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: thank you.

chair powell, is there anything else the federal reserve board is considering to prevent situations such as this on a going-forward basis? mr. powell: when we see things it is a lot of pattern recognition so we would be looking to avoid things like this happening in the future. rep. rose: all right, thank you. i think there has been a lack of appreciation for the work that president trump has done to restore the american workforce. it is's example of calling federal employees back to the office that we are now seeing corporate america follow as well. chair powell, as the federal government and companies work to end work from home policies and bring employees back to the office, how do you anticipate this shift will impact key economic indicators such as productivity, urban, commercial real-estate markets and consumer spending patterns? mr. powell: that's a really good question. i'm not sure the answer.

i've always felt that i am personally more productive in the office, and that is where i work, except on weekends when i work at home. but in terms of productivity, i think there are different views. i know a lot of ceo's feel strongly that people are more productive in the office. will just have to see. i also think that on the other side, work from home did allow very high levels of labor force participation among, for example, women. we had all-time record high per dissipation by women -- participation by women. i think our benefits work from home and i hope we continue to realize those. >> gentleman from illinois, the ranking number on our financial institutions subcommittee, mr. bill foster, five minutes. rep. foster: well, thank you, and thank you for everything you do. i would like to get level sitting on what you have been facing in recent -- it is my understanding that your inspector general and the federal reserve has not yet been fired, is that correct?

mr. powell: that is correct. rep. foster: ok, and you have not also had high-level resignations of senior personnel as they have had in treasury? nothing like that? mr. powell: no. rep. foster: as of yet -- and so no examples of junior personnel being given administered access to your systems, your technical systems? mr. powell: are you talking about the payment systems? rep. foster: payment systems or other technical systems. mr. powell: no. none of that. rep. foster: so far you have not suffered through what treasury has. have you had any inquiries from other central bankers were commercial bankers from around the world about what can we -- uncertainty about whether the federal reserve will be able to continue doing its job if you suffer the same sort of intrusion that treasury did? mr. powell: i haven't. rep. foster: they haven't called you up and said "what the heck is going on, do we have to

defend ourselves against unknown software being installed on the systems"? mr. powell: i haven't had any such calls. rep. foster: we have also seen calls to resume -- resumption of calls to audit the fed. as you can remember from the gentleman on the wall there, this was a big theme -- first off, the fed does get audited, correct? mr. powell: we are audited in the sense that everyone understands that word to me, which is that we have a big four accounting firm who looks at her books and gives us an opinion, does the audit. that is all public. rep. foster: it is my recollection there have never been any big problems -- mr. powell: no, we have a quite civil business model, although we have a large balance sheet. we are like a big community bank with no credit risk and very simple. rep. foster: in the ordinary sense, talk of auditing the fed -- mr. powell: fully audited. rep. foster: what was really meant during the time a decade

ago, i guess, it was really all about micromanaging fed monetary policy. they said we want to audit the monetary policy, which doesn't really make sense. it's a policy thing. do you have any indication of whether the resumption of calls to audit the fed will be audits or some new effort to politically micromanage the monetary policy? mr. powell: i have no way of knowing. really what it is is the gao is free to work on every area of the head except monetary policy, and does so. we have gao reports all over the place for many years. they don't audit monetary policy. the threat would be if that were to go away, you'd have investigations into decisions on monetary policy. that would be a different thing. i think it was designed by its designer to be a step on the fed. rep. foster: that is correct.

the calls to end the fed came from the same wing of the republican party and i guess it. we are up to something like 20 republican sponsors of the end the fed bill. i was sort of surprised to see the word "tariff" only occurred twice in your monetary policy report, wher whereas if you look at financial trade journals, it is mentioned five times above the fold. for those who read hardcopies. this must be a very hard thing for you to deal with, because as you are aware, trump's tariffs and other trade policies put us in a manufacturing recession a manufacturing recession year before covid hit. this is not a small thing if these resume. but you have to sort of filter out the chaotic noise and the guidance that varies hour-by-hour or week by week. how do you actually filter that? you say correctly let's wait to see what the actual policies are complete and that depends. if you listen one day these are

the actual policies -- at some point you have to feed these into your macro models of what happens. how do you do that filtering when there is so much random noise? mr. powell: well, i think it is straightforward now in the sense that no one knows pretty much what the exact policies will be. that is still evolving. you can't really take action. you can do analysis of various hypothetical things, and we have been doing a lot of that. ultimately what is tariffed for how long, are there substitutes, many questions have to be answered. even then the question will be how much of that will transfer to consumers. as you knkow, mac and follow the exporter, the importer, the retailer, or the consumer. rep. foster: in my case, manufacturers on both end of this. mr. powell: we really just don't know -- >> gentleman's time has expired. the gentleman from south carolina, mr. norman, recognized

