the supply side, the progress we see on inflation and we honestly don't know there's risk on both sides, really, on growth and potentially on inflation as well so we're going to have to be just very attentive to what's happening in the economy and willing to adapt pretty nimbly our policy as we go through the year >> thank you >> thank you, senator crapo. senator tester from montana is recognized >> thank you, mr. chairman i don't know if there was any way to turn that mic down but it was painful. almost tough not your questions, just the intensity. first of all, chairman powell -- >> good tuesday morning, welcome to tech check. you have been listening to the fed chair, jerome powell's confirmation hearing on the hill today. watching the markets not a lot

in his q&a, talking about the prospects of rates rising, balance sheet normalization and runoff sometime this year. tech stocks rocked by inflation, rising rates, the comments from the fed. here to help us break things down this morning david rolf good to have you anything here that you think moves the needle in the tech playbook >> probably not over the next couple of trading days, but again, longer term, and we've written about this quite a bit of late to our clients we described the box that the fed has created as their own hotel california you can get into qe, but you can't get out. i think it's going to be a very volatile year for the stock market, particularly for the tech sector, we welcome it sort of our biggest holdings like apple and google and facebook, they're buying back a lot of shares these days and we would like for them to do that

at lower prices. but in our opinion, the fed is in a real tough spot right here. >> interesting you -- so obviously you see the pretty well telegraphed by now threat to tech from policy withdrawal interesting, there were some fed comments this morning that the labor shortage that the fed chair has been talking about is going to drive tech investment how valid is that, do you think? >> i haven't given a lot of thought. it seems the tech companies that dominate their space, on their employment front, they seem to be managing it pretty well that hasn't come into our calculation of either reducing earnings or keeping any type of earning calculation -- sorry carl, it hasn't been a focus of ours of late >> so david, let me ask you this, if this is a hotel california situation, do you think that the fed -- are you skeptical they're going to raise

rates three to four times next year >> yeah, i am. we went through somewhat of this -- well, we went through a little bit of qt back in 2018, that might be a pretty interesting playbook if you recall, we didn't have inflation then and it got to the point they were tightening enough that it cracked the credit markets and then we had the famous powell pivot. i think it's going to be very difficult for the fed to raise four times not they shouldn't but it's going to be difficult to do that again, in our simple view, qe over the past number of years has been oxygen for the stock market, the bond market, the credit market, and to think that we're going to taper and start to maybe even sell, reduce the size of the balance sheet and four rate hikes, if that does come to pass, we're going to have a tough year. and the s&p 500 has doubled over the past three years

i mean, you know, back in the day it seems like a 5 or 10% correction these days is kind of the old 15 to 20 we'd welcome a sharp pullback. we're always interested in improving the quality of businesses in our portfolio. but i think the first week or so of january is a precursor for the rest of the year >> so, david, then you think that stocks are going to come back, i suppose? you don't think there's a whole valuation rerating going on here, particularly some of those high growth momentum names, think they're going to get back up to those levels we saw at times during the pandemic? >> i don't think so. those two classes of tech stocks, the ones that are generating a lot of profitability in earnings and those that are more sales now, let's try to get some market share. we'll get earnings and cash flow sometime in the future there's not a lot of buyers underneath these stocks. i think they have to come much

further down with a valuations make sense i think we have to throw out the old playbook of the last couple of years where maybe we're looking at valuations, quant measures i think it's psychological for the next year. when enough investors speculate, psychologically don't want to speculate, let's bar the door, who knows where the down side is some of the valuation measures or quantitative figures you can point to -- when folks want to sell, they're going to sell. look at the damage done to some of those stocks just last year that roared in 2020. so i'm looking forward to a lot of volatility. again, i hope our tech holdings buy back a ton of stock. we're making up a short list right now on a handful of companies if they continue to

fall further, we'll add them to our portfolio, increase in the ratings. we've waited for opportunity and we actually welcome it >> david, good morning it's john. soalong those lines, i wonder if big tech, and i don't just mean the mega cap, but big tech companies have become the dividend paying stocks that are easy for people to say they want to pile into, and if investors might overlook other interesting names that have fallen quite a bit to maybe even pre-pandemic levels six months, a year is a long time if you're managing other people's money, not as long managing your own, roku, stitch fix, peloton, all well off, ct3ai, well more than 50% off of their 12-month highs given that and this whole thesis

