>> so these are part of international agreements and each country can take that anhef international agreements and each country can take that and do whatever they want above about fuller. we would not allow u.s. bank holdout at zero way, i assure you. in terms of the gse, the mortgage-backed securities have not created any laws whatsoever. not to the holders of those securities. and i don't think that that has been a problem. it's not just the risk rates, but it has significantly increased the high amount of capital that they have to hold for a given set. it seems like to me, at the end of the day, with respect to what you are working out as a calculation. you have a situation where

high-risk countries like spain or portugal, should they receive the same risk weight. .. the extraordinarily careful look back over the greatly ballooned bubble and subsequent bust that

was developed as a result of housing policy and law of the actions taken. title two of the path act has several provisions meant to allow fha to play that countercyclical. legal obviously is to really expand eligibility. which you agree to play an expanded role in times of crisis will help ensure continued access to the mortgage learned from the great majority of borrowers regardless of conditions. i not advocating as sufficient land but not pointing out that we need something to think about the situation with as a

backdrop. i have to sleep never started this proposal. that we will we have the government provide a backstop. >> we will grow to be in consultation. >> certainly. >> the chair recognizes the journal of vortexes. >> thank you, mr. chairman. thank you, mr. bernanke, for appearing again. i trust that this would not be your last visit. i believe that our country has benefited greatly from the service.

i would like to for just a moment as to talk about this. you may do a lot of things, if consumer confidence or they're is a lack of confidence, and of a significant impact on long-term growth. confidence is important to growth, and i read through your paper. i'm fairly excited of us will the things he said. i didn't it quite enough on the question of confidence. would you please elaborate? >> the home builder confidence, consumer confidence is important . try to create a framework.

the basic macroeconomics stability, it is a difficult thing. to some extent it's a political talents to be able to us create confidence in your constituents. so nobody has the magic formula. clearly the more we can demonstrate that we're working together to try to solve, the more likely will instill confidence that it will pay off in economic terms. >> well, i compliment you. i would like to focus on one aspect of what use of a working the other. i contend that this is an important element in instilling confidence. i believe that the american economy is quite resilience. it is strong and notwithstanding some of the weaknesses that have been exposed.

the reason i know it's strong this because it has survived congress. if the economy can survive congress i'm confident that it will thrive eventually. but seeing what we do come over pealing continually over attempting to repeal some of the significant aspects of bills that have passed that will impact the american people, i'm not sure how much confidence these things in july. more than 30, 40 attempts to repeal the affordable care act, but tend to reveal -- repealed dodd-frank without replacement, a tempter repeal the see of bbc without a good sense of what their plans will be. it seems to me that some point we in congress have to do more to in gender the confidence

level across the american people to want to buy, to want to invest, to want to produce. and i think that congress has a significant role to play. unfortunately we have not. the american people are confident that we are moving toward a broader economy. very focused on jobs. we have not been as focused on jobs. legislation that can produce jobs, much of it as lynyrd and has not had an opportunity to move forward. i just believe that in the final analysis art could york will be lot of them applauded and will need some help from the policy makers in terms of working

together to us instilled confidence. confidence is needed. think this economy is ready to blossom. but when i talked to a business people they say to me, when -- we need confidence. many to have of the rules will be static. consumers take a minute conference. i will buy a house. i am confident that the system is going to remain static in not dynamic. i think you for your service and buttress the we will be a will to help instill the confidence to augment and supplement the good work you have done. >> thank you. >> the time of a gentleman has expired. the chair recognizes the gentleman from virginia. >> thank you. >> mr. chairman, thank you for being here to it. we thank you for your hard work. i represent a rural district in virginia, one that has not seen the same economic growth that other places in this country have seen. we still have places in our

district jobless rates of the will digits and recently look to washington to adopt policies that will make it easier for businesses to succeed, families to succeed as opposed to making things more difficult to read and listening to your remarks you talk about systemic -- adopting policies that coats the systemic importance. obviously bonds will carry it seems to me in disgust in terms of what is systemically important. tip your hat to main street talking about that the fed has adopted policies to support main street, jobs, consumers, things of we are care about. in the aftermath of the rules there were adopted earlier this month related to basel three, frank keating with the american bikers' association said that --

asked the question, are we making things i teach your job easier or more difficult? essentially severe making them harder. that is now well when the for our economy. then as now or are recovering economies. as i think about all we need in my rural south side virginia district, that community and what an important life pau they are to our mainstream economy. and i wonder if you could talk a little bit about the reasoning behind not just exempting community banks from the application of the rules that you will have adopted. and why you did that. >> well, i mean, i agree with you about the importance of community banks, particularly in rural areas which might not be served by larger institutions. it is also important, of course, to community banks to be well-capitalized of the can continue to lend during difficult times and don't tell the reader want to be sure there

well-capitalized. but in terms of the final rule we just put out, we were very responsive to the concerns raised by community banks. a number of specific issues relating to of the waiting of mortgages, the treatment of a comprehensive income contrast preferred, a variety of things which we responded to. as part of the brought attempts throughout reach, through meeting with advisory councils and so on to understand the needs of community banks and to make sure that we do everything we can to protect them. >> i was just going to say that it is primarily aimed at the largest internationally active firms. most of the rule was just not relevant in small firms. >> clearly you will try to make some accommodations for community banks, and recognize that. my question is, is there reason that you all -- talk a little

bit about why you all concluded that you could not exempt them entirely. and i guess the second question that i have is, do you think, do you think based on your studies or anyone else's, do you think that these rules will have a disproportionate effect on community banks? obviously that is part of the concern. the smaller banks have a much more difficult time complying with regulations then obviously a largest banks. >> again, i don't think that it is primarily aimed at community banks. the amount of bureaucracy and rules is not what they're doing now. terms of capital, the community banks are already typically holding more capital as a ratio that larger banks to. our calculations are that

community banks are already pretty much compliant with the basel rules. we don't expect them to have to raise substantial amounts of new capital. >> you don't believe there will be a disproportion affect on the smaller banks in complying? >> smaller banks are disproportionately affected by the entire collection ovals that they face ranging from bank secrecy to a variety of consumer rules. i think that your constituents may not be distinguishing possible three from all the other different roles that they face. of course a small bank is just fewer resources and people to do with the ranger regulatory and statutory requirements that the banks have to deal with. >> one of your earlier appearances, we talked about the regulatory structure of what is perceived among some as a micromanagement by bank

examiners and regulators and the function of the federal reserve as an examiner. are you able to give us any indication of what has been done in the last two years or so charts improve that? and of the you mentioned that there were some things that the federal reserve had in mind and was trying to work with the smaller banks on cards are one have time to go through all list, but we have a community depository institutions advisory council the beach with the board, gives us the perspective. >> my time is expired. do you believe these efforts have been successful? >> i think we have made definite progress. yes. >> the time of the chairman has expired. the chair now recognizes the gentleman from missouri. >> thank you, mr. bernanke, for being here. you have heard a lot of commons today. in my businesses call the eulogy

. i'm not trying to -- the time he came back. but i also want to thank you for your service. the stimulus, the fed stimulus is violently criticized by many. can you come in as short -- express would you believe would be the consequences of easing quantitative easing prematurely? >> again, it is important to talk about our overall monetary policy stance. our intention is to keep monetary policy highly accommodative for the foreseeable future. the reason that is necessary is because inflation is below our

target and unemployment is still quite high. in terms of asset purchases i have been very clear that we're going to be responding to the data. if the data are stronger than we expect will move more quickly. the same time maintaining the accommodation through rate policy. if the data are less strong, have they don't meet the kinds of expectations we have about way economy is going then we would delay that process or even potentially increase purchases for time. so we intend to be very responsive to incoming data both in terms of the edge as -- asset purchase program, but it's also important to understand our overall policy is going to remain highly accommodative. >> thank you. one of your former colleagues has repeatedly warned that he

has written that too big to fail is still a major threat to to the u.s. economy. he suggests that in many instances, many of the huge financial institutions have gotten even larger. to you think that if we went through again what we went through a few years ago that we would be in a situation where we would almost be required to save the u.s. economy and perhaps even the world economy from oppression? because we would have to step in again to bailout these major corporations, aig. >> well, i think there is more to be done before we feel completely comfortable about

systemic firms. the dodd-frank act and other international agreements provide a framework for working toward the day, which is not here yet, or we can declare too big to fail as a thing of the past. but we do have some tools now that we did not have in 2008-9, very importantly the orderly liquidation authority of the fdic, the federal reserve supports the ftse in that which would allow us to do a much more orderly resolution of a failing firm that would take into account the impact on financial market stability, unlike 2008-9 when we had no such tools and were looking for ad hoc way to try to prevent these from for a trailing. in addition, these firms are now much better capitalized than the war, and we're making other reformers and will make it much less likely that the situation

will arise. i would not be telling you the truth to photo to the problem is gone. we need to keep falling through on various programs. i think we need to keep doing what is necessary to make sure that this problem is solved for good. >> the question, and i was here as we went through all this. you know, we did not have the time, we were told, and actually i believe, too, you know, rationally and thoughtfully consider all of the options and my fear is that if something happened, we tried to reduce the likelihood that this would happen. but what assurance do we have that we would have time for action by the fed and congress? >> we have the from workout. we have a liquidation authority.

>> the time of the gentleman has expired. the chair recognizes the july from ohio. >> thank you, mr. chairman. thank you for being here today. i appreciate your willingness to come and answer all our questions. i'm going to try to get through questions and will see how much time goes. the first airline to talk about is following upon the questions. all try to "you. not primarily in that community banks and it is clear that it is aimed at a larger financial cetaceans will create a financial crisis. i agree with you that it will result in most community banks having to raise capital because the capitals normally are higher. for a few community banks that don't have capital right now where they have not as much access to the capital market it actually could harm them. none of these banks are going to be too big to fail. no one will come in and bail

them out and they're not so interconnected. i'm curious why given that it is voluntarily complied, would it not just exempt ducking many banks? >> i think it's important to be well-capitalized, will to protect the deposit insurance fund, to protect the local communities and the borrowers that depend on them, and we have seen in the past financial crises that were small firms like in the depression and the savings-and-loan crisis. so on this issue that you mention, we are giving very long transitions. us and you have to have this level of capital to more. so banks can raise capital through retained earnings and the mechanism as well. >> i appreciate that, and i don't think it is a burden on most community banks, but i do worry about a few and think it could result in a consolidation in the industry allows community banks. that troubles me. >> i agree with that concern.