for five minutes. rep. norman: thank you, mr. chairman. thank you, mr. powell. appreciate you coming and addressing our body. in 2011, vice chairman yellen made a statement about the concern about the long-term debt situation, the imbalance we have with our budget. in the fourth quarter when she made the statement, the federal debt held by the public was as percentage of gdp 64.75%. now the same debt to gdp is identified by cbo was 99% at the end of 2024. do you express the same concern that ms. yellen had about the severity of where we are with our continued long-term imbalance? mr. powell: i've done so on many occasions. essentially the u.s., we are on

an unsustainable path, and the debt level is unsustainable but the path is sustainable and certainly it is past time for congress to work on that. but that is what i can say. i can't say more than that. rep. norman: what do you think the benchmark would be? we are in the middle of the budget situation now trying to debate particular reconciliation. what would you say is the benchmark that would -- what level of cuts would ease your concern over what we are doing? $37 trillion now, but when you add the mandatory spending we have on social security can going bankrupt in 2035, highway trust fund running an imbalance, what level do you think would give you some assurance that we are going to get our house in order? mr. powell: so i don't have a specific number, wouldn't be appropriate. but i will say this, having looked at this, the successful

plans to program -- the programs to get back on the right track, they tend to make progress over a long period of time. in other words you got to get to a place where the economy is growing faster than the debt and stay on that for 20 years. this is not the kind of thing where we can fix it overnight. we need to be making progress. right now we are running very large deficits at a time of full employment. we need to start moving. you are either making progress or you're not and right now we are not. the key thing is for you to become a big issue and then people work together. the things that need to be done are things that can only be done on a bipartisan basis, only. these are things that need to be dealt with not be done with by one political party, i will leave you with that. rep. norman: it's going to be a tall order. mr. powell: it is. it gets taller every year. rep. norman: yeah. yeah, it does. that's one of the issues we are

having now. the level of growth you think with what president trump is doing with giving americans confidence with the doge commission, which is giving americans hope that we would -- we are seeing things being spent of the taxpayers' dollars that we never imagined, he is exposing that. what level of growth do you think with the confidence growing under trump that we will be able to reach this year and the years after? because the 20 years you are talking about, we have got to be solid -- it's got to be, would you say, 1.8, 2% growth of gdp? mr. powell: you know, for a long time people thought that u.s. potential growth was a little bit below 2%. i think we have had five years of good productivity growth, and

we hope that will continue. if that does continue, it might be 2, 2.25. if you're talking about long-term budget assumptions, i would be conservative and say 2%. rep. norman: you think that is doable? mr. powell: 2%? yes. rep. norman: on another note, the stress tests that banks run and that public has been given information on everything but how the stress test relates to them. why is it not further -- why is it -- most people don't understand what it is. why is not broadcast more, in your opinion? mr. powell: why the stress test? rep. norman: correct. mr. powell: so the theory from the beginning was to not disclose the whole models and the way that they work because in a way that felt like giving the test in advance. this is a brand-new initiative that started coming out of the

global financial crisis, very successful generally. but over time the argument for not giving away the models, giving the models out, has weakened, and also the law has moved. the supreme court has moved to reduce the level of deference given to agencies and increased our obligations to be transparent under the administrative suture act -- >> gentleman's time has expired. rep. norman: thank you so much. >> the gentlewoman from texas, ms. gonzalez, recognized for five minutes. >> thank you, chairman powell, for joining us this morning. united kingdom, mexico, brazil, and japan allowed non-bank payment service providers access to their instant payment services. this allows improved access to the could it be for users by ensuring they receive payments instantly without waiting multiple days to access their money. i believe this is especially

important for those who have tighter cash flows and for those sending payments to loved ones abroad, both which happens quite frequently in south texas and across the country. with that in mind, does the federal reserve plan to allow non-bank payment service providers access to that now payment? mr. powell: we don't plan that right now. for we really want to do is to have the consumer not care. the consumer can have access, our payment rails go through the banks. you have to go through a bank. rep. gonzalez: so there no plans on changing that? mr. powell: no. not that i'm aware of. rep. gonzalez: what -- i'm getting on the consumer price index -- what consumer price index reading would cause you to cut rates? is it 2% exactly, or a trend closer to 2%? how much more movement downward do you need to see in cpi for the fed to start looking at rate cuts? mr. powell: so remember we are

