do you think >> again, everything we do on payments and financial regulation, every single thing we do is subject to gao audit. these are policy audits, not like a financial audit the public should understand we are audited, our business model is actually about as simple as that of a very small business, not complicated and we're constantly audited what this exemption does is it prevents the gao from coming in and assessing individual monetary policy decisions, which congress saw fit, you saw fit, your congress saw fit to to carve out of the law it was an appropriate thing to do and it would be unwise to take a step back from that i don't see any harm that it's doing. >> well, the former chairpersons of the fed -- >> that's fed chairman jerome powell testifying in front of the house financial services committee in day one of congressional testimony.

we'll bring you back to that hearing in just a moment in the meantime, we are getting breaking numbers on boeing order s and deliveries we go to phil lebeau >> the month of january for boeing was a shutout for new airplane orders. there were zero new aircraft orders for boeing in the month of january this is the late nest a string of months we've seen going back to the grounding of the 737 max back in march last year. several months since then the company had zero new orders. they delivered 13 aircraft last month including six 787 dreamliners. there are no deliveries going on of the 737 max because it is grounded far point of reference, in january, airbus logged orders for 274 commercial airplanes back to you. >> phil, thank you let's get back to the q&a with fed chairman jerome powell >> as part of this demographics

of wealth examined the connection between race and wealth accumulation over the past quarter century was the result of an analysis of data collected between 1989 and 2013 due to a federal reserve survey of consumer finances more than 20,000 heads of households were interviewed over e those years. hispanic and black wealth levels are about 90% lower than the median white wealth levels, yet median income levels of hispanics and blacks are only 40% lower. the larger ratio wealth gam could be due to hispanics and blacks investing in low-return assets like housing as well as borrowing at higher interest

rates. hispanics and blacks can also feel less of a need to save for the future because society's progressive old-age safety net programs will replace a relatively larger share of the normal incomes they earn during their working years. could you comment on why many communities continue to lag and how the fed via its monetary policy might seek to address some of the underlying factors that have lead to gross inequality >> what we can do and what we have been doing is take seriously your order to us to seek maximum employment. that's what we're doing. i think we've learned -- we just learned because we've been watching what's been happening -- that unemployment can be lower than many had expected without raising

inflationary or other concerns so that's what we can do and we will continue to do it. i think that's showing up in communities everywhere i think other governmental and other tools are necessary to address longer-run problems, though >> such as how do we address the pay inequity how do we impress upon corporate america that it does this country no good to have a persistent pay inequity among its workers, especially when you look at the disparities in the races and the pay inequity >> i will say i think it's important that those issues be addressed. it's really not for the fed to prescribe the measures to address them

we have this grant of independence including the gao exemption, and to keep that we need to stay with what you've given us to do, maximum limits, stable prices. >> on another subject, will the federal reserve release its own proposal on the community reinvestment act, one that takes into account the needs of low and moderate income communities? >> we haven't made a decision on that yet i think our focus right now is on the ongoing process of the other agency's proposal and the comments i think we'll learn a lot from those comments and i suspect there will be changes to that proposal coming out of the comments so we have not made a decision at our own proposal. >> traditional monetary policy works through a single economy-wide variable, single interest rate or perhaps the

money supply of growth of credit credit policy, by contrast, aims at directing credit in specific forms towards specific groups of borrowers. credit policy consists of a central bank operation targeting specific segments of the private debt and security market what is your view of shifting from traditional monetary theory to one that involves a use of more tools in order to enhance borrowing to segments of society? >> i think that historically not been a function of the fed and of central banks generally we have, as you pointed out, one tool, which is our interest rate policy when you're talking about affecting different sectors of the business community or of the population, that's really -- that really should be another agency or congress itself in fiscal policy -- >> the witness is requested to

continue his answer. >> thank you >> the gentleman from missouri is recognized for five minutes >> welcome, chairman powell. always good to see you, sir. i'm sure you saw the speech and probably read or heard the speech by vice chairman corals on the need to reform banking supervision. one area i think needs clarity is the role of guidance. i push regulators to clarify the use of guidance and in 2018 came out with an interagency statement on guidance. he urged an additional step, doing a rule making of the role of guidance. the trump administration's recent actionings out of the office of management and budget. do you believe we need an official rule making out of the fed on the role of guidance? >> we have not made a decision on that. like the other agency, we're evaluating the omb memo. as you know, guidance is not enforceable.