we were hearing the past several months how the pandemic changed and accelerated everything, might some of those names be bargains >> they have to come down further. in some of these business models we're in a period -- on, the stocks were probably way ahead where they should have been on any future fundamentals the last couple of years. once the fundamentals come in, you can value them some of the names you mentioned may start catching a bid but i don't think it's going to happen this week or maybe even this month. it's a new environment and for those names that you mentioned specifically, if they kept those pandemic gains, one stock we own is tractor supply, and they report that they've kept all those gains they made during the pandemic, that has to be proven with the other names you mentioned. if they have, the revenues and earnings start to make sense,

the business model is resilient, profitable some of the names start to catch a bid but i think it's going to be -- at least in our opinion it's going to take a while, a few quarters, and maybe not when they report coming up soon with results. >> i hear what you're saying, but part of what i'm questioning is, how closely should investors who are playing at home try to time this? when something has fallen by a half, if you're not looking at a six-month, one-year time horizon, you're investing for the long term, does it make sense to push in, i'm not saying riskier names like a meme stock necessarily but something with a growth trajectory but perhaps isn't that profit stage quite yet? >> i think the way you clarified it, jon, is really key if you're a lay investor at home, absolutely start doing work on these names. i don't think there's a risk that these things are suddenly going to catch a bid and zoom

back up. you have time. you have time to do your work. and that is actually a good -- that original list is a good starting point, and others to think, hey, something is down 50 plus percent, i think i understand the business model, time to dig in more and see if it makes sense and become a fundamental investor maybe not a momentum investor that just literally killed it in 2020 i think there's a different playbook now >> indeed. well, the top that you reference, david, is definitely in play today as the nasdaq goes green. thanks for your time, good to talk to you. let's get back topowell. >> really impacted the ability of people to actually pay their mortgages or pay their rent, or for that matter, they were going to put food on the table before they were going to pay the mortgage do we have a similar type of situation developing here with regard to individuals that are trying to get to work, paying a higher price for their gasoline,

and now they're seeing the possibilities of other things going by the wayside >> that is right i mean, gas prices are high, and those gas prices and food prices and heating oil prices are the kind of things that affect people who are living paycheck to paycheck on a fixed income. >> not necessarily something that you can do at the fed, but nonetheless, it does impact inflation and it's something that would probably have to be addressed with the regulatory environment that we have within this country today >> we can have marginal effects on demand, but really when it comes down to energy and food, those are largely imimportantly influenced by supply side issues. >> thank you i would add this i know with regard to regulations, the fed has been considering whether or not to make permanent adjustments on a separate item to the slr, in

order to account for significant influx of cash that consumers have got trying to put them in banks yet banks have to have capital to be able to accept those deposits. i would just hope and i would consider that you continue to look at considerations with regard to the adjustments on the slr so that we have the ability to accept that -- those deposits in the future, sir >> we will return to that. we want risked-base capital to be binding not leverage ratio. we want to make adjustments but we want them done in ways that don't reduce the bindingness on the capital requirements on the largest firms. but within that we think there are things we may be able to do on the slr that honor that first principle. >> thank you, mr. chairman. >> senator warner from virginia is recognized. >> thank you, mr. chairman chair powell, let me join my colleagues on both sides of the

aisle thanking you for your service. i want to pick up where senator tester left off when he started talking about pre-pandemic economy, pandemic economy, and post-pandemic economy. you said in your testimony that post-pandemic economy is likely to be different in certain respects and pursuit of the fed's goals will need to take these differences into account what are those differences seeing changes in employment patterns, may need to see new supply chains. can you talk about that post-pandemic economy, what those differences will be, how it will affect the fed's decision making, and will there be any economic indicators that might have a new emphasis or even be new economic indicators in this post-pandemic economy? >> we're just beginning to see it emerging from the fog so it's all indefinite you mentioned supply chains.

the supply chains we had pre-pandemic were very efficient and pretty fragile so i think companies, since the very beginning of the pandemic have been looking at ways to have more robust supply chains that won't be, you know, subject to these kinds of disruptions we've had now for two years. that's one another i mentioned earlier is labor force participation has been much slower to come back than we had hoped for. the level of employment that's consistent with price stability is something that can evolve over time and we have to deal with the economy as we find it right now we have very high inflation. and, you know, wages at multi-decade highs which are not causing the current inflation at all, but something that we're ch watching and we want participation to come back, but it's been quite slow we have to deal with the fact that it probably will take a long expansion to draw people back into the labor market

