degiorgio, again, unilaterally approved changes to the switch to increase the torque. his report note the, quote, there's no evidence that degiorgio told anothers at gm, including ng nears on the cobalt program and the spring change to the ignition switch he authorized in april of 2006. so mr. valucas the report notes that other gm employees had received documents describing the ignition switch change as early as june of 2006 and that these documents clearly indicated that the switch's used in pre-2007 models were not within specifications. is that correct? >> the answer so that question is -- there were e-mails which were forwarded to other individuals which contained within those e-mails after the change was made, information about the fact that the torque had changed. we interviewed those individuals. those individuals by and large, in the warranty area, they

had -- they were looking at something that it meant nothing to them as we were able to locate and find. it was not -- they were totally unaware of the issues concerning the switch not deploying any aspect of it. one individual who did know all of the facts and had that information was mr. degiorgio. the other engineers who were on the e-mail train it meant nothing to them. >> so, there's an e-mail i'm holding it here. on your report. it discusses implementation of the new -- >> page 102 and the footnote. >> i believe that's right -- the quote is increased torque forces to be within specifications and it was sent to five gm employees on june 2nd, 2006. but we have also obtained another document that was not included in your report and this document indicates that another gm contract engineer may have

approved the 2006 change. it's a production part a approval process report obtained by delphi through gm's global quality tracking system. it is dated june 1st, 2006, and it lists gm supplier quality engineer. a gm supplier quality engineer. the document has a section labeled, quote, supplier quality engineer notes and these notes read -- new -- this is a quote -- new pcb and spring plunger implementation for performance improvement. part a proved. first applier submitted, warrant and gm, 3-36-60. so have you seen that report? the global quality tracking system? >> yes. >> so did you interview the listed of supply quality engineer or look into what role he might have played in approving the switch change in 2006? >> we did the following.

we looked at the form change and what happened with that form change is the following. high quality engineer's function is to determine whether the boxes are filled out and materials are properly identified here. and then he submits that and puts that into the system. he does not have as we understand it, anything to do with making decisions on the change. he's actually functioning as somebody putting something into this system. and -- i don't think we interviewed that particular individual. >> that's mr. degiorgio's actions or role in any way but i do think these documents point to the fact that the problem at gm is deeper than one row of engineers. i yield back. >> yields back and now i'll recognize mr. johnson from ohio for five minutes.

your report discusses in may of 2005, at tab 12 of the folder that up, you recognize this and the report focused on mr. degiorgio's awareness of the exchain. there were others on this including doug parks. what was doug parks' position at the time? >> i honestly don't recall his title. >> wasn't he the vehicle chief engineer. >> he may well have been. as i say, i don't recall. >> why was it more significant -- let's assume that he was. that's what we think he was. why was it more significant that mr. degiorgio was aware of this exchange rather than the vehicle chief engineer? >> i don't know that it was more significant. it was significant because mr. degiorgio ultimately make the decision to change the part and in our interviews with him he said he was not aware of the

fact that it was an issue or the publicity or the e-mail traffic because of this when we had information that that, in fact, was not the case. >> what is the chief engineer's responsibility? >> within the company? >> i do not have an answer for that. >> okay i'm happy to submit that. >> ms. barra do you know what the chief engineer's responsibility is. >> for the overall integration of the vehicle and making the balance and trade-off decisions for that vehicle. >> okay. >> and if -- if issues are raised to him that he or she will deal with that. >> what knowledge should someone in the chief engineer position have about the vehicle compared to someone such as mr. degiorgio? i mean, would it be reasonable that the chief -- the vehicle chief engineer would have known about this situation? >> again, a vehicle -- there's 30,000 parts on a car. the chief engineer has to count on the people doing their jobs. we've now put -- in the mid 2000's there was validation engineers that were added to make sure the process was done

well and now with the product integrity organization we're validating the subsystems. so the chief engineer, you know. >> takes information from those that come up? >> yeah. the system works. >> i got to move on. in a may 4th response to the chain, mr. parks' request a plug to insert in the keyhead since it appears to be the only -- in his quote -- only real quick solution. but this solution was not implements for months. mr. valucas, do you know why? >> part of the function 06 what was happening in this organization. they were treating this as a customer convenience issue rather than safety so they look at issues and turn price, expense, cost -- >> rather than safety. okay. a few weeks later on may 17th, a new prts was initiated. and at the time, the program team decided to pursue additional solutions beyond the service fix for the keyinsert. a short-term production fix that

changed the key from a slot to a hole and a long term solution to introduce a more robust ignition switch. who was responsible for initiating and implementing these changes? >> these would have been the committees which were involved in the -- and i don't have the committee name in front of me. the committee that were involved in the review and ultimately they didn't do what they said they were going to do. >> were they reviewed by the vehicle chief engineer? >> i don't know that. >> you don't know? >> do you? >> as i read the report, i think what you're referring to was continuous improvement team and i believe that chief was not there. it was the program engineering manager. >> why did it take until 2009 to implement the new keyhead and who was responsible for ensuring that this change was implemented? do either of you know? >> i can tell you that the reason it was delayed is because it was treated as a customer convenience issue. they had an issue with regard to a supplier in a dispute with regard to his ability to

deliver. it wasn't until 2009 that the dispute was resolved and they ultimately made that change with regard to that. >> okay. ms. barra, in my previous life i worked as part of an executive team. we have a risk and compliance department. we had a risk and compliance director. my understanding of the issue, part of the concern that you've addressed and that you are continuing to address is that this information never bubbled up to some of the key decisionmakers. the s.e.c. requires -- 24 are laws that require reports ofs aring and compliance related issues. were any of the s.e.c. reports run the rusk -- were or the risk

and compliance folks notified that millions were being paid out for claims as a result of some of these problems? how does it break down that bad in a company that is, you know, publicly traded? >> i can't speak to specifically what was in an scc report but what i can tell you is it's unacceptable the way things broke down. that's why we've made dramatic process changes but as congressman ipd dated we have to make substantial changes in the culture and we're well on our way toing to that and i believe the men and women of general motors want to be make sure that we have the safest and highest quality vehicles on the road. >> thank you, mr. chairman, i yield pack. >> and now we recognize mr. tonko for five minutes. >> thank you and welcome to our panel. as we examine what went wrong in this terrible tragedy the most

important job i believe for congress is to strengthen and improve auto safety laws to ensure something like this never happens again. we owe that, sortly owe it to the families of the victims of this tragedy, many of whom are in our audience today for the hearing. that being said, one area that i believe we need to address is to improve early-warning report data. mr. valucas, can you describe briefly early warning report data? >> what is the data itself? >> yes. >> information that comes to the attention of the company which indicates there's probable safety problems of which they're required to make alert? >> i believe the 2000 tread act the information be reported? >> that is correct. >> so in valucas, you describe a number of cases where gm investigators analyze this tread data to attempt to identify or exexplain airbag nondeployment

in cobalts and -- is is that not correct? >> the answer is i cannot give you a number of where that was done. >> and the federal regulators also conducted analysis of the early-warning report data but were not able to separate the weak from the chaff, so to speak and identify the defect? >> the issue of the airbag, we noted that there were these nondeployments and gm's response to that was to begin the administration under mr. sprague, to keep apprised of what was taking place. there were no major further discussions about that issue until 2013. >> it seems that part of the problem here is that early-warning report data provided, are reported in 23 broad categories. and in the case of this defect, the early-warning data provided