>> the second thing i want to recognize is that you appropriately recognized that activity off for example, international activity increases the systemic risk. i was a little trouble that you continue to use artificial asset numbers. i am from ohio. we have a lot of regional banks that serve the middle market. you use the 10 billion number at the ball, the 50 billion up to the 250 billion. if you look at the size of fall the 50 largest banks of america there really are put years, the top banks about 2,000,000,000,003 of those -- i'm sorry, two of those. two more of a trillion. and then there are three more above half a trillion dollars. then it falls layoff. use of that supplementary

regional banks that to 50, and there are banks are essentially super community banks where above that. i guess a less where you pick that artificial number. most people would recognize both as regional. >> we have met with middle-market banks and try to understand their concerns. the basic philosophy is that took the capitol requirements and a supervisory requirements are sized. be a failed to do it appropriately. we can go back and try to figure out. >> i would urge you to take a look at the major collapse in our asset sizes because they really do spell themselves out. the beja between 350 and 500, there are no banks between

$350,000,500,000,000. there are two or three just above 350 and there's no one until you get to 550. so that is a big jump. i would urge you to take a look at that. the last question i would like to quickly ask is about stress testing. in your qe, in the way you judge your portfolio, would you be willing to submit the federal reserve qe2 the same kind of stress testing and the same kind of provisions to provide for the banks of potential interest rate spikes and inflation? >> well, the stress test has a different purpose, and how much remains we send to the treasury. we have done various stress tests in that respect. many of them are publicly available. we have a number of research papers. they have done this tests. the bottom line is that for any reasonable interest rate pass

this is going to end up being a profitable policy for the taxpayer. >> the time of the gentleman has expired. the chair recognizes the jungle in from michigan. >> thank you. and appreciate you being here today. last week the bank of japan announced that they were going to maintain their current monetary policy which as you know includes significant devaluation of the end for the purposes of improving the competitiveness of japanese exports. the yen has fallen in value. japan as you also know is joining the u.s.-led transpacific partnership trade talks. i've raised a number of concerns about the japanese entry into the trade talks until they open their markets, particularly to the u.s. of polk. will they continue to manipulate their currency, this increases my concerns and could make our trade deficit even worse. nl in 2011 you expressed concern

with the chinese devaluation of currency. right now our concern is that the chinese currency policy is blocking what might be a more normal recovery process and the global economy and is to an extent hurting a recovery. would you please discuss your views on the japanese currency policy and its impact on the economy and what you believe the currency policy is hurting the economic recovery. >> yes. fundamental differences between the chinese policy in the japanese policy. china has managed this a strange rate and kept it below its equilibrium level in order to increase its exports. that is what economists call a zero sum gain. the japanese approach is different. they're not manipulating the a stranger or directly trying to set the exchange rate it a different level. they're engaging on strong domestic monetary policy measures, trying to break the deflation at the half 15 years.

the side effect is that it has weakened. the chief 20 and the g-7 have discussed these matters. the international consensus is that this long as the country is using domestic policy tools for domestic purposes that that would be an acceptable approach to really recognize that moves and exchange rates affect competition. he said you're from michigan. vacancy were our concern would come from. i think all it is in our interest to seize and pans strengthen. it all increase sarah the market error. achieved positive inflation that increase in prices there were partially going to offset the exchange rate movement. recognize the concern. i do not begin affected as. of talk to a couple of people are the auto industry at some of

the companies of trying get their sense. but they're is a difference. japan is trying to expand its overall economy and therefore there's a benefit as well as a cost of the benefit is a stronger japanese economy in asia market. >> well, if you could kind of give me some sense. as you wind down your quantitative easing the activities of japan maintains the current policies, driving down the yen to monday believe that will have an impact on american manufacturing and exports as you wind down as they continued that policy? >> it could to some extent. of course as you know many japanese producers produce in the united states. they're is a sense that for a number of reasons including many u.s. manufacturing is generally becoming more competitive globally than has been in some time. i don't think that this change

in the value would offset that underlying trend. >> and ficus which. if you could touch on it, there has been recent report that talk about monetary policy and the impact on inequality. as you know, and equality has expanded dramatically, particularly in the last 23 years. the report, the talk about monetary policy is having a much more significant role in driving historical and equality patterns than has been expected or anticipated and certainly read about. would you comment briefly, do you believe that has a significant impact on inequality has received? >> i don't think so. the purpose of monetary policy is to keep inflation low. everyone is affected by inflation. and to maintain employment at the highest level that the economy sent -- can sustain.

jobs are critical to the welfare of the broad middle class of americans. some are really don't understand it is true that in the short run some of the tools that we have involved changing asset prices. higher stock prices and things of that sort. but we can't affect those things and the long run. it's only a short run transmission mechanism. >> the time of the gentleman has expired. >> thank you for your service and for being here today. and going to read a paragraph for my benefit more than years to get started. the federal reserve was intended to be a fully independent central bank monetary authority. the offer -- authors did not want the subject of the institution to the winds of politicians but clear objectives for the institution in the interest of macroeconomics stability. that independence has eroded significantly since the 2008

financial crisis from the federal reserve and the treasury department initially to a coordinated steps, stabilizing the economy. one persistent concern, the central bank's independence is infringed upon by the government, monetize the sovereign debt. a couple of questions. of what has happened with quantitative easing hours looking at the dow of finance ago, 154, nasdaq 3504, 1680 for the s&p. to the comments earlier, i think the private sector is addicted to the government money. and anytime you talk about cutting the money off their is a panic. because we have our own currency and we can manipulate that currency, unemployment where it is, inflation meriden's, the entitlements in this country where they are. it will we ever get back to the place of unemployment of 5%?

i live in a part of the country, our rural part of the country. a lot of farmers, the viral culture unrealistic. we have seen land prices go through the roof. one reason i think we have is interest rates are so low that people that can borrow money, is there but that causes problems also because when this thing -- if it ever does turnaround, how you stop it to make interest rates are how you stop it, but the country also is in debt up to its eyeballs which creates another problem, high interest rates. breaks the back of the country. i said a lot, but are you concerned that pumping money into the economy when we stop that can the country tickets, can the private sector react? how do we do that? >> well, the reason for the low interest rates is the economy is weak and inflation is low. even if the fed wasn't engaging in an asset purchase interest rates would still be quite low.

one reason that asset markets react is there trying to determine whether the fed will provide sufficient support for the economy to get back to full employment. that is our job, that is our mandate to try when the economy is a way for full employment, provide the financial support the will move the economy. >> i do not think the politics of the past four, five, six years the replan war world than they did six, seven years ago. >> i don't believe your earlier point about collaborating with the treasury had nothing to do with monetary policy but the two main financial institutions and the government working together to prevent a big financial collapse and that the collaboration was needed. but at no time during the crisis or any point to the administration ever tell the fed when the bunch our policy of

lax. we have always maintained that independence in think it is critically important. >> i have about a minute left. i fear that the government's intervention into trying to the make sure the private sector is running at full capacity creates all sorts of problems. now that i'm appear in the sea abbesses, i have a constituent the other day who brought this point and said, you know, with the regulatory policies we have, the choking of fact that some say, the big government is really good for big business. the unintended consequences because the big businesses can react to big government. the smaller businesses are harder time doing now with the resources they have. i thought about a minute, and it's a great point. again, i am fearful that we're out of control, pumping money and. the private sector is addictive.

and when we ever shut that off there will be a reaction. the reaction of the stock market is 15,000, have to drop back to throw thousands of see a panic. what we do them? so many people think that the government's role is to step in and save the day. this is taxpayer money. this is very dangerous. >> well, the idea going around that the fed can step away and not to anything, we have to do something. the fed does control on money-supply. we have to do something. i think we're better off trying to get the economy moving and not. >> the time provision on the has expired. >> thank you. i think when it is time for the teachers to be passed out a your retirement party a very good candidate for that would be the $34 trillion when in household net worth. we have seen over the last

several years the $16 trillion drop in household net worth caused by a complete failure of republican fiscal regulatory and monetary policy replaced by in $18 trillion recovery. it's one of the most impressive achievements commanders know that the three legs of financial policy. you deserve the compliments you been getting. the question i would like to pursue, it's my understanding that the fed than the cbo maintain roughly comparable macroeconomic models. in the last few weeks the cbo has analyzed two different macroeconomics scenarios, one in which congress has passed the senate proposal for comprehensive immigration reform which they found resulted in about zero and a half trillion dollars increase in economic activity over the next ten years and about a 200 million -- on

sorry, $200 billion reduction. the second scenario -- my question is, do you anticipate giving this policy and certainly the your going to have separately considered both of those scenarios, but the high debt though growth skynyrd -- scenario caused or will the construction and the high growth -- a scenario that would follow congressional passage of the senate, the haitian to our comprehension reform bill. >> we have not done any comparable analysis of the economic implications of immigration. in general a growing population, more talented people, all those things help the economy grow. the and the population when also helpless deal with the aging

population. all that being said, there are a lot of details in setting of a program in terms of how it should be monitored in managed and someone that i really think of the province of congress. i already don't want to try to set the immigration policy. it may think the details have yet to be worked out? >> my question is how you deal with what our policy choices being made a fairly large microeconomic affects combat you do with this. >> generally we take those positions as given in turner figure out what the best thing we can do is given the economic environment. with respect to fiscal policy in the restraint this year from fiscal policy we take that as a given and try to figure out how much one terry obligation is needed. think is a much longer-term propositions. these are gains and losses over many years.

the fed because it focuses mostly on short-term cyclical movements in the economy, our focus is typically not ten or 20 years. >> i would like to follow up on the rep's questions about the counter cyclical element and federal laws and policies which are present not only in the republican path act proposal but the dark credit principles for housing market reform. there was also a recent front-page article entitled central bankers on tools to probables. at the scene that? it discusses the efforts in various countries to implement countercyclical housing policy. the american enterprise institute is also hosting a two day workshop on the subject. my question is, do we believe the regulators have the tools necessary as well as the collective will to address the

development of potential asset bubbles such as the housing bill we are still recovering from? >> we have some tools. for example, basil three included a countercyclical capitol requirement will be in other words, we see the economy growing too fast the could raise capital requirements. think it makes a big difference that the cfbb and other agencies have done a lot to eliminate the worst kinds of mortgage abuses that were very important in the housing boom. we do things like the federal reserve has recently issued some guidelines to banks on leveraged lending and other kinds of practices that could contribute to has said bubbles. all that being said, who want to make the financial system as fair and transparent as possible, but i don't think we can guarantee that we can prevent any trouble.

>> the time of the gentleman has expired. chair recognizes the chairman from indiana. >> thank you, mr. chairman for being here today. i really wanted to thank you for your comments earlier of of what congress should be focused on, the long-term liabilities to our country. i do believe that if we would address those issues the trajectory of our economy would change. instead of being focused on such a near term rhetoric and the effects to the economy by short-term policies. so i appreciate what you mentioned earlier. i want to talk a little bit about employment. for the entire u.s. work force employers have had a far more part-time employees than 2013, averaging 93,000 per month season adjusted than full-time workers with to average 22,000.

last year the reverse was true with employers adding 31,000 part-time workers monthly compared with 171,000 full-time. earlier in june i along with other colleagues from indiana for hhs secretary to find out whether not they had forecast the impact of the affordable character on part-time workers or currently just above the 30 hour threshold. does this shift of workers from full time to a part-time and all affect your statutory mandate to reach full bloom in? >> i think it to us. as i mentioned in my testimony, there are no more problems of the labour market. on employment is one. long-term unemployment and underemployment -- and i underemployment, and people who are working fewer hours than it

would like corpuscle they're work in jobs well below their skill level. it's indicative of the weekly rig market and a stronger economy will help all those dimensions. that's part of our concern. as elected unemployment rates and try to determine what it means for the labor market, will look at other indicators as well >> you mentioned earlier that taxes at the beginning of the year were affecting the economy. you mention something else. >> spending cuts from before and there were tax increases. >> that's right. sequestration and tax increases. to you believe the affordable care act is dragging the economy down and all with the transition that we are currently going her in the effort and implementation ? >> is very hard to make any judgment. u.s. representative the part-time. one thing that we hear in a

commentary we did is that some employers are hiring part-time in order to avoid the mandate there. so we have heard that. but on the other hand, a couple of observations. the very high level or part-time employment has been around since the beginning of the recovery. we don't fully in the standing. secondly, it is a little bit inconsistent with some of the data from the firm's survey which suggests that work weeks about really declined. i would say at this point we are withholding judgment. >> do you think of the lay in a mandate would be appropriate? >> this is beyond my pay grade. this would be -- depend on questions of how well and how much time is needed to fully implement the bill. thank you. with about a minute left to live like to touch on some of the global economic concerns and

other countries beginning a trend of currency devaluation and fear of currency wars that could follow. >> as i mentioned in an earlier answer, the international community makes the distinction between attempts to manipulate individual exchange rate dollar to gain unfair vantage in export markets verses using monetary or fiscal policy to achieve domestic objectives that may have the side effect of weakening the currency. so this was the example of japan japan has taken policy actions that have weakened the yen, but that wasn't the focus. the actions are intended to break the deflationary which it faced for the last 50 years or so to get their economy growing more quickly to give back to a 2%. if they're successful the maybe exchange-rate effects that could

also be a benefit for a stronger japanese economy and asian economy will increase world growth and be a benefit to u.s. as well. so the distinction between those different types of management of the currency. >> thank you. >> the time of the gentleman has expired. the chair recognizes the gentleman from florida. >> thank you, mr. chairman. i want to echo what has been said already thanking you for your service to our country. a lot of talk already in the committee about the talk of tapering. the board of governors of come out and tried to clarify comments. it is been turmoil of. this is in and knock on wall street, but my concern is main street. we have seen since may, 40 percent increase in interest rates of mortgage rates. what do you think we should be doing?