looking at two things, the labor market and inflation. headline inflation last year was 2.6%. we've said, assuming the labor market remains a and strong, we want to see further progress. we did not make much progress on core pce inflation last year for reasons that i can explain, but nonetheless, the progress wasn't there. we want to see a resumption of progress. i'm not going to put a really specific number on it. the truth is the economy is strong, the labor market is solid, and we have the luxury of being able to wait and let our restrictive policy work to get inflation coming down again. that is what we are doing. rep. gonzalez: is there any concern that the fed that deporting millions of undocumented workers that do a lot of crucial work in the agriculture industry and construction, hospitality business, will create upward pressure on inflation in this country? mr. powell: so we don't -- we don't have concerns about policies. we just look at the data.

labor supply has actually -- the new labor supply for immigration has come down quite sharply over the second half of last year, and there is every reason that think that will continue. demand has come down. the unemployment rate has been flat since july. rep. gonzalez: but wouldn't taking a million workers out of the economy have a direct impact -- mr. powell: it could. we will have to see how supply and demand match up. we are not here to comment on immigration, we are here to achieve -- rep. gonzalez: right, i totally get that. i just figured if you take a million people out of the workforce, how do we make that up and how would that have inflationary pressure on our economy. moving on, recently the cleveland fed's lieutenant index tumbled into a -2.4 year-over-year rate. does that type of deflation and shelter make you more positive on future interest rate cuts? mr. powell: so, yes, but the

thing is, what we are really looking at is in the aggregate housing services inflation. i believe that is a measure of current rents, so market rents happening. market rents have not been showing much inflation for a long time. market rents don't make their way into rents until leases turnover, existing leases turn over. that's the slow part of the process. we've seen a lot of progress on that, but we are not back to levels of housing services inflation, which is what i described. we are making clear progress. rep. gonzalez: you recently said that employment prospects are solid, and construction employment, which represents 6. 1% of private employment, is falling significantly. does this concern you? mr. powell: we look at aggregate numbers. there are always industries that are growing and not growing. the last few job reports have been significant job creation. you saw the 10 week or so ago

which revised up the last two months and strong job creation. it looks like job creation picked up a little bit at the end of the year -- rep. gonzalez: thank you, and very briefly, we had that's the last time the economy faced uncertainty with large tariffs. are you manner durin--are you monitoring the developments this time around? mr. powell: we are monitoring them carefully, yes. rep. gonzalez: i yield back. >> chair of our -- [indiscernible] >> thank you, mr. chairman, and thank you very much, chairman powell, good to see if i did share an oversight subcommittee hearing on banking. we revealed evidence that the fdic pressured banks to to debank crypto. what do you think of that situation? mr. powell: so i think we are awestruck at the number of complaints and the breadth of them.

we want to take a fresh look at this area. it is not something -- we are not telling banks that they can't bank certain people from anything like that. nonetheless, we are giving these things, and i take at least some of it as real. we need to understand it and stop it from happening. if you look at what the banks are saying, they are saying a lot of this is that the enforcement of money laundering is so tough that any flag at all the gets raised, they cut people off, and they can't explain that may be part of it. we need to do some work to get to the bottom of it. >> hundreds were pretty clear that we should avoid doing business with crypto companies. no such pause letters as they were referred to in communications from the fed? mr. powell: not that i'm aware of it is not our policy.

we have been doing business with crypto committees and we've been careful with it, but i don't think we've been telling people -- >> a lot of people appreciate your doing a careful review of that. the banking industry itself is concerned that there is no vice chair of supervision to provide clarity on multiple issues from basel iii, d banking. do you expect to have an acting vice chair supervision -- when do you expect to have an acting vice chair? mr. powell: we don't have -- we need to have a confirmed vice chair if we have a vice chair. there is no such thing as acting for us. i don't know, that is up to the administration. the way we look at it is we are going to do our jobs. i think there are a number of things that can be done that will be very constructive. if there is a new vice chair of supervision, i will welcome at present and do everything i can to make them successful. rep. meuser: ok, thank you. yesterday you noted that basel iii could be finalized quickly.

