certainly hope that you will clearly communicate with congress if there are statutory ambiguities or obstacles that present time prevent the fed from doing the right thing when promulgating regulations. in that context of a lead to ask if you agree. when chairman bernanke was before us last year, i think it was, i asked him the same question. would like to know if you agree with him that the areas of end-users, swaps, pushups, and reducing the regulatory burden on the community banks are areas in which we need additional statutory attention to getting it right. ..eas in which we need additional statutory attention to getting it right. >> so the three areas that you mentioned are ones that are high on our list of concerns, areas that we are looking at ourselves

as we design the dodd-frank regulations, in all of these areas we're doing our very best to address in these areas you've mentioned issues that have been raised and that we consider quite appropriate. it makes sense to me that congress should consider these areas as well. i want to assure you that we will do our best in writing regulations in these areas, however, to address the concerns that have been raised. >> thank you. i appreciate your attention to it. i also believe that you need additional clarification and strength in the statute to do it right. i hope that we'll be able to provide that from congress. next, in numerous hearings last year it was revealed that we ed dot there are no undue oues t interruptions after they finalized the proposal for the banking organizations last week,

the european commissioner's office issued a statement that the fed rule conflicts with the standards on the cross-border cooperation in the bank resolution. what concrete steps are you taking to ensure effective coordination with counterparts to create a complementary regulatory regime? >> well, cooperation with our counterparts globally has been a core part of our approach to strengthening the financial system and putting in place regulations under dodd frank. so, we are very actively engaged through the financial stability board, through the basl committee and with the insurance regulators attempting to craft regulations in all areas that are consistent globally and that

meshed together as a successful system. in the area of fou foreign bankg organizations and of the rule writing which we finalized the week before last on section 165, we faced important trade-offs. the role of large foreign banking organizations in our capital markets has changed dramatically over the last 20 years. these organizations are among the largest and most systemically important organizations in the u.s. financial system, and we try to write the center for rules that provide a level playing field for both u.s. organizations and foreign banking organizations bargaining in the united states and of rules tha the rules thatn place i believe our quite similar to what our banking

organizations face when they do business abroad, so we have tried to construct a set of rules that preserve the opportunity for cross-border international global capital flows, branches and agencies in the foreign banking organizations to continue to operate with the bad separate capital requirements in the united states but it's important to put in place a set of rules directed to financial stability of our own markets. >> thank you very much and welcome, madam chair. the market has made the point that we need to be operating in the core purposes as the federal reserve is pursuing an expansive monetary policy we are pursuing a very restrictive fiscal policy, and it would seem to me

that if we were in harmony or complementary it would be better for the overall economy. there are several examples. the current debate, most objectives suggest that could add anywhere from 180,000 to 200,000 jobs in the economy into the same time helping people who need help. we are trying to find the healthcare systehealthcare systr which is another example of how the fiscal policy could aid the reference. can you comment on this purpose activity. >> there was a pose a substantial drag on spending in the u.s. economy over the last several years. the cbo estimated that last year the fiscal policy drag probably

subtracted a percentage point and a half for growth. the drag is likely to listen to substantially during the current year but nevertheless it remains some drag and of course it is true there has been fiscal policy drag and the burden on monetary policy has been larger. this is true not only in the united states but in a number of advanced countries in europe and in japan. my predecessor has always urged congress recognizing there are substantial long-term budget deficit issues in the need for the sustainable fiscal path for the country and focus to the maximum extent possible on fiscal changes that would address the longer run issues

that will be associated with a rising debt to gdp ratio to try to avoid doing harm to the recovery and i would take the same position. >> but in the short run, there is a value of additional step up fiscal stimulation and also make it easier for you to begin to withdraw the quantitative easing. is that a fair comment? >> the economy is beginning to recover and we have made progress. in the minimum, i would hope the fiscal policy would do no harm. >> one other question, you and your predecessors have looked at the employment rate of 6.5% as a sort of point of inflection if you will, but one of the aspects of the current situation is the

labor force participation is falling so that 6.5% might not actually capture the sort of reality of the current economy idea in an adequate sort of measure when you should begin or how you should begin to undertake fiscal easing, quantitative easing, sorry. are you looking at other ways to gauge your actions? >> let me first say that 6.5% unemployment is not that kennedy's definition of what constitutes the full employment? the range of views among that of the committee members are substantially lowering the central tendency that is over 6%. so, 6.5 was meant to be the committee look at the

unemployment rate above that. we see absolutely no need to consider any possibility of raising rates. below that we begin to look more carefully. and as we do so, of course the unemployment rate off a sufficient statistic to measure the health of the labor market. an additional 5% and unusually high fraction of the labor force is working part-time for economic reasons, which means that they are unable to get full-time work but want it. that is an additional 7 million plus americans who are involuntarily employed part-time, and we have an unusually high fraction of americans who are unemployed and have been for substantial amounts of time so as we go to a full consideration of how the labor market perform we need to

take all of those things into account. >> senator shelby? >> thank you, chairman and for being here with us, and congratulation. i want to talk to you a little about the proponent of the fed that has been mentioned and i understand it's about four chilean dollars at the moment. you have tapered off some. you are still at the current rate by 65 billion a month. so at that rate if you don't tapered substantially or stop, you will be getting up to $5 trillion at the end of the year more or less; is that correct? >> we are around four chilean. >> but at the rate that you are buying. >> if we don't continue to tapered. >> but even if you continue to buy -- if you tapered down from

65 to 50, that is still substantial in the market. >> is. we have indicated that if the economy progressives as we anticipate, that we expect to continue reducing the pace of the purchases and measured steps, which would mean the purchases winding down and ending sometime next fall. >> in your portfolio are there mainly treasures and mortgage-backed securities is that what the portfolio is? >> yes. >> what is the relative ratio of that one or the other? relatively, just an educated guess. >> iab lead we have a larger quantity of treasuries. >> do you want to look at it or furnish that for the record? >> i would happy to furnish the exact numbers for the record.

>> to unwind a portfolio of that size which is unprecedented, the chairman bernanke has told us before that it would be a big challenge. do you agree with that? >> we do not need to and have no intention of quickly winding down that portfolio. >> is it your plan to keep some of the mortgage-backed securities in the treasuries? >> we have indicated we have no intention of selling mortgage-backed securities. they will -- i think that when we begin the process of normalizing the monetary policy, wanting to tighten monetary policy, we are -- we will have a look at permitting the portfolio

as these securities mature, and allowing the runoff, we would bring down the portfolio over time even without sales, and i think my predecessor has emphasized and i agree there is no reason to bring down the sides of the portfolio to tighten the monetary policy. we have a range of tools that we can use to raise the level of short-term interest rates at the time the committee deems it appropriate to begin to tighten the monetary policy. now that is a way off, but we continue to develop the tools to make sure that we have an arsenal of tools to be able to as appropriate height in the conditions and not have to do asset sales or mandatory portfolio in any way that would be disruptive to the financial

markets. >> now to the regulatory side as the chair and board of governors. basel iii is supposed to be in effect in 2015? to make those adjustments for capital and the flexibility of the capital liquidity so to speak is that correct? >> i believe so. >> the senator mentioned before in -- foreign banks and so forth. will you make sure they comply with capital standards just like our banks have to if they are doing business in the united states of america? >> yes, we have said that four in beijinforinventing organizatt have over $50 billion at size will have to form intermediate

holding company is to organize their activities of every branch and the agency and activities in the intermediate holding company that will be subject to the same regulations as the u.s. base banking organization that is the essence of the proposal that we finalized two weeks ago. >> thank you. my time is up. >> senator schumer. >> thank you, chair yellen. you are off to a great start. i know that some of my colleagues on the other side of the aisle expressed amazement at the fed would take extraordinary measures to boost growth, but if the congress had been done more on the fiscal side to deal with the damage the economy suffered, the fed wouldn't have to do this and yet some of the very same senators and congress members

who blocked all of the further need of investment in infrastructure and other things that used to have broad bipartisan support complained that the fed is doing too much to help the economy and its incredulous to me you don't have to comment on that. but do they expect you to just stand here and what the economy get even worse and slow? >> is preferred but it's not available because people have blocked it. my question first relates to tapering on the economy. i know you testified were surprised. those were your words by the jobs report in december into january but they had no intention despite the fact that the economy may not be showing the growth that you had originally anticipated. in your analysis of the data since then have you seen any trends or additional information that has led you to reconsider slowing or popping the tapering of the buying?