spanned several categories including engine, airbags and category of "other." and they are able to request more detailed information from auto manufacturers for individual warranty claims and field reports but it is difficult to know what is -- what to request given the minimal level of detail provided in the first place. and nitsa needs more detailed early-warning data so they can spot trends and request most useful follow-up information from the auto manufacturers and more early-warning data should be available to the public. we can all appreciate the value of outside experts in spotting issues that otherwise go undetected. finally, nitsa needs appropriate enforcement mechanisms to help them comply with the laws. especially when safety is at stake. on may 16th, gm agreed to pay the maximum fine for failure to report a safety-related defect and that, i believe, is $35

million. what was gm's net income in 2013? >> $. >> just under $4 billion. >> so the penalty for failing to report the ignition switch defect is less than 1% of gm's earnings for last year. >> that's correct math but our intent is to deal with the safety issues. by the time you talk about fines the customer has already been impacted in an incredibly negative way. we want to make sure we're putting high quality safe vehicles on the road and we want to work in cooperation with nitsa to do that. >> nonetheless can be not much of a deterrent, mr. chair. we need to increase this maximum penalty. $35 million is not an adequate depercent to a large, protect company like gm. in the penalty might have been higher gm might not have waited over a decade to report this

safety defect to nitsa. and uds cleesh to me that nitsa needs higher penalty authorities. we need to make certain that the penalty for not reporting a safety defect is a sufficient threat to deter auto companies from needlessly delays safety decisions. fixes in these areas like the tsb's public improving, early-warning report data and increasing penalty should be easy for us to agree upon and with the seconds i have remaining, gm rault website indicates that even after the new switch is installed customers should, quote, only utilize the key, key ring and key to be if equipped, that came with the vehicle. ms. barra, mr. consumers have key chains with multiple keys. why if the new replacement switch is adequate does gm still recommend that consumers not use their full key rings the way they would normally use them?

>> the system has been validated and as i have gone 24r50u this process over the last three months i have seen incredible things on key chains that across the industry, i think this is an industry issue we have to hook at. i notice key chains everywhere i go now and i think it's something that needs to be addressed more broadly across the industry. >> thank you i yield back. >> and now i recognize mr. long for five minutes. >> thank you mr. chairman and thank you all for being here. mr. valucas, do you feel like you conducted auth thorough investigations? >> yes. >> >> according to what you said today, if i added right, how many peopler were on your team? >> the number of people that were employed at one time or

another? several hundred. >> several hundred. according to my math with you all had 1220 documents a minute. >> i'm sorry, say that again. >> according to my math, you all looked at 1220 documents a minute. you said you had access to 41 million documents over this period, i don't know how in the world you could do a thorough investigate information that time federal. >> we use computers and programs to analyze the documents for purposes of kicking ought those documents which are a fleckive of the issues that are here. we use as part of that database requests are being made by congress and requests are made of us by the united states attorney's office and by nitsa, and we isolated those documents and gave them through three levels of review. for purposes of determining

that -- >> i'm just trying to learn here. so what are you -- >> the report that you -- were you given a deadline by general motors on when that needed to be out? >> yang general motors, the board of directors, when they employed me to do this investigation asked me whether i could get it done within a certain time frame and i told them we could. that was the deadline. my commitment we could do it in that time period and part of that was associated with the fact that they wanted to know because there were deaths involved here. part of it was because of -- we wanted to get the report out and be able to respond to congress. so we have that deadline. >> once you got your report, completed. to whom did you present your results? >> the board of directors. >> and what was their reaction? >> i can't tell you what narrow action was. i know their reaction was what

you've seen with ms. barra here. to follow-up on it. so you didn't receive any resistance? >> no. >> were youed is to make changes to your report? >> no and what i mentioned to staff here is if we found something different as we pursued gathering the documents because there's questionses here and elsewhere we would review the report and if there was anything in the report that was an error or needed to be corrected or changed we report that back to the board and i presume they would report it back to you. >> other than that, your report, does that end your investigation? i apologize. i've been here for 90% of the hearing so i had to step out a few minutes a few minutes ago so -- >> we believe we've completed the inquiry buts i say, we'll update it if we found something that changed in any significant way. i believe last week we found something we corrected and notified your staff of that

immediately. >> thank you and i yield back. >> thank you, in chairman and thank you to ms. barra and mr. 'valucas for being here today for this very, very serious subcommittee hearing. i, too, some of my colleagues have said, extend my condolences to the family. it must be very difficult for you to be here and listening to this dissection of information, as important as it is, these are your loved ones. mr. victim alucas, i do want to -- this is more of a process question that i have for you, sir. going back, again, over the investigation and what you have reported, back march of 2007, it says, staff approached gm personnel in between meetings in washington and mentioned a

concern about nondeployment of the cobalt and ions. what's your understanding of the information 2456s shared by nitsa? >> my understanding, it comes from the interviews. i did not talk where anybody. we didn't think we were going to be interviewing federal officials. we interviewed the people at gm and looked at the documents and materials which they produced as a result of that meeting. and it was that in the course of that meeting, nitsa they noted there were these nondeployment cases and asked general motors about them and the response to that was -- the assignment of mr. -- i believe, mr. sprague at that point, to look into it and document what was taking place. to keep a chart, essentially, as to how this is happening and how many there are, et cetera. >> the gentlemen that you're referring to, what division was he in as far as -- i'm assuming general motors or nitsa. what division was he part of?

>> an investigator with the fda? >> which means he would have been detailed into the legal department. >> okay. so according to our information, when the engineers returned to michigan, apparently after being here in d.c., the product investigation's team, the group that determines the root cause of the problem, reviewed the claims relating to the cobalt nondeployment but ultimately decided not to pursue it. why did product -- why did the product investigations not pursue this matter at the time? >> that's a very good question and the answer is -- this was some of those things that was passed off to another agent. sprague was keeping track of it. the other investigators were not following up with regard to it. they were got h gathering information, if you will, but that's where they we want with it. >> so when you say it was kind of handed over somewhere else, you're referring to the product and the field performance assessment division?

>> yes. >> because according, again, to our information, it says after the product investigators declined to investigate, the responsibility for tracking these claims or tracking these claims, i mean, there again, i think that's something significant as well. swus assigned to the field performance assessment division? >> now. do you consider this to be unusual an unusual pattern to have followed? would this be typical in a situation where there's beenen obvious issue that's -- been an obvious issue that's come to light and it just kind of is passed off to another -- and i guess, i would like to know, too, one, it was given to another division. what exactly is the field performance assessment division responsible for and was this just a way to kind of, you know, put aside the problems because they weren't focusing on it? >> i don't know if it's typical. i do know it happened in this case and it's one of the things we called out on the report.

passing off responsibility of one committee to the other committee and fda would be focused on potential claims in the level department and whether or not they have litigation which end k5i9 the existence of the problems but they are not the products investigators. they are a different group. here's what you have you had a pass off to mr. sprague who then gathered information about it for years and nothing else was taken place other than gathering that information. until 2009 so everything was in hiatus. >> do you know who it was who made or authorized that change? who gave the assignment to mr. sprague? >> no, i don't. i don't know if we have a name. i can get a name for you? >> okay, if you could, that would be incredibly important information for us as a committee to have. thank you. >> i know the legal department was at the meeting with them so it's as if the legal department said, we'll take a look at this and went forward but i'll get you a name. >> did they ever attempt to

evaluate the matter back in product investigation? was there ever an attempt or according to your investigation, did anybody address these issues? >> well, in 2009, when they humid the second continental report, and then it became elevated, if you will. they looked at it and realized it was something that could be associated with the switch as pengu being the cause of the nondeployment and at that point other things started to take place including mr. sprague going to visit mr. degiorgio and asking him if there was a change in the switch and him saying "no." >> so i guess my last and final question was basically, you know, was there reluctance there? i believe you indicated there was. reluctance to acknowledge and address the issue? >> i'm sorry -- >> that would be hypothesizing on -- thank you, mr. chairman. for your time. >> it's committee's practice

another member of the full committee can ask questions after other members have asked theirs so we recognize mr. terry, the chairman of the subcommittee of commerce and manufacturing for five minutes. >> thank you, mr. chairman and i, too, want to recognize the parents and family members in the back. those photographs up there really keep reminding us why we're here and investigating today. i want mr. valucas, i want to go back to -- i'm still stuck on how this subspeck parts were even allowed at the very beginning of the process? in that regard, the production part a approval process. they go through and do the testing, would that 2002 pack be each be a key document in this investigation? >> it certainly would be something i'd want to see.

