case, it is possible that the economy would evolve in ways that, because of tariffs or partly because of tariffs, we would need to do

something with our policy rate, but we can't know what that is until we know what policies are enacted. remember, it is not just tariffs. there are significant changes to immigration policy, fiscal policy, and also regulatory policy. you put all four of those things, and they were all four things the president was elected to do, we will then try to make an intelligent judgment about the overall effect on the economy of those and conduct our policy accordingly. but it is not our role in any way to comment on the wisdom of the policies that are enacted by congress or by the administration. >> it will have an effect on whether or not you will resume your plan to cut the interest rates this year or continue to hold? >> we will make our decisions as

we go about what to do with interest rates based on the data that we see, the outlook, the evolving outlook and the balance of risks, and we will be considering all of those things. we won't be focusing on any particular policy, and i can't tell you what we will be doing because it will really depend -- it is fairly uncertain environment right now. the underlying economy is very strong. but there is uncertainty about new policies. we will just have to wait and see what the effects of those policies are before we think about what we can do. >> all i want to say, god bless you. we have worked together over the years on many things, and this nation is grateful that we have you, your wisdom and intellect at this time. >> i agree, but the gentleman's time has expired. the chair now recognizes the

gentleman from missouri, mrs. wagner. >> it is good to see you again, chair powell. under the biden administration, american families were hit with a huge stealth tax from inflation that drove up grocery prices and lead to high rates on things like mortgages and car loans. since 2021, the average missouri household is paying about $1100 more per month due to inflation. to put that number into perspective, the median family income in missouri is $69,000. these families have had to spend $13,000 more of their annual income on the exact same goods. what specifically is the federal reserve's plan for making life easier for everyday americans? >> the best thing we can do for

americans is to vigorously pursue both stable prices and maximum employment. we are trying to get back to a long expansion where prices are stable, around 2%. >> tell me what else. you seem to be there on labor, so what else? >> i would say we are close but not there on inflation. you did see today's inflation print, which says the same thing. we made great progress toward 2%. last year, inflation was 2.4%. we are not quite there yet, so we want to keep policy restricted for now. >> we are definitely not there. for 30 year mortgages at 7%. let me switch topics. i continue to believe, as we have spoken about and was brought up by prior colleagues here, that the federal banking

agencies including the federal reserve should scrap the flawed basel iii in game proposal and start over. you talked a little bit about how you plan to do that, and a timeline potentially, but how about the public -- how will the public be able to provide comments on any proposal as provided by the administrative procedures act? >> i fully expect, and i think it is a good idea for the united states to finish basel iii, in keeping with basel and with what other jurisdictions are doing. >> the key is an game. this has been going on for two decades. >> where is the end already? we will put all that out for comment again and it will comments for all commenters. >> i want to make sure we are following the administrative procedure act. >> we will. >> i understand you are interested in making the stress test scenarios that assess how a

bank will perform through a crisis more transparent. as things stand now, while the fed may make some information public, it doesn't show its math, which makes it difficult to assess the robustness and analytical rigor of the stress test. recently, the federal reserve announced that due to the evolving legal landscape, it would begin to take public comment on it stress test models and annual scenarios. can you describe the changes in the legal landscape that have caused the federal reserve to suddenly seek public comment on it stress test regime and why it did not seek public comment from the beginning? >> we are an agency that is strongly committed to following the law as written by congress and as interpreted by the supreme court. in the past few years, we have seen a string of administrative

law cases from the supreme court which are dealing with different issues, but there is a common theme, and that is significantly less deference to the views of agencies as compared to those of courts. also just a raised expectation for compliance with the administrative procedures act. we take that very much to heart. this is one of the things we are doing because of that. >> we can look at things like chevron deference, you can look at the epa ruling by the court's, and returning the power back to the people and congress, not the administrative state, not those agencies and rule makers. >> because of those things, we are putting the models and everything else out for comment and taking similar steps. >> i understand the fed intends to complete a conference a review of its tools and communications practices. what is the timeline? >> we expect to complete our

work and announce the results by the end of the summer. >> the gentlelady yields back. the chair recognizes the gentleman from massachusetts. >> welcome, chair powell. good to see you. thank you for your good work. chairman powell, the senate just filed a bill called the genius act. i am always worried about anything that comes from the senate with the title genius in it. but it is an attempt to provide a regulatory framework for cryptocurrency. and in that proposal, which is similar in some respects to the house proposal, it would allow individual states to oversee issuers, and there would be no central federal authority. the idea is to disperse the responsibility from state to state.