given last year's extensive public commons, would you ensure that the rule does not restrict access to capital and incorporates industry feedback? you felt the capital reserves for banks was about right. i would imagine you are not looking for anything too drastic there. mr. powell: no, that's right. that's correct. rep. meuser: ok, great. so the cpi this morning came in a little hotter than expected at 3%. did this surprise you?this surprise you mr. powell: note of caution, we don't get excited about good readings or batten readings. need to know the translation from cpi to pce, and we get more data on that. tomorrow we get the producer

price index. it is always wise -- people who follow us closely know this, that we know what the pce readings are late tomorrow. rep. meuser: ok. in the past, as you will note, you called inflation transitory. then the fed signaled three rate cuts for 2024 and the markets priced in six. now that you are saying there is no rush to cut rates, do you find the guidance stabilizing markets or fueling volatility? mr. powell: so this is the summary of economic projections, the dot plot. i think markets like it. it is the only -- it is the forward guidance we give. we don't really mean it as forward guidance, but markets take it, sometimes they take it too seriously. i think most market participants understand it is highly conditional and depend on what happens in the economy. rep. meuser: and that is feedback you receive? mr. powell: yes. we talk about getting rid of it

and market but is been tell you please don't do that. rep. meuser: if doge found a trillion dollars of wasteful and unnecessary spending, wouldn't that have a positive in fact on inflation, allowing you to lower interest rates and reduce our deficit spending? mr. powell: so this is if a trillion dollars of spending were eliminated. you have to run that through a model, but ultimately it -- hard to say exactly how it would affect the economy. rep. meuser: we've got a $6 billion budget at the fed. would you welcome doge to have a look under the hood? mr. powell: we haven't heard from them, and i got nothing for you on that today. rep. meuser: i yield back. >> the gentleman from illinois is recognized for five minutes. rep. casten: chair powell, always a pleasure to see you again. i don't expect you to comment on

the policy, but there's been a number of actions by the trump administration of scrubbing or eliminating get that the private sector has historically relied on to understand the direct and indirect impact on the economy, public health data, information about breaking things down by gender, by race, that we need to understand granular shifts in the economy. i realize that you don't rely exclusively on government data, but has there been anything that has happened since the trump white house was sworn in that has limited the fed's access to information you need to fulfill your dual mandate? mr. powell: not that i'm aware of, no. rep. casten: if there was, would you commit to sharing it with congress so we can fulfill our oversight response police? --oversight response abilities? mr. powell: sure. rep. casten: i want to confirm if you feel the same way, is it the view of the federal reserve that climate change presents a threat to u.s. financial stability? mr. powell: yes, i would've -- i

wouldn't say that climate change is currently a threat to u.s. -- rep. casten: an emerging threat? mr. powell: it may emerge over time as such. rep. casten: ok, so $250 billion of losses in california, multiple states where the insurer of last resort is insolvent, reporting today that california is having to bail out -- i know we have a difference of opinion i don't want to go into that, but is the fed monitoring what is happening to our financial system as those insurers pull out, as insurance rates go up, and access to property insurance and the cost of insurance are going up? are you monitoring what is happening systemically in our economy as a result of that? mr. powell: yes. the question, though, is that a threat to the financial stability of the united states, that is the question. of course we are following that very, very carefully. rep. casten: if you are monitoring it, where is the risk

that was being backed by the insurance industry moving? mr. powell: insurance companies, as you know, can cancel policies and not issue them and leave states, and they are doing a lot of that. where do the risks fall? they fall on homeowners and other beneficiaries and they fallen state governments and some accent the federal government. they don't cause large financial institutions to fail. rep. casten: are you seeing shifts in mortgages, mortgage servicers, the willingness to provide loans to homes as the insurance rates go up or disappeared? mr. powell: implicitly if you can't get insurance, there won't be a mortgage. i can't point to episodes where that is happening, but that is where this looks like it is headed. rep. casten: there has been reports going back several years now that the more prone your property is to flood risk, fire risk, the more likely you are as a bank to offload that to fannie and freddie. we have seen that happening. that raises the question of -- this may be purely academic and wonky --if you own a set of cash

flows and you want to sell them to me with full information, i'm only going to buy them from you and increase value to the extent that i have lower costs than you do. econ 101, right? if we own fannie and freddie because they are in receivership, setting aside the nuances of how the cbo scores these sorts of things, is in the sale of fannie and freddie and the assumption that the buyer and seller have perfect information, the same information on both sides of the transaction, if that's accretive to the american taxpayer, does not implicitly assume we have to sell to somebody with a lower cost of capital than we do? mr. powell: i follow your logic there, yeah. rep. casten: ok, and that would only not be true to the extent that either the buyer violates every rule of paying for upside, as they say, or that the buyer

lacked information that the seller had, right? mr. powell: fair. rep. casten: ok. so what i'd like to understand, does that create a conflict of interest for the united states government? because if we have information about climate change being scrubbed from our data sets and we have a white house that would like to sell fannie and freddie, are we committed to efficient markets that depend on accurate, transparent information, or are we committed to making a quick buck, in which case we might want people to not be informed? is the fed committed to transparent markets? second question, do you feel the conflict? mr. powell: i think we are getting away from my mandate at the fed. the idea of privatization is to get it off the balance sheet of the fed and get it into private capital backing it up. rep. casten: su there wouldre,--