i think we sorted it out. i don't think we ever found it and we'd ask delphi for it and we don't have it. and delphi wouldn't produce it. >> they informed us they don't have it. >> they don't have, do you believe that? >> i can only report what they told us, we made requests from them from the very beginning for access to any and all documents relating to this matter but they produced to us were a limited number of documents which were documents that had actually been exchanged with us initially we may have received a few additional documents over time. and that's what we got. so. >> no one has been able to locate the path of the ignition parts. >> that's my understanding. >> do you know whether or not the ppap for this from fwoo exist? >> i think mr. valucas and his

team would have found it if it exists. >> i'm proud you said that. but it would have been great to discover that in 2002 during the process. and the fact that it wasn't is disturbing in and of itself. should this committee consider a subpoena of those records since they were not produced? >> you put me where i cannot go. let me say this. and i think this is important. it is clear, at least from my -- from our fact finding and mr. degiorgio approved this part. and he approved this part knowing it was well below specifications and we did not find anybody else who was involved in it, though delphi certainly knew that the part that was being approved was -- >> and in that respect, you have

this folder, binder by you, and if you would turn to tab 4, it is a memo from degiorgio regarding this issue. now, this is an e-mail from around april of 2002, around the time the original switch was actually being approved. is that correct? >> yes. >> and the subject here is gmx 357 talc issue for this saturn ion, correct? >> correct. >> and that talc, what role does this have on the approval of the switch. do you know? >> it's part of the process. how the feel, as it's explained to me, how does it feel when you make the turn?

they wanted to make it feel like a european sports car or something like that. >> does this e-mail from raymond degiorgio, to raymond degiorgio, the answer is, does that raise any concerns to you as the investigator, particularly the sentence that mr. reinke did not find spring back from crank run to accessory as terry meehan and others had observed? >> no. >> were you aware of these discussions around the time of the switch approval about the feel of that ignition switch? >> yes. >> okay. in the last 30 seconds, you mentioned that there was an adversarial feeling regarding

between nitsa and gm. what you concluded -- have you concluded who is responsible for the adversarial relationship? >> no, i have not. i just noted from the documents and this is not from testimony, more from the documents. just the tone of the documents, that's maybe an incorrect way to assume something but from the tone of the documents it suggests that there was some nature of adversarial activity here. >> and one last question. there were many times looking under the documents under the tread act, gm should have provided notice to nitsa. is is this adversarial relationship between the two impact their decision not to provide that notice? >> no. let me -- when i say that, let me explain what we did and

someone else will make that judgment in a different contekts. we went back through all of the disclosuretion, the tread act disclosures to look to see whether something was or was not disclosed and as best we could tell, marking those disclosures what the information which was then in possession by virtue of the interviews or documents we had, it appeared to us the tread des closures were client. but i will not be the ultimate judge of this. >> thank you for your additional time. >> thank you, the gentleman-year-olds back. >> thank you mr. chairman. mr. vchltd a lch mr. valucas. i wanted to follow-up on a couple of questions mr. johnson was asking you. your report says on page two, gm engineers concluded that moving stalls were not safety issues because drivers could still may their calls so as a result they viewed the switch problem as a customer convenience issue,

something annoying but not particularly problematic as to the safety defect it was. is that right? >> correct. >> and you told mr. johnson, so therefore, because they called it a customer convenience issue, they looked at issues of pricing and not issues of safety, is that right? >> that is correct. >> and this was despite the fact that early on, gm starting getting a lot of complaints about the ignition shifting into neutral and the car losing all power. is that right? >> that is correct. >> and in fact, in a review of the cobalt in "the new york times" -- in a review in "the new york times", the freelance writer said that his test kuo battle 2kri6 ven by his wife stalled after her knee bumped the steering column, right? >> there were reports in "the new york times" and other newspapers. >> and so i -- this kind of boggles my mind. a car could be going down the

highway at a high rate of speed, 65 miles an hour, and it gets bumped and goes into neutral and then everything stops. the power steering, the brakes, the air bags, that's what happened to brook melton where she's driving down the highway in georgia on her 29th birthday and the ignition stops. the car loses power, she goes into the other lane and she's killed. do you know about that case? >> i know about that case, i certainly do. >> and so, yet, the gm engineer said that this was a convenience issue, right? >> they not only said it internally they said it publicly when they were interviewed by the press. they said, this is our position. a stall does not constitute a safety issue. >> that's just insane, isn't it? >> it is -- i won't use the word insane but i'm troubled by that. >> okay, good. now, at the same time, gm was talking to nitsa about whether stalling was a safety risk.

are you aware of 245? >> i'm aware of conversations for all this period of time. >> mr. barra, were you aware that at the same time nitsa was talking to gm in 2004, general motors recalled cars because of stalling risks? >> i was not involved in thatiary. >> so you're not aware of that? >> now. -- the notice was signed and was gay cat reporting to you at the time? >> no. >> did gay cat ever express any concern to you about the stalling and safety risks from the ions a s cobalts? >> no. >> >> okay. so basically, what you're saying in your report, mr. valucas, to have these cars that stall out at any speed, really and all of the power goes out but, yet, the

gm personnel maintained this was a customer convenience issue? >> that's where they were, in 2005 to 2009, at least. >> have you ever talked to a fellow named clarence ditlow who is with the center for auto safety. >> i received correspondence from him? >> did you receive a letter dated june 17th, 2014, from him? >> in the material that you just gave me? >> i don't know. we can hand you a copy -- yes, we'll happened you a copy. his conclusion is that the valucas is clearly flawed in accepting gn's explanation that it's engineers and senior managers did not know stalling was safety related. are you aware of this claim that he made? >> i am aware of his claim. actually, i know i read this letter and i sent him back a nice note saying thank your for the information. >> what's your view of that? >> that he didn't read the

report and understand what 3450i responsibility was here. what we were charged to do and i think this is very important to understand. we were charged by the board of directors to find the facts concerning how and why this occurred. we were charged with laying those facts before the board and we were charged with making recommendations and the board was charged with responsibility, i presume, of making decisions, whether or not the employees within the organization, at the top level, lived up to their responsibilities. that was where the board's responsibility was. so the suggestion in here that with we didn't cover up people or we didn't -- we exonerated certain people, that's really not correct. >> i really appreciate that answer. you clearly delineate had with you were hired to do and you believe you were hooired to do that, correct? >> that is correct. >> so there may be other information that this committee needs to gather, beyond your report, right? >> that is absolutely possible

and as i said before, if we found new information as we went along, which reflected on it, we would share it. >> you will share it with the committee? >> yes. >> thank you. mr. chairman i would ask unanimous consent to place this june 17th letter into the record and also, a report by the american association for justice entitled "driven to safety" from june 062014 talking about some of the lawsuits we have vofds in this? >> without objection, so ordered. >> thank you very much and thank you again for both of you coming today. >> just a follow-up question about the phone number. >> the consent requests since i brought it up, to put it to the record one 1-800-222-1020 is the customer service number that should be available to customers of general motors and the observation. we're talking about the nondeployment of an airbag which is a supplemental restraint system, a primary restraint system is the seatbelt and i encourage people, you got to wear your seatbelts when you drive opt highways.