my concern, my overriding concern is that with that spread and expansion of crypto, and the president is 100% behind it, as he just started his own meme coin. he is making a lot of money off of that, which is another issue. my concern is that the spread and expansion of crypto will in fact the traditional banking system because it is a volatile, speculative asset, and we have seen some very sudden disasters with crypto. i am just wondering, are there any backstops that we can use, any firewalls we can put in place that might isolate the traditional banking system, because they have access to the discount window and fdic insured so there may be second order

impacts if we have a collapse of the major crypto issuer. are there any extra things that we can do to protect the traditional banking system? >> yes. first, i would say there are really two things that are happening. one is banks are serving crypto customers, and we don't want to get in the way of banks serving perfectly legal customers, as long as they understand the risks. we don't want to single out anyone. >> are you speaking to custody? >> the second thing is undertaking activities on their own. in that case, i do think it is appropriate, as bank supervisors, to make sure we understand and banks understand the risks involved in the activity they are taking. on the other hand, you don't want to go too far. i think there were a bunch of disasters, as we all remember, and we were reacting to some

extent to those. you don't want to go so far as to overplay your hand on that. so i think we need to be mindful that many of these activities can very well be done inside of banks and custody may be one of them. in fed regulated banks, there's a lot of crypto activities happening. they just happen under a framework where we make sure the bank understood and we understood exactly what they were doing. >> right. we also have the example of silicon valley bank and first republic bank, one of the triggering events there. obviously risk management was very poor in that respect, and they got on the wrong side of interest rates. but there were also some failures of issuers who had huge deposits at silicon valley, i believe. and at signature. maybe both of them.

the suddenness of their collapse caused a run for the exits. and luckily, with a scramble, we were able to save that situation so it didn't create a greater contagion. but are there steps that we can take that would strengthen our ability to respond to that type of collapse as well? >> yes. in the wake of silicon valley bank, we did work with many medium-sized banks that had any of the characteristics we saw. you mentioned a long position in a long-term securities that was underwater, along with a very unstable deposit base made up of uninsured deposits. in the case of silicon valley bank, it was a lot of similar

private equity and venture capital and hedge fund companies where they all pulled the money out. bank runs are very destructive whenever they happen. so, we look for that pattern. we worked with companies that had any aspect of that pattern, and we were successful in not having that crisis spread very broadly. and that was a good thing. cooking forward, we need to not forget that lesson. and making sure that funding bases are stable and we are focused on the basis of banking. >> the gentleman's time has expired. the chair recognizes the gentleman from kentucky for five minutes. >> let me ask you a quick monetary policy, then turned to regulation. i know hindsight is 20/20, but it is important to learn from mistakes. you have conceded that the fed miscalculated on inflation and mischaracterized inflation as

transitory in 2021-2022 time period. given that inflation remains stuck above the fed's 2% target, would you commit to scrapping the flexible average targeting framework? and if not, why wouldn't you commit to returning just to a simple 2% target? >> we are just beginning the review. it will be done by the end of the summer, and that is the exact question we will be asking. i cannot commit to a particular outcome. i need to respect the process and views of the other 18 participants. >> i appreciate that. i hope in that process that you and your colleagues recognize that that framework allowed rising inflation to persist and allow the fed to mislabel it as transitory. let me turn to bank regulation. in october of last year, i led a bipartisan code out to basel and met with the committee on bank supervision. there, the committee conceded to