so we do understand that guidance is not a rule >> mr. corals was here recently. he made the comment he intended to look at all the guidance, separate out what he believed needed to be under rule and the rest of it then be clarified as strictly guidance. that's great approach, but i think the question is do you anticipate a rule to be able to do that and force that in the future so you're looking at trying to do that. >> that's something we're looking at we are looking at our guidance and asking if some of it should be -- is more like a rule. >> okay. mr. corals also discussed how regulations have a framework under the administrative procedures act but there is no real framework for supervision and you lose lisick as an example of it without appropriate oversight and without specific guardrails. the gao said this should have been conducted as a rule making. do you believe we need to change lisick and what should we do love to the firms under this regime >> so, i would agree that it's

appropriate that we draw broader lines around lisick membership and as vice chairman corals mentioned that's the a path we are on >> very good something that is kind of concerning to me is the fact that we have a lot of banks and nonbanks that are in the home mortgage lending space nonbanks in general were roughly lending about $250 billion in 2016 this next year it's anticipated to triple to $750 billion. in 2019, nonbanks originated 85% of all loans sold in the securitization by jenny mae. in a most recent report, nonbank mortgage originators were designated as a potential systemic risk.

you're a member of lsac. can you explain that or talk about it do you have any concerns over it >> as you mentioned, we have looked at that and i believe it was part of the recent annual report the thought being these are now very, very important channels through which mortgages are originated, and in the case of a downtu downturn, the banks have high capital, lots of regulation, lots of liquidity and that's in a good place, but these institutions are operating sometimes under, you know, funding themselves with credit line, which might not be available. there's ris there can and we're in the process of assessing that in determining what all to do about it >> do you have a timetable on that. >> we've highlighted it as a risk and -- >> do you have a timetable on what you might come out with a statement and say you will or will not do? >> this is something the treasury has the lead on >> very good one of the things that concerns me also is with regards to home

lending is the stack of forms you have to go through i mean, we had a gentleman here who respected -- actually a credit union at the time but the stack was this tall. i asked him how many pages and he said we don't measure by the page, we measure by the pound. i said, this is how off the charts we have gotten when the stack of papers this tall to do a home loan. i've talked to the fdic and hopefully can engage you in a way to kind of reduce that down to where it's manageable, where there are still protections for consumer signing for a loan and enough information to allow the bank and the regulators to see it this has got to change this can't continue to grow. this is crazy. do you have an opinion on that >> well, to the extent it's not legally mandated, a lot of that stuff is legally mandated by state law. >> i understand that >> we do try to make assessments about what is necessary and what's not but it is a big challenge. i would agree. >> thank you i note for the record i did not ask a question about cecil

today. thank you very much. >> the gentleman yields back the gentleman from georgia is recognized for five minutes. >> welcome, chairman powell. good to have you chairman powell, concerning liber, the alternative reference rate committee is pursuing in new york legislation to address legacy contracts in new york state. would the fed support federal action in that regard? >> mr. scott, so actually it's some members of the arc, the alternative representation committee itself in terms of the need for federal legislation, we have not reached a point where we think it's going to be necessary. we have plans to do that if we do believe that federal legislation is necessary, we

will come tell you, and we understand that's not something you can do in 24 hours we know the time for that is soon >> very good let's move over to great britain for a minute the uk regulators have been very direct with their financial institutions, and they recently established a goal for their institutions to cease liber-based lend big the third quarter of 2020. why has the fed not been so direct and do you have plans to set clear goals and guidelines for your regulated institutions? >> yes we will do that at some point. you may have seen that fannie mae and freddie mac have said they won't accept those mortgages after some point later this year. that sort of thing will begin to happen now i think well in advance of the deadline, which is the end of 2021

>> okay. and chairman powell, your fed board recently finalized its rule on tailoring the hopes of providing more clear and well-defined risk indicators to determine the regulatory requirements that are placed on firms based on their size and risk but the board has never disclosed, nor provided clear and quantitative criteria under which firms are placed under its enhanced supervisory regime that is called large institutions, supervision coordinated committee. even your vice chairman, mr. corals, recently gave a speech where he said this. he said he would like to align their portfolio with the tailoring categories and make

the designation criteria transparent. and you even recently indicated you agreed on the need for brighter lines so could you outline what changes the board is considering to make in this supervisory framework? >> we're just in the process of working out the specifics, but i would agree that we should provide more clarity around what is a lisik firm. >> thank you now let's move to -- and you are a great man and a good man, a good friend. i respect you tremendously but chairman powell, the fed is the axle of our financial system you are the most powerful regulator. and i want you to stand back up

to mr. otting on this business of him coming with this rule making change to the community reinvestment act let him know that you not only have a mandate for inflationary monetary policy, you have a dual mandate -- employment, jobs. and mere's there's the other thg you need to remind mr. otting that this piece of legislation, this law, the community reinvestment act, is precious to the nation but it's precious to african-americans more than anybody because the civil rights act, the voting rights act, the