what can you do? and what do you think is the effect of this pretty said and sharp rise in interest rates? >> first of all, we're going to continue to communicate our policy intentions and make clear that now was standing have a mix of policy tools change, we intend to maintain a highly accommodative much to the monitor policy for the foreseeable future. that message is beginning to get through in the think it will be helpful. more generally, we will be watching to see if the movement in mortgage rates has any material effect on housing. the main thing is to see housing continued to grow. more jobs in construction and the like. as we said, if we think that mortgage rate increases are threatening that progress, we would have to take additional action in the monetary sphere to try to address that. of course there is always go for congress to look at problems that were made in the housing

market in terms of people under water, in terms of refinancing of underwater mortgages, other kinds of issues that congress to look at. we're going to be looking at it from the perspective of weather and not the housing recovery is continuing to a degree sufficient to provide the necessary support for the overall economic recovery. >> thank you. >> my background is cpa. i worked for a while as an auditor. i am not want to say we need more or less regulation necessarily, but smarter regulation. certainly being here now, trying to understand all the different regulators and dealing with a lot of the institutions in my district, especially the small and medium-sized banks, what are you doing to work with all the different regulators to try to streamline and make it easier for the smaller institutions to back.

>> well, one of the vehicles the we have is an organization called the ssi ec which is basically the place with the banking regulators canada and talk to each other about policy and regulatory decisions. and they have no regular committee which is focused on small community banks and trying to find ways to reduce the burden of regulation and find ways. as far as the fed itself is concerned, i mentioned earlier the we have an advisory council of community institutions. a special subcommittee that looks of the effects of regulations.

there's a heavy regulatory burden. we want to do everything we can to mitigate that. whether congress has earlier to. some of the things that our community banks have to deal with come from the statute and not the regulation. >> thank you. i agree with that. this kinds of -- kind of leads to my next question of a systematic and boards of banks. germany of the balance sheet is the best place for should be trying this line and if not in the other thought you would have for that and what the difference would be in a bank with 55 million versus 45 billion is for a systematic risk to our economy. >> as i mentioned, we have dodd-frank that tells us to do this in a great gated way, to have capital requirements and supervisory requirements become tougher as the size and complexity and systemic importance of the banking crisis there will obviously be certain

dividing lines to try to separate banks into different categories, but even within the categories are trying to distinguish between the smaller banks and the larger banks. and as i said earlier to a questioner on the other side of the aisle, to the extent that the rules don't provide sufficient smoothness in how they vary by type of bank, we have plenty of capacity to go back and let them. the basic idea is that the very largest internationally active banks should bear the heart and spirit to fight hardest burden of regulation. >> the time of the gentleman has expired. >> thank you. want to begin by going back to some of the questions came from the very outset of the hearing. i think i have a graphic you have in front of you that we would like to put upon the screen simply showing a correlation between the size of

the balance sheet and the performance of the last for five years. as you can see, there's a strong argument that the tea things tend to move together. my question is, what can you say to convince us and the markets and you will be will to return the balance sheet to its normal size as i think your internal study says you want to do budget does in 8919. able to do that without driving them to fund dragging the market down, especially in light of what happened last month after your comments. >> well, the main thing now supports the stock market or other markets is the underlying economy. i would say that i don't know what it means to say that markets are addictive. up think that is a technical term. the reason i think the markets have improved so much is because fed policy and other policies have succeeded in providing a stronger economy.

>> of the economy is growing as such a strong rate, wiry continuing your easy money policy? >> well, profits are actually at a jobs. we continue to provide money in order to get the job situation back to where we needed him because inflation is below our target. so the kind of scenario you're worried about would be most likely to happen if the fed withdrew easing monetary policies prematurely in the economy relapsed into weakness. then i think you would see asset prices come down. >> a you satisfied that if called upon at some point in the future to begin bringing the balance sheet back to normal size and the markets react with substantial reductions that you have the staying power to keep at exit strategy despite the fact that markets are going down? >> i think the key is making sure that the market's first of all understand our plan but

secondly that we have done enough that the economy is growing on its own. if the economy is growing and its own it will need the fed help us support and then the markets will be just fine with someone to talk about something else. uni have talked about before. you mentioned it here earlier this year. it was mentioned in a speech. i think your written testimony at the time said it could be quite low for a time. some scenarios, particularly if interest rates rise quickly. romances' could cease entirely for some time. you have an internal study in january of this year which indicates that having the fed generate combined earnings insufficient to cover its operating cost demands and paid in capital is not much of a problem as the fed can simply carried on the balance sheet as a deferred asset. thick as on to say that has been for a short amount of time and

we have never seen a time when the fed was not able to make these germans is. given the fact you have an extraordinarily large balance sheet, this unprecedented expansion and given the fact they used and to lose a tremendous amount of money in a higher interest-rate environment . testified of 100 basis point interest-rate rise that can generate losses of in excess of hundreds of billions of dollars. if we end up in an environment where remittances from the fed go on for an extended time, how will that impact the fed operation? >> it won't affect our ability to do monetary policy. attendance is up to congress. terms of the fiscal impact we have done many simulations. there may be a time of very low remittances, but we already had a loss 300 billion in the last four years. >> word is the money come from?

if your combined earnings and generate enough to cover their operating a spences, beta capital, whatever else, or is the money come from? >> from the balance sheet. we have all the resources that we need to do that. >> if you have tremendous losses paying to the bank. your negative cash. >> it comes from the income from our former assets. from an accounting perspective we don't have to recognize losses unless we sell. >> is there ever a circumstance where you get your cheryl for capital call? >> no. >> i guess this the end of my time. >> it is the end of the gentleman's time. the gentleman from maryland is now recognized. >> thank you, mr. chairman. thank you for your in comparable

service to our country of the last several years. my first question, i have several. that think they have a relatively short answers. as a obviously been recent volatility in the bond market's, an uptick in rates based on a variety of factors. it seems to me a the economy has and that pretty well. would you agree with that assessment? >> as i said in my remarks, i think we need to monitor particular in the housing market to see if there's any impact. >> you get a lot of current micro data. heavy seen anything that suggests that this uptake in rates has had a native effect on what appears to be a reasonably good housing recovery? again, i understand it's terrier lead. >> i have not seen anything that points strongly to any particular problem.

again, is very early. is there any second half economic data coming out that would lead you to conclude your original views about the economy for the second half of the year, and particularly as it relates your ability to begin to taper has changed your view? >> i'm sorry. >> is there any new second-half economic data that causes you to think differently about the economy from what you did? >> our general broad outline is that we expect the economy to pick up probably later this year at the exact time of the pen and the impact of the fiscal restraint. we see continued improvement in the labour market. inflation moving back up to where is 2%. that general scenario still seems to be correct. has not obviously been confirmed by the data.

>> and this notion of highly accommodative monetary policy. i assume you can taper in the context of that position, that does not imply you can't begin to taper it purchases? >> as i describe in my testimony we think of the two tools that we have as having different rules. the purpose of the asset purchases was to achieve more near-term momentum, to achieve a substantial improvement in the outlook for the labor market, make progress on an objective. the traditional most reliable and powerful tool that the fed has a short-term interest rates. using low short-term interest rates and guidance about those rights is going to provide a sultan of it with sufficient monetary policy, nation to achieve over trying to get. >> that sounds like you maintain the posture you think is important for the economy using short-term interest rates. in that context he should have

the flexibility to potentially taper consistent with what you had wanted to do. it .. >> switching gears a little bit to banks and their portfolio, which is obviously part of the responsibility of the federal

serve. how concerned are you about interest-rate risks on the balance sheets of the regulated financial institutions based upon the environment we have been in and some of the assets shortages. how concerned are you that they are building a reasonably significant interest-rate risks in their business? >> we have been looking at that as regulators. we are reasonably comfortable that we are managing this appropriately. noting from the bank's perspective that even as higher interest rates reduce the value of some of their securities, higher interest rates also potentially improve their interest margins on their profitability. we have actually seen some bank stocks go up rather than down. >> thank you again for your

service. >> the chair now recognizes the next gentleman. >> thank you, chairman. thank you chairman ben bernanke. we appreciate your time today. i would like to highlight an article from earlier this year, discussing being closings and consolidations in and around chicago. certainly there are many causes. but the article uses one contributing cause, a near zero interest rate that makes it nearly impossible for banks to invest safely with decent yield. for community banks to rely on us, how you justify the policy, and is the fed using a tool to help a section of the economy while hurting another? >> well, first, i think that is not accurate. some interest-rate have come

down, but not all that much. habitability has been generally quite good. low interest rates, the purpose is to give us a stronger economy and better asset quality and low interest rates tick away, they give on the other hand by a better economic environment. and i theoretically maybe that is true, but it only stood up for my community banks. they are struggling under the regulation, the regulatory burden. also because of an interest rate crunch, it is really how they are expressing it to me. switching gears, you have been outspoken on the negative effects of section 716 of dodd-frank and the spinoff provision, some of my colleagues in the committee have reversed their position from last year and i'm wondering if you could restate why section 716 could have a negative effect on this.

>> well, it creates additional costs. it moves out certain kinds of things from the banks. it makes it more difficult for banks to offer ranges of services and puts u.s. banks at a potential disadvantage to international competitors. >> you'd still be supportive of changing this provision in the this section 716? >> we have some concerns heard of course everything depends upon what the alternative is and how the congress make those changes. >> let me switch it into something else. mr. chairman, dodd-frank requires that we adopt procedures to implement limitations on the 133 authority. it has now been three years later in the fed has not done so. how do you justify implementing these basic restrictions on the fed's authority to bailout nonbank firms?