>> senator's eye as i mentioned in my opening remarks, we have seen quite a bit of data over the last month or six weeks. it was the envoy met report, the relatively low below expectation growth in payroll into some of the housing numbers and retail sales and industrial production, so it is quite a range. i think that it's clear whether if it is unseasonably cold weather has played a role in much of that there are many ways in which the weather would have affected the peace, but what we need to do and we will be doing in the weeks ahead is to try to get a firm handle on exactly how much of that set of soft data

can be explained, and what portion if any is due to the soft outlook. >> and it's not mostly whether, would you consider pausing or changing the rate of the tapering? >> as we have said in our statement, and i would agree as the purchases are not on the preset course so if there is a significant change in the outlook, certainly we would be looking to reconsider that i wouldn't want to jump to conclusions. >> my next question talks about some of the qualitative versus quantitative guidance. the fed reserve walk hard set for the last couple of years forward guidance may be the lead policy to the most potent method that we have for influencing the financial conditions and economic result. i appreciate the use of the guidance as another tool to influence market conditions, that i would like to get your

thought on how it can be most effective. based on the last meeting it seems that the fomc had a significant discussion about revising down the forward guidance which originally stated and considering raising interest rates once the employment fell below the threshold of 6-5. in her testimony before the house, you indicated earlier this month that the threshold would not be the only factor that is taken into account. policymakers would be looking at what you called a broad range of data on the creation and other indications. so it seems to me that they offer a more positive approach rather than the threshold of 6 6-5. given the importance of the guidance which is these days more than ever into the reality that to be effective the guidance must be trusted by the market, what you agree with the president who said that he would favor discarding the threshold and much more work towards the qualitative approach and giving

more flexibility if still get the market guidance? >> there are many different views in the committee about what the right way is to cast forward guidance and this is something we have been dating for a long time and we will undoubtedly continue to discuss as the unemployment gets closer to the 6.5% threshold. i think we have already clearly indicated, and i emphasized in my testimony that the unemployment rate is not a sufficient statistic for the labor market. there is no hard and fast rule about for the unemployment rate can't get to its for employment and we need to consider a broad range of indicators. many members of the committee have emphasized this point and it's one that i agree with it moves in the direction of

qualitative guidance. on the other hand we want to give markets as much of an indication of how we spent to conduct the policy as we can. we did provide additional information in the same or which we reiterated in january. what we said is the committee based on its full assessment of the data on the labor market and the inflation pressures and expectations, financial developments taking all of that into account, we believe that we could begin to raise our target interest rates passed the time the unemployment rate is declined below 6.5% and we said that that was true especially if inflation remains low because an important factor is that an inflation is running well below the 2% target, so i guess this is qualitative guidance, but i feel what we provided them was

additional information. >> moving more towards the qualitative, which i think is a good thing. >> thank you mr. chairman. i'm surprised my friends from new york in the partisan comments i can only assume you had to much coffee this morning but it's good to see you. >> so, madam chair man, since this is a first, how would you like to be addressed? >> madam chair is fine. >> it's good to have you here. i met some of the nominees for the board, you and i talked about that a little bit in the back room and i want to say that i'm impressed especially i want to make reference to stanley fischer. i think you may have had something to do with him being nominated into the former chairman might have had something to do with that, but

very impressive person and i think that he is a very good complement to your background so i'm glad that he's being put forth and i look forward to him confirmed. you and i when we were having a confirmation hearing talked a little about financial instability in the hearing, and i know there's been a lot of discussion about inflation and concerns. i know senator shelby asked you questions about quantitative easing. but we addressed in the process the concern about the markets overheating and the long term policy and may be the thread on the front end isn't inflation. maybe it's instability in the markets and i'm wondering if you have seen any signs of that and find any thinking about how you might address that should occur. >> i agree in the environment of low interest rates especially

when it prevails for a long time and we have had a long period of low interest rates can give rise to behavior that poses a threat to the financial stability. and therefore we need to be looking at that very carefully. we are doing that in a very thorough way i believe. we are monitoring measures of asset prices and whether or not they appear to be diverging from the historical norms, namely it's hard trying to spot any of the price bubbles that might be emerging looking at the leverage that might be built up in the leverage can be very dangerous to the financial system and pose stability risks. we are looking at the trend is in leverage and credit growth to see whether or not that has

potentially worrisome trends. in addition to that we are looking at a stress test at financial institutions and a low interest rate environment. we have to worry about whether they are appropriately dealing with interest rate risk. we have been looking at that and in fact the current stress test includes a special portion -- >> i'm going to run out of time and the chair man is very punctual. have you found anything yet that gives you concern and to do you have a tool with a zero intereso interest rate policy to address that if you do? >> i would say at this stage broadly i don't see concerns, but there are pockets, a few things we have identified that do concern us.

for example underwriting standards and the leverage lending appear to be deteriorating. we have addressed that with supervisory guidance and special exams come and we will continue to be very vigilant in that area. that is worrisome to us. there are a few areas and asset price valuations broadly speaking. there are a few areas where i would be concerned. many people have emphasized the farmland there is a concern of the farmland prices. we have regulatory and supervisory tools and to me they should be the first line of defense. >> thank you for the detailed response. >> we were meeting with regulators bear an there and i w there is a large concern about though balkanization of the

markets, and i know there was some discussion about trying to address that with the trade agreement and i know the administration is not interested in that, but i want to raise that as an issue that i think does need to be addressed and i realize the fed will take a major lead in that. the final point, the earlier title that was put together and i think a lot of us worked on it together and i'm proud of that title and it's not exactly the way that any of us would like for it to be that one of the things even though it was orderly liquidation, i think that the federal fdic realized when they went through the process there's really not a way to orderly liquidate and so instead of coming in through the single entry to the holding company one of the things i think all of us have a concern about is making sure if we are

going to use that process -- and i think it is sound personally, we ensure that there is enough of the holding company level otherwise there will be other kinds of distortions. where is that right now? and when are we going to come up with a ruling that gives clarity so that we know absolutely we have things in place should the institution fail. >> i agree with you this is extremely important and it is high on our list. we have been working globally with other regulators and looking ourselves that a requirement of the holding companies have a minimum amount of long-term debt that would be less absorbing and that would permit an orderly liquidation. we would need enough long-term debt to absorb the losses and also be capitalized the company in the title to liquidation and

come up with the rules we are working with the fdic on this. >> i hope it is a very large amount of debt held at the holding company. >> senator menendez. >> madam chair man, let me ask youcut the number of long-term unemployed americans has continued to go down but it's still exceptionally high by historical standards over 3.6 million. as you know, long-term unemployment could have serious consequences for individuals and their families and can permanently impair the growth prospects for our economy if workers are stuck on the sidelines for too long and networks become out of date. do you feel that the policies have been successful in helping to reduce the number of long-term unemployed americans? is there anything more that the fed can do for is their congressional action that you might leave is necessary in order to meet that challenge and

