especially senator powell. these have a real impact on our economy and it is wise that the fed ease the associated burdens. you recall i sent you a letter, and while you understood my concern, the fed wasn't necessarily looking to curtail some of the stress test-related activity now that the vice chair of super vising remains, i would ask for a response to these statements and concerns >> so we have a relatively light regulatory agenda at this point. i'm pleased to see a nomination. clearly we will look very carefully at the whole system and look forward to having the input from that individual if that individual is confirmed.

>> okay, thank you at that end, i mentioned that i'm supportive of the provisions you have include in the recent treasury report. i hope that the federal reserve is taking some recommendations seriously. have you read the report yet or are you aware of it >> yes, i have read the report and there are many very useful and productive suggestions that mirror things you have been thinking and doing ourselves with respect to tillerian the rate -- we are always looking for ways to reduce the burdens that are very useful there are a few points where we have a different view, but a lot in it that is very useful. >> i look forward to working with you on that while our branch of the government is a check on the executive branch and agencies, we want to work with you to try to improve the ability of our

banks to be able to do the job of helping our communities grow. i've worked with the committee in the past. my district has been caught in purgatory for the last five years. the agency has blocked the merger and acquisition and is concerned over certain products, the same products that have been encouraged by the fdic and the state of missouri's finance. your staff has forced this bank through the years to produce document after document, which they have done the bank has made several offers to remediate, but the fed has rejected them. midamerica has spent more than $2 million legal fees, and this is a small bank that can't afford to do this, and this process has to stop. the federal reserve after five years owes this institution a determination of whether they can get this done.

the first question is, are you aware of this case >> i am aware of this case >> okay. what can be our expectation and w resolution of this >> well, i'm not prepared today to comment in detail on what is confidential super advisory matter but there's a set of complicated issues pertaining to consumer -- >> i understand where you're coming from. the bank on my side is very open about what their problems are, the concerns are we have an elderly individual who has medical problems who wants to divest in themselves of this bank. they have a very viable wealth, structured well financed capitalized bank that wants to take them over basically what is happening is a punitive way of punishing the bank for a product that is something the fed didn't like, quite frankly. so the five years this has gone on, and that is enough, and so the opaque rules and unwillingness of the fed to work

cooperatively with the banks and the attorneys and the regulators is not something we can continue to go on and support and so this is why there's a treasury report. the treasury report has solutions to some of the problem that is the regulatory committee has. and that is the punitive action of some of the actions taken by the agencies including yours i think we have to stop to increase the variability in the banks and improve their communities and help the economies grow and we look forward to that. i yield back >> time of the gentleman has expired. the chairman recognizes the man from minnesota, mr. elson. >> good morning, chairman yellen thank you for being here today let me start out by saying, i'm really happy about the appointment of rafael bastic as federal reserve president in

atlanta. he meets the legal mandates and has great expertise. ands, he increases the number of african-american bank presidents from 9 to 1. a lot of the cause of slower growth over the last few years you have been exposed to some people's theories as to why we have slower growth but i was intrigued by this book i read recently called "makers and takers." i don't know if you're familiar with this book, but it's a book that really talked about the financialization of the economy. and i want to get your take on it the author notes that the reason for lower wages is from those in the financial services sector, banking and real estate hedge funds and wall street. in effect, the author has a stat

up there on the screen i would like you to take a look at she says, that while the financial sector is a little less than 7% of the economy, it provides about 4% of the jobs but earns a whopping 25% of corporate profits. 25% of corporate profits, that's a lot of money and so, as a result, you see money flowing into those sectors rather than, you know, plant and equipment and other sectors of the economy that may lend themselves to greater employment do you have any take on that do you have any impressions about that particular theory >> so the financial sector has grown in importance relative to the u.s. economy but my sense is that if we look at the plight with respect to wages and jobs of middle class

families that have seen diminishing opportunities and downward pressure on milt waddle wages, we have to take effect of the technological changes that have eliminated middle income jobs and globalization that have reinforced the impact of tech non logical change and those things have to be an important piece of understanding what has happened. >> i'm sure the technology does play some role, but we have always had technology, haven't we i mean, when we went from horse-drawn carriages to cars, people who made horseshoes has to find something else new to do so i'm always a little skeptical when i hear people say technology we have always had technology and always had more employment but we have kind of the slow growth period and had some