i yield back. >> thank you. i'll recognize myself for the final five minutes. i want to be clear. when you said when you get additional data and it was very clear in your mandate, ms ms. barra, she wanted this to be thorough with no stones unturned. if you receive that information from plaintiff's attorneys, i hope you'll share that with us. you said they had not responded to you as of yet, but if there was information that they have with regard to clays from general motor's attorneys in getting them information, i hope you review that and let us know. >> and let it be clear because my responsibilities here, i will gather that information. whatever we'll do we'll have to share with the board of directors and they'll make the decision as to the disclosure but in this instance that's made those decisions up to this point. >> so i want to make sure we're now with the benefit of time. we recognize that the cobalt and several other automobiles had a defective switch. that switch, for a couple of reasons, hitting a pothole or a

bump, bumping the key ring with your knee or a heavy key fob, could have h could have moved the on switch to an accessory position and cause a stalling of the vehicle. and subsequent loss 06 power steering and power brakes when the engine was not on and, also, air bags would not deploy. all those things are clear, right? >> mm-hmm. >> and on page 8 of the report, there's reference to a technical service bulletin from 2005. and it says in here that the technical service bulletin accounts for customers moving heavy itemtion and offered an insert to the key that would produce the likelihood that the ignition was rotate inadvertently. it did not refer to the problem as quote stalling end quote, but because customers might believe they associate stalling with a safety problem and only customers that had experienced a stall would get information about the proposed solutions.

other customers would remain unaware of the problem as well as gm's proposed solutions. i'm assuming if you knew then what you know now you wouldn't have allowed that bulletin to be written that that way? >> that is correct. >> i want to refer to something taking place today which it's important that you know. that is, i took a look at the gm current website with regard to the safety recall. your comments and your speech et cetera and i go to the section marked frequently asked questions. under the item number 7, are the recalled vehicles safe to drive, you say, simple answer to that question is, yes. the gm engineers have done extensive analysis to make sure if you use only the ignition key with no additional items in the key ring that the vehicle is safe to drive.

>> that's true. we skrvalue date and we validat that with nitsa. >> the old cobalts that could go into a stall. >> we're talking about as long as you have the key or the ring, you don't end up having the ability to trap it with your knee, that that condition will not occur. that's what that statement is referring to. >> they still could not hit it with their knee. >> the issue is when you look at the key, there's -- you don't created a moment to be able to do that. >> but still, what it does not say at all in this statement, customer, if you don't do this your car may stall and you may lose power steering and you may lose your brakes. you won't have your airbag. this is an extreme safety concern? it simply says, this is isn't a big safety deal. and then, you even say, once the service repair is completed, can customers put a heavy key ring back on and we recommend only utilize the key and key ring and

fob that came with the vehicle. so you say if you repair this with the previous item i just quoted, you'll be fine but later on you say -- don't change the key. so i don't understand how that's fixed. >> the frequently asked yes they're referring to, there's a number of questions and there was also opening statements, i know i personally recorded videos that we have on our website to truly communicate what we need to do. it's been included in our letters. you have to look at the complete communication, not one question. >> okay. but my point is this. i'm making a recommendation to you. you've come before a committee and i believe you've tried to be honest and straight-forward. my recommendation to you is there are how many cobalts and ions and how many cars affected. >> something less than 2.6 million. >> so far, i forget how many you said, have been repaired.

>> almost 200,000. >> okay. that's a lot of cars out there. >> right. >> that could still stall. you lose power steering or brakes or you could lutz control of the car and you could crash, i hope that becomes a lot more glaring than going through and say, you know, it's safe to drive. i don't think it's safe to drive. >> congressman murphy, we've sent letters and gone on social media. i've done videos. our dealers have been informed. we've done special training sessions. believe me, we take it very seriously and we want people to know until their vehicle is repaired, that we want them to only use the key and the ring. we have done extensive communications. i don't want any other incidents to occur. >> ma'am, i her what you've done. i'm talking about what i would recommend you still do. the unfortunate thing about that is with all these things you do and all the things we do to try

to communicate with people, many times people don't read mail. they don't watch commercials on tv. they don't look at things like this so you have to try all levels on that. until maybe it gets on the comedy network that people pay attention. i would highly recommend what you do in this situation is make it very clear that if you don't do this, this is a consequence. i would hope that would be somebody gm would make abundantly clear because i may not know a lot but i know as a psychologist what motivates people and if you give them the bold, blasting facts, if you don't do this, you could be in a serious accident, that might wake up people to understand that in order for gm to work on safety, customers have to pay attention to this, too. and i hope that that's something that people across america will pay attention to as i said before, i thought this report could be subtitled, don't assume malfeasance when incompetence will do. there's more to it than that. we all have to take responsibility and i see this as

something i hope gm does more with communication. >> we'll redouble our efforts there. >> and i ask for unanimous consent that the member's written opening statement beings introduced into the record and without objection those documents are entered into the record and unanimous consent that the document binder from the hearing be entered into the record subject to appropriate redactions by staff. in conclusion, i want to thank the witnesses today and the members who participated in today's hearing. i remind members they have ten business days to submit questions to the record and i ask the witnesses to all agree to respond promptly to questions. and with that, i adjourn this hearing.

representative kevin mccarthy was voted as the new house majority leader today replacing eric cantor who announced he will step down effective july 31st, following his primary election loss last week. elected today to replace kevin mccarthy as majority whip, was steve scaleese of loin. president obama addressed the current situation in iraq saying he would be sending an additional 300 troops to help train and advise iraqi forces.

third, the united states will continue to increase our to rooirk security forces. we're prepared to create joint operation centers in baghdad and northern iraq, to share intelligence. and coordinate planning to confront the terrorist threat of isil. through our new counterterrorism partnership fund we're prepared to work with congress to provide additional equipment. we've had advisers in iraq through embassy and we're prepared to send a small number of military advisers, up to 300, to assess how we can best train, advice and support iraqi security forces going forward. american forces won't be returning to combat in iraq. but we will help iraqis as they take the fight to terrorists who threaten the iraqi people, the region and american interests as well. fourth, in recrept days, we've positioned additional u.s.

military assets in the region. because of our increased intelligence resources, we're developing more information about potential targets associates with isil and going forward we'll be prepared to take targeted and precise military action if and when we determine the situation on the ground requires it. if we do, i will consult closely with concongress and leaders in iraq and the region but i want to emphasize the best and most effective response to a threat like isil, will ultimately involve partnerships where local forces like iraqis, take the lead. >> watch the president's entire news conference on our website, cspan.org. irs commissioner appears tomorrow on hissing a sir's ongoing investigates into the targeting of conservative groups. we'll have live coverage of that hearing for you at 9:00 a.m. eastern on our kpn onnetwork

c-span2. companion network, c-span2. the thesis of the book is that there's a whole group of people in america a large part of america that's being ignored, left behind, not included in the discussing with i think, for either party. particularly, though, i would argue the republican party and that's -- i call them blue collar conservatives. the folks out there that are working people. most of whom don't have college degrees. folks that really still understand the value of work an and the importance of work and responsibility and people who understand the importance of family and faith. believe in freedom and limited government. so you would say, wow, those are conservative republican voters. and in many occasions they're not. in fact, a lot of them aren't voting at all because they don't really see either party talking to them about the concerns they

have in trying to create an opportunity for them to live i the american dream. >> former pennsylvania senator and presidential candidate, rick santorum argues the working americans have been abandoned by both political parties and offers conservative saturday night at 10:00 eastern on "afterwards" fpart of booktv on c-span2. this month on our online book club, we're discussing amity shlaes' "the forgotten man." discuss the book in our chat room at booktv.org. booktv. television for serious readers. this weekend, american history tv is live from the gettysburg college civil war institute. saturday morning starting at 8:45 eastern. you'll hear historian peter carmichael on robert e. lee followed by arizona state university professor brooks simpson on ulysses s. grant. later, historian megan kate nelson on the burning of