is boosting the demand the best way to reduce long-term unemployment right now based on the current economic conditions. >> senator we are very focused on and concerned about the high level of long-term unemployment. it's really unprecedented to see something like 37% of unemployed in the long spells. we can try to foster a stronger labor market. generally we don't have the tools that are targeted at the long-term unemployment, but in taking account of how much slack there is in the labor market and attempting to stimulate the demand so that there is more spending, there is the production and more jobs in the economy, we have seen long-term unemployment down. very slowly it's taking a long

time for those people to be free absorb into the labor force, but our approach is to foster a stronger recovery and try to get the economy back to full employment, and i think that they will seek gains. >> is there anything else the congress should do to achieve in those numbers are strictly high numbers down even quicker? >> i think it is also appropriate for the congress to look at what some of the special needs of the long-term unemployed are. these are spells that are damaging to families and put a great burden on the families both in terms of income and even health burdens on children and marriage is, so i think it certainly is something congress can look at along with us.

are the skill sets something we should be considering? >> sometimes long-term unemployed dude needed to require different skills in order to be read as word into the job market. >> i know chairman thompson asked you on the income and wealth in the quality and i want to follow that up in terms of monetary policy. at the top 1% of earners has grown by more than 86% while incomes for the remaining 99 has grown by less than 7%. during the current recovery in the financiaafinancial crisis, % have received 95% of the income gains of nine below. we all applauded those that achieve financial success, and

we are thankful for that. but we are concerned with the vast majority of the people feel they are not sharing in the economic growth and when the income and wealth disparity make it harder for ordinary working families to move up the economic ladder as the studies have shown to be the case, it creates i think a greater challenge to our overall economic well-being. so my question is how does the fed account for the income and wealth equality in its monetary policy decisions? a fed is looking to the statistics like the gdp and economic growth is only accruing to a small share of the population while the rest are still in a recession. is that something that the fed would wait until the broad-based growth takes place or is there a broad range of statistics including measures of income that they should be considering? >> i think the trends that you have described in detail or extremely disturbing trends with

a very significant implications for the country. othe major thing that we can do as we continue to assess the state of the labor market and appropriate policy to look at a very broad range of statistics and metrics concerning the labor markets not just to the unemployment rate, but in particular other measures that suggest the labor market is not functioning properly the fact that we have seen the growth in wages for example i take as one of the many pieces of information suggesting that of the labor market is not returned to normal and has quite a way to go into something that is appropriate for us to look at as we consider appropriate monetary policy.

>> you will look at a broad range of factors you are making your decisions. >> absolutely. >> thank you mr. chairman and madam chair for being here and for your work. you know many of us certainly including senator brown and i are concerned about capital requirement that the biggest banks. can you confirm that the regulators are close to finalizing the supplemental leverage ratio that would impact bat, and if so, when di do you expect the final action to be taken? >> this is high on the regulatory agenda for this coming year. we have an initial proposal on this. while i can't give you an exact time, we will certainly be

working with the other agencies to finalize. >> can you give an exact general timeframe when you would expect the fed to act? >> in the not too distant future i would say. >> according to "the wall street journal" for vice chair man said that regulators are unlikely to change the draft proposal with regard to the 5% capital buffer against all large bank assets in a similar 6% at the subsidiari subsidiaries. in contrast to that, there has been concern that you might follow the lead in watering down some other provisions on the initial draft concerning things like the weak treatment of the residents and the valuation of the repurchase agreements. can you give us any insight into

where those things stand in your discussions? >> let me see if i understand what you mean here. when we came out with a proposal for the five and 6% -- >> do you think there is any chance that it would change on the final action? >> i think this is something that we have been quite supportive of, and i'm not envisioning -- deeper in the weeds if you will there has been some suggestion that if you can back up some other alliance of the draft for instance on issues of the valuation of purchase agreements. we have weakened element of the draft. the draft is that under discussion.

my objective would be to come out with the strong proposal with increased greatly risk-based capital requirements in light of that increase i see the leverage in the risk-based capital is sort of built in suspenders. it is definitely in my view appropriate to increase the leverage requirements more or less in line with risk-based capital requirements. >> i would just encourage a strong final set of proposals or rules as strong or stronger than the draft, so i would just encourage that. let me movwith the move to one c i wanted to hit. and this is related to the too big to fail capital requiremen

requirements. a lot of us have concern about the squeeze that community banks are getting in the financial sector. that has been a historic long-term trend come and often even a lot worse since the 07 and 08 crisis and since in some cases because of dodd frank it's gone from bad to worse. if you look at the federal reserve board membership, there's also a trend and it is a way from representation of any community banking or community bank supervision experience. let me put a chart up and this shows it's a little busy. this shows the makeup of the federal reserve board members over time. and any community ban bank in te communitandcommunity bank supern experience, which is the yellow,

is limited and there has been a huge growth over time in terms of folks with fewer economics and academic background. in particular right now there's one person with that sort of community bank or community bank supervision experience and she is leaving. so soon there will be none. what would your thoughts be about a requirement to have at least one person in the future with that type of community bank or community bank supervision experience? >> i've had the privilege of working with the governor and previously i can certainly say that they made huge contributions in the community banking area and in the background that they were able to bring was extremely helpful to us in crafting regulations

and approaching the supervision responsibilities with sensitivity to the special issues in the community banks face. i hope the administration would consider an appointment of someone with that kind of experience and i can certainly attest that it's helpful to us in doing our work. >> thank you madam chair. >> senator brown. >> madam chair, while some we are thrilled you are here and thank you for your public service up to this moment and your continued service. i think senator vitter for his comments about the capital standards and urge you and appreciate your answer as quickly as possible with the fdic to move as quickly as possible. thank you for the response about the real economy and/or confirmation hearing last friday as the board released transcripts of the 2008 fomc meetings.

it was interesting for those of us that find this stuff interesting. as you know the fed has a dual mission maximizing employment, but according to "the new york times" in september the most important of those in the september meeting on the eve of the lehman brothers bankruptcy, the fomc mentioned, according to the minute, inflation of 129 times and recession five times. you speak forcefully and have for sometime about the potential threats to the broad economy into this statistic indicates the implications to ththey overs happening and now you convince us that we won't see meetings like that where the emphasis is so much more on inflation than an appointment because the focus will be more on the ordinary americans that aired the brunt of this economy. >> i think as you know the fed

takes the dual mandate. seriously, and we be legally should be focused both on inflation and on unemployment. but to just try to myself put the 2008 situation in context, if you think about what happened within months of the september meeting, where perhaps people didn't realize how serious the deterioration in both the financial and the economy was about to get, within days or months of that meeting, the most incredible array of programs had been rolled out by the federal reserve to address the deteriorating economic conditions in an alphabet soup of programs to support credit, the availability and extension

of credit throughout the economy to provide liquidity not only to banking organizations, the two markets that were really finding themselves deprived, and by december of 2,008, even with all of the mentions of inflation that you noted, the fomc had certainly changed its focus and in december lowered the federal funds rate to zero, so i think i was one of those who was urging more, faster we need to get on this. but within three months, a great deal had been done and since then we have been trying to do it. so in some sense i think the fed has responded. >> added to your credit you look better in those minutes than some of your colleagues but that's the past and you look to the future. >> i want to follow up on some of the too big to fail.