people say, it's because people don't want to supply labor because they are living too good on welfare and we also -- is it possible the financial sector is channeling investment into financial, you know, activity and not into agricultural -- if you look at clothing stores, hundreds andhundreds of communities are losing retail access of course, you know, you can point to technology, i'm sure that's part of the explanation, but can you share some ideas or point to some analysis to explain why the retail sector is being hit so hard?

you could say amazon, but i'm doubtful that explains the whole problem. do you have any specific information on the role that finance may be playing in part of these decisions companies like sears need to sell real estate to have returns on financial equities. >> i don't have any specifically for you on that. i would be happy to take a look. i mean, i would point out that for many years, many american companies have been sitting on a lot of cash. and have been unwilling to undertake investment and plant of equipment on a scale that we would ideally like to see. so there are a number of different things going on. >> thank you very much i yield back my time >> time of the gentleman has expired. the chair now recognizes the gentleman from michigan, mr.

huizenga >> thank you, janet yellen sorry, i'm hiding behind a couple of my colleagues here thank you. it is good to have you, janet yellen i appreciate having you here i want to touch briefly on something that chairman barr talked about the labor force participation. these are u.s. bureau labor statistics, civilian labor participation rate this is a study released by the st. louis fed. i'm sure you are familiar with it it was june 17th and it clearly shows that what i heard you say are the disappointing levels of participation that are unavoidable because of an aging demographic. and i wish i had the chart that i was able to put up, but it seems to me, what is most concerning is the drop in participation really comes from youngest americans and, in fact, that chart again

released by the fed of st. louis, shows the highest levels we have seen since the 1960s for americans age 55 and older and it seems to me this argument that our economy hasn't responded the way that it has, you -- we talked about this the last time you were here. and i think i labeled it flim-flam, not in a disrespectful way, but it was clearly not what some of those statistics are showing what i want to talk about, though, quickly, is that during your semiannual testimony before this committee in 2015, you were asked about concerns regarding a lack of liquidity and certain fixed income markets and you stated that it's not clear what it, quote, it's not clear what has happened in these markets and what is causing what you continued that, quote, we don't see a problem, but that it was something that you needed to study further. so my question is, has there been additional study and

follow-up on the fed by that particular issue >> that is something that we continued to look at we provide this committee with regular reports, particularly pertaining to corporate bonds. we have the fed and outside of it, there are no clear patterns. some suggest that regulations may be negatively impacting liquidity, but other studies reaching different conclusions >> so you don't believe there's problems in the fixed income markets? >> so the inventories of bonds held by some of the largest banks and market makers have declined on the other hand, the ask spreads are low. corporate bond issuance is healthy. >> don't we know if the ask

spreads are there. there's a lack of transparency. >> it is hard to draw conclusions purely based on that >> we are going to actually be exploring this in my capital market subcommittee on friday. we have a hearing on fixed income markets really just trying to find out what is going on so maybe we can help you with some of that analysis with some of the testimony from here, but i -- we need to have thats investigative effort by the fed on this as well. i quickly want to move on, former fed governor tarulo said, new paradigm is needed to expand regulatory of banking institutions he wanted this to be modified by the judiciary rates of financial firms to obtain regulatory objectives specifically, he believed that there is a special corporate

governance method needed as part of the regulatory system and traditional duties focus on shareholders inadequate for banking institutions we are not talking about the banking institutions do you agree with his recommendation >> those are his personal recommendations. >> is that a no? >> i'm not prepared to say that i agree with all of those recommendations. we are focused on trying to clarify expectations for boards of directors to distinguish what the important role that they have in a banking organization and what is the job of senior management versus a board of directors. >> that would be a concern that i have here is, what expertise the fed has on corporate governance issued like fiduciary