just to speak of two, there are many others. >> for example, would child care be one of those factors? we have a large percentage of the workforce, particularly women in the workforce whose participation is down, if we don't find a way to provide adequate affordable child care is that a disruption >> it's clearly weighing on participation. although participation has moved back up in women but that part of the economy is suffering from a lack of workers as much as any part is that weighs on participation by people who depend on child care, yes. >> i think on supply chains, a lot of us at the beginning of the pandemic raised concerns about being dependent on sole source, whether it's the base chemicals that go into our pharmaceutical drugs or ppe coming from china, i think some of the changes are going to be permanent we at the congress need to act so we don't maintain

that dependency. i want to go to another topic p. we saw a disproportionate effect on minority communities lost 440,000 black owned businesses the paycheck protection program, well intentioned but clearly minority owned businesses didn't do as well i'm a big believer and think folks on both sides of the aisle, we have a lot of moneys in the cdfis and mdis but there still remains challenges for these organizations. for example, after the murder of george floyd, private sectors indicated they were going to put up $250 billion to deal with racial wealth gap issues but we hear there are entities that might want to, for example, invest in minority owned deposit institutions but they can't make those investments because of

potentially triggering that regulation on change of control. i think we'll need some regulatory review here i think as well we need to look at, for example, a nonemergency discount window geared towards cdfi and mdi modelled after the seasonal discount windows that exist on a nonemergency basis can you speak to how you and the fed can work with me and others on this committee to make sure that cdfis and mdis that are going to play i think an increasingly important role in serving under served communities don't get blocked by these regulatory barriers. >> so as we -- we've talked about this a lot we're focused on what we can do to support cdfis and mdis. we did see in the pandemic, a number of cases where they were the ones who were there in poor communities delivering credit.

to a great extent. so they were in some cases pretty effective nonetheless, so what are we doing? as you know, we've been working with the other banking agencies to make sure those loans and investments can be made in a way that gives attractive capital treatment. you know, there's a range of things that we're doing. we want to foster investment in cdfis and mdis under the law -- >> i would just ask that we continue this offline. but, you know, for those entities and private capital that wants to come into these institutions with no intention of trying to take over control, whether we set up a different class of stock or some ability for private capital to flow into these without triggering the change of control requirements that prevents a lot of these investments. i appreciate what we've worked on so far, but much more to do thank you, mr. chairman. >> thank you, senator warner

senator tillis from north carolina is recognized. >> thank you, mr. chairman chair powell thank you for being here you mentioned in your opening statement you committed to regular contact, i can attest you have contacted my office regularly. i appreciate you for your responsiveness i want to talk about the current extraordinary inflationary pressures and the tools that the fed has to deal with it. you could have a benchmark rate increase, we know what that would have as a consequence for raising the price of lending and ultimately affecting the cost of buying a car, buying a house, or just making ends meet. your other option is to reduce the balance sheet, particularly from some of the covid era bond buying programs. i believe it was governor waller, who last month said that

because of the alarming rate of inflation the fed should begin shrinking the asset portfolio without delay, and i think this week the fed president from atlanta, mr. bostick, said he thinks the fed should aggressively draw down the balance sheet by 100 billion a month, i know you went up from 15 to 30 billion, but that's a three and a half time increase over the current run rate. so to what extent do you think, and give me an idea of discussions that you're having at the fed to have a faster taper in lieu of a rate increase >> we haven't made any decisions. we had our first discussion of these issues about runoff and as you mentioned, there were a number of different pieces to talk about, we had that at the december meeting, i expect we'll talk about it again at the january meeting. again, just no decisions but i -- as we reflected in our minutes, we looked at what the fed did last time, i was there

as we, you know, ended qe and then later started to have the balance sheet shrink and we thought that's -- we looked at that experience and thought that's quite informative, but the economy is in a completely different place than it was when we ended asset purchases the last time. so the period of time between stopping purchases and beginning runoff will be shorter and also the balance sheet is much bigger. so it can be -- the runoff can be faster. so i would say sooner and faster, that much is clear beyond that we're not at a point of making decisions at this point. we'll have another discussion and i think we'll be in a position to provide guidance at coming meetings. we're mindful that the balance sheet is $9 trillion, far above where it needs to be -- >> at a current draw down rate that's about a 24-year trajectory to retire the balance sheet, is that right >> that would depend on the speed you assume.