big issue facing african-americans, financial stability. and the two anchors for that is a home, owning a house, and having a job and this bill was the bill that outlined redlining that kept african-americans out. he needs to back off of that you need to assert your power in this and let him know we're serious and to back off this rule change. >> the gentleman from ohio is recognized for five minutes. >> thank you, madam chair. good morning, mr. chairman how are you doing today? >> great thanks. >> great thanks for being here. i want to do some yes-or-no questions. you covered them in your testimony but just to remind everybody. the labor participation rate is now 83.1%, which has increased in the last three years, is that correct? >> i think that's prime age

adults >> yes has it increased or decreased? >> i believe it has, yes >> and wage growth has outpaced inflation for workers in the last three years is currently outpacing inflation. >> yes, it is. >> wage growth has gone up the last -- for about -- by about 3% the last few quarters on an annualized rate. is that correct? >> over the last few years if you rook at a range of measures, you would see wages up about 3%. >> and we have record low unemployment rates for african-americans and hispanics. is that correct? >> that is correct >> so the economy -- the fundamentals of the economy are in pretty good shape is that correct? >> i would and i did >> thank you for that testimony. your colleague at the atlanta fed stated recently an, economic expansion does not die of old

age. that's great quote given that the fundamentals of the economy are strong, do you think many businesses and investors are trying to talk themss into a recession? >> i don't think so, and i certainly hope not there's no reason why the expansion can't continue there's nothing about this expansion that is unstable or unsustainable. >> great i think the fundamentals are strong, but i think a lot of people are worried you know, i hope that they don't talk themselves into a resgs i agree with you on that given about two-thirds of all lending and capital formation occurs in the capital markets, i'm curious to hear about what the federal reserve is doing to coordinate with the securities & exchange commission and the cftc as regulators for the capital markets to make sure there is actual coordination on the capital markets. >> well, i mean, the s.e.c. really -- cftc really have primary regulatory authority for those markets.

you know, we have supervisory regulatory authority over the banks. where we overlap is in financial market utilities we regulate some and the s.e.c. regulates some and the cftc regulates some we collaborate on all of that. we collaborate pretty cleesely on that. >> i would encourage you to increase that collaboration because the lines between securities, capital markets are blurring more than ever before i would ask you and vice chairman corals to redouble your efforts for that coordination because i do hear from some of the firms that are regulated that they feel like it's not coordinated. if you could redouble those efforts i'd really -- i think that would pay dividends to the american investor and the american economy a couple other quick questions here what do you think the most significant risk to the financial system is today? >> i mean, i had to start by saying i think the financial

system is strong and has been materially strengthened since the financial crisis, particularly the banks, high capital, high liquidity, stress test, keep them on their toes, and now they have real resolution plans none of that was in place before i think the financial system is generally in a good place. you know, the thing that we worry about a lot is cyberattacks i think we have a great game plan for traditional, you know, issues like bad loans and things like that. it's more cyberattacks is really the frontier where you worry we worked very hard on that. all the agencies do. we work together the institutions themselves work very hard. but that i would say is a major focus. >> thank you an interesting note, mr. chairman, you are in line with the ceos of the biggest institutions i asked them the same question and the consensus, although not complete in agreement, unanimous agreement, was that cyberattacks were the issue i think congress needs to focus on it and our regulators need to

focus on it. two quick things because i'm running out of time. i know you're focused on the transition from libor and sofor. i hope you'll pay particular attention to the impact on small businesses and community banks as we make that transition they are particularly vulnerable and with regard to the repo market, i hope you will continue to focus on the origins of the problem that caused it.regulato market based and i know you're focused on it. you and i have had private discussions about it i'd like to see that solved in a way that you don't have to provide federal reserve capital at the end of every quarter, at the end of every year. so if you can stay focused on those thing, i'm out of time thank you, mr. chairman. >> thank you >> the gentleman from texas, mr. green, who's also the chair for the subcommittee on oversight and investigation, is recognized for five minutes. >> thank you, madam chair. thank you for appearing today,

mr. powell mr. powell, this is an observation, not a criticism you've indicated that the fundamentals are strong. however, you also indicated at the last fmoc press conference that you were a bit surprised that wages ha s havs have faile up despite being well into an expanding economy, sustained levels of historically low unemployment, increased labor force participation. strong numbers but 42% of working americans in 2019 made less than $15 an hour. fundamentals are strong. yet many of the people in my congressional district, mr. powell, more concerned about the supermarket prices than the stock market when they go to supermarket,