you said addressing too big to fail is among the most important goals of the post crisis and you mentioned capital requirements and capital surcharge regulation authority, long-term debt requirements, the leverage ratio you also have living wills into the authority to break up institutions if they pose a grave threat to the financial system, despite all of that, the nation's foremost expert on the banking regulation, your once the low governor said on tuesday that they were, quote, not even close ending too big to fail. it's been five years since the crisis. you have the tools as the new chair. why is it taking so long and when is this going to be resolved? when can the financial -- when will the financial community and the american people know too big to fail has actually ended? >> i am surprised you said we were nowhere close because i personally think that we have made quite a lot of progress in

putting in place our regulations that will make a huge difference to this even in an orderly resolution. i think it's important we were just discussing the long-term debt requirements. there are obstacles to resolving the firm having to do with for example cross-border resolution issues and how to deal with the fact that the foreign law in foreign countries could make it impossible, could precipitate the ending of the contracts that would cause a disorderly failure for the firm, but we are working very closely with our foreign counterparts to be able to resolve these issues and you gave a list of all the things or some of the things we have on the join board that we are hoping to finalize within months ordering this year.

beyond that we are working on shadow banking or stress test capital in the banking system, the highest-quality capital is doubled since the crisis and i personally think we are making strides, and i am completely committed to seeing this agenda through to fruition and i am more encouraged about the progress that we are making. >> one last comment mr. chair. the quick accelerating of the rules that the fdic and the occ without diluting those rules is really important not just substantive thing to do but really important message to the financial community and the public that you really do mean it and you mean business on this and you do want to and too big to fail. >> senator. >> thank you mr. chairman and doctor for being here and for

listening, being patient and taking the question. i know as a former chair of the san francisco federal reserve you have a pretty good understanding of the state of nevada and the current economic conditions. since we've had this economic collapse. in the federal reserve to the normal economy than we have been in a long time and i would stress that data is nowhere close to the normal economy. well maybe some parts of the country are experiencing some recovery. nevada is still at 8.8 unemployment, second highest in the nation and many homeowners are still underwater. so i guess the question is do you feel that the struggle that nevada is currently experiencing, is this a new normal? according to the president of

the federal reserve or a new economic reality? >> as you know, senator, nevada was one of the hardest hit. it had one of the biggest booms in housing and that is about the biggest bust of any market in this country, and i am well aware that it's an unusually large share of the home owner's underwater. the prices have come up, and they are coming up in a way most rapidly in some of the areas like las vegas. but it is still going to be long before things are back to normal in the housing market in nevada and some of those hard-hit areas. prices are moving back up. we see investors coming in and

buying homes and converting them to rental housing, but the credit is hard for many families to get the ability to have home equity loans when it's been wiped out and back unfortunately nevada is one of the state that has been most badly affected. >> any timeframe for the new normal or a normal economy class >> some years i think. >> can you give me what your definition of the full employment is? >> the people are able t were ad in a reasonable period of time jobs for which they are qualified and there is no single metric i would say that would enable me to tell you you when we have reached that. i would look at a broad range of

indicators in the market, the unemployment rate if i have to choose one match record the unemployment rate is probably the best, and members of the committee are not certain exactly what constitutes full employment, but generally see the range of five to 6% or a little bit -- in that area to be a state of full employment but also looking at part time employment, job flows, what's happening with wages and a broad set of metrics i think is necessary. >> what is real on employment today? >> i'm not sure. some of the broadest measures of unemployment, mike that which includes the marginally attached workers and those who were part time for economic reasons mainly they can't find full-time work

around 13%. >> the congressional budget office recently reported that president obama's proposal to raise the minimum wage to eliminate half a million jobs. some believe they are lowballing disfigure. and i know it is your job at the fed to maximize employment. i would like to hear your thoughts on this soft economy, and the impact of raising the minimum wage. >> i think almost all economists think that the minimum wage has two main effects. one is to give higher wages to those who continue to have jobs and who are earning the minimum wage and then second, that they would be some amount of negative impact on employment as a consequence, and there is considerable detail about just what the employment impact would

be. cbo is as qualified as anyone to evaluate that literature, and i wouldn't argue with their assessment. i mean, there are a range of studies and they cited them, but i wouldn't want to argue with this kind of evaluation and i think they also -- i can't remember the numbers involved, but indicated that a large number of individuals would see their incomes raised as a consequence i think that's the trade-off. >> thank you mr. chairman. >> senator tester. >> thank you mr. chairman and i want to welcome news yellen thank you for putting yourself up for this job and historic confirmation. we were able to visit a number of issues and we will visit them again, end-users. one of those issues that we discussed, clarifying the end-user extension from the margin that was included in dodd

frank given the risk that they pose to the system. as you know we visited a term in bernanke the predecessor and the governor and both indicated comfort with the intent of the exemption given the lack of systemic risk posed by the end users. but concern about the ability on that intent, since the proposed rule issued back in 2011, there's been a number of developments including most notably the finalization of the framework in september setting forth the standards. can you share where the thinking stance on this issue in light of those developments? >> they do not pose systemic risks and we will come back and craft a rule in light of the international negotiations, and i believe that we will do our

very best to make sure that there is no undue burden posed on the end-users that do not pose systemic risk. >> i know your plate is full and there are many who are dealing with and people are always askinasking me when is it goingo come out so i will do it. when is the timing on that front? >> i can't give you a date certain. >> the chairman talked about the regulatory policies and in the final rule released last week declined to provide the rule to the nonfinancial companies at this time and it indicated a desire to basically tailor this rule for insurance. can you tell me more about what the fed has in mind with respect to the tailoring?

>> we understand the business models of insurance companies are quite different than those of banks. there are a number of ways the asset liability matching separate accounts and so forth that require the design of the capital and liquidity requirements, so they are appropriate for those business models and we are trying to take the time necessary to understand in detail the businesses of the companies and what is appropriate. i would say it again we do have some constraints in what we are able to do because of the amendment. >> can you give some insight into what extent with respect to the school to provide a roadmap out a might seek to tailor after move making this?

in general we try to tailor the rule makings and i'm not sure what area in particular. >> with the insurers in particular but others, too if you mind. >> we try to tailor the rules so that they don't pose undue burdens on companies that are not really you know, don't pose risks to the system. i would say for example in the case of community banks, i know the community banks are under many burdens and it's not easy to run the community bank for our part. we are trying to avoid burdening them with the same level of regulatory complexity that we would impose on it systemically important institution, and the same is true in other areas where we have the ability to tailor the rules to make them

appropriate. >> with regard to the international regulation i just want to say how much i appreciate the fed moving in the direction that you spoke of earlier. and i very much look forward to working with you to ensure that we do not force the in insurers into the regulatory model and i want to note how critically important sentiment and the direction the fed is having on the regulations is fully reflected at any international negotiations regarding the capital standards that you may be a part of your capacity. i as others have expressed we look forward to working with you as we go down into the future. >> senator toomey? >> welcome to your new role. i have been very concerned about

this monetary policy for some time and i wondered if you could for the committee gave us a sense of how you would quantify the benefits the economy has enjoyed. you be the there are benefits from this unprecedented experiment into the economists look at the traditionally understood mechanisms to the asset price and translate into more spending and the quantification of that gives a very modest numbers but i wonder how you quantify the benefits from the quantitative easing that we have had. >> i don't have a quantitative estimate that i can present to you today. there are a range of estimates in the literature. we have hit the so-called bound in december of 2008. we lowered the overnight interest rate target to zero.