sure, there would be good reasons for that, but if that is coming to the expense of value to the taxpayer, we need to be transparent. mr. powell: all credit could be made cheaper if offered by the central government, right? >> the gentleman from south carolina, mr. timmons, is recognized for five minutes. rep. timmons: yesterday in an exchange with senator warren on stress testing you said the fed is having to change their approach "because the ground has shifted very substantially in administrative law." well yes, the ground has certainly shifted since last year, but i'm slightly confused because after reading up on the banking industry's lawsuit against the fed, i do not see a direct connection between their case and the loss of chevron deference. their case it seems to center on the fed not complying with the long-established process laid out by the administrator procedures act, and while some of the fed may not classify stress tests as a rulemaking, when they require banks to alter

capital levels, they have the effect of rulemaking. >> is this a matter of adapt to a post chevron world or was this the fed unlawfully using stress tests to increase capital requirements on beings without having to go through the legally required >> process? pretty good chance that the next sentence i say would be evidence in the court case we are having so i am not going to get into debating what the law is because we are in litigation. i will say it's not just chevron. it's clear from other cases that expectations under the administrative procedure act are also raised to just generally speaking so we felt like overall that really has changed the playing field. >> any changes in capital requirements is very disruptive and having a more predictable process is helpful for long-term stability of the u.s. economy.

foreign banks, many of which are smaller than the domestic counterparts, play a large role in providing financing to the treasury market. u.s. banks unless involved than they could be because it made it less profitable for them. compliance costs stemming from dodd-frank make it more costly for u.s. banks to engage in treasury market operations number particularly in repo lending. they stepped into take on this crucial role providing the liquidity and financing needed and this shift altered the landscape with foreign institutions holding a larger share of financing operations that were once dominated by u.s. banks. why are we setting up a system where the u.s. treasury market needs to rely on -- so much on foreign banks for proper functioning and do you think -- do you see that as a national security threat? >> the trend that i see is that we have very significantly raised the capital costs of

supporting market activity, especially for low risk activities that are low risk, low return. the amount of treasuries has grown much greater than the capital that is allocated to immediates so that is why you see a low intermediation so it's important to do something about that and that is what we will be looking to, to reduce the enhanced supplemental leverage ratio to account for that. this is something we propose before which i think is intended to increase liquidity in the capital markets for banks subject to it. >> i want to discuss the optimism among the american public. small business optimism experience is largest increased and years following president trump selection with continued positive momentum in the months sense. this reflects growing confidence.

the indexes not only well above its 50 day average but reached its highest point in december since late 2018. this caught the attention of many across the economic landscape. in south carolina, i speak with small business owners who were enthusiastic about the future and help their businesses thrive under the new administration. how do you see the significant jump in optimism translating into tangible outcomes in terms of investment, hiring, and overall growth for small businesses? orcs we know that sentiment really matters. it's hard to model it but think about it when you are thinking about your forecast. you are thinking about optimism and that kind of thing because that is what supports the investment. all the investments companies make, they had to have optimism that it is worth shelling out this money to do what it is they are doing so it is a key part of how the economies work. >> given the potential for increased investment, are there economic factors you are watching closely to ensure this

optimism leads to sustainable growth in the long-term? >> the best thing we can do is achieve price stability and full employment, maximum employment, and then create a stable environment where businesses and households tend not worry about inflation and we have steady, sustainable growth. >> as one of the million americans about to get a mortgage, interest rates going down would be helpful. i yelled back. >> the gentleman from massachusetts, miss presley, is recognized for five minutes. plus chairwoman powell, we are at an inflection point and we need leaders who are courageous enough to speak truth and were committed to helping every person who calls this country home. there are many who wrongfully justified trump's presidency as good for the economy. well, chairman powell, you actually know something about the economy. the federal reserve has a dual mandate maximizing employmen and stabilizing prices. it is clear to me donald trump and elon musk's actions are

impeding your work. the threats of tariffs against our allies are not helping the fed do its job nor will they help people across our country. the boston federal reserve put out a report this week which estimated tariffs would be inflationary and raise prices. i asked consent to enter the report titled the impact of tariffs on inflation. additionally, donald trump has threatened mass deportations. he seeks to terrorize immigrant communities and separate families, claiming it will help the economy. i don't think so. and neither does the peterson institute for international economics will estimated employment would drop 7%. i ask unanimous consent to enter into the record the report titled mass deportations would harm the u.s. economy. >> without objection. >> chairman powell, i want the