>> i think that the law is very clear about what we can and cannot do. i don't think that the absence of a former rule should be something that the law prohibits. it prohibits us from bailing out individual firms and there's no way we can do that. we have made a lot of progress and i anticipate we will have that out relatively soon. >> i think by the end of the year,. >> i will chat with staff, but i would hope so. >> okay, now would be great. following up on that as well, i know that there were questions asked and again we always appreciate your willingness to come here and spend time with us. but i do know from colleagues and myself the questions were submitted and we hadn't heard back from now. it has been about four months since we were here last time. as i can get it could check on not as well as letting us know when this final rulemaking would

be done. with one minute left i legal back. if the chairman jim penciling has any further questions -- >> i'm going to ask one more question. getting back to the banking rules. as implied to insurance companies. statutory accounting is sound credential of the insurance companies important applying must be more prudent approach is developing capital rules for the savings and loan holding company is the predominant in the business of insurance? >> a lot of issues still. we deferred this rule for savings and loan holding companies that are more than 25% interest activities. we are looking at a range of issues about how we can adopt and adapt consolidated

supervisory rules and the capital rules at hand for insurance and we recognize that there are some differences that we need to look at. >> the time of the gentleman has expired. >> thank you. >> the chair now recognizes gentlelady from ohio. and i thank you, mr. chairman. thank you madame ranking member. mr. chairman, i join my colleagues in thanking you for all the work you have done. we started the questions today with a series of quotes or statements and i would like to end it with one. that is our mission as set forth by the congress is a critical one to preserve stability and growth in output and employment and to promote a stable and efficient financial system that serves all-americans well and fairly. the efficient financial

stability or the financial system that will serve all americans. i know you have a a lot of questions related to the housing market and i want to thank you for opening your testimony. i am my longtime housing advocate. in reviewing the document this morning, the multiple pages on this, it puts in mind this question for you. will you speak to what impact maintaining an adequate supply of affordable housing options for first-time homeowners, as well as moderate income buyers, then conversely, what will happen to the market or economy if we only promote a housing finance system where only the well-off who have high credit scores, who have the double-digit dollars to put down 10 or 20%.

when you look at it more than $10 trillion in economic value, the united states housing market certainly is inextricably linked to the performance of our nations economy. >> in this recovery, one of the credit areas, which is not normalized is mortgage credit and we have noted that people with first-time homebuyers scores are not able to get more of this credit many cases. of course that is a problem for their communities and the overall economy since we are looking for a stronger housing market to help the economy recover. there are many reasons why mortgages still tight, mortgage credit is still tight for those

borrowers. but it is definitely a concern and something we are paying close attention to. >> let me take this a step further. i think america expects this congress to advocate for those folks. as soon as you say low income and moderate, someone has to stand up for them. but let's look at the flip side of this. in your opinion, let's look at what it does to the market for credit unions and banks. because housing is not currently being able to purchase a house but it deals with constructions and jobs and what responsibility do you think those credit unions and banks have to play in this environment you are in now? >> well, we encourage banks to lend creditworthy borrowers. we certainly enforce the fair lending laws. it is important that first-time

homebuyers be able to get credit to buy homes and it's important for our economy. there are some issues still out there as i mentioned. including, and i think regulators have to take responsibility for the fact that not all the rules for making mortgage loans are finished and out there. we need more clarity on most things. there's a lot of concern about risks and the notion that gse's will for back anymore as it goes bad if there is anything, any technical flower with it, that makes the bass less likely to one. there a lot of things to work on to get the mortgage market in better shape than we are approaching this from the point of view, trying to keep the mortgage rates low so that housing is affordable.

also as regulators and working with other regulators to try to solve some problems in extending mortgage credit. >> thank you. >> the gentlelady yields back. the chair recognizes the gentleman from florida, mr. ross. >> thank you chairman hensarling. let me begin by addressing one of the earlier comments when he said the debate concerning other fiscal policy issues, such as the status of the debt ceiling will evolve in a way that will hamper the recovery. my concern with that is that i believe that $17 trillion and counting as we see in the debt clock up there, when 6% of the budget is used to pay national debt, i firmly believe that this debt should not go unpaid that there is a difference between borrowing money to pay for an irs video in pain are dead. you see, i believe that it is disingenuous to say the debate

on the debt ceiling where the debt limit for this country adversely impact us, when in fact two years ago the credit rating agencies came to us and said that we don't have in place a systemic long-term path to reduce and address our debt, that we will be downgraded in our debt and our ratings. it wasn't so much the debate, but the fact that we failed to take action to reduce a systemic fashion in a long-term fashion the debt. out of the debt ceiling debates we have come out with things like pay-as-you-go. there have been good things to help us with that. it's important we acknowledge having healthy debate is prudent and responsible and i also want to address the second part of your opening statement, when you addressed the non-important financial institutions, specifically the implementation

of the collins amendment. my concern with data going back to last week when the governor testified before the senate banking committee, he told senator johnson that with regard to postponing and delaying the rules if you testified before, he said it is to say that the collins amendment does require the capital requirements be applied to all the holding companies and supervisors. i look at the collins amendment and what concerns me is i'm afraid your hands may be tied. and that we have three different types of financial institutions here. we have the short-term funding in the long-term and insurance companies. yet we will give the state's capital requirements expanded requirements based upon accepted accounting principles, which don't apply to insurance companies and we will input in turn increase the cost of insurance. i come from a state where insurance is very important in florida. more importantly, we are going

to probably result in a conflict between this and the implementation of this for insurance companies. how can we resolve that? can we resolve that? >> is not trying to make a policy recommendation other than to say that the last time around we did get a pretty big shock of consumer sentiment was harmful to the economy. it was done in whatever way and with insurance companies we will do best to consolidate. i agree with you that the amendment does put some tougher restrictions on this. >> thank you. >> i think that one of the reasons for the delay is that you can put the capital requirements for banks and the minimum level. as was pointed yesterday, you

will see insurance companies that will be held to higher capital standard with more short-term debt and they could be counterproductive with where we want to go with a correction we are trying to do. so my question to you is that if we impose the brain centric capital requirements on insurance companies, would that have done anything to have saved aig from its financial clout siders ago? >> there a lot of things that aig is doing that they can do now. on the collins amendment does make it more difficult for us. because it imposes, as you say, capital requirements on insurance companies and there are some things we can do, but it is providing this. >> would be safe to say that the future is not to write for the

non-bank financial institutions in terms of having any reduction in the capital requirements? remap there are some assets that we can wait for example. there are some things we can do. but i think this does pose some difficulty for the oversight. >> thank you. thank you for your service. >> determine now recognizes the gentleman from washington. >> thank you, sir. >> mr. chairman, given the eulogies that have been given here today, i feel a little bit like bette midler, the very last guest on the "tonight show" with johnny carson. she famously quipped that he is the wind beneath my wings. there is some application to that you, sir, as it relates to the economy. i thank you for your service as well. i also think mr. ross for anticipating where it is i wanted to go with this.

everything that goes by, i am increasingly less optimistic than i am a member of this institution that can successfully deal with the debt limit. sadly, i must admit that. i'm wondering if failure by congress to do if it was one of the unanticipated shocks, suggesting the economy might be bulkier. whether it is or not, what you would suggest that what the economic consequence would be if congress does in fact fail to lift the debt limit later this early fall. >> well, it would be quite disruptive. it's important to understand that passing the extension of the debt limit is not approving new spending, but it is approving for spending already incurred. so it would be very concerned for financial markets and i think to the general public. if the united states can pay its

bills. i hope that that issue can be resolved and i'm not claiming in anyway that's not important to discuss these critical fiscal issues. it is. but to raise the prospect that the government won't pay its bills, but even what it owes to the seniors were the veterans or contractors, it is very concerning and i think it could provide some shock to the economy if they got severely out of hand. >> is there a material possibility of the shock would be so great as to be recession inducing? >> depending on how it plays out. i think in particular a default by the u.s. government would be extremely destructive.

>> secondly and lastly, over the last couple of years, the feds began targeting interest rates on mortgages in addition to the historic baseline interest rate. if the fed considering and what they consider implementing monetary policy through other credit channels? other to minimize the possibility of an asset bubble or to target job creation. should we not see continued progress or that this involves lower unemployment rate that is involved by so many. >> the federal reserve is limited to what we can buy. we can basically buy treasuries and government guarantees. agency securities. we are not allowed to buy corporate debt or other kinds of

debt. so we don't really have the tools to address other types of credit. >> setting aside for the moment, some people would probably have said the same thing about the activity that we are engaged in today. it was you, sir, who 11 years ago that indicated there might be other monetary policy options available. it just does not seem to me to be much of anything other than a fairly easily adapted technical fix to allow you to buy and engage in credit channels that engage in infrastructure. it is something which, of course, is the gift that keeps giving. but i don't see any legal impediment to being able to venture into that area is somewhat conclude that in 2002 before you were the chair and some might suggest that direct

parallel to what you're doing today. >> i will put you in touch with our general counsel. i do not believe that is within our legal authorities. >> would you rule it out altogether? >> i don't see what the legal authority is. >> okay, i would like to have that. >> thank you, sir, thank you very much. >> the time of the gentleman has now expired. the chair recognizes the gentleman from north carolina. >> thank you, mr. chairman. thank you chairman bernanke it. in response about willingness to conduct a stress test of its quantitative easing exit strategy, he stated under a reasonable interest rate scenario do not expect any significant disruptions from the feds withdraw to monetary stimulus. but the whole point of the

stress test is to position an adverse scenario that was last seen in the late 1970s and early 1980s. not a reasonable interest rate environment. mr. bernardi, has the fed stress test of the strategy according to that extreme scenario? >> this is not about our strategy. this is about the witnesses to the treasury. when we do tough interest-rate tests. again, there a number that have been published and are publicly available, what we see is that even though there may be a time when witnesses are low or zero, but over the 15 year period from 2009 until 2023, the total remoteness is generally higher than the case when there were no asset purchases. i think you need to look beyond the arc, which is to the extent

that our purchases are strengthening the overall economy and that is very beneficial to the treasury because of higher tax collections. so i think most college level of the best conclude that the asset purchases are almost under all scenarios part of the. >> are you concerned about the finance institutions and policies and strategies by the same rules? >> it's not comparable. the banks have credit risk and we have no credit risk. we buy only treasuries. in a recession we make money good because interest rates go down. >> chairman hensarling has shown on the board the debt clock. we have expressed earlier that my friend for 20 years, alan simpson and mr. bowles have rang

the bell on the concerns related to the debt. you know, i wanted to thoughts when it comes to the interest payments on the debt. do you believe that when interest rates rise, we are going towards the close of the decade that interest rates along with annual deficits are pushing us to to unsustainable levels? perhaps post what we are seeing across europe? >> minera say that this is for my grandchildren i would say it was for my kids were for me. but the urgency seems to be gone. it is the big elephant in the room. but for some reason it hasn't been there in terms of the focal

point. the interest rate will be compounded. how would you like to address that as we look ahead and foresee the outcomes as it might achieve the same results that we have had here? >> well, when they do the deficit projections, they assume that the economy recovers and interest rates should rise and that is part of a healthy recovery. that is taken into account in the analysis. what the analysis finds is that for the next five years or so, the debt to gdp is fairly stable and getting it to the next decade, we start seeing bounces from long-term entitlement programs and a variety of other things. so as i said on numerous occasions, i am all in favor of

fiscal responsibility. but in focusing on the near-term and not the long-term, you're looking for the quarter were the lamppost is rather than that is my general view. we should be looking at a general fiscal situation. >> thank you, mr. chairman. >> the gentleman has yielded back in the chair now recognizes the gentleman from mention in. >> thank you, mr. chairman. i will echo the sentiments. back in february i was a mere freshman with six weeks experience in congress and now i am a seasoned member of congress almost seven months behind me.