us, agreed with me that the michael bar proposal of july 2023 goldplated bank requirements. instead of promoting international harmonization, it actually made american banks less competitive. they conceded that to us. i applaud the fed for not moving forward on that july 2020 three proposal that would have made it harder for large banks to, among other things, facilitate the smooth functioning of the u.s. treasury market, including holding treasuries on the balance sheet. a couple questions. one is, should the goal of our bank capital rules, should it be regulatory harmonization internationally, or should it be working economic competitiveness? >> clearly the goal is to have a strong banking system that supports american economic

activity and growth. that is the ultimate goal. what you get from basel is a global floor so that the other banks cannot run on less capital and have a short-term advantage. that was the whole point of basel, to get everyone to the same level. >> i see that utility, but i think the goal of our regulatory system should be america first, and it should be about american economic growth and competitiveness. but let's talk about the treasury market issues. obviously, we are issuing a ton of debt right now. according to blackrock, we are issuing 570 $3 billion of treasury bonds every week. to put that in perspective, the entire national debt of australia is $573 billion. we are issuing australia every week in this country, if you want to think of it that way. would reducing excessive capital and liquidity requirements on u.s. banks for inner mediating u.s. treasury market take the heat off of u.s. capital markets

and increased treasury market liquidity and instability? >> i strongly think it would help. >> i think that is especially an important comment in terms of your regulatory approach because, as you know, maturing bonds were being financed at an average of near zero during covid, now they are about double the cost of the average of about 3.5%. now is not the time to make it more difficult for banks to hold treasuries. let me drill down with a little more detail on this structure issue. do you agree that supplemental leverage ratio and the enhanced supplemental leverage ratio, the eslr, are problematic as they create a disincentive for banks, especially large banks, to serve as interim mediators in the primary, secondary, and repo markets for u.s. treasury securities? >> i do. >> so you would commit to reviewing the slr framework to

create greater capacity for our banks to provide liquidity in the treasury market? >> i think it is time to move on the eslr. and we proposed doing so several years ago, we just did not follow through on it. so, i do think it is time. >> thank you for that. yesterday, senator warren asked you about the future of consumer protection laws that the cfpb has abolished. isn't it true that prior to dodd-frank consumer protection laws were implement to buy financial institutions primary prudential regulators? >> yes. >> if there were a decision by the congress and doge or whatever to repeal the cfpb, we could return the consumer protection law enforcement function to other financial regulators? >> you could, yes. >> thank you, i yield back. >> the chair know recognizes the gentleman from texas for five minutes. >> thank you, mr. chairman.

i think the ranking member as well and would like to associate myself with the comments of the ranking member. mr. powell, i would like to complement you for standing up to the president for literally preserving the independence of the fed. it was one of those pivotal moments in time. it would have been more than you are simply resigning. it would have been the president taking control of the fed with one of his pluto puppets. mr. powell, i would like to speak to you now about the process of collecting tariffs. when the tariff is collected, at what point does that actually happen? if we impose a tariff, product is coming into the country, where is that tariff collected? >> great question. i am not an expert on that. i will say the customs bureau

collects it, but i stand to be corrected by anyone. >> i believe you are correct. that is what my research reveals. permit me to extend this. when it is collected, it goes into a coffer. i believe we call that coffer the general fund. is this correct? >> i don't know, actually. >> it does. the tariff goes into the general fund. a tariff is another way of saying tax, i believe, for many people. is that a fair statement? >> it is sometimes characterized as a tax. >> so if the president imposes a tariff, which is a tax, and the tax is collected by some entity before the product gets in the country, then the president is putting tax dollars into a general fund such that they may at some point -- and

these dollars, by the way, are coming from the consumer -- at some point, they may be used to cover some of the appropriations of this very house that the president has control over. so, in essence what the president can do is aid with the payment of what he would call a tax break, but putting dollars in the pockets of his billionaire buddies that he collects on the tariff that the people in this country ultimately have to cover. i think that the president, while he seems to always avoid the question of how the tariffs are going to be dispersed, he