they're concerned about the price of procter & gamble products, not the stock market price of procter & gamble itself the stock market means nothing to them. it's what they have to pay for products in the supermarket. this brings me to my question. has there been a study to give us some sense of what a $15 an hour wage will do for the economy? a study of what a $15 an hour wage will do for the economy has the fed done such a study? >> the fed has not that's not somethingwe would do >> let me address that don't mean to be crude, rude, and unrefined. let me call your attention to a study i found, the cobbin

disclosure project based on disclosures you concluded that the 500 largest companies by market capitalization are exposed to a trillion dollars in risk now, someone could argue that's probably not something that you ought to do, although i understand that climate is something that is important to the fed because it will have an impact, global impact. but i think you can take a closer look at this. you're the ultimate authority on price stability, on wages. let's have a study to determine what impact the $15 an hour minimum wage will have on the economy, a wage disclosure project, if you will give me some thoughts, mr. powell can you help us, please? >> there's a great deal of research that's been done on minimum wages, and i don't know

of a plr one, but there has to be somewhere research on what a federal $15 wage increase -- >> i agree with you. i agree. i've read a few. but they don't come from the fed. they don't come from the entity that has the dual mandate, price stability, unemployment, or employment it would mean something to working people if we could get such a study, not withstanding what others have done, and these are observations, mr. powell, not criticisms i've enjoyed visiting with you notwithstanding what others have done, this would be meaningful to working people. by the way, i think $15 an hour is not enough as a minimum wage. i think it ought to be at least $20 now. but i'll still settle for $15 if we can get that. can we work with you, discuss with you, the possibility of a wage project

>> again, our -- i'll go back and talk to our labor people who know this issue very, very well, and many have published on these issues let me come back and -- >> i'm going to thank you for it i've got 46 seconds. i'm going to applaud you for it. personal applause. madam chair, with that, i will yield back the balance of my time >> thank you very much is the gentleman requesting to have an answer in writing for record on this question to the chairman >> yes, madam chair. thank you. the witness is requested to provide an answer in writing for the record the gentleman from kentucky is recognized for five minutes. >> chairman powell, welcome back to our community i want to touch on your testimony about the importance of fiscal policy and supporting the economy. in general, what would you say is the lag time associated with a major change in fiscal policy? >> well, it can tend to be long, as you know.

with monetary policy, we can go into a room and change interest rates, and we do, obviously fiscal policy tends to take a lot of work and some time. >> let me ask the question this way. fiscal policy has change prod foundly in the past three years. tax cuts, deregulation, a less restrained energy sector, a pullback from dodd/frank, new trade deals. are any of these policy changes impacting current economic conditions >> i'm sure they are, but of course we don't try to assess that that's not really what we do when we look at the economy. but yes, they would be affecting it >> the u.s. economy is presently exceptionally strong since the 2016 election 7 million new jobs have been created, the unemployment rate is at a 50-year low, more americans are employed today than ever before, wage growth is the high nest a decade and the lowest income workers have been seeing the fastest pay increase

growing at 16% since the 2016 election just over the weekend this was the headline of "the wall street journal," which i'm sure you follow the reporting was that a tight u.s. labor market is drawing americans off the sidelines at a record rate. despite this after last week's state of the union speech, speaker pelosi said it was, quote, appalling to hear the president, quote, try to take credit, unquote, for an economy heinherited. chairman powell, i'm not going to ask you to weigh in or arbitrate a domestic political dispute, but when the fomc conducts monetary policy, given what you said about the lag time of fiscal policy, is it fair to say that --

key components of the stress capital buffer finalized in time for the 2020 ccar. can you describe what the key components are and a more precise time line given that the fed announced last week scenarios for the 2020 ccar? >> i think the time line is we do believe -- we do intend and will put into effect the core of the stress capital buffering time for the 2020 ccar cycle that's coming right up i prefer to leave the exact details of that to the -- they're still being worked out lit happen in a timely way for the 2020 cycle >> a little more detail. is it still the fed's view that the activation of the countercyclical is a suitable replacement in light of the stability report from november which stated that the vul neshlgts have not significantly changed? >> we haven't made a decision on that, on using the buffer versus the other approach

we have not made a decision on that >> we're looking forward to that decision final question the business roundtable as you probably remember announced last summer it was redefining a corporate purpose to elevate so-called stakeholders ahead of shareholders a large investment firm recently announced its intent to divest of fossil energy effectively limiting investment options for clients to a subset of secotors that check the environmental concern box. i am concerned that they may choke off capital to perfectly legal, productive, and profitable sectors of our economy and cause retail investors to miss out on returns that they need to fund their futures. as a leading voice on the financial stability oversight council, will you commit to raising this issue with your colleagues at fsoc and urge that body to examine the extent to