questioning what why took a minute or two to pursue. but in your prepared remarks, he makes a pretty important references and i think that the one that got my attention was the reference to improved financial positions of state and local governments. while i do think we would all acknowledge that that is generally the case, i want to return will likely be my theme for a long time, and that is there is great unevenness or in equity in the condition of municipal governments, state governments, invisible governments. so i ask if you would perhaps my commenting further. i prepared a have prepared a letter for you that i would like to submit and ask for your response. but if you think about the

potential impact on regional economies and employment as an extension for what seems nearly certain to be severe financial stress for cities like detroit, which in many ways a sort of a placeholder for what is a much bigger problem than that is the disconnect between the presence of wealth and economic activity in the older industrial cities and the obligations of those cities have two sustainable regions. so regarding the reach of the federal reserve, i would ask of you would think about how you would advise congress or how the fed itself might pursue policy to have the effect of

potentially avoiding the mitigating the economic effect of potential failure. the one that comes to mind first is the potential potential for invisible bonds to occur. affecting not only the credit worthiness, but also implications for state governments since most than because of how these are creatures of state government. as importantly, the effect on particular regions and i say this because i believe that this potentially is an institutional failure that is regionalized or localized for those places. and it is every bit as much and i would argue even more threat with the financial distress that we faced in the last half decade in the case of auto industry. this is a serious pending crisis

and i would ask for your comment and i would submit this letter for further response. >> it is a very serious problem and i agree. we have a city manager on one of our local boards and she has kept us informed and razing parts of the city and working on economic development. it is a very serious problem. as far as the fed is concerned, i think they there are two kinds of things we can do. the first is obviously to solve the problem and you have to solve the economic problem. that means jobs. that means economic growth. that means monetary policies and i think beyond that, you do have community development experts at the fed that work with groups and others to try to reestablish

economic base in places that have been hollowed out for various reasons. i went to detroit and i talked to auto suppliers to provide input to the big companies to understand their economy. so i think that working with community groups and the like to try to restore this, that is something you can provide in the short run unless the economy comes back if you don't have a sustainable situation. >> the chair recognizes the gentleman to speak. >> thank you, mr. chairman. thank you for your service and testimony here today. i've listened to your testimony and i have an observation. the observation is the fed has

interest rates for four years now. it has tripled and continues to grow. today he testified that this will remain appropriate for the perceivable future and that unemployment remains at 7.6%. the four consecutive weeks, only 50% of the working age is employed. five straight years of wages, three quarters of the american people living paycheck to paycheck and gdp growth remains well below this. higher taxes, stimulus spending, government spending, obamacare, skyrocketing costs, and crushing regulation.

these realities are asking the following question. what is the cause of weakness in the labor or is it the fiscal policy on higher taxes, obamacare, and my question is related to the strategy. he refused to rule out tapering by the fall timeframe. the federal committee then released other policy ideas as appropriate and he reiterated that today. these are hardly unprecedented

in the bond purchase program. as discussed earlier today, the dow suffered declines in billions of dollars were traded at out of credit funds after the fed could start winding down later this year. given this sharp reaction from the possibility of tapering, how would you prevent a catastrophic spike when you do slow the bond purchases. >> by not surprising people letting them know what the plan is and how it relates to the economy. and that is evident that we need to provide continue accommodation, even if we begin to change over time the tools and providing accommodation. he said a lot of crap crepe things about the weakness of our economy. unattended is the case that we have made some progress since 2009 and many people think of it

as one of the rights spots in the world. what we are certainly not where we want to be, with we are given the high unemployment many continue to remain unemployed as you testify, the underemployment problem persists in this country. and they justifiably have to ask themselves about this. there has to be fiscal policy here that has created this.

inflation will follow. this makes it extremely difficult and makes businesses less willing to invest, especially for the long-term. can you respond that?

>> without objection i would like to recognize the remaining members at this time mr. chairman, a simple question that you have. >> we create when we buy securities.

>> is that printing money? not literally. >> when i look at the balance sheet, when i look four years ago, now up to 3.5 trillion. and i just -- you know, i say that you are confident that you have the tools available. in order to do a job down. >> the balance sheet is 311% in four years without negative

consequences? >> absolutely. >> i appreciate your feedback on now. >> i think the chairman back-and-forth over the years. let me ask you a couple questions. the balance sheet as everyone has pointed out, $3 trillion. it is the largest bond fund manager. we have seen a one percentage point spike. if the fed would tell us the change of values. >> the cases were $150 billion.

>> is as far as inflation is concerned. but we do see increases maybe as a rule of thumb and it illustrates a relationship between the 10 year treasury rates and the values of the bonds. while the magnitude be in long-term yields. >> i don't have a rule of thumb. it depends upon the mix of maturity that we have and also the computing of the. >> yes, we publish at. >> but without result in? >> i don't have a number for you. >> okay, in the next 20 seconds, right now the week of september

september 13, fannie and freddie have been originating around $12.5 billion and you have been purchasing about 12.5 and agency debt which means about 109% ratio there. is there a problem and deal with the originations going forward? >> we are not seeing any problems in the market. we are not just buying the stuff that old stuff as well. >> the time of the gentleman has expired a. we now recognize the gentlelady. >> thank you, chairman ben bernanke for being here today. but daily treasury statement, and the subject of the legal limit $16,099,000,000,000 great

and it started exactly 16,699,396,000,000 per 56 straight days. when we working elating about $4 billion a day in additional debt. i note that we have added over 400 million in debt just in the time that we have been talked to today. so how can this frequent nature occur at the u.s. treasury would report for 56 straight days that the debt stayed at $16,699,000,000,000? has the federal government than cooking the books for this? >> this is not the case. i don't know what the issue is. i'd have to look at the numbers and what they refer to. >> this is reported and it is on

the treasury statement for july 12. >> were you aware of this? that the debt stayed by a frequent coincidence at this level? >> maybe it has to do with the use of unusual measures to deal with the debt limit. there are various things that they can do. maybe that is what is happening. >> that is what is reported. this is an extraordinary action. but this looks clearly like the federal government is adjusting the books. >> treasuries under both parties have used a variety of different accounting devices to give some extra headroom in space. >> have we exceeded development? >> i do not think so. >> last question will be the gentleman who is recognized.

>> thank you, mr. chairman. he almost beat the clock. last year we gave you an invitation and we have talked to you and the group is still gathering out there. so if you ever decide to come the next could have that meeting, the gentleman was actually headed down that direction. they don't have access to sophisticated evidence and a lot of them have a lot of money and cash equivalents. sir, it was noted that the home financing has increased from 3.3 to 4.5 and there is a lot of profit reports. did the seniors even get an honorable mention about who's

going to pay for this? when he going to start going up on the interest rate just a little bit? right now it is 43rd per capita income, per year in the seniors live their life right. but they feel like they are being punished for this common meet the economy is weak. inflation rates are low. if we were to tighten policy, the economy would tank. >> it just went up 8% and a half. one last question as we run out of time, the obstructionism comments on immigration. considering the multipliers, they thought it was 1 million,

they have legalized 1.3 million, 3.5 million, they have brought this with them, about 16 million. if we get 150 million people that could be here, is their number at which the economy is adversely affected? >> i don't know. >> thank you, sir. >> the time has expired or want to thank the chairman for his testimony today. we have five days to submit additional questions and we look forward to the witness and i would ask the witness to please respond promptly as possible. without objection, we asked that everything be included and this meeting is adjourned. [inaudible conversations]

[inaudible conversations] >> chair ben bernanke will continue his testimony on capitol hill before the senate banking committee. watch live coverage at 10:30 a.m. eastern on c-span3. >> coming up, a reaction to the supreme court's decision on the voting rights act. followed by the confirmation hearing for u.n. representative nominee samantha power. in another look at ben bernanke's testimony to the house financial services committee. in june, the u.s. supreme court

ruled a section for the voting rights act unconstitutional. section four defines the views that federal approval isn't met before changing laws. john lewis testified on the court's decision today and called the vote precious and sacred. the commerce and who cheered the house judiciary committee during the 2006 reauthorization procs of the act also testified. from the senate judiciary committee, this is two hours. >> welcome back to the senate judiciary committee. one of my heroes, congressman john lewis and another dear friend of mine from so many battles over the years, jim

sensenbrenner. i welcome everyone to this important hearing. it is an issue that affects all americans and their rights to vote. the title of today's hearing shall be working together to restore the protections of the voting rights act. it speaks to the efforts of protecting the voting rights and expresses determination to continue work together to affirm the voting rights act. from its inception through several reauthorization, it has always been a bipartisan effort that is going to continue. part of that tradition is right here, john lewis and jim sensenbrenner, two highly representatives.

so i look forward to working with both of you. seeking to restore the protections in the case. the historic struggle reaches a turning point in alabama on march 7, 1965. a group of peaceful monitors were brutally attacked by state troopers called bloody sunday and became a catalyst for the passage of the voting rights act. he later said that the vote is precious and almost sacred we have to create a more perfect

union. to me and two others he is a hero and i thank them for being here today. republicans and democrats in the house of representatives joined together to pass a reauthorization of the voting rights act with support. one of the reasons they do it is congressman sensenbrenner is a true leader in that effort. in fact, having been there at that time, watching what went on. i can say that we would not be able to reauthorize that without his leadership in the house judiciary committee. i was proud to work with him back then and i think him today and i think that he and i and the congressman were very happy when we saw the president in the

rose garden on a gorgeous day. they held the coverage and said it was outdated and the five justices struck down section four and voting continues to be a problem. chief justice roberts said discrimination still exists and no one doubts that. that is why we are here today. the supreme court has called on congress to update this voting rights act. not as democrats and republicans, but as americans. people die in other parts of the world with the free right to vote. americans should not be denied by the application of practical

lives. doctor king proclaimed the magnificent words of the declaration of independence in which every american was to fall into. i would like to say we want to fill this promise and uphold the constitution. no one's right to vote in any part of this nation should be suppressed or denied. but yet we continue to see that practice today. it is a work together and i know that congressman lewis is someone who has a view and we

will turn to him. >> it is so right to turn to you after a significant decision by the supreme court and the extent of which congress has a duty to do it in our checks and balances of government. the voting rights act guarantees the fundamental right for all qualified voters regardless of race or language the law was necessary to address the history. i have voted to reauthorize that i appreciate her congressional colleagues and i welcome both of them here and point out specifically representative lewis and the participation to lead to enacting the law and your enduring place in history. thank you for being here today. we should be pleased that our country has made advances in race relations and the voting

rights act was passed. it contributed to the progress, no doubt that the progress must be made and should be made. a hearing like this will help the dialogue to continue. much has changed since 2006 and the voter turnout was higher last year among african-american voters than other classes of people. more african-americans and hispanic candidates than ever are winning elections and i say that because we found these facts to be of constitutional significance. we are here today largely because congress failed to heed the 2009 morning that the differing treatments of states raised serious constitutional questions. eight justices said so. the law was struck down at that

time. congress could have drafted a new formula to address those concerns and a formula based on the 21st century realities. the court then ruled, as it did, many people believe that this is the heart of the voting rights act, unlike section five that prohibits voter discrimination nationwide. unlike section five, it can be used to challenge procedures before they take effect and over the years the process has led to many fewer objections to proposed election law changes and only 31 objections have been made. there have been no objections to any changes in seven of the 16 states that are covered in whole or part. many have been approved and

additionally the gap in turnout is now lower with the states that were originally covered in section five than is the case nationwide. the court has given congress the opportunity to draft the institutional coverage for now. i disagree with the member who said as long as republicans have a majority in the house, democrats don't have 60 votes in the senate, there will be no clearance. it has never before characterized the reauthorization of the voting rights act. rather than blaming the republicans for blocking a bill that does not exist, the majority should bring forth a proposal for updating the coverage. we should cover the whole country. we could identify jurisdictions engaging in discrimination in the 21st century and where section two is inadequate. there may be other options and i