standard rules would have called for substantially more accommodation rules like that would have said that we should go to minus four or 500 basis points if we could come and we could not. so we look for other ways to provide the accommodation the economies seem to need. ..guidance. i think thefz served the to push down interest rates. o we have seen some significant recovery in housing. the backup in rates we have seen last spring and summer clearly seems to have had a negative impact on housing, and so i think it's fair to say that we were successful in pushing down

longer-term rates in terms of these policies. we did see a positive response in housing. i think in the area of vehicle sales, interest sensitive spending -- >> i don't mean to -- i just have such limited time. so i'm aware of the changing in economic statistics, but the point is you don't have a quantification for how much of that is attributable to the quantitative easing. >> there are estimates of a number -- >> but there's not one that you've endorsed or that you subscribe to? >> i have cited some. and i provide details on some that i've cited. >> and on the risk side of this equation, i know you mentioned the things you're looking for. many people believe that last decade the unusual monetary policy, including maintaining negative real interest rates for an extended period of time contribute ed significantly to e housing bubble that later burst,

of course. do you agree that that was an attributing factor and secondly, among the risks that you look as as we hopefully move to normalcy, which ones concern you the most? and then i have one last really short question? >> so i think it will take a while for scholars to decide exactly what role easing monetary policy had in contributing to the financial crisis. i would not argue the idea that a long period of low interest rates does contribute to the buildup of leverage and may have touched up a housing bubble. i think on the regulatory side. on the supervision side, there were also failings that contributed importantly to the crisis. we're watching very carefully for the development of any such

excesses. we are very focused on not allowing such a thing to happen again. and twhil in might be a few areas where i have concerns, such as deteriorating underwriting standards and leverage lending, farmland prices, a few things, i don't see those excesses having developed at this point. wrpt to housing prices, they have rebounded significantly, but remain not back to their peak levels by any means and price ratios and housing certainly remain in normal ranges. and so i don't think we've promoted those kinds of excesses. certainly not at this stage. >> thank you. my last question. you stressed a couple of times the importance that you attach to fulfilling the congressional

legislative mandate to maximize employment. as well as the other portions of the mandate. my question is would the bhafr of the fed, would the actions and the policy of the fed by any different if the fed had only a single mandate, and that were price stability? >> so over this last several years i think the answer is no. because at the the moment -- >> how about today? >> well, inflation is running well below our objective. and the economy is falling short of unemployment. so both pieces of the mandate are giving us the identical signal. mainly we need an a policy. there can be situations where there could be conflicts between the objectives. and in that sense, it would make a difference. it might make a difference to have a dual mandate rather than a single mandate.

at the moment there is no such conflict. my personal view is this mandate has served as quite well, and most central banks even if they have an inflation target also have a mandate to take account of economic growth. >> although the ecb does. >> that is true. >> thank you very much, mr. chairman. >> senator, egin? >> thank you, mr. chairman. welcome to the committee. i was so pleased at the beginning of the hearing to hear chairman johnson's introduction and welcome to you as the first woman to head up the federal reserve. so welcome. >> thank you so much. my first question is during the january of 2014 federal open market committee meeting, the committee authorized the federal reserve bank of new york to conduct a series of fixed rate overnight reverse repurpose operations involving securities and securities guaranteed by agencies of the united stateses.

the authorization runs through january 30th of next year of 2015. and specifies an offering rate of 0 to 5 basis points that you have the authority to waive. the program, which has been steadily extended and expanded is being considered for use in supporting the implementation of monetary policy. so i want to ask you some questions about this. can you begin by describing this program? its scale, and then your vision for its expanded use, and also if you can talk about the dollar volume of these operations. >> so this fixed rate overnight reverse, repurchase facility is one where we're essentially borrowing from nonbanking from

entities other than banking organizations. we're offering the to pay a low, fixed rate and are offering our counterparties in return for their loans to us, collateral which comes -- comes in the form either of treasury or agency mortgage backed securities. and we're engaging in this program. as you mentioned, this is something technical. but we want to be table to firmly control short-term money market rates when the time ultimately comes, which it's not. it's probably ha long way off, but when the time comes we do wangt to tighten monetary policy and raise our target for short-term interest rates. we would like to be able to execute that in a very smooth way so that we have good control

over the level of short-term interest rates. and the paying interest on reserves, that's something that is one tool we will be using to boost when the time comes, the level of short-term rates. but using this new facility can also help us gain better control, i think, than we could through interest on reserves alone. so at the moment we have been experiencing with developing this facility, making sure we can smoothly execute these transactions with a range of potential lenders. we have put limits both on the magnitude of loans that we will be willing to take on, and what we're paying, as you mentioned, the limit so far has been five basis points. we're pleetzed by what we're

seeing about our ability to carry out the exercises and it's part of prudent planning that the fed has been doing for quite some time. >> and what about the dollar volume? >> it varies from day-to-day depending on how much interest there is in the markets. it's up to the markets to decide. we've typically had limits on the amount that any one firm we lend to us overnight. >> it was 3 billion. now it's up to 5 billion? >> yeah. i think there were days at the end of the year given the pressures that existed toward the end of the year when i believe the volume rose to 30 or 40 billion. but i can get you exact details on the quantities if you would like further information. >> what tr the monetary policy effects of raising this offer rate beyond other range set than the fmoc's rez ligs? >> well, these are very, very

low rates. >> right. >> and so we're not raising rates by doing this. we're only going up to five basis points. we're paying 25 basis points on interest on reserves and there's really only any takeup at times when there would be, you know, pressure for unusual reasons for rates to fall to below that. but we're not pushing up the general level of short-term rates with this facility at this time. >> my time has run out. thank you very much. >> senator manchin. >> thank you very much. congratulations, madame chairwoman. i'm so pleased i was able to vote for you. and we had nice conversations concerning the quantitative easing. i appreciate the job you're doing. >> thank you. >> let me say i sent you along with five other regulators a letter representing my concerns of bit coin. i think it's being used for illegal activities.

it allows scam artists and hackers to steal money from hard working americans and it's a bad form of currency because it has a deflation problem. . most recently the major change for bit coin went dark, which led to $400 million in bit coin's evaporation overnight. i'm concerned other countries are ahead of the curve of already issuing regulations to protect their citizens, which may lead americans holding them back. i would like to know your view on the bitcoin and what actions does the fed have planned on regulating this unstable currency? >> so, senator, i think it's important to understand that this this is a payment innovation that's taking place entirely outside the banking industry. and to the best of my knowledge, there's no intersection at all, in any way, between bitcoin and

banks that the federal reserve has the ability to supervise and regulate. so the federal reserve simply does not have authority to supervise or regulate bit coin in any way. i think my understanding is that fence and the department of justice have -- i mean, one concern here with bit coin is the potential for money laundering. i think they have indicated that their money laundering statutes are adequate to meet their own enforcement needs. but it certainly is appropriate. so the fed doesn't have authority with respect to bit coin. but it certainly would be appropriate, i think, for congress to ask questions about what the right legal structure would be for, you know, virtual

currencies that will involved nontraditional players that aren't regulated. >> let me just say, and i'm so sorry, you know how our time is around here. if there's a new american exchange for bit coins, they're going to use banks. if this exchange is using banks you all will have. >> if they use banks. my understanding is the bit coin doesn't touch banks. >> why did other countries belief they that had to get involved? >> well, you could get involved if congress wants to get involved and set up a supervisory regime. it's not so easy to regulate bit coin because there's no central issuer or network operator to regulate. >> what we'll do is i think probably if we can, further explore this and get recommendations and see what our ramifications would be. >> sure. and we would be happy to work with you.