chambersburg. this weekend on american history tv on c-span3. federal reserve chair janet yellen on wednesday expressed confidence that the economic recovery was largely on track and that the fed would be able to begin raising interest rates next year. she spoke at a news conference following two days of meetings of the federal open market committee. it's just under an hour. >> good afternoon. the federal open market committee concluded its june meeting earlier today. as was indicated in our policy statement, the committee decided to make another modest reduction in the pace of its purchases of longer term securities. the committee maintained its forward guidance regarding the federal funds rate target and

reaffirmed its view at a stance of monetary policy remains appropriate. today's policy actions reflect the committee's assessment that the economy is continuing to make progress toward our objectives of maximum employment and price stability. in the labor market, conditions have improved further. the unemployment rate at 6.3% is .4 lower than at the time of our march meeting, and the broader u-6 measure which includes marginally attached workers and those working part time but preferring full-time work has fallen by a similar amount. even given these amounts, however, unemployment remains elevated and broader assessment of indicators suggest underutilization in the labor market remains significant. although real gdp declined in

the first quarter, this decline appears to have resulted mainly from transitory factors. private domestic final demand that is spending by domestic households and businesses continued to expand in the first quarter and the limited set of indicators of spending and production in the second quarter have picked up. the committee thus believes that economic activity is rebounding in the current quarter and will continue to expand at a moderate pace thereafter. overall, the committee continues to see sufficient underlying strength in the economy. to support ongoing improvement in the labor market. inflation has continued to run below the committee's 2% objective and the committee remains mindful that inflation running persistently below its objective could pose risks to economic performance. given that longer-term inflation

expectations appear to be well anchored, and in light of the ongoing recovery in the united states and in many economies around the world, the committee continues to expect inflation to move gradually back toward its objective. the economy will continue to assess incoming data carefully to ensure that policy is consistent with attaining fmoc's longer-run objectives of maximum employment and inflation of 2%. this outlook is reflected in the individual economic projections submitted in conjunction with this meeting by the fmoc participants. as always, each participant's projections are conditioned on his or her own views of appropriate monetary policy. the central tendency of the unemployment rate projections is slightly lower than in the march

projections and now stands at 6.0%-6.1% at the end of this year. from there, committee participants generally see the unemployment rate declining to its longer-run normal level by the end of 2016. the central tendency for projections for real gdp growth is 2.1% to 2.3% for 2014. down notably from the march projections. largely because of the unexpected contraction in the first quarter. over the next two years, the projections for real gdp growth remain somewhat above the estimates of longer-run normal growth. finally, fomc participants continue to see inflation moving only gradually back toward 2% over time as the economy expands. the central tendency of the

inflation projections is 1.5% to 1.7% in 2014. rising 1.6% to 2% in 2016. as i noted at the outset, the committee decided today to make another measured reduction in the pace of asset purchases. starting next month, we will be purchasing $35 billion of securities per month, down $10 billion per month from our current rate. even after today's action takes effect, we will continue to expand our holdings of longer-term securities and we will also continue to roll over maturing treasury securities and reinvest principle payments from the fmoc's holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. these sizable and still increasing holdings will

continue to put downward pressure on longer term interest rates, support mortgage markets, and make financial conditions more accommodative. helping to support job creation and a return of inflation to the committee's objective. today's announcement reduction in the pace of asset purchases reflects the committee's expectation that progress toward its economic objectives will continue. if incoming information broadly supports the committee's expectation of ongoing improvement in labor markets, and inflation moving back over time toward its longer-run objective, the committee will likely continue to reduce the pace of asset purchases in measured steps at future meetings. however, as i've emphasized before, purchases are not on a preset course, and the committee's decisions about the pace of purchases remain

contingent on its outlook for jobs and inflation as well as its assessment of the likely efficacy and cost of such purchases. let me now turn to the framework we will be applying as we consider interest rate policy. in determining how long to maintain the 0% to .25% funds rate, the committee will assess progress, both realized and objective toward its maximum employment and 2% inflation. this broad assessment will not hinge on any one or two indicators but will take into account a wide range of information including measures of labor market conditions, indicators of inflation pressures and inflation expectations and readings on financial developments. based on its current assessment of these factors, the committee anticipates that it likely will

be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends. especially if projected inflation continues to run below the committee's 2% longer run goal and longer term inflation -- longer term inflation expectations remain well anchored. further, once we begin to remove policy accommodate, it's the committee's current assessment that even after employment and inflation are near mandate consistent levels, economic conditions may for some time warrant keeping the target federal funds rate below levels the committee views as normal in the longer run. this guidance is consistent with the paths for appropriate policy, as reported in the participant's projections which show the federal funds rate for

most participants remaining well below longer run normal values at the end of 2016. although fmoc participants provide a number of explanations for the federal funds rate target remaining below its longer run normal level, many cite the residual effects of the financial crisis. these include restrained household spending, reduced credit availability, and diminish expectations for future growth and output and incomes consistent with the view that the potential growth rate of the economy may be lower for some time. let me reiterate, however, the committee's expectation for the path of the federal funds rate target is contingent on the economic outlook. if the economy proves to beticie committee, resulting in a more

rapid convergence of employment to the fmoc's objectives, then increases in the federal funds rate target are likely to occur sooner and to be more rapid than currently envisioned. conversely, if economic performance disappoints resulting in larger and more persistent deviations from the committee's objectives, increases in the federal funds rate target are likely to take place later and to be more gradual. before taking your questions i'd like to provide an juupdate on e committee's ongoing discussions of the mechanics of the stance and conduct of monetary policy. to be clear, these discussions are in no wayintended to signal a change in the monetary policy. rather they represent prudent planning on the part of the committee and reflect the

committee's intention to communicate its plans to the public well before the first steps in normalizing policy become appropriate. the me is confident that it has the tools it needs to raise short-term interest rates when it becomes appropriate to do so. and to control the level of short term interest rates thereafter. even though the federal reserve will continue to have a very large balance sheet for some time. the committee's recent discussions have centered on the appropriate mix of tools to employ during the normalization process. and the associated implications for the degree of control over short-term interest rates, the functioning of the federal funds market, and the extent to which the federal reserve transacts with financial institutions outside the banking sector. the committee is constructively work through the many issues related to normalization and

will continue its discussions in upcoming meetings with the expectation of providing additional details later this year. thank you. i'll be happy to take your questions. >> steve liesman, cnbc. there's every reason to expect, madam chair, that the pce inflation rate which is followed by the fed is likely to exceed your 2016 consensus forecast next week. does this suggest that the federal reserve is behind the curve on inflation? and what tolerance is there for higher inflation at the federal reserve? and if it's above the 2% target, then how is that not kind of blowing through a target the same way you blew through the 6.5% unemployment target in that they become these soft targets?