look forward to seeing what is brought before the committee. i certainly understand why there is no proposal yet. but we must respect the constitution's pronouncements and the court based its ruling on the 10th amendment. specifically they said our constitution provides that all powers not specifically granted to the federal government are reserved to the states and citizens thereof and i will point out the word specifically. this is a formulation of the 10th amendment that i have never seen before and it means that congress can only enact laws, such as the enumerated power of the 15th amendment, it is language that must be kept in

mind that congress considers legislation amending the voting rights act. and the court last month ruled under the election cause untracked laws that congress could regulate federal elections that are held but not those who vote in them. those decisions are left to the states. further, any legislature shall not use this for the integrity of voting. such as voter identification laws. they know that the right to vote is denied by the vote of someone ineligible to vote as one has. this record has ruled that it would raise serious constitutional values this is

very important and i commend you for holding this hearing after his hearing and i welcome all the witnesses. i think you. >> thank you. we thank the gentleman. we thank you for the introduction and the humphrey award. that was a product of combination of creative endeavors and we have seen this and we have worked on a. >> i would like to thank you, mr. ranking member and members of the committee for holding this important hearing and

inviting me to testify today. mr. chairman asked to consent on the full statement to be included in the record. congressman sensenbrenner has been a tireless advocate of voter rights and i am so pleased to be with him today. my friend and my brother. i have said before. i have set it against you. today is section .5 of the voting rights act and the day of the decision broke my heart and maybe want to cry. i felt like saying come and walk in the shoes of people who tried to vote but did not live to see the passage of the voting rights act. i know that each of you knows this history, but i think it's important for the record to note

what it is like for the voting rights act since 1965. when i first came in 1961, the same year that president barack obama was born, they were traveling through virginia and north carolina and georgia and alabama and mississippi to new orleans. there were signs that said white only and color only. people denied the right to vote simply because of the color of their skin and they were harassed and intimidated and force off of plantations and those who try to assist were beaten or arrested or jailed or even murdered. before the act, a person of

color would be asked number of jelly beans in a jar. in 1964, the state of mississippi had more than 450,000 there were only about 16,000 were registered to vote. 80% african-americans, but not a single one was able to register to vote, not one. it was located in dallas county, alabama and only 2% of african-americans were registered to vote. and you can only attempt to register it on the first and third mondays. before the voting rights act, three young men i knew, james

chaney and goodman was working with african-americans to vote in 1960 and 1964. they were arrested and led to jail in the middle of the night and they were beaten and shot and killed. they attempted to lead a peaceful nonviolent protest in montgomery as we march for the right to vote. more than 500 men and women and children were chased and beaten and bloodied and trampled by state troopers. it became known as bloody sunday. a little over a week later, he spoke to theame before the

nation. he said i speak tonight for the destiny of democracy and he presented the voting rights at congress. after lots of work, congress passed the bill in president lyndon johnson signed the voting rights act into law. i remember this very and the struggle was like it was just yesterday. to this day i believe that we are a better country and a better people because of the voting rights act and we have come a long distance. but the deliberate and systematic attempt to make it harder for many people to participate in the democratic process exists to this very day.

only hours after decision was announced, before the ink was dry, states began to come into force efforts to suppress peoples voting rights. as i said, mr. chairman, the vote is precious and it is almost sacred. it is the most powerful nonviolent tool that we have. it is my belief that the act is needed now more than ever before. a bipartisan congress and republican president worked on this law four times greater burden cannot be those citizens whose rights will be violated. it is a duty and a responsibility of congress to restore the voting rights act. we must do it now.

we must act now. we must do it on our watch at this time thank you, mr. chairman. mr. ranking member, and members of his committee, thank you for the opportunity to testify today. thank you so much. >> thank you, congressman. thank you for bringing us a sense of history and we also thank you for the book that you signed in march. it will be seen by all five of my grandchildren i mentioned earlier congressman sensenbrenner and how we had been friends for years and he is a civil rights icon in his own right. he is chairman of the house judiciary committee in 2006. he introduced the reauthorization to the house of

representatives and work tire sleep to building strong legislative records, including the need for reauthorization to section five. we have discussed it many times. but had we have talked about and someone from the other party is part at the time and of course the majority in your party and i can honestly say that we would not have gone through if it had not been for the work we put into the house. so i will continue this. this is something that we have told the gentleman. >> distinguished members of the

committee. thank you. let me express my appreciation not only for your statement and senator grassley statement, but also the statements that have been made by my colleague in the house, john lewis of georgia i tried to be available to put together legislation that will work. i thought that we did it in 2006 and we will have to repair a few parts this year. i am certainly on board to try to put something that will last for a long period of time together. i also deeply appreciate the comments that mr. lewis has made because he is truly a civil rights icon for what he did to emphasize the need for voting rights and the voting rights act that congress has successfully passed in 1965 and has reauthorized sense.

in 2006 i was proud to be a part of the house judiciary committee. it was last reauthorized, including section five. i think you are the invitation to participate in this hearing and provide my perspective of the continued importance of the voting rights act. in 1965 it was signed into law in the law was passed at the height of america's civil rights movement when citizens were fighting each other and sometimes authorities over how skin color and pox upon a person's place in democracy. historic in nature, it sought to end decades of racial discrimination that prevented minorities from fully exercising their constitutional right to vote. lon sheard that they do not and pass laws or policies and my

them the equal rights for these rates. as the leading democracy works, it should work to keep voting free and fair and accessible. that is why at the voting rights act is so important. make sure that every citizen, regardless of race, has an equal opportunity to have a say in participate in our great democracy. in 1982 i was pleased to help negotiations to reauthorize the voting rights act then. the legislation cleared the house by a vote of 389 to 24, and was signed into law by president reagan. upon signing the reauthorization, president reagan said there are differences for how we receive all of our people. sometimes amidst the rhetoric, the differences tend to seem bigger than they are, but actions speak louder than words. this legislation proves our

unending commitment to voting rights and also proves that differences can be settled in the spirit of goodwill and faith. as i said before, the right to vote is the crown jewel of american liberties and we will not see its luster diminished. one of my most cherished keepsake is something that president reagan used to assign with this pen. this is proudly displayed. a duty to support the constitution once again led to the 2006 reauthorization act. as chairman of the house judiciary committee and we held dozens examining the effect of the voting rights act, whether it should be extended, and if so, what the extension should

encompass. the committee assembled more than 12,000 pages of testimony and documentary evidence during its consideration. the legislative record accompanied the consideration of the voting rights act extension 2006 is among the most extensive in congressional history. the bipartisan conclusion, while we have made dramatic progress in ensuring that no american is denied this right based upon the color of his or her skin, the work remains incomplete. again, in a bipartisan fashion, the house passed a 25 year extension. as we are here today because of the supreme court's ruling in shelby county versus holder, we are severely weakening the election protection for both republicans and democrats have fought so hard to maintain over the years. the court essentially

disregarded this years and years of the extension of branch and substituted it with their own judgment. the justices voted to eliminate this for selecting which places are allowed to make changes where the election laws by without clearance from the u.s. department of justice. although the court left in place section five, it a provision that requires states or parts of states to ask permission from the federal government before making changes to their elections, that part of the law has little or no part in section four, which was struck down. .. congress is now presented with a challenge and an historic opportunity. we are again called together to restore the critical protections of the act by zpdesigning a new

formula that will cover jurisdictions with recent and egregious voting records. our sacred constitution guarantees that an american citizen cannot be kept from exercising his or her god-given right to vote because of race or color. though the voting rights act has been enormously successful, we know our work yet is not yet complete. and eight years ago had 12,000 pages of a record to prove it. discrimination in the electoral process continues to exist and threatens to undermine the progress that has been made over the last 50 years. i am committed to working to pass a constitutional response to the shelby county versus holder decision. and i look forward to working with anybody who wants to approach this effort in good faith. i believe that the voting rights act is the most successful of

all of our important civil rights act that have been passed since the mid-1950s and actually eliminating discrimination. we cannot afford to lose it now, and it is our obligation as senators and representatives to continue it. thank you. >> all right. gentlemen, i thank you both very, very much. and i wanted to hold this hearing before the august break because i wanted to be able to use the august break to work the phones a lot and talk to a lot of people from vermont, people from arnold the country, but be able to use that as a base to do it. i'm hoping that two of you and anybody else in the house that may want can join with those of us here in the senate when we come back in the fall and see

what we can do. i know you both have a tight schedule. you're welcome to stay and watch if you'd like, but i'd be happy to have the next panel come up if you wanted to leave. >> we're due for votes pretty soon in the house. >> i'd better let you go. it's a long way over there. >> sometimes the differences between the house and the senate are the difference between here and the moon. hopefully not on this one. >> i hope not on this. my office -- i have an office that is just a couple feet from the so-called dividing line between the house and the senate. i like the fact that we're able to walk back and forth across that line often as the three of us have done in many, many different issues. and i hope that both parties, both bodies, will on this issue because if you protect the right to vote for everybody, it's one of the greatest steps you can

take to protect democracy. so i thank you both very, very much for being here. i know we're going to set up for the next panel. senator durbin who is the chair of the civil rights subcommittee has held hearings on this. senator, before we start that, did you wish to say something? >> mr. chairman, i want to thank you and senator grassley for this hearing today. and i want to congratulate my friend congressman john lewis for coming over and producing testimony that no one else can produce because of his singular role in the history of civil rights in america. and a special thanks to congressman jim sensenbrenner who shows that there's true bipartisanship alive and well

when it comes to preserving civil rights. congressman sensenbrenner, thank you for being here. mr. chairman, it was seven years ago that 98 senators and 390 house members reauthorized the voting rights act by an overwhelming bipartisan vote. after 21 hearings and 90 witnesses testified, a 15,000-page record was produced. congress passed the bill. president george w. bush signed the reauthorization. we did so because we all recognize that despite real progress in america, unlawful and unfair discrimination in voting remained. i urged some of those discriminatory practices firsthand in a series of hearings in my constitution subcommittee last congress. here on the hill, i chaired the first congressional hearing to examine new state voting laws that limited early voting, tightened registration requirements, and required photo i.d.s. we then took the subcommittee on the road. at the invitation of senator bill nelson, we went to tampa, florida. and at the invitation of senator

sherrod brown, we went to cleveland, ohio. in those places, we invited election officials from both political parties to testify as to the changes in state law that were being contemplated and implemented in those two states of florida and texas. mr. chairman, before there was any testimony taken at great length, we asked the election officials a basic question. what were the instances of voter fraud in your states of florida and ohio that led to the states to change the laws relating to how people would register to vote and when they could vote and how they can vote? in both states, testimony was the same from election officials of both political parties. there was no evidence of voter fraud, none. these changes took place in the context of reducing opportunity for people to vote, period. i'm not going to defend one

person who tries to vote illegally or fraudulently. none of us would. but in those two states from election officials of both parties, there was no basis for these new state laws. when the time came to challenge these laws in federal court, what statute did they turn to? the voting rights act. the voting rights act asked the very basic question that goes back to the 15th amendment as to whether we're keeping our promise to make voting racially free and free-for-all americans. and that is why this hearing is so important and this testimony is so important. i'm just going to give three quick examples, mr. chairman, and yield. do we still need this? is this something that belongs in a museum, this voting rights act, in a civil rights museum somewhere? we still need it. listen to what we faced recently. in 2001, in the city of kill michael, mississippi, an

election was canceled because an unprecedented number of african-american candidates decided to run for office. at the department of justice used the voting rights act to require the election move forward, the town elected its first black mayor and its first majority black city council. 2001, killmichael, mississippi. in 2004, officials in walker county, texas, threatened to prosecute two black students after they announced their candidacy for county office. when that threat didn't keep them off the ballot, county officials tried to limit african-american turnout by reducing early voting but only at polling places near an historically black college with a large number of black voters. 2004. walker county, texas. in 2012, after the 2010 census showed that african-american voting population had grown significantly in the consolidated municipal government of augusta/richmond, georgia, the georgia legislature passed a bill to change the date of municipal elections but only

in augusta/richmond, georgia county. the bill would have changed the election date from november when african-american turnout was known to be high to july when it was substantially lower. 2012. the state of georgia. do we still need the voting rights act? yes, we do. that's why this hearing is so important. mr. chairman, i'm glad that you brought those two opening witnesses. and i'm glad that the panel will follow and will have a chance to raise these questions. and i think you're right to make this issue an issue to be considered by the full committee rather than just our subcommittee. and i thank you for this opportunity. >> i can assure you your subcommittee's going to have a great deal of work to do on this as you already have. our first witness is ms. luz weinberg. did i pronounce your first name correctly? luz abias weinberg.