knows that he can at some point use that money to help pay the taxes that he plans to return to his billionaire buddies. i think that is a very sinister way of doing business, to require the consumer to fund tax breaks. i think this president knows what he is doing. i think he believes that the very wealthy need more to do more and that the poor can do more with less. i don't agree with it, and i will do all that i can to prevent it. i yield back the balance of my time. >> the gentleman yields back the balance of his time. the chair recognizes the judgment from text -- the gentleman from texas for five minutes. >> over here. good to see you. the forecast extended beyond the fed's statutory mandate. while i agree with this decision, i have concerns how

previous fed policies may have discouraged lending to traditional sectors like oil and gas, and it should not be the role of the government and the federal reserve to be in the business of picking winners and losers. so my question is, can you clarify whether the fed will ensure that financial institutions are not pressured to making lending decisions based on political or climate considerations, rather than sound financial risk analysis? >> i confirm that is not our policy. that would be inappropriate. and that absolutely is not something we should be doing. >> thank you. the basel committee on banking supervision intended for the basel iii endgame proposal changes to be implemented in a capital neutral manner to ensure a level playing field for u.s. banks. following this intent, the previous vice chair for supervision initiated an implementation with capital neutrality in mind. his predecessor impose harsher requirements that exceeded recommendations. this only made the proposal more

difficult for banks and their customers, but also weakened u.s. banks globally. he took his eye off the ball and went the wrong direction. will the federal reserve commit to conducting a more thorough impact analysis before finalizing any capital requirements to ensure they do not hinder economic growth? >> growth? mr. powell: yes. >> regulatory overage -- the faa faced many of the same requirements as large institutions but many of these banks serve as lifelines for small businesses and first-time homebuyers, and it is key for the federal reserve to protect these institutions and make sure they are not subject to one-size-fits-all regulation. what steps is the federal reserve taking to make sure that new regulations do not force consolidation on the banking industry, making it harder for small institutions to compete?

mr. powell: like everybody else, we have seen consolidation over the last 30, 40 years, community banks going out of business, fewer and fewer banks. we know that may be happening due to technology and various things, and also just people moving to cities and away from rural areas. but we don't want our regulation to in any way foster that. we try hard to -- try as hard as we can to make sure we are not letting the heavier regulation we applied to the regionals slipped down to smaller institutions that are serving their community and generally doing a good job at that. we try hard to do that. this is tailoring, it is very much a basic value we have, it is what we are instructed to do under the law. i won't say we are perfect, but we keep this in mind. rep. williams: i'd like to say thank you for being here and good to see you and i yield my time back.

>> the chair turns to the gentleman from missouri, mr. cleaver, for five minutes. rep. cleaver: very capable and courageous ranking member. mr. chairman, thank you for being here today. as you know, my words, the cfpb has been disemboweled over the last 10 days or so. which probably -- it may not be much concern on the hill in certain quarters, but two things i wanted to ask you about. rules at the cfpb must be from time to time updated. right now there is no system for updating any of the rules.

and one of the other issues is that -- is there a regulatory gap, or are there regulatory gaps that you can see clearly, that people can feel, because there is essentially no cfpb for the first time since the end of the great recession? mr. powell: so it -- i don't think we know where this comes to rest. you may have seen last night that the administration nominated somebody to be the permanent head of the cfpb. i'm not sure what the end intention is here. if you assume that it goes away, then yeah, there wouldn't be any federal agency that can examine banks above $10 billion, whether they are state member banks or state nonmember banks or

national banks. i'm not sure we know what the endgame really is here. rep. cleaver: in terms of regulatory gaps that are created when the agency was essentially shut down, i'm assuming that there's been somebody appointed to complete the murder of the cfpb. if i'm correct, that means there are -- there have to be, or they have been tricking us all these years, that they would not do any regulations. that is my political position. i was very proud in my community to get the hispanic chamber and the black chambers to come together. we got a building, functioning,

big celebration across my congressional district in missouri. and then about two weeks ago, i started getting these phone calls, as many of us on both sides of the aisle have received, about 64% of the small businesses have invoices unpaid for more than 60 days. in the fed now, the fed's real-time payment system allows individuals and small businesses to send and receive money instantly, which is a step in the right direction, mr. chairman. so what is the status of the fed now adoption for financial institutions? mr. powell: so it's coming along. as was the case with ach back in the day, it takes quite a while. there's investment that has to take place on the part of banks.