>> what sort of indicators are you looking at that would drive you to a faster taper, particularly based on some of the comments from the folks at the fed? >> we're looking at the whole range of things, this balance sheet is shorter in duration than the one we had at the end of the global financial crisis, that can play into it. i think we'll do -- we tend to do a lot of analysis we tend to take two, three, four meetings to work these things through. i find the best ideas sometimes take a while to surface. they did the last time on this issue. so it'll be part of the things we're discussing and doing this year >> okay. thank you for that i should have also mentioned that i look forward to supporting your nomination >> thank you >> i want to turn to bank mergers senate bill 2155 gave us the opportunity to do some regulatory tailoring for some of the smaller banks and i think it was largely successful, appreciate the bipartisan effort to do it i still -- bank mergers are one

of the most highly regulated transactions that you can go through. it involves the federal regulators including the fed, the department of justice, and a lot of opportunities for outside interest groups and others to voice their opinions but i'm getting the sense that moving forward there may be a trend towards making it more difficult for some of the super regionals and other banks to move through the merger process. i tracked one recently that involved a north carolina banking institution, seemed to take longer than i thought it would have can you give me an assurance that there isn't sort of increasing bias on the part of the federal regulators to make it more difficult for some of these super regional and smaller banks to get through a merger and acquisition process, or am i missing -- is this a trend i should be concerned with or do you believe the financial

regulators are still in a position to allow that ecosystem to continue to evolve, which i believe is important for the viability of the u.s. banking system >> we're still applying the same -- the law hasn't changed and our practices haven't changed. we're still working our way through the applications that we have in front of us. >> i'll submit a question on the record on the status of the fed payment system thank you. >> thank you, senator warren from massachusetts is recognized. >> thank you, mr. chairman so since president biden took office, we've added more than 6.4 million jobs, the most jobs that have ever been added to the economy in u.s. history. but over the past few months families have faced higher prices at the grocery store, the gas pump addressing inflation is one of the federal reserve's most important jobs and if we're going to solve this problem, we need to understand why it's happening. if we can, let's start with econ

101. chair powell, in markets with lots of competitors are company's profit margins generally like to stay low that is in competitive markets are profit margins likely to stay steady, modestly above the cost of labor, materials and capital? >> micro economics would tell you all the things equal you compete down to your marginal costs. >> in markets with greater concentration and not much competition, are corporations generally able to raise prices and increase profit margins, all else being equal >> so the -- actually, the connection between concentration and market power is not as clean as we think it might be. in some of the industries that have concentrated, they've actually -- there actually has been sort of lower cost

increases, it's resulted in lower costs to consumers and i'm thinking there of retail and things like that, so it's not as direct. >> let me ask it the other way because we're doing econ 101 here if you're a corporation that's eaten up most of the competition and cornered the market, is it easier for you to raise prices on your customers and maximize your profits because you don't have to worry about losing your business in other words you lost the discipline that the market imposes. >> if you don't have competition, yes, you can raise prices. >> over the past year we know that prices have risen because of supply chain problems, unexpected shifts in the demand for goods and higher labor costs. but if corporations were simply passing along these costs in highly competitive markets, would the company's profit margins have changed much? >> so many things affect those -- that calculation.

it -- in principle you could be right, but -- >> it's very much not what we're seeing right now today nearly two out of three of the biggest publically traded corporations in the country are reporting fatter profit margins than they reported before the pandemic which doesn't sound like they're just passing along costs so let me ask you, does that increase in profit margins, combined with greater market concentration in industry after industry suggest to you that some corporations may be passing along increased costs and at the same time charging more on top of that to fatten their profit margins? >> that could be right it could also be that demand is incredibly strong and that, you know, they're raising prices because they can. >> that's the point. they're raising prices because

they can, and they're not being competed down. market concentration has allowed giant corporations to hide behind claims of increased costs to fatten their profit margins consumer pays more, both because the corporation faces higher costs and because, as you put it, because the corporation can increase prices. the reason i raise is that higher prices have many causes and we can't overlook the role that concentrated corporate power has played in creating the conditions for price gouging now before my time expires, i want to ask you about one other important topic and that is about climate change mr. chair when you came before the banking and housing committee last july you said the transition to a lower carbon economy could quote lead to a sudden repricing of assets or entire industries and we need to be in a position to deal with

all of that. why is it important for the fed to assess risks related to climate change in order to fulfill its mandate? >> our role on climate change is a limited one, but it's an important one. and it is to assure that the banking institutions that we regulate understand their risks and can manage them and it's also to look after financial stability. and with financial stability, the issue really is can something from climate change arise from the level that would threaten the stability of the entire financial system. so that sounds more in the nature of what you were reading, something in the nature of transition risk where some unexpected, you know, government policy change happens, which could potentially create disruption >> well, the world is running out of time to deal with the climate crisis and the fed has an important role to play here, and i hope the fed will step up.