i apologize. she's served of commissioner in florida since 2005 and the youngest person, first person of hispanic descent to hold that office. also the vice president of the board of directors for the national association of latino elected and appointed officials. ms. weinberg, please go ahead. >> thank you, mr. chairman, ranking member grassley and members of the committee. >> your microphone's not on. there's a little button on the front there that says talk. >> thank you. give me those ten seconds back. chairman leahy, mr. grassley, thank you for the invitation to submit my testimony on the need to restore the protections of the voting rights act. mr. chairman, as you mentioned, i am a republican elected to serve in my city of aventura as a nonpartisan in northeast miami-dade, florida. i the first and only hispanic to hold that office. i have taken also statewide and national leadership positions,

just recently governor rick scott appointed me to serve on the miami-dade expressway authority and i also serve as vice president of the national association of latino elected officials. and thank you, senator durbin, for joining us last month. i'm here to share my firsthand account of the critical impact of the voting rights act in guaranteeing access to the ballot box. as a result of the recent supreme court case, i urge this committee to once again demonstrate your clear unprincipled commitment for equal voting rights regardless of race, language spoken and to also act swiftly to restore the protections. whether to maintain voting rights act, it's not a partisan issue. it's a nonpartisan issue. it's an issue for all americans, whether republicans or democrats, all americans strongly believe in fair and equal electoral opportunities. my experience serving as an elected official in south florida has south florida has afforded me the privilege of being personally acquainted with how absent a

check, a franchise ethnic and minority communities. ever since i moved to florida from puerto rico in '86, i've add front row seat to observe how the unfortunate repeated attempts to adopt the policies that continue our national history of putting racial, ethnic and minority voters at a disadvantage. two main incidents come to mind. central florida is one of many counties that have an outlarge election system for its commissioners. the first hispanic commissioner finally elected. in reviewing counties election law changes, the department of justice identified that the commissioners favored a return to at large elections in part because they recognize that the substantial growth of the counties latino population would lead it latino voters elected candidates of their choice. since 2002, osceola county has twice more faced charges that

its electer electoral methods. third party registers became subject to strict reporting requirements deadlines to return registration forms in 2011. these requirements were later withdrawn but the change in the law led to several organizations like women leaving voters suspending voter registration operations in florida. which meant a drop we saw of 39% registration. in the 1975 sanction of the vra, five counties had district tags against latino voters. the vra protect not just latinos in the five counties, formerly subject to, but protected voters statewide. for example through 1980s and 1990s preclearance was used to make sure absentee ballot

procedures did not put under represented voters at a disadvantage. the successful application of section five occurred not only if florida, in the course of formal request for clearance, the very fact that these state policy makers have had to anticipate fulfilling preclearance requirements, has urged them to propose new election laws. for us floridians, the voting rights acts has not only been effective but also critical in insuring preservation of equal electoral opportunities. the preclearance mechanism has no peer. it is uniquely tailored to prevent irreparable harm to voters and candidates for requiring view for

discriminatory effect before a new law may be implemented. it is by its very design and definition still very much necessary in our 21st century america. on a personal note, i arrived in this country as a native born immigrant. that is to say, i am one of millions of puerto rico yns who leave the island for the mean land for a bet are life. i registered to vote as a young adult who just a couple years before my arrival had not spoken a word of english. i had throw children. my oldest son, jonathan, now 20, registered to vote and voted for the first time two years ago. my daughter, jessica, turned 18, just two cycles after the registration. jessica registered independent. their elected official mother, myself, is a republican. so in my households we were white latinos, afro latinos, we speak spanish, english, and

sometimes spanglish. sometimes very badly. but first and foremost, we are americans. we ensure the voting rights acts are preserved. we see it as nonpartisan, nonracial and nonlanguage dependent priority. i urge you to once again demonstrate this priority for equal voting rights for all-americans and to please act swiftly to restore the protections so necessary through the voting rights act. thank you. >> thank you very much. next witness, mr. michael carvin from law firm here in washington, d.c., focussing on constitutional appellate litigation. testified before this committee a number of times at the invitation of our republican colleagues and welcome again, mr. carvin. >> thank you, mr. chairman. senator grassley. obviously the committee is facing a very serious question as is the entire congress. does shelby county section 5

create a gap in civil rights laws which might expose minority voters to unconstitutional discrimination. the thrust of my comments today is that there is no gap. because section 5 is no longer needed to ensure equal opportunity for minority voters. for one reason. you have section two of the voting rights act. it is a very muscular provision amended by this body in 1982 to prove laktically eliminate anything as purposeful discrimination because it prohibits anything with discriminatory result for minority voters. it was valleyhooed then and hailed as successful piece of legislation that has done much more than section five to eliminate unconstitutional voting discrimination. section 5 on the other hand was limited. limited in terms of the kinds of voting practices it got at. only changes in terms of the states it was addressing, and in

terms of time. always a temporary supplement to section 2. so i think the question that congress has it grapple with is not whether discrimination persists in the jurisdictions covered by section 5, but whether it is the kind of discrimination that can't be effectively remedied by section 2 of the voting rights act. and i submit that there's not much argument that section 2 is inadequate to the task. a couple of logical intuitive point. we don't have preclearance requirements. it doesn't seem to be necessary for two reasons. one is, we don't have it in most states. we don't have section 5 on top of section 2 in most states with respect to voting discrimination. and we don't have any kind of analogous requirement for any kind of discrimination. employment, housing, educational discrimination is all dealt with through statutes like section 2 that prohibit certain actions, not supplemented by preclearance requirement. even though employment

discrimination is more difficult to prove than voting discrimination because it is done in private without the kind of ready access you have in the voting context. and i think that congress -- with respect to what we have been calling first generation ballot access issues, i think that is with congress in 2006, those problems were addressed in coverage jurisdictions and noncovered jurisdictions. so there is no reason to extend section 5 just to get at those ballot access issues. and there was no argument, even though section 2 is more than adequate in oklahoma and arkansas, to eliminate their kind of voting discrimination. no one in congress in 2006 found that it was okay in arkansas, inadequate in brooklyn, manhattan or mississippi. in part because congress found that mississippi actually had the highest participation of black voters of any states. but nonetheless remain covered jurisdiction.

in terms of second generation issues, and that was the principal focus of congress in 2006, they said look, covered jurisdiction have done a better job than noncovered jurisdictions in fostering minority participation and turn-out. but they are diluting the vote through these at large electoral systems and racial gerrymandering. and i would like to make two point about that. section two is actually more effective at dealing with second generation vote dilution issues than in section 5. for one thing, section 5 can't detach -- attack at large voting systems because it only is triggered if there is a voting change. if at large election system is in place it can't be got at by section 5, but it can be got at by section 2. there's been an argument made which in my view is completely false, and counter factual, which is somehow section 2 challenges to racial gerrymandering or too slow or

not effective enough. that's completely untrue. in every state outside of section 5, people don't sit around before they bring their section 2 lawsuits and say, let's have two or three elections and see how things go. they do exactly what they do in the section 5 jurisdictions. they go to court before the must redistrict oog plant is reentered and seek injunction. a high publicized case in texas makes this known well. in november of 2011, well before the elections in 2012, while the section 5 court never issued a decision until late august in 2012. so the point is that section 2 courts can act and do act just as speedily and effectively in dealing with the redistricting issues. the only thing that the demise of section 5 will help eliminate is the compelled racial gerrymandering that the justice department imposed on a number of jurisdictions to create these districts that were struck down as unconstitutional and to be used as they were in texas to

prevent, to protect white democrats, even though there was no large minority population in those districts and frankly, to end the partisan uses by the republicans of voting rights act. some of them strongest supporters of voting rights act have always been republicans because it is politically advantageous for republicans to have the majority minority districts because the adjacent districts present political opportunities. thank you, mr. chairman. . >> thank you, very much. and our next witness is justin levit t, from loyola law school in los angeles. national expert in constitutional law and voting rights. before he joined the faculty of loyola, his council at brennan

center at new york university school of law. he worked on cases promoting equal access to voting and again, i should note that all of you, your statement or any addition to it, will be put in the record. professor levitt, i don't want you to think it is because of anything you have said or about to say that i leave and turn the gavel over to senator whitehouse. but i'm also required back on the floor. so please go ahead, sir. >> not at all, mr. chairman. and thank you, very much. mr. chairman, distinguished members of the committee, thank you for the invitation to testify here as well. our constitution expressly gives congress the specific enumerated power and obligation to ensure that there is no electoral discrimination in the country based on race or ethnicity. congress repeatedly attempted to step up to that responsibility. not perfectly perhaps but

pragmatically. shelby county ripped a sizeable hole in congress's work. that decision has left americans today, less sure that discrimination won't taint their elections. we have to correct that damage. sweeping national statistics hide the fact that unfortunately there are still public officials who try it limit electoral opportunity based on race or ethnicity. sometimes because of contempt, sometimes because of perceived political advantage. it's disgusting and it's illegal. even with armies of lawyers, it is very hard it fix using existing tools, like section 2. normally, we in the legal system, depend on responsive lawsuits. the sort of tools that mr. carvin was talking about. if there is a legal problem, you sue, prove harm, and it gets fixed. that's the the way the housing system, education system works, exactly as mr. carvin said.

voting and election laws are different. these normal lawsuits attack one at a time. they look it limit political power based on race just switch tactics. rule x drawes a suit, okay shift to y. that draws a lawsuit, okay, shift to z. the official doesn't bear the costs of this whack-a-mole game, the taxpayers do. if taxpayers get sick of it, it is hard for them to toss them out of office buzz the tactics changing effect the very structure of how the elections work. election laws are different. normal lawsuits are also a little bit like ocean liners. they are complicated, very expensive, slow to get going. they can take years and frankly i'm not sure which texas case mr. carvin is talking about. the court in texas still hasn't delivered a decision on the merits, years after the original district were put in place. there's still no decision based on these normal lawsuits.