justice for boards and what corporate governance requirements there are and a number of things so i appreciate your answer and thank you for being here >> time of the gentleman has expired. the chair now recognizes the person from colorado >> good morning, madam chair thank you for being here and for being a steady hand at the federal reserve. and you must be doing an okay job because because i have listened to my friends and my republican friends who generally have very crisp, sharp, piercing, probing and accusatory questions. they don't have those today. because things are doing pretty well in colorado, i want to thank you. we were in real dunks eight years ago. 10% unemployment, housing crashing, foreclosures through the roof, we're, in my district, we're at 2.1%, unemployment is

generally at 2.3%. that's not the same, some of the parts of my state a little tougher and i know across the nation, but generally things have been steady and i want to thank you and the policies of the fed in helping us get out of what was a very bad situation. >> thank you for that. >> so a couple questions first, there's a guy who has been prettydogged in telling m that we need to shrink the feds accommodative policies and pretty much, he's in the audience today so explain to me, he's right directly mibehind you a couple rows and he's been very firm over these years in wanting me to press you on this.

so would you explain to me how you plan to shrink the accommodative policies that we took back in 2008, 2009 and 2010 >> so the federal reserve was filled with many years of very high unemployment and inflation running below our 2% objective we did everything that we pole could to achieve the goals that were assigned by congress, namely maximum employment and price stability. we were constrained in our ability to use short-term interest rates as a tool and so we used our balance sheet and undertook other measures to try to stimulate the economy and i believe we have been succeeding while inflation is still running below our 2%

objective. the labor market as you pointed out is much healthier. the unemployment rate is now even running a little bit under levels we regard as sustainable in the longer run. i think that's entirely appropriate given that inflation is running below our objective so as the economy improves and we come closer to achieving our objectives, we see it as appropriate to begin to gradually remove accommodation and move to a neutral stance as i've said on many occasions, the new normal with respect to what level of interest rates is neutral appears to be rather low. so we have raised the federal funds rate target. i believe policy remains accommodative, but given how low estimates of the neutral federal funds rate are now, namely

levels of the funds rate that we just need to be consistent with sustaining the strong labor market over time, perhaps we have some further moves that we envision making if the economy proceeds along the path it's on. we will anticipate that neutral may move up some although remaining at low levels. and that generates a view that over time we may want to increase the funds rate a bit more but that will really depend on how things evolve. >> let me change the subject real quick and on page 12 of the report, there are two words that i've never seen in any of your reports, it's a bismol performance. and it's asked to productivity developments in advanced economics. that's the section and the combination of

technology and advances in science and everything else coupled with labor, we're seeing something so it's in the second column a number of potential explanations have been put forth for the bismol performance of tfp. that there's a waning -- oh, well, i'm out of time. i thank you for your service you're doing a heck of a job thank you very much. >> thank you very much >> time of the gentleman has expired. the chair now recognizes the gentleman from wisconsin, mr. duffy, chairman of the housing and insurance. >> thank you, mr. chairman my friends across the aisle seem to be excited about the low unemployment, the economy is picking up excited the stock market and people's 401(k)s are improving and they want to give you a lot of high-fives and back slapping. you get all the credit what changes have you made since november 8th to kick-start this

economy and make it grow that you weren't doing before november 8th we have continued on the path of normalizing the monetary policy. >> you haven't changed anything since november 8 the real change is having a new president in the white house i just make that point to my friends across the aisle to not get too excited on who should get credit for an improving economy. but i do want to follow-up on what my friend, mr. huizenga was asking about, the gentleman from michigan, in regard to the role that the fed is playing on corporate boardrooms and our financial institutions you acknowledge you do have a role at the fed in these boardrooms what role do you have? what are you doing >> well, it's our have job to m sure that banking organizations are operating in a safe and

sound manner and have policies in place that ensure both our safe and sound management and compliance with federal laws and regulations and corporate boards play a critical role in ensuring the performance of financial institutions. >> isn't it fair to say, though, that virtually anything could fall under the umbrella of safety and soundness i mean, who is hired and who is fired and who is disciplined within a financial institution could fall under safety and soundness, right >> well, i think it is important to, and we're going to try to do this >> that could fall under safety and soundness, right >> yes, it could. >> and help capital flows. who a financial institution lends to could fall under the office of safety and soundness, right? >> yes, it could. >> in essence, in fact, under the office of safety and soundness could replace the board of directors who have a