federal reserve to be successful so if elon musk and his doge bro s were to walk into the federal reserve, intimidate staff, and take control of the agency can the agency, same way they did usaid and the consumer financial protection bureau, would that help or hurt our economy? >> we don't have that happening. i am not going to speculate. >> on your own website, it says "the federal reserve is accountable to the public and the u.s. congress." i would like to see a clear action on this people wall street is watching. donald and elon are certainly watching and we all want to know what is your view if doge goes to the federal reserve what it has already done to other independent agencies? >> what we are going to do at the fed is

keep our heads down and keep working. wait to see what new policies emerge in trying to make a sensible set of policies on our part once we understand the implications of those. >> if elon musk or anyone from doge attempts to access the federal reserve's private data, will you immediately alert the members of this committee? >> sure. >> thank you. this is as clear to me as night and day. donald trump and elon musk are not trying to help working-class people. they are trying to help themselves. they want the fed to be a tool that helps the rich get richer, banks get figure, and regulations disappear altogether . but that is not your mandate. the fed must maintain its independence and integrity. the interests of the public before elon musk.

the world's richest man does not care about the price of eggs. he doesn't have to when he has already bought the presidency. i yield back. >> the gentlewoman yields back. the gentleman from california recognized from five minutes. >> thank you for joining us today. i want to commend you again for ignoring the outside noise and stay true to the feds dual mandate. chairman powell, it seems the advent of artificial intelligence and other emerging technologies has helped the united states increased productivity when compared to other countries around the world . that makes our country more competitive in envy of economic growth. the boom in productivity is sustainable in the long term and

if so, how does that increase in productivity affect your models to forecast inflation. therefore monetary policy? >> we have had a boom in productivity. it is most welcome. some of them could be more sustained. you mentioned technology and ai. it could be a sustainable increase in the rate of growth and productivity. it's more about job reallocation, people switching jobs coming out of the pandemic.

it is most welcome and a corkboard in. -- welcome and important. >> we have seen the fed intervene with more regular frequency to maintain the functioning of the u.s. treasury market. much more than decades before. a long-standing and growing bipartisan consensus that the slr and other regulations may causing this. if so, what do you think the solution is to reduce the need for frequent said intervention? >> i do think we need to work on treasury market structure. part of the answer can be and i think will be reducing the calibration of the supplemental leverage ratio as you mentioned. that is something that i have

long supported for the reason that the quantity of treasuries has grown really significantly and the capital allocated to into mediating trades and treasuries has not. in fact, it has shrunk. we need a good treasury market and this is one of the things that we can and should do is to reduce the calibration of that measure. >> thank you. i want to go back to march 2023 in response to the fallout of silicon valley bank. the fed is analyzing ways to create a more efficient process for financial institutions to access the discount window. one issue that has come up is that it can take extended periods of time to assess and determine the lendable value of collateral. denying the institution's ability to access liquidity quickly.

>> we are looking -- so there are sort of impediments to the efficiency of the discount window and those are things we can work on and we are working hard on. there is also the question of stigma that banks are reluctant to use it because of the so-called stigma of using it and that is a very hard problem to solve and we are also working on that one. >> can you give us an update on what problems the third was able to identify? what solutions are you pursuing an what is the estimated timeline for any action? >> the city is ongoing and the work is ongoing. essentially, you touched on some of this. it is inefficient. it is slow. we need to have collateral processes that are very quick and very efficient. they need to be quick and efficient in a crisis.

that is part of it, just general modernization and investing in technology and modernizing the discount window. the harder part is turning into something banks are comfortable using because the fuel is not stigmatized and we are working on that, too. >> opening the discount window 24/7 could really help the banks in california, especially the state they represent -- i represent, the southern california i represent. thank you. >> the gentleman from new york, mr. torres, is recognized for five minutes. >> president donald trump has been asserting the most aggressive and expansive claims of presidential power that we have seen in our nations history with a unitary executive theory to new extremes. he's claiming to have the authority to define whatever agency wishes to abolish whatever agency he wishes enter fire whomever he wishes even if it means violating an act of congress.