>> thanks. >> thanks. thanks for the question. so i think recent readings on, for example, the cpi index, have been a bit on the high side, but i think it's the data that we're seeing is noisy. i think it's important to remember that broadly speaking, inflation is evolving in line with the kcommittee's expectat n expectations. the committee has expected a gradual return in inflation toward its 2% objective. and i think the recent evidence we have seen abstracting from the noise suggests that we are moving back gradually over time toward our 2% objective and i see things roughly in line with where we expected inflation to be. i think if you look at the

s.e.p. projections that were submitted this time, you see very little change in inflation projections of the committee. >> what about the tolerance for -- [ inaudible ] >> well, the committee has emphasized that we have a 2% objective for as a longer term matter for pce inflation and we would not willingly see a prolonged period in which inflation persistently runs below our objective or above our objective. and that remains true. so that hasn't changed at all in terms of the committee's tolerance for permanent deviations from our objective. and we continue to see the data coming in abstracting from the noise in line with what we had

expected, and continue to see a gradual pickup over the next several years toward our 2% objective. >> robin from the "financial times." madam chair, could you comment a little bit more on the decline in the long-run interest rate projection. is that more to do with temporary headwinds from the recovery, or is it something more permanent about the economy? and is this it? this decline to 3.75%? is there potential for this rate to go lower yet? thank you. >> you do see a very slight decline this time in the committee's longer term normal rate of interest projections. you know, i would caution you, however, we've had turnover in the committee, two new participants who joined and are submitting projections and two who departed, and that can

create changes in the projections, small changes that are difficult to interpret. but i think it's fair to say there has been a slight decline, and i think, you know, the most likely reason for that is there's been some slight decline, as i mentioned in my opening statement, of projections pertaining to longer term growth and typically estimates of the longer run normal federal funds rate or short-term interest rates would move in line with growth projections. >> hi. elan from the "washington post." my question is sort of the flip side of steve's. it's about your outlook for unemployment. your predecessor said the fed has been consistently too pessimistic about the level of the unemployment rate and today

you guys lowered your outlook again. can you tell me a little bit more about how you see the unemployment rate evolving to meet your forecast? why you believe the rate of decline will start to level off? and what an unexpected drop might mean for the first rate hike? >> so it's true that unemployment has declined by more than the committee expected and you to see small downward revision in the committee's projections at least the central ten t tendency for the unemployment rate. first of all, i mean, the labor market i think has continued to broadly improve. we have seen continued job growth at a pace that is certainly sufficient to be diminishing labor markets slack over time. over the last three months, for example, employment, payroll

employment has been rising around 230,000 jobs per month and we're running close to 200,000 over the last year. so, it's in no way surprising to see a decline in the unemployment rate. that said, many of my colleagues and i would see a portion of the decline in the unemployment rate as, perhaps, not representing a diminution of slack in the labor market. we have seen labor rate decline. while i think most of us would agree that there has been and will continue to be secular decline in the labor force participation rate, for demographic reasons, i think a portion of the decline we've seen in the unemployment rate probably reflects a kind of shadow unemployment or discouragement.

a cyclical part of labor force participation. now, if that's correct, we may see that as the economy picks up steam and we see further recovery in the labor market that those let's call them discouraged workers will return either to unemployment or to employment. and as labor force participation begins to stabilize, the unemployment rate will come down less quickly and i think for a number of people, that's a component of the forecast. you asked about implications for the path of policy. and i would just say the guidance that we've given, our forward guidance states that the timing of liftoff will depend on actual progress we see and the progress we expect to see going

forward in terms of achieving both of our goals. namely maximum employment and our 2% inflation objective. so we're not going to look at any single indicator like the unemployment rate to assess how we're doing on meeting our employment goal. we will look at a broad range of indicators. that said, as i tried to emphasize in my opening statement, there is uncertainty about monetary policy. the appropriate path of policy, the timing and pace of interest rate increases ought to, and i believe will respond to unfolding economic developments. if those were to prove faster than the committee expects, it would be logical to expect a more rapid increase in the fed funds rate, but the opposite also holds true. if we don't see the improvement that's projected in the baseline

outlook, that the opposite would be true and the pace of the timing and pace of interest rate increases would be later and more gradual. >> john hilsnerath from the "wall street journal." chairman yellen, some fed officials and some market commentators have noted that market conditions recently have looked a little bit like they did last spring before a period of turbulence. volatility is very low in stock and bond markets. risk premiums are very low. and in particular, the market expectations for interest rates, for short-term interest rates look below even the fed's own projections as laid out. i wanted to ask two questions related to that. one, what is your read on these -- on market activity? and are you at all concerned about a sense of complacency in

markets? and two, what is your view on market expectations for the rate hike cycle the fed laid out in its dot plot? is the market where you think the fed is on that? >> well, i mean, i'd start by saying that of volatility, both actual and expected in markets is at low levels. the fomc has no target for what the right level of volatility should be. but to the extent that low levels of volatility may induce risk-taking behavior that, for example, entails excessive buildup in leverage, or maturity extension, things that can pose risks to financial stability

later on, that is a concern to me and to the committee. i don't know whether a number of reasons have been cited for what we're seeing in the marketplace. i don't know if overconfidence or complacency is one of those reasons, but i guess i would say it is important, as i emphasized in my opening statement, for market participants to recognize that there is uncertainty about what the path of interest rates, short-term rates, will be, and that's necessary because there's uncertainty about what the path of the economy will be. and i want to emphasize as i have that the fmoc will adjust policy to what it actually sees unfolding in the economy over time. and that necessarily gives rise to a certain level of uncertainty about what the path of rates will be. and it is important for market

participants to factor that into their decision making. you asked me about the dot plot, forecasts or projections for the fed funds rate. you do see a range of disagreement among the participants there. so by the time you get to 2016, there is a considerable range of opinion and i think in part that reflects the uncertainty that i'm talking about that participants do see different pace of recovery, different trajectories for inflation, and it's appropriate for them to adjust their thinking about what the path of policy should be to their own view of how the economy will evolve over time, and around each of those dots i think every participate who's filling out that questionnaire

has a considerable band of uncertainty around their own individual forecasts. >> "new york times." you've spoken about the sense that the recession has done permanent damage of the economic output. your forecast of long-term growth. i'm curious to know to what extent do you think stronger monitory and/or -- are we stuck with slower growth? is there something you can do about it? if so, what? if not, why. >> i think part of the reason we are seeing slower growth in potential output may reflect the fact that capital investment has been very weak during the downturn in the long recovery that we're experiencing. so it diminished contribution

from capital formation to growth does make a negative contribution to growth. and as the economy picks up, i certainly would hope to see that contribution restored. so i think that's one of the factors that's been operative. of course, we've had unusually long duration unemployment, a very large fraction of those unemployed who've been unemployed for more than six months. and there is the fear that those individuals find it harder to gain employment, that their attachment to the labor force may diminish over time. and the contacts that are helpful in gaining employment can begin to erode over time. we could see what's known as

historisis where individuals because they haven't had jobs for a long time find themselves permanently outside the labor force. my hope would be, and my expectation is that as the economy recovers, we will see some repair of that that many of those individuals who were long-term unemployed or those who are now counted as out of the labor force will take jobs if the meconomy is stronger and would be drawn back in again, but it is conceivable that there's some permanent damage there, too, to them, to their own wellbeing, their families' wellbeing and the economy's potential. >> thank you, madam chair. i believe you mentioned in your opening remarks tighter credit. and i'm wondering what you think of the possibility that the

federal reserve, itself, with regulations that it has to impose under dodd/frank is partly responsible for that. and second, the current trend toward litigation. i read something where the three largest banks in the u.s. paid $51 billion in fines so far and obviously the number is rising. so why would anybody loan to a near prime borrower, and in fact if you look at federal reserve bank of new york research, here we are five years into the expansion and people below fico of 700 are having worst credit experiences. so it probably isn't because, you know, unemployment's tee kle declining. it's probably because banks don't want to take the risk. so as the nation's top bank regulator, what can you do to fix that? >> i first would start by saying think it's essential in the aftermath of this crisis to