last thing, chair powell, i sent you another letter asking for more information about the fed's ethics scandal and i asked for a response by next monday. can i receive your assurance that i'll get that response by next monday? >> i'll have to look into the status of that you'll get a response or we'll update you on where we are. >> okay. i'd like to have a response. very important thank you. >> thank you, senator kennedy of louisiana is recognized. >> mr. chairman, congratulations. i think it's fair to say that you are, and once you're confirmed, will continue to be one of the most powerful people in the world so you want to begin today, i

have some questions, but first, i have a plea. above all else, above everything else on your plate, i ask that you please preserve the independence of the federal reserve. the last thing that america needs right now is to have the federal reserve politicized. it's the last thing the world needs right now. and believe me, the whole world is watching. and -- including our enemies now i get it, our politics is polarized. i hope you'll remain blissfully

ignorant of that and i get it i'm not telling you not to listen to elected officials, public officials i get it i can only speak for the senate. we have some very smart people in the senate. they have strong opinions and strong personalities we've got a few senators that -- to paraphrase dave berry -- think they ought to make a hamilton style musical about their lives. i get all that but you've got to remain independent. the dollar -- and political fads come and go. but the dollar doesn't i hope not

the dollar underpins the entire world economy. p politicize it at your own risk let me shift gears question professor cane, about who you know i know more than i do, but professor cane has seen a resurgence in the last few decades in -- in his number of followers. of course, we both know professor cane said one way to get out of the recession is to have the government spend money it doesn't have, to deficit spend to stimulate the economy but professor cane said something else that the media doesn't usually quote. he also said when you get out of the recession, pay the damn

money back, didn't he? didn't he say that >> i was going to add that he said it's okay to do deficit spending but you should be doing surplus in good times to keep it -- >> yeah. now behind me is a chart of our public debt going all the way back to, i think, 1990 you don't have to be euclid to see that the direction is up and it's been up under republican administrations, and it's been up under democratic administrations. it's been up under democratic and republican senates and houses it's up. so here's my question to you at what point -- how much is -- is too much? at what point in had your judgment are we going to hit the point where you have to say, no,

that's it, we can't do anymore it's hurting the world, it's hurting our country. >> so we don't know when that is and as the world's reserve currency demand for our paper is very strong, if you had shown that and then asked somebody 15 years ago to predict what interest rates would be, they wouldn't be predicting the ten year would be at 175 >> no. >> so there's been a lot of demand. >> they would have predicted that the debt was going to go up >> they would have looked at that picture and said you must be experiencing difficulty borrowing, but we're not at all. we're on an unsustainable path debt is growing faster than the economy, meaningfully faster than the economy we have to address that over time we will address that over time and the better way to do it is soon, and in good times. do it when the economy is strong and taxes are rolling in since we don't do fiscal policy,

i will say that the sustainability of the debt is something we need to get back to and focus on again. >> good luck, mr. chairman. >> thank you, sir. senator van holland of maryland is recognized. >> thank you we all recognize we've got continuing economic challenges but i think it's important to look at some critical areas where we're much better off today than the fed predicted we would be at this time just a little while ago we've seen a record increase of 6.4 million jobs in our economy in 2021. and back in december of 2020, when the unemployment rate was 6.7%, the federal board of governors projected that the unemployment rate in december of the year we just came out of, would be 5%, isn't that correct? >> i can't do it from memory,

but i'm sure you're right. >> as i reviewed your predictions, that is what it was. in fact, we did much better than that the unemployment rate for december, the month that we just left, was 3.9% and the unemployment rate for that fourth quarter of last year was 4.2% a year ahead of what the fed had predicted, is that right >> yes. >> and what happened in between was a lot of us here in the senate and the house and folks around the country looked at those projections and said, that is not the kind of course we want to be on, and we passed the american rescue plan, which helped stabilize the economy and helped result in those much improved employment numbers, isn't that right >> yes >> now let me just talk about inflation. i think all of us recognize that americans are experiencing price

increases in many areas. the federal reserve has predicted a -- well, the cleveland fed projected a 2.6% inflation rate for this year, which matches the federal reserve board's projections. if you look at consumer expectations, not surprisingly, they're running higher than that, because of where we've been in the last couple of months but can you explain why you're confident at the federal reserve that we can hit that 2.6% target while continuing to push for full employment? >> so that is the median of expectations of individual expectations we don't have a committee or official fed forecast. so -- and it's conditioned on a number of assumptions. the most important assumption here is that we do get significant relief on the supply side that global supply chains loosen up and we get more semiconductors so we can start manufacturing cars again