we're looking at this and will be glad to talk with you. >> my other concern is community banks. a new study released this morning show that dodd-frank is having a negative impact on community banks. just came out this morning. most community banks have had to hire at least one additional compliance officers and many have had to hire two. it doesn't seem like much. but former fed governor iz beth duke who i know you know very well has said hiring one additional employee would reduce the return on assets by 23 basis points for many small banks, and in other words, 13% of banks with assets of less than $50 million would go from profitable to unprofitable. which is very concerning. and in west virginia the community bank is our life blood. and it's really caused a problem here. so based oen the new study 13% of banks may be unprofitable simply because they had to hire that new compliance officer to

deal with the burdensome dodd-frank. what can the banks do to protect the banks other than asking us to do our job? >> so we have tried in all of our rule makings to tailor regulations so that changes that are really meant to reduce systemic risks, that these banks don't contribute to, that we're not burdening them. i mean, we have thought it appropriate that even community banks have appropriate capital and appropriate quality of capital and so there have been some new standards that have applied to community banks, but what i can pledge is that we will, in all of our rule makings, do our very best to minimize burden on community banks and listen very

carefully through the contact of the community banks to understand what the burdens are and to minimize them. >> that report just came out and my time is up. i have more questions i will submit for the record and one thing i would like to say i hope you will consider. yesterday it was reported that china central bank engineered the country's currency which is another violation of currency. i'll submit. thank you. >> it is good to see you. back at your confirmation hearing you said you thought the regulatory responsibilities were as important as the monetary policy and responsibilities, and i agree. but i think current fed practices don't reflect those values. so while the feds board of

governors votes on every important monetary policy decision, the board rarely votes on issues like whether to settle enforcement actions. last year the fed reached its largest settlement in history, $9.3 billion with mortgage servicers affecting more than 4 million families but it was the fed staff that worked out that arrangement and the fed board didn't even vote on it. so two weeks ago congressman cummings and i sent a letter to you recommending that the fed change its rules so the board would have to vote before any major settlement. do you support such a change? >> senator i think you have raised very important questions about this and i do think it is appropriate for us to make changes and i fully expect that we will. >> so in principal support what

we've asked for in this letter that is clear and concrete evidence that the board is supervisory and regulatory policy? >> it is completely appropriate for the board to be fully involved in important decisions -- >> and voting is a good way to do that. >> and i fully intend to make sure that we are. >> thank you. thank you. now i want to ask about another aspect of the mortgage settlement. when the deal was struck, the fed had a big press release to announce a $9.3 billion settlement but it turned out that of the $9.3 billion, $5.7 billion was in the form of credits for what the fed described in the press release as, quote, assistance to borrowers such as loan modification and forgiveness of suppressency judgments and it didn't say how the credits will

be calculated and later it came to light that mortgage companies could get away with only paying a fraction of the $5.7 billion. now the fine print in this settlement could reduce the direct relief to borrowers by literally billions of dollars. so senator coburn and i introduced a bill, truth and settlements act that would require every agency to publicly disclose their settlement agreements including the method of calculating the agreements and whether it is tax deductible and so on and the disclosure would be required up front at the time this is announced. now the fed doesn't have to wait for congress to do that, you could voluntarily adopt that public disclosure now. will you do that? >> i agree with you, it is important for us to disclose more and to disclose as much as

we can. and we'll look at that very carefully and try to provide for mfgs. >> so in principal we're talking about more disclosure here. >> correct. >> i think this is really important because this is about accountability. we want to hold our financial institutions accountable but it means accountability for our regulatory -- >> i agree. >> and i want to follow up onp senator brown's question about too big to fail. you said we have made significant progress but much work remains to be done and i agree. but since the financial crisis in 2008, the five largest financial institutions are 38% larger than they were back then. so my question is, what evidence would you need to see before you could declare with confidence that too big to fail has ended?

>> so i'm not positive that we can declare with confidence that too big to fail has ended until it is tested in some way. i mean i do believe that there are demonstrable improvements in the amount of capital and liquidity that we have put in place through stress testing and dod frank testing and there is more to come in surcharges and there is a whole agenda here of minimum debt requirements. i think it is important to feel that we have solved to big to fail and that we have the confidence if an institution were to get in trouble that we could actually resolve that institution. >> and i'm over time so i will quit mr. chairman, he is strict with us.

but i want to draw in on this a little bit. so long as the markets believe that too big to fail has not ended and they demonstrate that by reducing capital costs for the banks that are perceived to be those the government would rescue, do we still have a too big to fail problem? >> the markets may think we would rescue such an institution and not end up believing us until we put it through resolution so we can't guarantee that they have an appropriate view of how we are going to handle such a situation. but i do think it is appropriate to look at estimatesch s-- estimates of subsidies and what progress we are making. i don't think it is definitive but it is appropriate to keep track of those market metrics and we see that rating agencies are changing their methodology, diminishing the amount of their estimates of the amount of support that would be

forthcoming and i think as we complete our work on orderly liquidation, putting in place minimum debt requirements and working with foreign supervisors to feel we could effect an ordererly liquidation if it came to it that estimate of market sub suddenies -- subsidy would come down. >> thank you very much. and i look forward to talking about that more. >> thank you. >> you are in the home stretch: senator brown has raised this but i came at this at a different perspective. if you go through the tools that dod frank gave you that might help make the case is in -- in your blessing of the resolution

plans, as you are, i know, well aware, you have the ability if there is an institution that such a behemoth that it has tebtsicles everywhere could not be put through orderly resolution, you have the ability to use that power to disentangle or take away part of that institution which might be a great signal because i think there are -- i don't want to say this with sherrod not in the room, but he continues to make a point that it would hate for us to wait until we have the moment of crisis to fully feel whether we fully got it right. i think showing strong evidence along the path, because i do think you have -- i've been concerned about arbitrary asset caps, and you have tools that you could use in advance of a crisis might make some of us more assured.

one edit oriole comment. second edit oriole comment. and following up on what senator manchin said, i think we felt strongly as we went through dod frank but putting the $10 million cap on the regulations that didn't fall below on the smaller institutions, i think it was good in theory, the challenges has been as best practices get built into the regular mindset even though there may not be a legal requirement for additional regulatory obligations for the smaller institutions, i think it has become kind of best practice model. so i know earlier on when sheila bayer was head of the fdic, there were job owning efforts and others and i would encourage you and your colleagues at fdic and other regulators, this is

the fastest growing area in the finance industry and that should be a concern and in some institutions it needs to be and in some of the smaller institutions it -- we are affecting the market in a way, at least from this standpoint, was not what we hoped to do in putting our smaller banks as such -- at such a disadvantage and there may be ways in regard to regulation and part of it may be just a mindset that you could come back to. my time is going quickly. let me just ask two questions totally unregulated so i can get them out before the chairman gavels me out. one is, and i know you have been hit on every subject and these are going to be completely -- maybe not out of leftfield. but student debt now, a trillion

dollars north of our credit card debt and i feel this may be the next looming financial crisis and ideas on how we get about it. part of that has been is because of decreasing direct federal and state assistance to higher education and we made this addiction to debt amongst our students. i would like a comment on that and then also i would like a comment on an issue that i've raised before and i know you have not -- you felt i perhaps overstated but with our financial institutions have $2.4 trillion in reserve deposited at the fed and i know that 25% interest rate that you pay isn't that much. but when you have other central banks like denmark which is negative and has pushed the institutions to get the money