strengthen financial regulation and to make the financial system more robust and to reduce systemic risk. we can see what the costs of the financial crisis were and i don't think any of us should want to see that repeated. so i think the regulations that we've put in place, most of which follow from dodd/frank, are highly appropriate to create a more robust financial system that will be a safer and sounder one for our economy going forward. and i think we're making progress on doing that. in putting regulations into place, we have tried to phase them in in a way that gives long enough lead times to make sure that in strengthening the financial system, we don't produce a credit crunch. and by in large, my own

assessment is that credit is broadly available in the economy. but there are some exceptions, and i would afree with much of what you said when it comes to mortgage credit. i think banks at this point are reluctant to lend to borrowers with lower fico scores. they mention in meetings with us consistently there are concerns about putback lists, risks, and i think they are -- it is difficult for any homeowner who doesn't have pristine credit these days to get a mortgage. i think that is one of the factors that is causing the housing recovery to be slow. it's not the only one but i would agree with that assessment, and of course, there were a lot of practices in connection with mortgage lending that really need to be changed. we don't want to two back to those days, but it is important

to clarify for us to work to clarify the rules around mortgage lending to create an environment of greater certainty for lenders to be willing to extend mortgage credit. >> good afternoon. jason with "reuters." chair yellen, the fed has slashed its growth projections for this year and you've gone to pains to explain that there is uncertainty in the path of interest rates and the economy. and yet the fed's central tendency projections for 2015 and 2016 remain quite strong. are you confident that the u.s. economy has entered a period of sustained above-trend economic growth? thank you. >> well, when you say confident, i suppose the answer is no because there is uncertainty, but i think there are many good

reasons why we should see a period of sustained growth in excess of the economy's potential. we have a highly accommodative monetary policy. we have diminishing fiscal drag. we have easing credit conditions. we have households who are 3 becoming more comfortable with their debt levels and more able to service debt, an improving job market. we have rising home prices and rising equity prices, and an improving global economy. at least in my estimation. so i think all of those things 3 ought to be working to produce above-trend growth and i think that's what's reflected in the forecasts. but nevertheless, as i said, of course there is uncertainty around that projection.

you know, nevertheless, the labor market has continued to improve, and over a number of years in which admittedly growth has come in at a disappointing level, we've still seen the labor market broadly, broadly improve, and i expect that to continue. >> steve beckner. madam chair, you mentioned there were discussions of the mechanics of normalization as you put it. i assume that involved some review of the third anniversary of the june 201 is1 exit principles. i wubder if i could get you to elaborate. in particular, is the committee reaching a consensus about the reinvestment in rollover policies. the timing of discontinuing those policies. i'd be interested in your personal view on that. >> well, reinvestment policy was included in our 2011 exit

principles and it's one of the things that we're discussing and reconsidering. we've not yet reached -- we've made quite a lot of progress in our discussion, but we've not yet reached conclusions about that or other aspects of our package. there are a couple of things chairman bernanke indicated in contrast to our 2011 principles. we would be very unlikely to be sell mortgage-backed securities and that remains the case. broadly speaking, some of the principles that were incorporated in that 2011 package, the notion we fully expect our balance sheet to shrink considerably over time back toward more normal levels, toward levels that would be

efficient with conducting monetary policy. that's still an expectation. i believe it's an expectation that eventually our portfolio will be, consist largely of treasuries eventually. there are quite a number of details. we have a number, as you know, a number of tools that we can deploy as we move to normalized policy. interest on excess reserves. our overnight rrp facility term repurchase agreements with the markets or term deposit facility. and exactly how to deploy that set of tools to meet our objective of raising the general level of short-term rates when the time becomes appropriate and how best to communicate to the public and to markets how we're conducting policy and what our objectives are. those are things we're

discussing and hope we will be able to come back with a full description or let's think of it as a revised set of exit principles later this year. >> madam chair, donna with american banker. one of the outstanding reform issues on the plate of the fed is to handle the risk related to short term wholesale funding. you've been very supportive of this issue, but we've heard little progress so far on where things stand. can you please explain to us why it's taken so long to get this proposal out? what are some of the aspects the fed is considering in their approach to how they roll out this rule? and where we may be in that process? thank you. >> so i'm afraid i can't give you a detailed timetable for when we will move forward with that rule. i've been supportive, governor

truil lor truillo and others have been supportive of taking some action to diminish the incentives for heavy reliance on short-term funding. we still see that as one of the risks to the financial system that wasn't really addressed in the risk-based capital requirements that we put out. or in the liquidity coverage ratio that's out for proposal. governor truillo suggested one approach could be to impose a capital requirement that's related to reliance on wholesale funding and in my own past comments, i've been supportive, but i'm afraid at this point, and this remains very much on the table, to take some action to address this. it certainly remains on the table as an unfinished agenda item, but i don't have a detailed timetable for you.

[ inaudible question ] >> i'm just not certain. i just don't have a detailed timetable for you. i'm sorry. >> madam chair, greg with the "economist." this is a follow wrup to steve liesman's question. how would you respond if it did remove above target in the near term? your colleague john williams and the imf have both suggested that the committee might consider allowing inflation to temporarily overshoot. second question, will financial stability considerations play a role in when and how fast the committee normalizes interest rates? >> so with respect to the question of overshooting, let me start by saying that inflation continues to run well below our objective. and we're still some ways away from maximum employment.

for the moment, i don't see any tradeoff whatsoever in achieving our two objectives. they both call for the same policy, namely a highly accommodative monetary policy. so at best, overshooting of inflation or the thought that we will reach our inflation objective before we've attained maximum employment i suppose i would see is at most as a risk that we could face somewhere down the road. symmetrically, it's also conceivably a risk that we would reach our maximum employment objective before we've actually obtained our inflation objective. so there are different ways in which we could conceivably -- there could conceivably arise policy conflicts or tradeoffs somewhere down the road. now, quite some time ago, the

fmoc adopted, and we reaffirmed just in january, a statement on our longer-run goals and policy strategy. and what that statement said is that first of all, whenever either inflation or employment are away from their preferred or mandate-consistent levels, it will always be the fmoc's policy to make sure that we get back to those target levels over the medium term. but a principle that's embodied in that statement is that the committee will follow a so-called balanced approach in deciding on its policies. and essentially that means when we see some conflict between achieving the two objectives that we would consider in deciding on a policy just how far we are from achieving each

of the objectives. and if the distance from achieving an objective is particularly large, it would be consistent with the balanced approach that we would tolerate some movement in the opposite direction on the other objective, but balanced approaches, the general policy strategy i think would follow. >> michael mckee from "bloomb g "bloomberg" television and radio. i'd lask to ask you about your signaling mechanism going forward. you told people, don't pay attention to the dot plot. your two mandates are backward looking lagging indicators. so if something should surprise in the economy with only four press conferences a year, how do you signal to the markets what the fed is doing so you don't run the risk of an event like last september when people were surprised or some sort of credibility problem where people

feel you're falling behind the economy? >> well, you know, again, we are very a tettentive to unfolding economic developments and understand that there can be surprises and twists and turns in the road so that the forecasts that we've made become no longer appropriate and we need to respond to unfolding developments. i'm personally committed to communicating with the public whenever communication is appropriate. we have four press conferences, but i would feel it appropriate for me to either have additional communications, meetings with the press, or to give speeches or to in a variety of opportunities i have to make clear what the committee's thinking is and my colleagues as

well i think would feel it entirely appropriate to communicate changes, changes in our views. >> pedro from "dow jones news wires." thank you very much. since we're currently having a world cup, i thought it would be valid to ask a question about the world and i'm surprised, a little surprised that the optimism of your forecast given the, you know, darkening outlook overseas. you've got conflict in ukraine, escalation of war in iraq, with implications for oil prices that potentially have global economic impact. you have -- excuse me -- a european recovery that's still fairly weak and emerging markets that are slowing down sharply. do you think the u.s. can be a lone engine of economic recovery globally? and if i should just follow up very quickly on greg's question, because you talked about the two

sides of the mandate but didn't answer the financial stability part. is financial stability currently preventing the fed from being more accommodative than it would like and if not, when do you expect that to happen if at all? thank you. >> so, let me -- i'm sorry i didn't answer the last part of greg's question and the last part of yours. let me start there. with respect to financial stability, we monitor potential threats to financial stability very, very carefully. and we have spoken about some, i've spoken in recent congressional testimonies and speeches about some threats to financial stability that are on our radar screen that we are monitoring trends in leverage lending and the underwriting standards there. diminished risk spreads in lower grade corporate bonds.