duty to shareholders and actually take over boards all under the presentation of safety and soundness. >> well, we believe the corporate boards play critical roles in ensuring the -- >> what falls outside the scope of safety and soundness? in a financial institution >> probably anything that you mentioned would have -- >> you can't give an answer because everything falls under that scope and that is our concern. the fed doesn't have a fiduciary duty to shareholders and actually, board members have potential civil and criminal liability in their service on a board. does the fed have any similar criminal liability should things go wrong on a corporate board? so board members are liable. how about the fed? >> well, we have supervisory

responsibilities >> you do, but are those fed member who is are sitting in on the board meetings, are they potentially criminally or civilly liable for the decisions that they push a board to make >> not to the best of my knowledge. >> mine either that's concerning for us and i push you on this because -- listen, you do have a super advisory role and i want you to do a good job, but from the feedback we get, the involvement that the fed has in our corporate boardrooms has far surpassed, i think the vision that any of us had in this room. and it concerns us >> so let me say that we have talked to many corporate board members and understand that there has been an accumulation of a large number of items we have indicated that board members along with senior management should be responsible for. >> i don't believe you have the authority, madam chair i think you have the authority

to make hiring and firing decisions. that's the feedback we have had. if i could ask you one last question we anticipate that this will be your last time testifying before this committee >> my term expires in february. >> that's a round-about way of asking you -- are you seeking another term >> i've not said anything about that i intend to serve out my term and not -- >> i pushed you hard, i thank you for your service i yield back my time has expired. >> the chair recognizes the gentleman from illinois, mr. foster. >> thank you, mr. chairman and chairman yellen for your service. in the past i have sent letters to you and federal regulators and asked you in hearings before about the requirement that custody banks hold supplementary ratio against deposits at the federal reserve. presumably because of worries that in some future universe the fed deposits may become less

safe and available than cash which is a universe that i don't enjoy contemplating. i believe that the federal reserve deposits are exactly the sort of safe place for these large immediately callable cash positions, that we should be encouraging because of the strength and reliability of the federal reserve as a counter party. now, as you may be aware, we now have bipartisan legislation to require that prudential regulators provide relief for institutions that clash with the fed. at the same time as providing significant flexibility for regulators to deal with unusual circumstances. so do you see any safety and soundness difficulties with this legislation if it were to go forward? >> so i'm not going to comment on the legislation but we are looking at the supplementary leverage ratio because of the impacts that you mentioned. a leverage ratio was meant to be

a backup supervisory device like capital risk requirements. and in general, the risk base capital requirements, especially for the largest and most systemic institutions, are at levels that i think are appropriate and am comfortable with it could be that the supplementary leverage ratio needs to be recalibrated relative to that and i'm very much aware of the problems you're mentioning >> thank you, i appreciate that. >> and considering how to address them. >> thank you and i would like to use a little of my time to just excellecomme briefly in response to my colleagues from new mexico every year the citizens of illinois write a check for approximately $40 billion to states largely in the sun belt and rural areas because for every dollar of tax money

illinois receives back 75 cents in federal spending. in contrast, new mexico receives $2.40 back for every dollar of tax money. so this check that we write for $40 billion a year, had it been put in to a rainy day fund instead of redistributed to the other states in the union, would have resulted in a balance in that rainy day fund in excess of $1.5 trillion today. so that i think when people discuss the fiscal problems of illinois, the starting point should be there. now, finally, i co-chair a future work task force for the new democrat coalition and we're looking at the effects of technological and other changes that might occur in our workforce in the coming years and what policies we should adopt to remediate the bad side of those effects there's a lot of discussion on