which a misallocation of resources away from shareholders to serve unrelated political errands might stifle capital formation, compromise investor return, and ultimately undermine financial stability? >> i don't know that i totally unction your concern, but i'll be happy to discuss with it you. >> the concern is that if shareholders are not a prime concern of corporate boards and directors, if stakeholders who have no ownership interest in the company are the focus of a corporation, then i would submit that there is a tremendous risk of misallocation of resources away from maximum shareholder returns. i would like fsoc to take a look at that. >> the gentleman yields back >> i will bring that to the authorities there. >> thang you >> the gentlewoman from ohio, the chair for the subcommittee on diversity and inclusion, is

recognized for five minutes. >> thank you to the chair and to the ranking member, and thank you, chairman powell, for being here today let me also acknowledge the advocates in their green t-shirts for being here today, and thank you for coming to my office yesterday and sharing what i thought was valuable information with my team appreciate you sitting through the hearing. chairman powell, in the latest edition of the federal reserve survey, consumer finances that was published in 2017, it gave the breakout between whites, blacks, and hispanics as it related to their net worth and we've heard the statistics i think my colleague, congressman meeks, talked about it, and i'm sure some other, so i'll spare going through all of those details. but what's very interesting to me, while that data seems great

for those who are researching the issue, is there any way your office could break it down by regions or cities? because when we go back home, this is one of the number-one things that i'm hearing. people are coming into my office, once you get through health care and this couple's in with jobs and education, they're saying, we look at the wealth gap, that it's getting wider it's not coming in and while we're talking about unemployment rates being better, many people have to work two and three jobs just to try to survive. someone talked about the minimum wage certainly as we're advocating for a higher number, it's not enough in my district, you'd have to make somewhere between $18.70 and $20 to be able to have a livable wage so the first question is can this information be localized to

a region or to a city to help us as members of congress when we go back home the second thing is, i just recently introduced a bill closing the racial wealth gap, which requires the federal reserve to further break down the data and this is something that i didn't realize until really studying the federal reserve, listening to some of the individuals like the folks here today. they have some really good ideas, and so my second question is could you tell me if you would entertain having your folks look into looking at wage as a measure because oftentimes, when you look at -- many folks don't work a full-time job, but they have a wage so could we be a little more creative in looking at the data based on what some of the things

that i'm hearing from the group that came in and i'm sure they've met with your folks and you know some of their issues i'll start with can it be localized, can we entertain looking at some of the things that they think we should look at when we calculate or present all the good news that is not the good news for many of the individuals sitting here or in my district. >> i think you're probably making some of our data people very happy back at the board of governors. >> okay. >> you know, they love to cut the data different way, and we do learn every time we do that, we learn things. i don't actually know the precise answer to your question, whether we can do it regionally or what dimension, but we'd be happy to look into that for you. >> and what about some of the individuals' ideas about looking at wages in your calculation >> yes i think we can do that

>> your folks would be willing to work with them on some of the ideas to at least start at a starting pointover ds of discus it >> yes >> now we're marrying the people with the power, and what a good win-win that would be for all of us since we're really talking about all of our lives and especially those who, you know, have to work a little harder than some of the rest of us. and so, then, the next thing, will your agency work with my office i am so excited about this bill. and as i understand it, part of the reason for asking for the data is the federal reserve actually collects the data that sets the policies that then get married with the allocations that come back to the districts. so i want to make sure i'm on the right path when i go back home and i say i have a bill that's asking the federal reserve to collect data that can

help us in the end is that in the ballpark? >> yes we should actually get the experts to talk directly to you and your staff and tell you what we do and how we do it and how that might be useful i don't know that we need legislation at all, but we certainly have excellent sources of data, and we do cut them different ways why don't we try to follow up with you on that >> thank you >> the gentleman from colorado is recognized for five minutes >> thank you, madam chair. chairman powell, thanks for being here this morning. i want to follow up on the cra we've had a fair amount of conversation on that and just wanted to have the clarity that the feld has been involved with the process, with the occ and the fdic is that correct? >> from the very beginning >> great also wanted some clarity were you comfortable not only with governor braynard making the speech but the content of