that's essentially -- that's going to be a big part of getting inflation back down. part of it will also be our moving from a very highly accommodative policy to a somewhat less accommodative policy but still accommodative but a lot of it comes on the supply chain side. >> there have been reports of progress in a number of supply chain bottlenecks. can you speak to your perception of where that stands >> you see -- you always see a few snow flakes but it doesn't amount to a storm yet. if you look at the port of los angeles, port of long beach, record numbers of ships still at anchor we did see, and this is maybe what you saw, that inventories are moving up and delivery times have shortened and that's a good thing. on the other hand, omicron can really, particularly if china sticks to a no covid policy, omicron can really disturb the

supply chains again. although it could be briefer this time. so i think the picture is -- you know, we wouldn't want to say -- i wouldn't want to say that it's decisively improving yet but we're watching it carefully. >> i got it. i was pleased to hear president biden say when he renominated you for this position that making -- that you saw the economic risks of climate change as a, quote, top priority. is that an accurate statement? >> yes. >> and if confirmed, how do you plan to prioritize addressing the financial risks of climate change in your next term >> we have a role to play. it's a narrow one, but an important one, and that is it relates to our existin mandates we don't have a newman designate on climate change. it's the central mandate of sizing and regulating financial institutions to make sure they're aware of and able to

manage all of their risks. we're doing that particularly focussing on the largest financial institutions, who by the way are spending a lot of time themselves on these issues. and secondly looking at financial stability issues we have responsibility for the stability of the financial system and over time, climate risk can play into that as well. >> thank you, mr. chairman, i'm pleased to see that you do agree it's a top priority. thank you. thank you mr. chairman. >> senator haggerty from tennessee is recognized. >> thank you, mr. chairman ranking member toomey. i appreciate you holding this hearing. i want to congratulate chairman powell on being renominated to be the chair of the fed, thank you for your presence and testimony here today first i have a quick housekeeping question for you. i think i know the answer to this but have you ever embellished your resume, record, publication history? >> i don't think so. >> i did not think so.

thank you for clarifying that for us i'd like to turn to the topic of quantitative easing for just a minute, chairman powell. when the chairman first introduced quantitative easing in 2009 he assured lawmakers it would be temporary and rare. it was introduced as an emergency measure. do you agree that quantitative easing should be temporary and rare. >> i agree we shouldn't use it unless we need to. but it's going to depend on some extent where interest rates are. we've been in low interest rates in good times all over the world. so if that's the case we don't have a lot of ammunition to support the economy. i can say a regular garden variety economy, which we wouldn't need to go to quantitative for asset purchases. but where you have a couple of

bases points you may need to do that. >> i understand. but i just remain concerned because here we are 12 years later from its first introduction, the fed's balance sheet is nearly $9 trillion, we're continuing to grow it, albeit a slower pace, it remains a concern. you said earlier to senator shelby that you think the fed can begin to process o normalizing the balance sheet later this year. can you discuss that more, would you consider selling securities rather than let them run off the balance sheet? >> we had our first discussion at the december fomc meeting we'll talk about it again at the january meeting in a couple of weeks. haven't made any decisions this time is going to bear some similarities to last time but it's going to be different too in that that's clear we will have the ability to move sooner and faster than we did last

time so more clarity is coming on that soon. in terms of selling assets we haven't made any decisions on that we didn't do it last time, didn't rule it out either. the balance sheet is bigger this time and the duration is shorter and the economy is much stronger so it's a very different situation. >> i'd like to come to the question of governance while you've been nominated to be chairman of the fed the biden's three appointees, along with the nominee for vice chairman, will constitute a majority of the board, looking at the five member board of the fdic and what happened there there at the fdic, a five-member board overturned 88 years of tradition and independence with biden led employees, forcing out

the fdic chairman before her five-year term was up, strictly for partisan reasons this incident causes me to worry that a block at the federal reserve board could sideline you, they could assert your authority while excludeing the full membership. so my question to you, is the fed vulnerable to similar unfortunate politically motivated hijacking of an organization like we witnessed at the fdic and what could this committee do to prevent it >> first, i don't have comments about the fdic monetary policy is conducted by the federal open market committee, which includes the reserve presidents, in total as many as 12 voters. so we'll always have a balance of governors and reserve bank