why inflation is not increasing like you would have guessed in the past, particularly wage inflation. in the past when the gap closed up in the job market, that very rapidly employers were start to bid up wages that doesn't appear to be happening the way it used to and one of the explanations that is suggested for that is that employers have the opportunity instead of just bidding up wages to simply invest in technology to replace jobs. i was wondering if you think there's a reasonable chance that you're going to have to change your macroeconomic models to reflect the loosening of the link between the closest of the tightness in the job market and the increase in wages. >> well, we are seeing lengths between the labor market and wages, but even to a greater extent, prices and inflation, the relationship between those

two things has become more attenuated than we have been accustomed to historically >> well, in general, when the robots show up, they show up as low prices if you ask the average farmer what forced them to consolidate, they don't say it's the machines, it's low grain prices. and that goes on in many ways. retailers are struggling with price competition from amazon. they don't often name, well, we're not as efficient as the robots in the amazon distribution centers and so on but i think that we have to look at this in a macroeconomic sense because its effects will not be small. i yield back my time >> thank you, mr. chairman and chair yellen, our committee has been concerned for some time about confidential flmc information being shared with

favored constituents in march, vice chair fisher delivered the keynote for brookings institution dinner and reportedly delivered remarks and took questions on interest rate policy i say reportedly because the dinner was closed to the public and the press but open to wall street and other financial interests. in addition, fisher's prepared comments have not been made available and the fact the speech took place frankly at all was not widely known this keynote flies in the face of the fomc's policy on external communications of committee participants, which states that, and i'm going to read this right out of the policy, quote, committee participants will strive to ensure that their contacts with members of the public do not provide any profit-making person or organization with the prestige advantage over its competitors they will consider this principle carefully and

rigorously in scheduling meetings with anyone who might benefit financially from apparently exclusive contacts with federal reserve officials and in considering invitations to speak at meetings that are sponsored by profit-making organizations, or that are closed to the public and the media, closed quote. chair yellen, we all want transparency and accountability for our monetary policies so that it remains insulated from political and profit-making interests. the vice chair's speech does not help with that at all and flies, in fact, in the face flagrantly of policy. the speech occurred just days before another fed official, jeffrey lacquer, abruptly resigned as richmond fed president after admitting to playing a role in the 2012 flmc

league where the internal deliberations were leaked to a private consultant that then shared the details with clients who stood to net millions in profits by trading ahead of the release of the news. however, the true leader still remains at large apparently as former president lacquer appears to have only incidentally confirmed insider information that medley had already received this is something that i certainly as chairman of the oversight and investigation subcommittee will continue to look into. chair yellen, how could this speech have been allowed to happen given everything that had occurred with the 2012 fomc leak >> okay, so let me start by saying that the very beginning of our policy on fomc external communications states the two-way communications between

members of the committee and members of the public are very important, both to communicate with the public and it will conclude in a variety of ways including closed door meetings so there's no requirement that fomc members cannot meet in closed door sessions the brookings institution is not a for-profit institution it's a nonprofit and we have a clear set of guidelines governing what can and cannot happen in such -- >> were such remarks released to the public >> so the clear rules are that no fomc confidential information can be divulged ever, including in a closed door setting and that fomc officials may not discuss even their own views on

policy except to the extent that they have already been presented in a public forum. the vice chair's rematches did not pertain to monetary policy they pertained to financial stability. >> and the difficulty with this is that we don't know that in the interest of transparency and accountability, perhaps it would be good to show the light of day on whatever his remarks were to wall street bankers that were invited to a speech at the brookings institute. and i have to say, madam chair, that it's very clear that these should not be closed to the public or the media. so i'm very concerned about this going forward. and i'm also concerned about the resolution with the board due to the internal governance that happened on the leak

so i want to submit that in writing and get your answer to that i'm sorry i went over my time. >> i want to say we have cooperated fully with our inspector general and law enforcement agencies that they have had access to all information that is relevant to this matter. and they announced simultaneously with president -- >> the board must improve standards and keep to its standards, madam chair >> time, time, time of the lady has inspired now we recognize the member from illinois >> thank you, mr. chairman thank you, chair yellen for being here perhaps we should replace some of the fantasy that we have heard today on the other side with the reality, you know, i hear my colleagues say that within six months of the new administration, we have improved