we are working with a lot of small- and medium-sized banks to get them comfortable with the requirements of fed now so this is can build up over time. it is something we expected to be slow in terms of uptake, and it has been slow. rep. cleaver: well, is technology adoption a barrier for smaller community banks and mission-based lenders? mr. powell: yes, it is. and so we work with -- there are nonbank service providers that do reach out and do a good job with small institutions, and we have encouraged that. those institutions cannot have direct access, for their business is to -- they have the information and they can go to smaller institutions and show them how to do this, and there's a lot of that going on. we encourage that. rep. cleaver: thank you. let me just say i've been on this committee for 12 years, and i've seen chairmen, republicans

and democrats, and whether they are republican or democrat, they need to be independent. thank you, mr. chairman. >> gentlemen's time has expired. the chair recognizes the gentleman from ohio, mr. davidson. rep. davidson: thanks for joining us today, chairman powell. i might reflect on a ring on february 24 in the same room, frankly via zoom for a lot of people because it was the height of covid. during my five minutes you felt confident that inflation being 1.4% with standard control, it wouldn't be an issue despite the very large increase in the supply of money. in a subsequent meeting, frankly in my office, we discussed milton friedman's quantity theory of money in depth, and you believe it is no longer relevant, that inflation would not hit consumers. we debated asset prices during the hearing, and you claimed that the federal reserve's massive purchases of treasuries

did not distort the market. lastly, during the biden administration, you were actively calling for more fiscal stimulus at times. at some point along the way, more dollars chasing fewer goods seems to have actually resulted in higher prices. all of these things, inflated money supply, inflated asset prices come inflated consumer prices, happened on your watch. in light of the actual outcomes, have your views changed? mr. powell: well, i think we've learned a lot, but maybe not the lessons you think. but i do think we have learned a lot from the situation. we and essentially all of mainstream macroeconomics thought that this would be transitory. and what that meant was it would go away fairly quickly as the supply-side healed and demand

came down. it didn't, it did go away substantially for those reasons -- rep. davidson: to that point you felt like in the fall that it was going away, things were going to be under control and you would achieve your soft landing. but the market pretty quickly spoke. rates went up over 100 basis points where you guys were going down, and now in today's reports we see that inflation is trending up quite a bit from where it was in the fall. again, in light of the facts, would you reassess what you are doing with the central planning? mr. powell: you're right that long-term rates went up, but they did not go up because of expectations of higher inflation. no evidence of that. it is actually different things, is not about inflation. look at markets, markets are pricing in break-evens -- rep. davidson: the markets don't believe there is increased risk with massive fiscal spending in the market and they are not demanding a higher premium because there is more risk?

mr. powell: more risk, yes, but -- it's not mainly about -- rep. davidson: when you see asset price inflation and rate inflation, does not result in consumer price inflation? mr. powell: it is not a question of that. you are saying that the rate increases at the long end are caused by expectations of higher inflation -- rep. davidson: they certainly influence inflation, and if they don't influence the inflation, why do you guys try to steer inflation by controlling the rate? the reality, is you've got pressure including from the president, to lower rates. are you going to get lower inflation with lower interest rates? mr. powell: i think our policy is in a good place. i think inflation has come down from high levels to 2.6% last year. i colleagues and i are holding where we are awaiting further evidence of inflation. rep. davidson: a lot of the data you guys are looking at lag, just like when you said it was 1.4% and every thing is fine, a lot of people said it is not fine, you have to talk to good people. constituents in southwest ohio

just like all over the country aren't saying they are fine, and they might go that the rate greece has just the rate of increase has slowed down a bit, but but they're still getting hit pretty hard. you guys continue some of these policies. you are paying bank still not to put their capital at risk in the market. interest on excess reserves going back to the 2008-2009 financial crisis, you didn't even pay banks for reserves. now you are paying them for an unlimited amount of reserves. to what accent is that distorting the market likely capital out of the market? mr. powell: none, not at all. you are right that people are unhappy about the price level, several years of riches -- rep. davidson: what is the rationale for the policy? is it monetary policy or regulatory policy? as chairman barr pointed out, you guys are gold-plating the standards and the u.s. is holding way more reserves than