in the meantime, when normal lawsuits are taking all of this time to get up and going, elections infected with discrimination are taking place. we know that elections have consequences. discriminatory elections have consequences too. even when the contest is unjust, the winners still become incumbents and they end up making policy in the meantime while waiting to get election structure right, it doesn't fix the policy that's already been passed. election laws are different. these aren't just theorys. there are 215,000 pages of examples. i have plenty more, not just before 2006. but '06, '08, 2010. the most at risk have the least resources to fight back. this isn't just old news. in 2009, two months after

president's inauguration, we've justice roberts, kennedy and alito, said and i quote, racially polarized voting are not ancient history. much remains to be done to make sure citizens of all races have equal opportunity to share and participate in our democratic processes and traditions. congress has understood that much remains to be done. repeatedly it's recognized that the existing tool kit of tools like section 2 are powerful, but for the most electoral discrimination, and here i quote again, inadequate. in 2006, congress stepped up to meet the continuing need which brings us to shelby county. the supreme court's ruling had an enormous impact but also leaves congress with plenty to do. the court said that formula congress used in 2006 to cover some states and not others for preclearance purposes wasn't sufficiently tied to current conditions. it did not rule out a different formula. it did not rule out the idea of

preclearance at all. it did not rule out safeguard other than preclearance, above the normal responsive tool kit that exists today. it did not say we fix the problem of discrimination and voting and it did not change the basic truth that quoting chief justice roberts, 15th amendment empowers congress, not the court, to determine in the first instance what legislation is needed to enforce it. so now, it is up to congress once again. polls show that american people understood that this extraordinary right still needs more than just ordinary protection. whatever that may lock like. look /* republicans and democrats, including every member of this committee, who was able to cast a congressional vote in 2006, have stepped up to offer on a boy partisan basis that extra they demand. i will offer whatever i can as

both members of office include their bipartisan tasks. >> thank you. >> it seems to suggest that absent congress showing brand new evidence on a regular basis that we're dealing with some old problem in america that is virtually gone away. that seems to be the majority argument in the case. i think back to the last election cycle. there is the legislative exchange council financed by major corporations and major political players that went state by state to change the electoral laws to restrict the right to vote. i visited two of the states. the witness ms. wineberg, i was in your state of florida. as i mentioned, had electoral officials from both parties who couldn't point to a single instance of voter fraud that led

to changes. it clearly had some other design. now many of the changes in state law were challenged under the voting rights act under section 5. for example, voter id. as it whether or not it was discriminatory toward minority populations, disabled, or elderly and the like. so i would ask you, if you are familiar with this background and believe it is evidenced that voting rights act and its protection of that basic right to vote still is a vibrant and timely issue. >> thank you, senator. i am, and i've had the tount to speak with you on your committee about exactly these issues that you've been highlighting. they are of concern, and they are very much present. and they exist not only at the statewide level, but at the county level at the city level, municipal level, all the way down at all levels of government, there are still profound challenges. the existing tools that we have now, help. but i do not believe they are in

any way sufficient. i believe that election laws are special and demand more. >> i might, mr. chairman, ask for unanimous permission to enter into the record an exhibit, which demonstrates the financial supporters of the american legislative exchange council. many corporations, once they learn what the agenda was of this council, have withdrawn their membership and financial support, but many have continued it. and i would like it put this in the record. let me add quickly, they are right, under our constitution, their right of of speech, right of assembly, whatever they want it exercise, to spend their money for this purpose to try to change laws. i think it is legal and constitutional. but i think everyone should see whether. companies they are doing business with are in fact using their profits to restrict the right to vote out there legislative exchange council. professor carvin, you talked about section 2 and the fact

that it is there as the last protection we shouldn't be so distressed about the court's decision as it related to section 4. your argument was considered by justice ginsburg in this shelby county decision and she noted on page 14, congress produced evidence that litigation under section 2 of the vra was an inadequate substitute for preclearance. we address that directly when we reauthorize voting rights act. she went on to give two specific areas. litigation occurs under section 2 only after the fact when the illegal voting scheme has been put in place and individuals have been elected pursuant to it. thereby gaining the advantages of incumbency. an illegal scheme might be in place for cycles.

than she goes on to say, and litigation under section 2 placees a heavy financial burden on minority voters. congress already also received evidence that preclearance lessened the litigation burden on jurisdictions as well because preclearance process is far less costly than defending against the section 2 claim. so your argument that section 2 is good alternative seems to have been addressed directly by justice ginsburg. would you like to respond? >> sure. it is quite factually inaccur e inaccurate, that you wait until section 2 cases until elections have occurred to challenge it. your state is a good example of this. there's never been a congressional redistrict in illinois that a jurisdiction hasn't been adjudicated prior to election. sh some have been struck down on section 2 ground. the texas case, they entered a reimmediate yl order a year in advance of the elections. section 5 and section 2

litigation on redistricting is indistinguishable. you bring in a bunch of experts, look at prior electoral returns and look at -- >> it is dramatically different in my state. when we put a redistrict and reapportion map together, we know it is going to be challenged. the democrats and republicans do that for a living every ten years. it isn't a question of gathering poor minority dispossessed plaintiffs and trying to get the money together as well as evidence. we are prepared for this. it is a regular ritual in my state and most others. >> and most others. redistrict o redistricting is not an underlawyered legislation here. justice ginsburg said you have to wait four cycles -- >> that is different. that might be faced with the same allegation of discrimination and have to bring together the lawyers, money and evidence to challenge under section 2. >> your argument then sb senator, is not that you have to wait for elections to go by, you

have to go find a lawyer. we can both agree that justice ginsburg was flat wrong in suggesting you can have to wait for elections to go by. as your experience in illinois knows, lawyers get together right after the map is passed and run to court. so that's not true. does it happen less frequently in rural counties? that may be true. but that's the way we enforce every civil rights law from title 7 to title 8. and in all of them, if you have a meritorious claim, all of your expenses are paid for by the other side on the fee shifting provision. there is not a civil rights group in the country that doesn't have a voting system and we now have a lot of -- >> you made your point on redistricting an i responded. i will close by allowing you a chance to respond. >> it is odd to hear mr. carvin, a practitioner, step into the realm i'm normally in, which is pure theory. i've also been an election practitioner. and i can tell you, the facts on the ground look different.

ask charlston county south carolina whether a case was brought that they were able to get relief for before the election happened. and they will tell you, no. case was brought in 2001. plaintiffs asked for preliminary relief. they were denied. elections happened. elections happened again. it wasn't until 2004 that the court was able to actually provide relief. the existing responsive litigation system that we have is not only slow, it is expensive. i'm delighted that mr. carvin will -- i'm not independently wealthy and i can't wait four years to collect fees. there are, in my home jurisdiction, places that desperately need section 2 lawsuits brought where they are not being brought, in part because the data is hard to get,

because the experts are hard it find and expensive to gather. and particularly as yyou mentio there aren't armies of lawyer sweeping in. it would be wonderful if it were true. but there are lots of jurisdictions that need this extra protection. something other than the ability to file a responsive lawsuit after a law goes into effect. in order to fight it. >> senator. >> thank you very much, chairman. i think a lot of this, being a prosecutor for four years. in the state of minnesota, we are incredibly proud of our state. we have the number one turn-out in the country. we have same-day registration and people enforcing the laws and finding that when something does go wrong we have an enforcement mechanism in place, which i think you all know is incredibly pofrnt important. i was able to go to congressman

lewis just this last year, and something happened this year, which was incredible and that is that 48 years after the march across the bridge in selma, the white police chief in montgomery took his badge off and handed it to congressman lewis and apologized to lewis that the police had not protected them on that bridge that day. it made me think a lot about how progress can take a long time. and i think we know that. and that's the acknowledgement that's made and the need to reauj recognize this act and how incredibly important it is to do that. so i want to go to the practical questions with you, mr. levitt. i think we have seen new barriers to voting. with some of the states, things like very strict voter id requirements. things like shortening time periods where people can register to vote or can vote early. can you talk about that and how hear and now, not just 50 years ago, we are starting to see

major problems? >> so that's absolutely right. there are new threats to the ability for every eligible american to vote and have that vote counted and have it counted meaningfully in a way that leads to meaningful representation. there is a lot congress should do to remedy that. in particular addressing these new laws, new practices, and even the local versions there of, that discrimination on the basis of race and ethnicity is a special point of urgency for congress. >> can you elaborate on that? >> sure. so some practices that have gotten the most attention aren't necessarily the ones causing the most damage based on race or ethnicity in local jurisdictions. changing lines for a county commissioner for justice of the peace election. changing the language access

materials that are sent out in a particular election. moving an election date it a date as senator durbin mentioned, that you know will have less turnout and move that date as soon as the voting age population of african-americans hits 50% in a relevant jurisdiction. that is changing rules in response it a new perceived threat from minority citizens when really they are exercising their rights as americans. that is a particular problem. it is a reason there is constitutional amendments devoted entirely to the subject and it is particular important for congress to focus on issues here and now in response to shelby county. >> ms. wineberg, i appreciate you coming because we want to focus on this bipartisan solution here. what do you think of what professor levitt just said and do you see things that can be helpful on the local level? >> thank you for that opportunity.

i want it touch on that from an actual practical on the ground perspective of section 2 versus section 5 and what stays, what remains. absent section 5 what transpired in the state of florida last year with citizenship clerk would have continued. would have proceeded and we would have stood to lose over 100,000 votes. a large number of that having been from miami-dade county. section 2 alone is not sufficient. section 5 has no peer. section 2 alone is not sufficient. i can't stress that enough. it is an after the fact policy. it is cost prohibitive after the fact policy. and evidence exhaustive after the fact policy. not to mention the fact that preclearance -- well, the section 2 cases, and i noted only two in my written testimony. but i can bore you with a whole lot of different cases, as i'm sure mr. levitt is very familiar with, that have failed. section 2 alone is not

sufficient. if this hearing could end up with a slogan with my communications background, it would be that without preclearance, without section 5 and only section 2 is hunt saeg zon for discriminatory voting practices. >> okay, that's a good line. >> thank you. >> last thing i want to ask about is same-day registration. they don't have that in florida, i ne that. but a number of states have it. including states with republican governors. one of the goals here is to just make it easier for people to vote. five of the six top states for voting percentages have same-day registration. iowa, new hampshire, states like maine. and i don't see this as a partisan issue. i see, how do we make it easier to vote. representative elson in the house and i along with senator hester have a bill for same day registration across the country. can you talk about how that could help, professor levitt.

>> sure. and you are right, minnesota has been a leader in the means that it takes in order to make sure that eligible americans are able to participate. it is really -- it has leapt to a national leadership level. same day registration is one of the very important tools for this. this affects all-americans. not just those unregistered but those who have moved and we need to update registration. not just those who are unregistered bb those who find there is a problem, there is a typo and they can't be found on the records. not just those who are unregistered, but when they get to the polls that for some reason something has gone wrong. election day registration provides a fail safe mechanism to make sure that those who are truly eligible can participate on the same terms as everyone else tp it is an immensely important safety net. and it is used, as you say, in states both republicanes a

democratic administrators. republican and democratic voters have consistn'tly restored election day registration where there are threats to it in states that have had it. voters like it and it is obvious why. >> thank you. i would add to that and move on to colleagues, that bottom states with voter turnout, none of the 18 states with lowest voter turnout have same day registration. does that surprise you at all? >> it doesn't. it is a great safety net. and those who want to and are eligible to vote can do so securely. >> thank you. >> senator franken. >> thank you. thank you all. i was disappointed in the supreme court decision in shelby county and particularly troubled by the suggest that the oral argument that congress passed the voting rights act only because it has a nice name.

and not because of the mountains of evidence before congress or bodies long standing bipartisan commitment to the promise of the 15th amendment. voting rights act is one of the greatest and most consequential achievements of the civil rights movement as representative said. so for the democratic process tremendously and i believe that the law remains necessary today. the shelby county decision was a setback. justice ginsburg put it well in her descent when she wrote and i'm quoting, throwing out preclearance when it is worked and continuing to work to stop discriminatory changes, is like throwing away your umbrella in a rainstorm because you are not getting wet. end quote.