the economy, we have improved employment opportunities for america. i guess they're pointing to the carrier deal in indiana where they were promised money if they moved to new mexico. but we'll give the president credit for that deal and really, i know that the reason why the economy is turning around is the sustained job growth of the previous administration over more than six years. so here's my question to you, chair yellen, in may the overall unemployment rate of 4.3% hit a 16-year low. although the unemployment rate

rose .10% in june, this reflected the positive news that all of the labor force had returned to look for work. with the overall rate of unemployment down at historically low levels, would you say that the economy has reached full employment? or do you believe that this headline rate masks weaknesses in the labor market where additional progress must be made >> so not all groups in the labor market are faring equally well and we remain concerned about particularly for african-americans and hispanics weaker job market outcomes but monetary policy is a blunt tool as you point out, the unemployment rate and overall

state of the labor market is strong with many job openings and opportunities for workers. so the unemployment rate is even falling slightly below levels that my colleagues would regard as sustainable in the longer run. we have seen a steady rate now for several years now, a constant rate more or less of labor force participation which with an aging population tending to push it down suggests the groups that have been sidelined or finding opportunities and entering the labor force and gaining employment so that is a strong performance. this has now been going on, as you said, for a number of years and has continued, is continued this year. >> and thank you for that

response because progress does not happen in six months, especially when you have to recover from a devastating recession. and so for the other side to give credit to someone not even focused on our economy is ridiculous one more question, what in your view have been the key drivers of the job gains since your last testimony before this committee six months ago have job gains been driven by longer-term trends from a growing economy or have they largely resulted from new policy adopted in recent months >> so the global economy has recovered. it was a source of wakeness earlier that has been a source of support and we have had ongoing job gains and increases in, for example, housing prices that are

boosting the wealth and consumer sentiment of americans and that is driving consumption spending that is strong enough to create ongoing job gains that exceed what's needed for an expanding labor force. so the job market continues to strengthen and unemployment continues to move down >> and thank you for that response i hope this is not your last visit to this committee. i'm sure it won't be the last time we visit. thank you and i yield back >> the gentleman yields back the chairman now recognizes the man from florida, mr. posey. >> thank you, mr. chairman i what it to get into the cat fight or dogfight of who shot john and whose policies are doing what and i heard the remark that the economic analysis cannot show any significant short-term results or something to that

effect and i just would like to remind the other side that i saw dramatic overnight change in the stock market from the election to the inauguration. and i think -- we'll go on chair yellen, good to see you again. since i arrived in congress, the most co-sponsored bipartisan significant piece of legislation has been dr. paul's original legislation to audit the fed we passed it but it goes nowhere at the other end of the building. are you afraid of getting that passed >> i'm strongly opposed to audit the fed. the fed is audited in every way that normal americans would regard in an audit our financial accounts and holdings are -- >> it's not audited like all other agencies

you are aware as i am with a list of exemptions to the fed. >> what the fed does is removes one exemption that the federal reserve enjoys, which is realtime policy reviews by the gao of our monetary policy decisions. and that is the essence of federal reserve independence and trying to keep politics out of decisions that should be technical professional and nonpartisan. >> well, i would agree if i thought there was a lot of truth to that statement. but auditing something after the fact has nothing to do with influencing the decision, i wouldn't think i would consider it a matter, an important matter, actually, of transparency and i, for the life of me, cannot understand what the fed fears. can you give me an example that would justify the lack of

transparency >> well, we don't have a lack of transparency >> you do if you can't audit it. that's a lack of transparency. to most people i know it's a lack of transparency to some people it may not be, but i don't understand it. that's the reason i'm questioning you about it. >> so i record that the federal reserve is one of the most transparent central banks in the world. >> that's a same what do you fear about the audit? give me a realtime example >> so i think the fomc needs a space in which it can have honest conversations and deliberate in realtime about the decisions that we make without having political influence brought to bare in second decisions that we have made and opining on them, possibly with the idea of reversing them. >> we can discuss things in