lent out which might asuede senator shelby if the banks were going more to stimulate and get that capital out into the market place. i hope you'll comment on the excess reserves. thank you very much. and i got that all out with seconds left. >> so clearly the student get the standing volume of government supplied student debt has escalated. on the one hand i think it is a good thing because there are these huge deferentials between what more and less educated people earn and we want people to have access to education to be able to improve their skills. but on the other hand, it may be that sometimes they don't quite know what they are buying and what the education that they may be acquiring -- it is important for them to understand what are

the placement rates and job experiences of the schools that they are paying to go to. it is not obvious that that is always readily available. and then again because student debt is something that you can't get rid of in bankruptcy, individuals who take it on can really be faced with very substantial burdens if they ep counter -- encounter financial difficulties and that is really of some concern. on the interest on reserves, i recognize the argument you are making. i think that lowering that rate would have very limited -- it goes in the right direction but would have a very limited effect on bank lending. we have worried about what impact it would have on money markets that we operate in and not wanting to disrupt -- completely disrupt money market

activities. it is something we have considered and could consider going forward. but there are conflicting things that are going on there. >> senator merkel. >> thank you very much mr. chair and thank you for your testimony before our committee. i want to focus on a report that was released yesterday by senators carl levin and john mccain, a bipartisan report that chronicles how credit swiss helped wealthy americans evade taxes by stashing their money in swiss banks and highlighted flagrant abuses where employees of the bank came to seek clients at golf events and saying they were here for tourism. and set up rooms at airports and destroyed account statements that were being reviewed. billions of dollars of u.s. tax dollars were dodged and it is

doing business in the u.s. under the supervision of the u.s. forward reserve board. this report very thoroughly researched, and it is critical of our own department of justice for failing to prosecute a bank operating in the u.s. the senator pointed out, if the swiss bank doesn't want to or comply with u.s. law maybe it shouldn't do business in the u.s. this case has reminders or echoes of the hsbc base we saw just a year ago, flagrant violations through transactions to keep u.s. officials out of the loop and once discovered an unwillingness by the bank regulators and the d.o.j. to held anybody -- hold anyone accountable. and senators levin and john mccain asked the ceo to admit yesterday and he did admit to, not one person was fired for flagrant willful violations of

u.s. law from the ceo on down. it is the same story for hsbc and any other banks that were involved in predatory transactions that hurt american citizens. so i guess my question is this: we have a situation where the government refused -- and this is the government of switzerland, refused and blocked the identification of the folks who were stashing their money in switzerland, we're talking about 22,000 u.s. customers with swiss accounts of which less than or about 1%, the names were shared with the u.s. if they are not going to share the names for these illegal activities, should the forward reserve board be using its regulatory power to say if you can't play by the rules, you can't bank in the u.s.? >> well, you know, certainly in

our work with institutions it issin couple bent to make sure they comply with the law and when there are violations of the law we will refer it and have referred it and will refer it to the department of justice if there is criminal behavior that is involved. and the department of justice should be pursuing that and i think that the behavior that senator levin uncovered with respect to this institution is both illegal and highly unacceptable and it should be pursued. >> so certainly a criminal action being referred to the department of justice is appropriate. but you also have powers. you have powers for how banks operate in the u.s. that are separate and independent of the department of justice. should the federal reserve being used -- these powers in reaction to this type of criminal

behavior? >> well our obligation has to do with safety and soundness, and to the extent that these practices are illegal and we have an institution that is discovered not to be complying with the law, we have -- we have an obligation to act to make sure that it comes into compliance. and if we dedekt behavior -- detect behavior that is criminal it is our obligation to refer that to the justice department for prosecution. >> so one of the powers you have directly is to remove executive of banks when they misbehave and is it your intention to pursue this situation and to explore whether that type of action is appropriate in this situation? >> i will discuss with my colleagues what is appropriate. i don't have a definitive answer for you. >> thank you very much for

pursuing that, i'll certainly want to follow up with you because when we are talking over a billion dollars of tax evasion and of 22,000 americans engaged, we can't even get more than 1% of the names of folks and yet it is up to our regulatory agencies to decide whether and how a bank participates in the u.s. economy. and if we are holding u.s. banks to one standard and letting foreign banks operating by a completely different standard, that's a fundamental unfairness and it is also an unfairness to ordinary americans. if ordinary americans are engaged in tax evasion, they can serve a lot of years in jail. in this case we are talking massive facilitation of tax evasion by a bank now well documented by mccain and levin and it seems there should be some accountable and -- accountability and my folks at town hall say why is this, the

hsbc, they facilitated terrorist and drug networks and violated sanctions important to us, to prevent iran from obtaining nuclear items and this is another chapter and new opportunity to change the story of fundamental justice and fairness and i would just ask that you tack a very serious look at it. >> i will. thank you. >> senator shelby has a brief point to make. >> madam chair, thank you very much for sticking around with us. i pose, is the fed inconsistent. let me explain. on one hand there are gs securities on the face value and

under the other hand under sg -- i mean under [ inaudible ] regulation is asking financial institutions and our banks that hold the same gse backed securities that the fed has to take a 15% hair cut when risk weighting such aspects for basil three calculations is my understanding of what is going on and in the approach by the fed to its own portfolio as opposed to the portfolio of the banks that it regulates, it looks like on monetary policy you have one thing, your own stuff, and then the banks who hold about 40% of gse's prudential regulations looking a different way. >> well, senator, you mean they have capital requirements? >> that is right. that is exactly right.

liquidity. they call it new liquidity recovery under the baz ill three. >> why would the fed have a liquidity? >> the banks. go ahead. >> you mention we carry these on our balance sheet at face value. that is an accounting convention that we use in fed accounting. we also report when there are price fluctuations for these securities. we report that in our financial account so the market value of these securities is -- >> i understand that. but at the same time aren't you on one hand treating -- as a regulator, your banks say they have to take a 15% hair cut on gse holdings and the fed is different. i know you do different things. the approach should be consistent or should it not?

>> i mean we want to make sure in the liquidity coverage ratio that banks have adequate liquid assets to be able to meet potential withdrawals that they can face over a period of about a month. >> sure. >> and while mortgage backed securities are assets that can be sold, they are somewhat less liquid than treasuries and the most liquid and cash, and so in computing this we put on place a 15% hair cut. but to say that the same requirement should apply to the fed, i'm confused about that because we don't have the possibility of having runs on the forward reserve. >> ma'am, i was raising the inconsistency in the approach. is there an inconsistent approach or do you say one is good for the banks and the fed

doesn't need that? is that what you are saying? >> i believe that the fed doesn't need that and we are not in this area of liquidity in the need to maintain liquidity that the forward reserve is quite different than an ordinary commercial bank. we are not subject to liquidity runs. and to me, it is different. >> but in the same -- you are treating securities differently. you are treating the gse backed securities in a different way -- you are basically weighing a hair cut of 15% discount of a value of those securities, is that correct? >> well because we think they are somewhat less liquid than, say, treasuries and because they are somewhat less liquid the markets in which they trade,

there needs to be some hair cut that they aren't quite as good as cash or treasuries in terms of meeting potential runs on a bank or liquidity drains and to me that is an prooptd recognition -- appropriate recognition in the difference of liquidity between mortgage backed securities and treasuries or cash. >> 15% is a pretty good number though, isn't it? >> it is something. >> does it seem like a high number. is that an arbitrary number that has been brought forth to risk weight something at a discount of 15%? >> there are judgments that have been made throughout about what the appropriate rates of discount -- >> a lot of the smaller banks are concerned about this because they have bought a lot of gse securities and if they are going

to be risk weighted adversely in their portfolio, it could cause them a problem, as you well know. >> so we put this proposal out for comment and we will certainly look at all of the comments. >> well look at it closely is all i'm saying. >> we will look at all of the comments that come in and try to take that into account as we craft a final proposal. >> thank you, mr. chairman. >> chairman yellen, i want to thank you for your excellent testimony. this hearing is adjourned. [inaudible conversations] [inaudible conversations]