presidents regulatory policy is really the business of the board of governors and there are as many as seven governors and the majority is four we have a history at the fed of working clollaboratively of coming together and getting consensus on issues. that is my intention, that is my nature and i will work hard to make sure that things stay that way. >> as a member of this committee i'll work hard to support you to maintain that posture as well. thank you, mr. chairman. >> thank you >> thank you, sir. senator cortez from nevada is recognized from her office >> thank you, mr. chairman chairman powell, good to see you again. thank you always for taking the time to answer my calls, meet with me, answer my questions, so appreciate it. let me start with a question that senator tester talked to you about, because i think it's

important we recognize, put this in perspective again, he asked about what the economy was like pre-pandemic, during the pandemic and after you said something i think was important. that we are still in a pandemic. and even still in the middle of this pandemic, you said earlier in your opening remarks that the economy is expanding at its fastest pace in many years and the labor market is strong now in our many conversations, you have always prioritized job growth and higher wages, especially for those who tend to earn lower salaries. and you have consistently said that the best thing any one of us can do to increase employment, raise wages, improve our supply chains and reduce inflation is to get vaccinated to wear masks and follow the medical guidance to prevent the spread of covid-19 do you still believe that reducing covid-19 infections will have the greatest impact on

inflation, supply chains, employment participation and wages? >> i do. and if you imagine a world in which we no longer have to deal with the pandemic and that would -- i think that's the answer to your question, we would quickly see the supply side problems alleviate, see more labor supply. so these issues are still related to the pandemic. it's proving more difficult than we had hoped to end the pandemic but i certainly would think that's right >> and let me just adds one additional thing that, of course, we all have concerns with the rising prices of so many goods i see it in my home state when i go grocery store shopping or hear from family members and constituents in nevada, one other area i want to focus on, though, is housing a new study from the federal home loan bank of atlanta reported the household would need 32% of its income to cover

mortgage payments, the most since 2008 and the home prices have climbed 18% in the past year we are short at least 3 million homes, especially affordable homes. so chairman powell, do you think increasing the supply of housing, in essence, building more homes, would also have an effect on the inflationary prices we're seeing in housing market. >> yes, that's outside of what we can do, but clearly the housing market is extremely tight. it was tight before the pandemic and it's remarkably tight now and supply is quite limited. >> thank you let me jump to another topic which is ethics for the board of directors. i think we're all disappointed that vice chair clarida did not disclose his active trading in 2020 can you describe the changes you've made to improve the

ethics guidelines and training at the federal reserve >> yes, i'd be glad to we made a complete change in the way we govern purchases and sales of securities by covered people, which includes all the policy makers and senior staffers no one can any longer buy individual stocks. in addition, if you want to sell something that you -- so people will be owning mutual funds, mainly, as i already do. when you want to sell something, it has to be outside of blackout, as always, but you have to give 45 days notice and you make that decision you have to clear that trade with that sale with a central body we don't really have -- because of our federated nature, we don't have a group in the center that applies these rules consistently and clearly across the whole system we will have that now at the board of governors so you'll go and say, i want to sell x amount of this mutual fund, 45 days later that trade

will take place, whether things change or not. so no ability to time the market and really no appearance of the kind of appearance issues that we've had. i think the old system was in place for think. the old system was in place for decades on end and suddenly it was revealed as insufficient, and so we do take the need to protect our credibility with the public very seriously and i think our new system is easily the toughest in government and the toughest i've seen anywhere. >> thank you, chairman powell. mr. chairman, thank you. >> senator llamas from wye onlying is recognized. >> thank you, mr. chairman congratulations on your nomination please throw me a lifeline here and help me support your

nomination the fed's website today says that the federal reserve will ensure the provision of payment services to all depository institutions on an equitable basis, and to do so in an atmosphere of competitive fairness but that's not the case at all, mr. chairman the fed actually uses substantial discretion in providing master accounts to depository institutions or denies them by delay simply starving the master account applicant until it dies and that's true even though every single federal court that has ever looked at this issue disagrees with the fed's

assertion of substantial aggression the greater buffalo press and jet courier services cases in the second and sixth circuits found that the federal reserve services were, quote, available to all banks, the fourth corner credit union case in the tenth circuit from 2017 said the same thing. the federal reserve act says that a depository institution is any institution eligible for deposit insurance. the fdic says in general counsel opinion 8867 that an entity is a depository institution if it is creating deposit viabilities out of customer asset and is characterized by state law as a bank as you know, chairman powell, i

am terribly concerned about the manner in which wyoming's special purpose depository institutions are being treated by the federal reserve we've discussed this what is your reaction to this? >> so as we discussed, there are novel charters and the vspdis are one of them and we want to be really careful because they're hugely presidential. they're very important from a presidential standpoint, and so we've been looking carefully at this, and i would say, there are good arguments for viewing spdis as depository institutions for this purpose, and i think we're looking carefully at it. i do think we'll make some progress on this, and we can talk about it more offline, but you should -- i think you do