we are required to. mr. powell: sir, what is your question? rep. davidson: if it's not distorting a market, what is the purpose for doing it? if it has no impact on the market, what are you doing it? -- why are you doing it? mr. powell: it is the way we exercise interest-rate control in the market. rep. davidson: it has an impact -- i yield back. >> the chair recognizes the gentlelady from ohio, ms. beatty, for five minutes. rep. beatty: good morning, chairman powell, and thank you for being here. i want to thank you for your leadership at the fed the last seven years and i've had the pleasure of being here the entire time could under republican and democratic presidents through an unprecedented pandemic an uncertain economy, your apolitical guidance is a testament to the historic independence of the federal reserve, which is absolutely

essential for you to carry out your mandate come keep prices stable, and achieve maximum unemployment. over the last few years, inflation, as we all have witnessed, has come down from the high of 9.1% in 2022 to about 2.8%. during your tenure, under president biden, we saw the unemployment rate dropped to a staggering 3.4% in 2023. its lowest rate that we have seen in some 55 years. and now it sits at around 4.1%, which is still low by historic standards, although the economy has a way to go and american families, as we have heard throughout today, are still struggling to pay for expensive groceries and gas and the list goes on. it is truly remarkable what the fed has managed to achieve over the last few years. chairman powell, while i have sat on this committee, you and i

have frequently discussed the importance of representation at the federal reserve and the benefits of recruiting the best and the brightest that this country has to offer by broadening the talent pool. the fed has been a great partner to this committee on this issue, which as everyone knows has been very personal to me. however, the white house recently attacked these very basic concepts are incredibly concerning to me, as many of my democratic colleagues. i'm going to ask you a few questions and you may answer them for the sake of time yes or no. will the fed continue to follow existing law as passed by congress that requires all financial institutions, reform, recovery, and enforcement agencies to maintain offices dedicated to recruiting from abroad talent base and fostering an inclusive workplace, yes or no? mr. powell: yes. rep. beatty: i am pleased to

hear, as my ranking member mentioned and also talked about implementing it under dodd-frank section 342. but i also am pleased to see that the fed recruits from ohio schools. i'm from the great state of ohio. institutions like the ohio state university, case western reserve university, denison university, kenyon university, and oberlin. do you agree that hiring the best and the brightest, whether it is an economist, analyst, lawyer, researcher, or i.t. professionals, that this country has to offer means you don't have to recruit just from ivy league schools, but you can find these individuals, whether it is an hbcu or a state school, have you found success in recruiting from those universities?

mr. powell: yes, we have. rep. beatty: thank you. do you agree that these recruitment programs at their core do in fact prioritize merti and skill-- merit and skill and sadly expand the pool of candidates being considered?-- simply expand the pool of candidates being considered? mr. powell: yes. rep. beatty: do you agree the federal reserve has concretely benefited from times to attract highly skilled and diverse perforce?--workforce? mr. powell: i do. rep. beatty: as i mentioned at the top, the united states economy has come a long way since the pandemic and peak inflation, but hard-working families still are struggling. last night i was in a store, eggs and washington, d.c., $14.99. i'm concerned about how recent policies from the executive branch would impact the fed's dual mandate. we are seeing reports of -- from

the department of government efficiency's attempt to conduct massive layoffs. do these policies, whether you agree with them or not, affect the labor market, unemployment in the united states economy, and how does the fed plan to achieve maximum employment during the circumstances? mr. powell: we have, i want to say, 170 million people in the labor force, so they would affect the numbers technically, but it's not clear that he would be material. rep. beatty: ok. thank you, my time is up. thank you again for being here. >> the gentlewoman yields that the gentleman from georgia, mr. loudermilk, recognized for five minutes. rep. loudermilk: chairman powell, thank you for being here. i want to spen it ironic that my colleagues on the other