public that are sensitive. talk about national security, the supreme court does the same thing. i know that they don't worry about the transparency or influencing them just give me an example of how transparency can hurt the fed. just give me an example of how it can hurt the fed. >> because what you're talking about with the gao or policy reviews on -- >> just give me an example, not a general swipe of review, just say, take for example this if somebody said this, it would be horrible or end of the world for the fed. give me an example like that >> so i would envision a situation where the gao, at the request of members of congress, might come in and say at our meeting a week ago, taking the transcripts and reviewing what we said, they believe that the decision we made was the wrong one at that particular meeting

and i would say that is an extreme interference in splitizati splitizatispliwh politicization -- >> so you are saying that somebody is saying that you have a fear of being wrong, so i get that >> we are talking about political interference and decision making. >> i don't see that. if it's after the fact, i don't see it as interference in decision making. >> i do. >> so give me an example. >> i gave you an example >> just give me one example why they shouldn't have that transparency >> well -- >> time of the gentleman has expired. the chair now recognizes the gentleman from georgia >> chair yellen, i, first of

all, want to thank you and the federal reserve, for the leadership under our ranking member ms. watters and john kuyers and myself and others, we were hopeful that for the first time in history, american history, that the federal reserve would appoint and hire the very first african-american ever to hold the position as a regional president of the fed. and you all did that and we want to say thank you so much we deeply appreciate that. that means a lot, not just to the african-american community, but to all americans that's what this great country is about now, let me go to one other

thing. chair yellen, let me talk -- you and i have had ongoings about the high unemployment rate of african-americans. and i always remember fondly when you referred to that as a blunt instrument as i said, that's what m said to james bond because he couldn't go through it. so you said that congress had to come up with some legislation. we did that. house resolution, 51, 52, of this we sent a copy to you, you know, which would get to african-americans staggering unemployment in the inner city and get men to apprenticeship programs attached to rebuilding the crumbling infrastructure that has been introduced

and, of course, each five years we have to by law fund the 1890s african-american colleges. so we put $95 million in the appropriations, hopefully. and we'll be able to spend over five years, $5 million at each of the universities over that period now, i read your past reports that you have given. and you have talked about housing. and we like to move to that next and in your past three reports, you made a point to dedicate full sections of the report to specific topics related to the disparity that the federal reserve is seeing in the data if for the african-american

community. so want to call your attention specifically to those sections from the three most recent reports to congress. the titles of these, and you refer to them as boxes, if you . that's what the fed calls them and one box was have the gains of the economic expansion been widely shared? box number two, home ownership by race, ethnicity, and box number three, does education determine who climbs the economic ladder? and in that discussion of those problems, you highlighted, included socioeconomic differences between whites and blacks, poor credit scores due to income disparities, and continued discrimination

that lays it bare. so, chair yellen, let me just ask you, of all of these factors in your boxes, which of these factors is most pressing and what recommendations on substantiative solutions can we in congress work on to help address the home ownership problem hurting african-americans, much as you suggested that we develop this legislation that's moving forward on the unemployment of african-americans? >> well, i don't want to try to give you detailed suggestions for what legislation you can put forward. our job is to try to do the best we can to provide information

and a background that will be helpful to you as you decide what's appropriate >> yeah. >> and i do believe this is squarely in the domain of congress and the president and we're trying to provide useful information. >> absolutely. and we will pursue that. i commend you for bringing that up and i would love for you to stay on in your position as chairlady of the fed >> time of the gentleman has expired. >> if i have -- >> time of the gentleman has expired. time of the gentleman has expired. the chair now recognizes gentleman from new jersey, mr. mcarthur >> thank you, chair yellen, down here, over here. hi, there. welcome. i want to thank you for your service to our country and i appreciate you being here today. your testimony has been helpful to me. i had two areas i wanted to explore. one is non-bank sifis.