her speech in regards to the cra? >> yes >> what extent has the fed been doing? i know you're talking about doing some of the analysis, comments coming in, but to be able to work on cra mode modernizati modernization? >> from the beginning of the process we said yes, that sounds like a great idea. it's a good time to update cra let's try to make it more transparent, objective, effective in serving the intended beneficiaries we went around the country i think we had 29 events around the country where we talked to different groups of people about cra and their experience in it it turned us in a different direction. we had a bunch of ideas. we weren't able to get on the same page or really agree completely with their approach and they weren't able to completely agree with ours but we continue to push and we continue to learn. i would agree with mr. hills' earlier comment that ideally you would have one agreed, you know,

set of standards >> i would agree with that as well i think that is something we ought to strive for and really encouraged reading your comments and your statement that people who live and work in low and moderate income communities are finding new opportunities. wages have been rising, particularly for lower paying jobs that's mainly the area i have a lot of concern on. my state, colorado, i represent the rural areas. we oftentimes have two economies where the metropolitan areas, resort areas have been doing well, and rural areas continue to struggle. we're seeing some of that real movement when we're looking at that cra reinvestment back, talking about the community bank, i would encourage you to be able to look at that occ and fdic proposals i do believe they reach further into rural america you talked about policy. have you done any assessment in terms of the opportunity zones

that were included in the tax and jobs act we're certainly seeing some benefits and investments coming into rural areas in my district. those are some of the policyiie we need to be looking at >> i'm not aware of any research we've done but we probably have done research on it and will be happy to share wit you >> thank you fan ye mae and freddie mac just took some steps talking about sofor-based mortgages. other agencies have been taking this step separately is there any kind of uniform effort at a high level to be able to coordination the adoption of sofor? >> yes, there is, very much so we're coordinating with other agencies and with the market participants as well and you will see more of that. you will see more instances in which lickor will no longer work

or be usable in that context >> to follow up on the question in regards to community banks, do you see any pluses, minuses in regards to using soforover libor for community banks? >> yes i think libor itself is really a problem in the sense that there's no guarantee that the rate will continue to be published after the end of 2021. but there's a question about having a credit sensitive rate in addition to sofor soforwill be the main substitute for libor, but we are working with regional and some of the larger banks, too, about the idea of also having a credit sensitive rate, and that's something that's ongoing >> and we've had a little conversation about the coronavirus, china, the impacts on the economy the president just signed into law the usmca. do you see that as creating a

runway for further economic expansion in the u.s., job opportunities and wage growth? >> we don't give advice on trade policy but i would say that -- >> q&a continues with the fed chair. one top that i can's been lightly touched on, not much, is political pressure to lower rates. and the president two minutes ago tweets this. when jerome powell started his testimony today the dow was up 125 and heading higher as he spoke it drifted downward and is now down about 16 points. germany and other countries get paid to borrow money we are more prime but federate is too high. dollar tough on exports. it hit a four-month-high today maybe one of the congressmen or women will use this tweet to get powell's view on white house pressure >> -- digital currency we enjoyed that as well as the meeting with the staff, who are excellent. great to see how plugged in they

were to this issue in a speech last week, governor brainard highlighted the role of digital currencies and ensuring sovereign currencies stay at the center of each nation's financial system do you agree with her crash triization in particular, do you think establishing a digital dollar would help ensure that the u.s. dollar continues to serve as the core of the u.s. and the world's financial system >> well, to take this first part of that, i think having a single government currency at the heart of the financial system is something that has served us well it's a very basic thing. it really hasn't been a question i think, you know, before we move away from that, we should really understand what we're doing. i think preserving the centr centrality of a central, wildly accepted currency that is semied and trusted is an e enormously important thing. whether a digital currency move us along that path is an open question as you know, every major central

bank is currently taking a deep look at that, that we feel like that's our obligation. technology has made this possible private sector is innovating, they're doing it it's very much incumbent on us and other central banks to understand the costs and benefits and tradeoffs associated with a possible digital currency >> so how would you characterize, you know, your state of progress on this compared to other countries? you know, the swedish central bank developing an e-corona. the chinese. one of the reasons there was so much concern about the project is they would immediately have scale if they rolled out the product. another entity in position to do that is the chinese government, to roll out its scale using their already established payment by cell phone systems. they would immediately have a scale comparable to facebook if they rolled that out so how would you characterize

our ability to respond to this potentially competitive threat >> we're working hard on it. we have a lot of projects going on, a lot of efforts going "on the money" that right now. we haven't had the problem that -- many mentioned sweden. a lot of the northern european economies have moved away from cash to a remarkable degree, and that has not happened in the u.s. economy, even though it seems like it must have happened with our kids not using cash very much. nevertheless, the amount of cash in the u.s. economy continues to grow faster than nominal gdp >> if you look at the curve of adoption of payment by cell phone, you know, it starts slowly and then all of a sudden it just happens. so that seems like that transition can happen in a period of about just a couple of years. so we have to be able to respond, you know, if that's the driving factor we have to be in a position where we can respond by, you know, rolling out, for example,