side of the aisle in the ranking member in her remarks have taken a sudden interest in data privacy and individuals' transactions when in the ira bill they worked very hard to force banks to report the financial transactions of individuals of $600. data privacy is something i've been very serious about since i've been here. i've been fighting the securities and exchange commission with their unconstitutional acquisition of pii from individual investors. we're attempting to reform and modernize the bank secrecy act to limit the amount of information taken from individuals. they often turned a blind eye to the abuses by the cfpb. but it's encouraging to know they are finally interested in some level of data privacy. i bring that up because there is something about data and data security i want to ask you about. the u.s. department of justice announced it was prosecuting a

senior federal reserve official for economic espionage. this just came out in the past few days. this economist, who barely had access to sent -- who apparently had access to sensitive documents, provided information to representatives of the chinese common's party. -- chinese communist party. i know you are limited in what you can say in a public setting, but to say i'm concerned would be an understatement. in but you can share with us, if you will please answer a few of these questions, do you know what kinds of sensitive nonpublic information with this individual have access to in his role of the federal reserve? mr. powell: i -- him personally, no, i don't. i really don't know the facts of the case, and i could not comment. rep. loudermilk: ok. just assuming certain types of information from the role he's in, is there any idea if

information was provided to the ccp what advantage,s with that give them? mr. powell: without knowing what it is -- i can tell you what staffers generally get, the economic analysis that we do in advance of an fomc meeting. you know, in modern central banking, we try to be as transparent as possible. i don't want to sound like i'm dismissing this case in which we take very, very seriously, just as you do. the truth is what we have that is secret knowledge of what we are going to do in the future and in modern central banking, the whole idea is to be transparent about what you were going to do. nonetheless, we take this case very seriously, to your question. rep. loudermilk: and i appreciate it. this is not adversarial at all, i'm just trying to get to what possibly the chinese could have gone and if they have anything with it. of course if you are unaware of the type of information

accessed, you couldn't answer that question, but does the federal reserve have an insider threat program designed to combat this kind of espionage? mr. powell: so we have a very, very strict information handling requirements. we do background checks on every federal reserve employee before they start working there. we do every thing we can on this. b --u rep. loudermilk: obviously certain things to happen and people slip through the crack. does this open the door for a more strategic analysis of the federal reserve and how to protect critical economic information? mr. powell: i do think that once we see this unfold a little bit and know what the facts are, we will absolutely look and make sure that our controls and employees understand the consequences of this, and i think they do. with a few thousand employees, there is going to be one

sometimes that breaks the rules. i can't comment on this case. rep. loudermilk: i understand it's sensitive, but as things move forward if you could share with me and the committee more information so we can work with you to make sure our nation's policies are kept just -- more so kept away from our adversaries. mr. powell: be glad to do that. >> gentleman yields back. gentleman from california, mr. vargas, recognized for five minutes. rep. vargas: thank you very much, mr. chairman. chairman powell, i don't want to insult you in, but i hear you are a deadhead. mr. powell: i'll own up to that. [laughter] rep. vargas: i assume you know one of the songs of the grateful dead, so i'm going to give you hear a quote to see if you know who said this. "the risk of a dispute over the

position could be a distinction, -- a distraction to omission." you know who said that? mr. powell: no. rep. vargas: michael barr did. i would be remiss if i didn't mention that what michael barr did was selfless and noble. the rest of that quote, by the way, is "in the current environment i've determined it would be more effective for serving the american people from my role as a governor." i think he himself took the position that it would be a distraction to continue in that role. i personally think he's a person of great distinction that always managed himself in a way that was appropriate, and i appreciate the role that he played. i didn't always agree with him. he was always agreeable and certainly was able to commune kate with him our disagreement.