my state, new jersey, in 2014, authorized by legislation our department of banking and insurance to do group supervision of insurers that were involved in the international market place and i know that fsoc under dodd/frank, when it re-evaluates sifi designations annually is required to consult with state regulators and i wanted to get a sense from you how you would view now a state insurance department doing regulatory work of a group insurer, does that impact, in your view, how fsoc might look at the sifi designation of an insurer? >> so this is a matter for fsoc to decide. we have met with state

regulators in new jersey and i'm aware of this development, which is a heartening one. i would say that the fsoc's focus in designation is the systemic risk that the failure of a given entity could pose to the border, financial system, to the best of my knowledge most state regulators focus in supervision on protection of policy holders, which is, of course, a very important objective, but not on the systemic risk of the activities of a company could pose to the broader financial system so in considering this matter, fsoc would, i think, have to take account of what the focus of that holding company supervision would be >> okay, i appreciate that although i would add, as just

somebody who spent a lifetime in insurance, i think regulation has proven to be, when you regulate individual companies within a group, you create a safer company. and i think our system is better than the europe system, which focuses on the group, not the company. but that's another matter. the other area i wanted to explore with you was the labor participation rate you have mentioned it twice today, and each time you've said that our aging population is pushing it down. and i guess on the one hand, that makes a certain amount of intuitive sense. we have a baby boomer bubble working its way through. but i did want to ask you about a through particulars with that. do you use -- does the fed use the bureau of labor statistics data on labor participation?

>> i believe that's the core data that we have on -- >> the core data so i have there the bureau of labor statistics employment data on they my ipad. i'm looking at it. unfortunately, i didn't do it ahead of time, so i don't put it on the screen, but when i look at the actual data, all people over 16 years old, so basically everybody who is of working age, that has gone -- labor participation rate has gone from 66.6% in '94 to 62.9% in '14 it's a 3.7 percentage point decline in labor participation and you've zpsuggested that's because people are getting older and they're dropping out of the workforce. but that's not what this chart says what it says is that 65 and older has actually increased from 12.4% to -- in '94 to 18.6%. that's a 6.2% increase in that

20-year period let me just finish the question. for that group and then for 55 and older, which is broader and includes those of normal retirement age, that number has gone up by ten pir g percentage points. the group that's gone down is the 25 to 50-year-olds they've declined from 83.4% participation to 80.9% participation. that group, the 25 to 54-year-old group, peak earning years, that has declined by 2.5% 2.5% times 324 million population is 8.1 million unemployed people in peak earning years. it doesn't seem to square with your assertion earlier, twice. >> so, very quickly, it is true

that people in the retirement years, 65 and older, are working more now than they used to but the level of labor force participation of that group is dramatically lower than of prime age workers and an increasing share of the population a now moving into those years with low labor force participation. >> the time -- >> so there's no conflict between thenumber that you cited and my statement that an a aging labor force -- >> my time -- >> time of the gentleman has expired. >> it is also -- >> tame of the gentleman has expired -- >> the worker declines -- >> the chair now recognizes the gentleman from california, mr. sherman. >> thank you, madame chairman, for coming here. every few months i remind you that you have not yet used your authority to break up the too big to fail institutions and i will spend the next minute

reminding you. they are too big to fail if the entity, if just one entity goes down, it could take our whole economy down with them they're too big to compete dp s against, because economic studies say that investors and the markets assume that they will will be bailed out they've seen that congress will pass new legislation to bail out, if that is thought necessary to save the economy. and that therefore, they're able to get a cost of funds that may be as much as 80 basis points less than they would otherwise they are too big to jail, as former attorney generals have said, they wouldn't criminally prosecute, pause it might take down the whole economy if the same thing was done by a medium-sized pang, bank, no eco problem, go ahead and prosecute. and with the wells fargo debacle, we have a difference between republicans and democrats. democrats tend to blame the

management of wells fargo and says that proves they were too big to manage. and republicans tend to blame you, the regulators, which just proves that they were too big to regulate so too big to fail, too big to compete against, too big to jail, too big to manage, too big to regulate. when a protozoa gets too big, it is able to split into two healthy cells. and i would think that the geniuses on wall street would be able to have at least the same level of intelligence as a one-celled aquatic animal. every time you come here, you're attacked by those who criticize the low passport interest rate have had in our economy. with low interest rates, you get low economic growth, but you also might get more inflation. over the last five years, has rampant inflation been a disastrous difficulty for the american