a digital dollar on a couple-year time scale >> i completely agree with that. libra really lit a fire under that and was a bit of a wake-up call that this is coming fast and could come in a way that is, you know, quite widespread and systematically important fairly quickly if you use one of these big tech networks like libra did. so we're working hard on it. we fully appreciate the importance of making quick progress we have not decided to do this it is not -- i think there are many questions that need to be answered around digital currency for the united states, including issu issuescyber issues, so we'll be working through all that and doing that work early and responsibly. >> have you had open visibility into what the chinese are doing?

do you have working-level contacts of some idea of what their rollout is likely to look like >> yes, we certainly have that, but they're in a completely different institutional context. for example, the idea of having a ledger where you know everybody's payments, that's not something that would be, you know, particularly attractive in the united states context, not a problem in china but nonetheless -- >> from a competitive point of view, they were claiming they're going to roll it out on the belt and road countries sometime very quickly. and so this -- you know, i urge you to keep the fire lit thank you. >> thank you >> the gentleman from texas, mr. williams, is recognized for five minutes >> thank you, madam chairman, and thank you for coming back to our committee, chairman. we appreciate it with baseball season slowly approaching, i wanted to make sure one thing before i

continue, that you still are on team capitalism. >> oh, yes >> thank you appreciate that. experian recently released their 2019 consumer credit review. i wanted to read a section from the report because i think it k accurately depicts thestate of our economy. i'm a main street business guy and the economy is really good right now. record job growth caused unemployment rates to drop to historic lows while the stock market flexed throughout the year consumers and returns showed their confidence as they continued to borrow and spend energetically, most recently evidenced by the strong 2019 holiday shopping season. it says the consumer credit score has reached an all-time high in 2019 at an average of 703. this antidepressant latranslatee getting better rates to br row money, get a home or business loan to live out the american

dream. chairman powell, what should we be focusing on in this committee for jobs explosion that we have seen the past few years? >> honestly, i think the focus for me really oug to be on things that that address our, wt are or longer run issues that can be addressed by legislation? it is really two important things one is labor force participation, what are the things that you can do that we really can't do that will help people stay more attached to the labor market we still have low labor force participation compared to essentially all of our economic competitors. the other is productivity. what drives productivity a stable legislative environment, it is a legislative and administrative environment that supports investment and those sorts of things. >> i am sure you are aware of the fed's work -- i have had my

reservations about entering into a international agreement that does not conform to our current approach one particular piece of the international standard i want to ask you about is the flexibility that our government was given to develop an equivalent solvency standard that would better fit our insurance ecosystems my question to you is how does the fed plan on assuring the standards developed in the u.s. will be deemed equivalent by the international group given the continued resistance you are facing from the europeans? >> i can just say that we will -- we will not be part of approving any international standard that doesn't accommodate our own american insurance regulatory framework. >> that's great. we are leaders not followers. some of my colleagues of the aisle have called for a financial transactions tax i think its a shrt sighted approach to raise revenue that will greatly affect the amount and the ways that americans save

pour the future. the thought of adding another layer of taxation is redundant since capital gains taxes are already in place and they should be lowered that take away moneys from successful investments. if we want to expand economic growth we need to focus on lowering the personal and corporate tax rates so americans can keep more of their hard earned incomes and businesses can reinvest into their businesses can you explain how implementing a u.s. transaction tax with impact the economy >> we don't do fiscal policy if i comment on individual taxes i am worried where that might go >> i have to tell you from a mainstream standpoint it will hurt the economy, an extra layer of tax we need to actually cut taxes. looking at financial trends across world, with being in business over 50 years like

myself, one data point is that catches my eye are negative interest rates can you help me understand those economics and talk about the threats that this phenomena poses to financial stability >> a number of countries around the world, as you know, face the problem of what do you do when your policy rate gets to zero? some of them actually went below zero the united states chose not to we chose not to at the fed we used other tools when we got to the lower bound those were forward guidance and large scale asset purchases. i think going forward our inclination would be to rely on the tools that we did use as opposed to negative rates. that's our instinct is that in the u.s. context that's not a tool we are looking at the question about intermediation is when you have negative rates you wind up -- does it wind up creating downward pressure on bank

profitability which limits credit expansion we are watching other institutions around the world who have done that, and we will be able to see what the results are. >> thank you for being here. >> the gentlewoman from michigan, ms. talib is recognized for five minutes. >> thank you madam chair i don't know if you know but in 2013, chairman detroit filed for chapter 9 bankruptcy, which was marked as the largest municipal bankruptcy filing in u.s. history. in july, when you were here, i asked you why, if the federal reserve is willing to back stop or support, you know, big banks and corporations during periods of credit market distress that we wouldn't want to make equally sure that state and local government also had access to credit as well you mentioned that you didn't have the authority to lend to local and state governments. madam chair, i would like to submit for the record section