mr. chairman, suppose for a moment the president were to ignore the congressional statute that establishes the independence of the federal reserve. what economic consequences would result from the fed losing its independence? >> research over many, many years and jurisdictions shows that some degree of independence is very important in keeping inflation under control and the connection is obvious if politicians are going to want to be reelected and things like that, they will not be focused on the longer-term. we have the mandate to remain separate from all of that and stay out of all of that so that we can just focus not on election cycles but helping or hurting any political party or politician but just on serving the public as a whole. that is essential in uniform across all advanced economies and central banks. >> much like the bureau of fiscal service, the federal reserve has highly sensitive payment systems. president trump and the secretary granted elon musk and

his team of outsiders access to the central payment system of the federal government, a system often described as america's checkbook. would be you federal reserve chair evergrande a team of outsiders access to the fed's central payment system without sufficient security clearance? >> know, but let's remember we are treasuries fiscal agent. everything we do was under the direction. the treasury payment systems and there is our side of the wall and payment to the recipients. i control access to that very, very careful. >> they order as to pay someone and we just pay. we just make the payments. we control access to those payment systems carefully. >> what would be the danger of lightly granting access to the feds payment system.

>> the reason why we are so careful about it is the possibility of the -- mistakes and someone coming in and changing the code and things like that. very careful access. we open it up tomorrow cyber risk and things like that. we are no exception. >> you believe that granting an insufficiently vetted team of outsiders access to the payment systems of the treasury or the fed would radically raise the risk of a breach at the science of foreign adversaries like china and russia? >> we are typing -- talking hypothetically. we can speak to the systems that the treasury has asked us to operate on their behalf.

>> -- exorbitant fees simply to transfer their own money often to loved ones abroad. access to fed wire could play a role in reducing the cost of remittances and payments for the lowest income americans. what is your position for expanding access for the purpose of reducing remittances and payments? >> these are wholesale transactions, one of the world's most important if not the most important financial market utility. i don't think we are looking to open it up to retail customers. i think faster retail payments and particularly cross-border payments are subject of a lot of work in the international sphere and i think we all understand it is important to lower the cost and the risks of those. >> the commercial real estate.

do you feel that continues to be a ticking time bomb within the financial system? what is your sense? >> we have been saying and i think it is still true. this is a problem that is going to be with us for a while. if we can say something modestly constructive, it doesn't seem to be getting worse. so there are a lot of embedded losses, a lot, and they are going to need to be realized and we are working with financial institutions to make sure they have a plan and understand their losses and can manage them. >> i see my time has expired. thank you. >> thank you, mr. chairman. good seeing you again. i want to start with just a broad-based conversation. the fed has been making adjustments to the fed funds rate over the last several months. although there has been movement on short-term rates, there really has been minimal impact on intermediate to long-term

rates. can you expound on why you think this phenomenon is starting to exist with respect to federated, monetary policy, versus the general borrowing rates for businesses and consumers? >> you are right, of course. you lowered the federal funds rate. longer rates are going up. they have gone up and down. they are higher. the reason is that we don't control long-term rates. they react to a whole bunch of different things including a sense of more deficit spending coming including expectations of more growth. risk of higher inflation. markets are not pricing in higher inflation. the risk of that is there. that could be a reaction to new policies or not. alternately, the increase in longer-term rates is mostly not about fed policy or our job of maintaining price stability.

the term premium in particular. happy to meet with you and go through this in a lot of detail, more than you could do here. >> i would love to do that. one of the concerns i have -- there is so much that the fed can do with respect to rate policy. i wanted to get your views on that. it is also the desire and the conversation happening right now with doge and elon musk and the desires for efficiencies but then also stability in federal spending and bending the cost curve, fiscal policy from capitol hill, do you think that would have -- yield positive results in medium and long-term rates, barring rates not just for the federal government but for the american consumer? >> when you say fiscal policy, you mean fiscal policies that would reduce deficits over time? >> i would say fiscal common

sense over the intermediate and long-term for the united states. >> i think part of what market participants think about when they buy treasuries -- will you get on a sustainable path? the term premium, so called premium goes out for that reason. there is no question if we were on a more sustainable path, i do think rates would be lower. >> i appreciate that testimony. while we do talk about obviously tax policy, regulatory policy through the entire federal government, it is important for the american people to know that washington does have to be fiscally responsible and if we are not, and i say all of washington, if we are not, then the risk premiums are to speak for borrowings in the marketplace are going to increase not because of the american consumer, not because

of the strengths of the american engine but simply because the amount of treasuries we are putting out to market are just demanding a higher premium for every new dollar that we borrow because people want to be paid back. chairman, you don't have to comment on that. that is the major issue, if you will over the next 20 years, 10 to 20 years for the federal government that we have to get our fiscal house in order if we are going to give the american consumer who might be poor and trying to make a way in this country a middle income, trying to take care of the children. figure out what the next stage in life is going to look like. people who are in the upper middle class who are now forming businesses, building real wealth for themselves and for their family, all of that is at risk. if the united states government does not take its fiscal health as serious as any other family and any other business would do.