>> president obama is in washington they spending the afternoon hosting a student film festival at the white house. coming up at 445 east and the president is set to speak at the democratic national committee annual winter meeting being held at the capital hilton. you can watch live coverage of his remarks on c-span. >> here is a look at tonight's prime time lineup. >> pearl harbor, of course, was in december of 41 and almost immediately people start talking about what is to be done with

the enemy alien population which includes german and japanese and italian foreign nationals in our enemy in the in. the japanese american population in general on the west coast were rounded up on mass and had to leave their homes of the lived in what was called the western defense own. they were removed, forced to leave, and then put in camps surrounded by barbed wire. they were not charged with anything in particular. west coast non-japanese americans, most politicians and newspapers and strongly supported the removal of japanese americans buried in is a very popular policy. civil rights organizations which were largely based becky's to not pay much attention to it. in all the major jewish newspapers on the west coast they were weeklies, and they have editorials talking about how the rights of all have to be

protected and we should fight prejudice and all forms without ever saying the word japanese specifically, was almost as if they wanted to say something but warner's about actually doing so. so there was -- i call it a kind of awkward silence or an uncomfortable silence around this issue that i started to investigate more. >> this weekend book tv and american history tv look beyond history and their real-life of salem, oregon saturday at noon on 21. [inaudible conversations] >> is this a technique they you hope will prove fruitful? >> i don't think that's an agribusiness. >> i think the glamor of reagan had less to do with his hollywood roots personally.

it was not that it was the glamour of hollywood exactly, but it did have something to do with the skill in the grace he acquired as an actor. he always set his mark. and so he looked like he made being out there and fielding those questions look effortless, which is another aspect of glamour. so people who were likely to support him politically could see in him the ideal candid, the ideal representation of their views because he did not make them embarrassed in any way. it were not waiting for him to fail. as he got all of that became more of an issue, but especially in the early days he had this kind of press of toro, which is a word that comes from and the 16th century book about how to be a successful -- the

politician of the day, his successful italian courier. >> defining in using glamor some in and it:00 on c-span queue and in. >> on wednesday members of the european parliament debated how the eu should respond to the unrest in the ukraine. financial assistance, international intervention and the harbor jennifer ukrainian exceptions were some of the topics. members, the assistance of the united states and other countries to help stabilize the ukraine economic and political climate. this is a 50 minute portion of the debate.

[speaking in native tongue] [speaking in native tongue] >> thank you. madam president, hon. members, it has not even been one month since our last stood here. we'll follow the tragic developments unfolding before our eyes in the intervening time

. what i retain is a sense of immense sorrow over the higher numbers of dead and wounded. wish to express our sympathy and condolences for the families of all those who have fallen victim to unprecedented levels of violence, provocation, and indiscriminate use of force in the ukraine during the last few weeks. during my last visit to kiev i visited to hospitals to show solidarity with the injured people. no matter which side there were on there were suffering because of the actions or non actions of politicians. hon. members, as the president said in this house yesterday, the winds of change are knocking again at the door of ukraine.

the will of the people must prevail. those who violate and russia should be brought to justice, fair and without revenged, fully in line with the convention on human rights and case law of the core of human rights. this strategy puts an even greater responsibility on all involved to make things work now on the green. it puts a greater responsibility on the new ukrainian government, an interim to deliver the changes the people of past and fall for. but it's also a greater responsibility on the pact -- your opinion. all our support and expertise to ensure it is changes are put on solid ground and will be sustainable.

d'agata example of european foreign policy in action, intensive and fruitful interaction with the european parliament. as you know, i represented it to vice-president ashton, and a heavenly close and personal presence in kiev. lastly the foreign ministers of poland took up the task to visit us at the very moment of the deadliest clashes in the outbreak of the crisis. the remaining foreign ministers are maintaining regular contact with their colleagues on the ground. we adopted stronger conclusions including sanctions. meanwhile our three cowlicks facilitate talks between the president and the opposition in kiev, transmitting the clear and unequivocal message is from the european union's.

a multiparty didn't -- delegation from this house visited key of last weekend. it is important that all sides continue engaging in a meaningful dialogue to fulfil the aspirations of the ukrainian people. we expect everyone in ukraine to behave responsibly and to protect unity, serenity, independents, and integrity of the country. due respect for region, culture, and linguistic diversity of the country is also of the utmost importance. hon. members, we need a lasting solution to the crisis.

elements were the solution are clear and are also outlined in the agreement and the 21st of february. first a comprehensive constitutional reform of restarted immediately and completed by september drawing substantially on the relevant expertise of the venice commissioned. second, the formation of a new, inclusion governments. third, the conditions for free and fair elections also in close cooperation with the venice commission and the lsc. let me underline the importance. it is crucial of the new administration is inclusive politically, geographically, and in terms of space will the participation. as i said earlier, it is used in

violence. it will have to be addressed to heal the wounds of the last days and months and bring this country forward. we are ready to step in where requested in close cooperation with international partners. i work on the engagement of the council of europe including commissioner for human rights recent preliminary report following his visit to kiev which focuses on the needs to prevent other islands and insure the investigation of human rights violations. and also strongly hope the and international a advisory panel will start work soon. hon. members, or offer a political association and

economic integration remains unstable. and the association in marina does not constitute the final goal in the european union ukraine corporation. we are ready to work toward the future in government committed to economic and political reforms and to step then that the assistance. we are working on the best inclusive platform for international coordination to provide a sustainable economic and financial support, including all international partners to help in addressing the challenges that this country is facing. the high representative was in kiev on monday and tuesday to

discuss and engage in the inclusive political process. this visit was warmly welcomed as well as by the representatives. underlining the need to restore trust in the institutions and the european union's offer of help. all partners shares responded positively to the softer. while in kiev she also met with. [inaudible] newly released from prison. shortly after his boat to her by phone underlining the importance of for health recovery. her release was an important step toward in the view of a longstanding concern with the selective justice and the entry. that may once again think the parliament for its immense

efforts on this issue. that may also command -- commend the outstanding work done over a sustained time. before concluding my the me say a few words about russia. ukraine needs russia and russian news ukraine. russia has a chance to become a part of efforts to bring stability and prosperity back to ukraine, including being part of the coordinated international effort to help ukraine address its economic challenges. this will require recognition of the civilian right of the ukrainian people to make their own choices about their future. those choices are about domestic politics, just as much as they are about foreign policy. russia can only gain from

ukraine's access and it risks losing heavily if ukraine fails. we are ready to work very closely with russia, the neighbor of our neighbor, to insure it plays a constructive role in the future of the ukraine, the future of a neighbor with whom russia establishes ties which support. madam president, hon. members, in view of the challenges and the need for a continued coherent european policy i congratulate you for organizing today's debate. the parliaments and roman has been important for all in ukraine that have been striving for a stable, prosperous, and democratic future. and thank you for your attention . [applause]

[speaking in native tongue] ..

[speaking in native tongue] >> translator: this fundamental objective freedom has taken the three months for the stability of the country. the european union must support ukraine. the union must support the political transition process. there needs to be serious consideration of the extension of the