i just want to thank him, because what he jested is -- just did is what a lot of people can't do, make a decision for the betterment of the situation that we are in for our country, he would purposely do something that wasn't necessarily beneficial to him personally. i would be remiss if i didn't thank him. since i am asking tough questions, i want to ask you a tough question. see if you know this one. you know what the -- is? mr. powell: i do not. rep. vargas: you might know it in english, the bridge of sites. mr. powell: rings a bell. rep. vargas: in venice, the leader of venice had a palace, and across the policy had his prison. and oftentimes a prisoner would be taken into the palace and interrogated in a very rough way

and then be tortured and then after he confessed to something he normally didn't do, he would have to walk over the bridge and into the dungeon and oftentimes die there. however, before he completed the task of crossing the bridge, there are two windows there, and he would stop at the windows and he would look out over the magnificent city of venice, and it's the last time oftentimes that person would get to see venice. so he would sighs. that is why it is called the bridge of sighs. the reason i bring that up is a lot of americans feel that way right now, that they are crossing this bridge and maybe it is the last time they have seen the beautiful america that we have had. they are worried. they are worried about the usurpation of powers. they are worried about the balance of powers. i was very proud of you when you stood up and said you can't be fired, president can't fire me, i'm staying.

can anyone up here fire you? mr. powell: any one? no single person can. rep. vargas: no single person can. i hope you continue with that independence. at this moment it is very important. someone mentioned it earlier, and it is very, very important. that out of the way, i wanted to talk about the dual mandate, especially the employment issue. for a lot of people in america, their job is the most important thing for that. not even their investment, the job. that is why employment is such an important position and so important to be part of the dual mandate. are you looking at changing in any way the dual mandate? mr. powell: so we don't have that authority -- rep. vargas: who has the authority to do that? mr. powell: congress could rep. vargas: only congress? mr. powell: well, congress would have to pass a bill to be signed by the president congress would have to pass a bill to change the mandate the president

signs. rep. vargas: i hope you maintain your independence and at the same time follow the law. there is a dual mandate, and that is very important to most americans. with that, i thank you for your, service, i think michael barr, i know he will continue to serve honorably. mr. chairman, i yield back. >> we recognize the gentleman from middle tennessee, mr. rose, for five minutes. rep. rose: thank you, chairman hill and ranking member waters. thank you, chair powell. you may recall the last time we spoke i brought up the issue of credit risk transfers, crts, and urged you to allocate more resources to ensure that that framework applicants were receiving decision from the federal reserve. every sleeper it back from stakeholders that they are receiving decisions from the federal reserve regarding crt

applications. i hope the federal reserve team continues to be focused on cutting down the backlog so that financial institutions can take risk off their balance sheets. thank you for that. however, i still have concerns that we are not fully optimizing the use of the crts. in the case of mortgage risk, crts have shifted risk from taxpayers to private capital including capital markets and global the insurers. while government-sponsored entities have clear regulatory treatment under the federal housing finance agency, financial institutions lack similar clarity, particularly under basel three. i understand that the federal reserve has begun to provide guidance, but more is needed to ensure that financial institutions can effectively manage risk, stay competitive globally, and serve their customers. chair powell, do you believe there should be greater alignment in crt treatment

between banks and gse's? mr. powell: that's a great question. i will take your feedback back. honestly, i don't know the answer to that. rep. rose: i just wonder what steps is work with the federal reserve take-two harmonize capital rules to promote financial to ability and competitiveness in this space? mr. powell: again, i will take back your feedback. that is our objective, is to be timely and thoughtful in network. rep. rose: thank you, i appreciate that. enable 2024, synapse financial technologies, a fintech company, filed for chapter 11 bankruptcy. this event significant impacted its partnerships with various fintech firms and banks including evolve bank and trust. to this day i have constituents in tennessee's sixth district that are not able to access thousands of dollars and there

is no communication regarding the timeline for resolution. since the federal reserve board is a supervisor of the evolve bank and trust, would you provide any updates on what you're doing to ensure that my constituents receive their funds and the expected timeline for them to receive their funds? mr. powell: so as their supervisor, as you point out, we have been pressing that bank to get money back to customers and we are actively engaged with the bank as they take steps to do so and return that money. we're deeply concerned about the complaints we have heard and aware of concerns raised during the bankruptcy proceedings. and to the extent there are violations of the law, we will follow up on that. rep. rose: thank you again. are there any specific steps my constituents could take to expedite to the process or ensure they receive the rightful balances? mr. powell: i will have to come back to you on that. i don't have anything for you on that today. rep. rose: tha