142b of the federal reserve act asserting that the federal government, the feds actually do have the authority to buy municipal debt. >> without objection such is the order. >> chairman, given that you actually do have the authorities, can you explain to me why we shouldn't -- why shouldn't the federal reserve ensure that state and local governments have access to funding during times of financial distress >> we have limited authority i think it is to buy short-term municipal obligations. we did do that in the 1970s briefly and then have not donet since. i think a series of fomcs and fed chairs in all kinds of different political environments have thought of that as something that's not appropriate, really, for us in the sense that it's government financed we -- you know, that's to be dealt with by fiscal authorities rather than by the monetary authority. we focus on the job you have given us, which is maximum employment and stable prices, and to some extent, also, with

other agencies we work on financial stability and bank supervision as opposed to solvency of state and local governments. >> what about opening emergency lending facilities is that accurate n stabilizing the economy? >> well, yes, to financial institutions, we do. >> when the feds step in to rescue banks in a crisis, is that because you believe their role in the economy is vital >> really, because we had no choice but to prevent the financial system from collapsing in 2007 and '08. >> i mean, my city filing bankruptcy was devastating to so many retirees, sir 40, 50 years they worked for the city of detroit, saw their pensions completely diminished, gone do you not believe that the governments of detroit, and puerto rico also play a vital role that should be reserved,

even if financial crisis makes it hard for them the borrow money? >> i -- what i believe is that that's not a job for the fed the fed has a particular role and particular authorities and you know, lending to state and local governments and supporting them when they are in bankruptcy is not part of our mandate? we are going to strongly disagree i believe you have the authority. you mentioned that in the face of another financial crisis you would use the same tools of expanding the balance sheet and purchasing long term bonds, in other words more of the same, correct? >> yes. >> i am afraid that's simply not good enough. i think your press cessors former chairs yellen and bernanke -- for instance, chairman bernanke suggested a fiscal program might be helpful during the next recession. do you agree that that would be helpful? >> you know, i think that's really an untested and not widely supported perspective

i don't believe chairman bernanke said a money supported fiscal policy would be something we should do i know there has been a group of people that pushed that idea but i don't think it included the former chairman. you may have seen something i haven't seen. >> i know. and chairman, look, the federal government is supposed to be about people i don't see that we are treating, you know, pensioners, a city like the city of detroit, which is frontline communities that have really been hit hard by the financial recession, we haven't actually -- they keep saying detroit is coming back. if i show you neighborhoods they will tell you we don't know what you are talking about. poverty has increased, access to housing decreased. all of those things. we start reflecting and understanding that i believe the federal reserve act actually gives us authority to help and treat, just like we bailed out big banks that we can do the same for our people, the residents of the city of detroit. so i thank you for that. and again would actually ask and

push you to look at this from a different lens versus what the same old process which i believe hasn't really worked for working class people thank you so much. i yield the rest of my time. >> thank you the gentleman from arkansas, mr. hill s recognized for five minutes. >> thank you chair waters. chairman, welcomeback to the house financial services committee. i want to thank you for the discussion you had with dr. foster a few minutes ago i too want the thank you for your work with governor brainard and our discussion that we had with the governor and the staff about the concept of the digital dollar and the work being done at the treasury about that i won't belabor some of the points that representative foster made but a couple of comments that i would have for you on that, would you advise our committee or ask the fed to advise our committee what legal authorities the red ral reserve might require in order to doctor use of a digital dollar? >> yes, i mean that's a good

question it is one we are looking at. a lot of it would depend on the design of the currency. >> exactly witness thing we have also talked about and we have had a lot of discussions in our fen tech task force here is europe's approach to this idea of a payment provider license which is now part of their financial services code, part of their open banking movement, and the idea that one would have a regulatory license here in the united states for being a payment provider might be a bank or it might be a non-bank is that something the fed's looking at as well >> i wouldn't say we are specifically focused on that, but you -- more broadly we think it is a good idea to look at the landscape of oversight of our payment system that would be piece of that. governor brainard talked about that in another of her speeches last week. >> thank you for that. the last month, the chinese regulators bailed out