understand that we start granting these and there will be a couple hundred of them very quickly and we get to think about the broader safety and soundness implications and it's just hugely presidential that's really why we've taken our time with it, and we appreciate your bringing it to my attention and so that we can continue to talk about it. >> well, as you know, it's been well over a year well over a year, and it's -- i've been stonewalled for well over a year, my state has been stonewalled for well over a year you know, you mentioned in your testimony today that we can begin to see that the post-pandemic economy is likely to be different in some respects my job is to represent wyoming's best interests, and to ensure the fed is preparing itself for the post pandemic economy and to

promote responsible innovation as you mentioned in your statement. i asked your staff for an update on the spdi charter last week and i've yet to receive a response, and as we discussed in december i believed i would receive a response by today, so my disappointment is profound and my frustration is profound and for now i will leave it at that, but i will say thank you for your dialogue with senator kennedy and senator hagerty today. i thought those were encouraging dialogues and once again, chairman powell, throw me a lifeline i yield back >> thanks. senator smith of minnesota is recognized >> thank you, chair brown and ranking member toomey and welcome to the committee again chair powell, as always it was

good to talk with you yesterday, and i want to just say mr. chair, that i think that together chair powell and leo brainard will make a great team at the fed, and i think you're a strong combination so mr. -- chair powell, i'd like to ask you where we are with employment and how this relates to the decisions that the fed -- the fed is making. last week the bureau of labor statistics released job numbers in december as you know well and thanks to the american rescue plan and i would also say the hard work and grit and innovation of americans the unemployment rate has dropped to just 3.9% which is a remarkable and historic recovery from the beginning of the pandemic. i note that in my home state of minnesota in november the unemployment rate was even lower. so this is really an incredible

accomplishment, and you and i have discussed this before how it is useful to unbundle, though, these aggregate numbers so that we understand a little bit more about what's happening. we understand that it's a more complicated story. for example, black workers, amongst black workers the unemployment rate remains stubbornly high more than twice what it is for white workers so chair powell, could you tell us how should the fed consider factors like this? >> stocks have climbed since the fed chair began speaking you have the nasdaq up better than 1% this morning s&p almost back to 4700, 4690 here the vix is back to 19 as the fed chair says a few things. asset purchases will end in march. if we have to raise rates further over time we will, but no decision on balance sheet and expected to take two to four meeting to work through that decision maybe that's what some of the bulls took heart in as we came off of those lows.

>> and you're seeing the nasdaq really rebound today and be the outperformer up better than 1 and 0.2% peloton up 9% and you're seeing the broad uptick in tech at the moment gamestop, it is also up, though not as much. today marks the one-year anniversary of chewy co-founder that kicked off reddit from the last year. remember that? frank holland joins us now on what comes next. frank, can we know >> deirdre, number one, it's hard to forget gamestop shares are up 100% since last year, however they lost 25% since it was announced that ryan cohen would become the board chair. they rallied around cohen's so-called transformation strategy into the online retailer and quote, unquote, the amazon of gaming however, many analysts quoted gamestop's core business has

shrunk dramatically from 97% of the market to 2013 to now only 45% of the market. gamestop now plans to open an nft marketplace including characters, outfits and weapons and nft hit 23 million last year and michael pacter says there's one crucial detail that needs to be worked out. gaming nfts generally don't give the buyer full ownership >> digital sale is a use license, limited use license you can't re-sell a digital copy so why would anybody assume that nfts created by game companies are going to be freely transferable no chance. >> ryan cohen bringing in -- >> ryan cohen bringing executives from chewy, the online pet retailer he founded to execute a plan that's been relatively light on detailing until last week. matt furlong was named the ceo

gamestop is up among with the other most-talked about names on the anniversary of the quote, unquote rebellion. >> frank, we'll see where it goes from here frank holland, thank you and with that and the dow about flat the s&p up fractionally and the nasdaq up as you said up 1 1/3%. we'll get to to the half john, thanks so much welcome to "the halftime report." i'm scott wapner front and center this hour the nasdaq's incredible comeback whether it's a signal to start buying tech again. we'll discuss and debate that with the investment committee. some members today making big changes to their portfolios. you do want want to miss our trades today joining me for the hour, jason snipe, stephanie link, josh brown and pete najarian co-founder of market rebellion.com. good to see everyone today let's take a look at where the markets currently stand because they look different than the