real quick, chairman. he said yesterday that as long as you are chairman, the u.s. will never have a central-bank digital currency. is the federal reserve or any of its member banks conducting studies either for retail or wholesale purposes? >> i mean, we are not doing any work that is designed to lead to a retail cbdc. we don't have a legal authority to do one. the notion of a wholesale cbdc is not when we think about or accept. take fed wire. fed wire is a real-time digital process are of dollars every day between banks. is that a cbdc? >> the gentleman's time is expired. >> chairman -- the gentleman yields back. chairman garcia is recognized for five minutes. >> now questioning chair powell.

collects pleasure visiting with you. i'm going to talk about a topic that boasts congressman gonzales and representative presley brought up which is something i think does impact the federal economy but i know it certainly does impact my district in texas. i'm concerned about president trump's mass deportation efforts and the impact on your dual mandate. i believe the last time you were in front of this committee, i asked you about the impact immigration had on monetary policy given last year's congressional estimates. as a reminder, the report estimated that the labor force in 2033 would be larger by 5.2 billion people, largely due to the immigration search. since then, they have been more reports and research about the impact the economy has -- that immigration has on our economy in employment and stability in

our prices. for example, immigrants are fulfilling lower paying and oftentimes dangerous jobs more frequently than u.s. born workers. they earn more money. pay taxes, invest back in our economy with everyday goods and services, and help create even more jobs. a study done by the national academies of science, engineering, and medicine found foreign-born workers pay to have $37,000 more taxes in their lifetime then they receive in benefits. $237,000 more. these mass deportations will have a massive impact on both our economy and workforce with a drop in production in spending. we are already seeing some of that in my district. i recognize the federal reserve does not weigh in on policy so before you say that in your response, i already know that.

however, immigrants impact -- it does impact both unemployment and prices as they detailed in some of the work they are doing. does the federal reserve account for immigrants in its interest rate decisions? >> indirectly, yes. we are looking at the labor market and part of what drives growth in the labor market is population growth and part of what drives population growth is immigration, so sure, it can matter and sometimes, it matters a lot. >> do you look at the consumer price index in terms of the immigrants as consumers? and if they are afraid to go out because if they get deported, they are buying less? that is what i am hearing from businesses and my district. >> i think things like that would show up in the aggregate data.

we don't single out any particular group for them. >> can you quickly list some of your federal reserve responsibilities and do you have capacity to assume the role of being our consumer watchdog as the president now is focused on getting rid of the consumer financial protection bureau? >> before dodd-frank, they all conducted consumer exams and enforcement. for the banks to regulate and supervise. for us, it is state member banks. national banks. dodd-frank took all banks over 10 billion in assets away just for purposes of consumer examinations. statutorily, you can get that back to us or not but it is certainly possible to restate the old order but that would have to be something.

>> you have also said that your team will be there to get the job done. >> we sent a bunch of people over to cfpb. we don't have the people now who can take that over. they move many people from the fed and the fdic. >> there would have to be a/v allocation of resources. >> yes. >> ok. so sounds like you are obviously willing to do it and we may have to convince the president to make that reallocation of resources so thank you for that. i would like to ask for unanimous consent to submit for the record three articles. one, the brooking -- the labor market impact on deportations and the federal reserve bank of dallas. migration feels critical in the workforce. it boosts job growth.

class without objection. >> i yield back with two seconds. >> i yield back. >> last member will be the gentleman from new york, subcommittee on capital markets. you are now recognized for five minutes. >> thank you, mr. chairman. get to see you again. >> questioning chair jay powell. >> stabilizing -- balance. the economy headed 140,000 jobs during the month of january but when you peel back to stata and look at recent employment data for the smallest of small businesses, the mom-and-pop shops, firms without 100 employees like those included in the jobs report, you see small businesses are consistently losing jobs. the small business index shows employment for u.s. small businesses increased by 42,000 jobs compared to january.

in my home state of new york, small business employment decreased by .33%. do you believe we are seeing the same economic and business trends in larger companies? >> i guess not. i think it is always the case that there are differences between sectors and sites companies in all that? we are looking at the aggregate numbers. >> do you take into account the current macroeconomic trends in the smallest of the small business when setting policies? >> we read the same data you do in the reserve bank presidents come in and talk about their districts at length in they talk about if you read the beige book, they talk about small businesses, nonprofits,