high-yield bonds have certainly caught our attention. there is some evidence of reach for yield behavior that's one of the reasons i mentioned that this environment of low volatility is very much on my radar screen and would be a concern to me if it prompted an increase in leverage or other kinds of risk-taking behavior that could unwind in a sharp way and provoke a sharp, for example, jump in interest rates. and we've seen what effect that can have on the global economy and i think it's something that it's important to avoid. but broadly speaking, if the question is to what extent is monetary policy at this time being driven by financial stability concerns, i would say that while i would never take off the table that monetary

policy should -- could in some circumstances respond, i don't see them shaping monetary policy in an important way right now. i don't see a broad-based increase in leverage, rapid increase in credit growth or maturity transformation. the kinds of broad trends that would suggest to me that the level of financial stability risks has risen above a moderate level. and we are using supervisory tools and regulations both to make the financial system more robust, and to pay particular attention to areas where we've spotted concerns like leverage lending which is very much a focus of our supervision. now let's see. there was a first part to your question. and the first part was about global risks. and we always pay attention to global risks and the likely

evolution of the global economy. you expressed a lot of pessimism about emerging markets, and i see it more likely that we'll see moderate growth in a pickup there. of course, there are geopolitical risks. the middle east developments in iraq, of course, they're not only a humanitarian concern, they are a concern with respect potentially to energy supplies and prices, and so i would certainly list that as something in the category of risks to the outlook. >> peter barnes, fox business. just to follow up a little bit on what pedro asked about. specifically what about equity markets? i mean, right now today, the s&p

500 is on track to close at another record high. you have said you have not seen evidence of bubbles in equity markets and they've been trading within historic norms. is that still the case today? thank you. >> so i don't have -- since the committee doesn't try to gauge what is the right level of equity prices, but we do certainly monitor a number of different metrics that give us a feeling for where valuations are relative to things like earnings or dividends. and look at where these metrics stand in comparison with previous history. to get a sense of whether or not we're moving to valuation levels that are outside of historical norms. and i still don't see that. i still don't see that for equity prices broadly.

>> anna kurtz with cnn money. thank you, chair yellen. i'm wondering what's the fed's general expectation for wage growth this year and next year, and if inflation outpaces wage growth, does that scenario make you more hesitant to raise the federal funds rate next year? or if conversely wages rise just enough to keep up with inflation, moving in lock step, let's say. is that enough to satisfy what you're looking for in the job market? >> well, thanks. that's a great question. you know, i see compensation growth broadly speaking as having been very well contained. by most measures, compensation growth is running around 2%. so that's real wage growth or real compensation growth. it's essentially flat rather

than rising. and real wage growth really has not been rising in line with productivity. my own expectation is that as the labor market begins to tighten, we will see wage growth pick up some to the point where real wage growth, where compensation and nominal wages are rising more rapidly than inflation so households are getting a real increase in their take home pay. and even limits that might be size of the tighter labor market, within limits it's not a threat to inflation because consistent with the level of inflation we have for our 2% inflation objective, we could see wages growing at a more rapid rate and -- a somewhat more rapid rate and, indeed,

that would be part of my forecast of what we would see as the labor market picks up. if we were fail to see that, frankly i would worry about downside risk to consumer spending. so i think part of my confidence in the fact we will see a pickup in growth relates to the fact i think consumer spending will continue to grow at a healthy rate and in part that's premised on some pickup in the rate of wage growth so that it's rising more than inflation. >> marty kretsinger, "associated press." today's statement repeated a phrase that's been used -- that the committee has been using, that there's likely to be a considerable period between the end of the bond purchases and the first hike in the federal funds rate. in march, you gave us some guidance trying to help us

understand that by saying that that's hard to define but it could mean six months. is that a timeframe that you still feel comfortable with? and if you feel like it needs to be modified, do you -- could you give us an assessment of the market seemed to expect a rate -- the first rate hike in the second half of next year. is that a good assessment? >> so what i want to say, the guidance that i want to give you is that there is no mechanical formula whatsoever for what a considerable time means. the answer as to what it means is it depends. it depends on how the economy progresses. the committee said very clearly in their statement that what they would be looking at and deciding on the timing of interest rate increases would be the progress we're making in

achieving our objectives, how far we are from achieving our labor market objective and our inflation objective and that we will be assessing that progress and that's the key determinant of when interest rate increases are likely to come. there is no mechanical formula. >> thank you. greg robb from "market watch." there was a report this week in a salmon colored newspaper i won't mention that the fed is thinking about, or regulators in washington are are thinking about an exit fee for bond mutual funds. this has sparked a lot of comments. would you care to comment on this? >> i am not aware of any discussion of that topic inside

the federal reserve and my understanding is that that is a matter that is under the purview of the s.e.c. >> thank you very much. well an "f" on transparency and freedom of information, and i think my colleagues in journalism would give a similar grade whether they'liberal or conservative. the freedom of information process has become a swroek. it was already well on its way, prior to the obama administration, but this administration has perfected the stall, the delay, the redaction, the excuses and really it's shocking because i feel very strongly that the information

that they withhold and protect many times belongs to the public. we own it. but there's no sense of that when you ask for it. they covet it as if they are a private corporation defending their trade secrets rather than understanding that what they hold is information they've gathered on our behalf. >> emmy award winning journalist, investigative reporter sharyl attkisson on the changing face of network news and her career sunday night at 8:00 on c-span's "q&a." the thesis of the book is that there's a whole group of people in america, in fact, a big swath of america, that is being ignored, left behind, not included in the discussion, i think for either party. particularly, though, i would argue the republican party. and that's i call them blue collar conservatives. you know, the folks out there that are working people. most of whom don't have college degrees. folks that really still understand the value of work and

the importance of work and responsibility. and people who understand the importance of family and faith. believe in freedom and limited government. so you say, well, wow, those are conservative-republican voters, and in many cases they're not. in fact, a lot of them aren't voting at all because they don't really see either party talking to them about the concerns they have in trying to create an opportunity for them to live the american dream. >> former pennsylvania senator and presidential candidate rick santorum argues the working americans have been abandoned by both political parties. and offers conservative answers to their problems. saturday night at 10:00 eastern. on "afterwards" part of booktv this weekend on c-span2. and this month on our online book club we're discussing amity shlaes' "the forgotten man." start reading and join otherses to discuss the book in our chat room at booktv.org. booktv. television for serious readers.

united nations whistleblower james wasserstrom says he suffered retaliation after reporting a kickback scheme involving u.n. officials. on monday, he took part in a discussion on the need for more whistleblower protection and oversight of the united nations. hosted by the heritage foundation, it's an hour and 15 minutes. >> good afternoon. welcome to the heritage foundation. we welcome those joining ussen our heritage.org website and those joining us today via c-span. we ask everyone in house to make sure your cell phones have been turned off as a begins courtesy to our program. we'll post the program on our heritage home page for

everyone's future reference. hosting our discussion today is brett schaffer, r.j. kingham senior research fellow in international regulatory affairs. part of the margaret thatcher center for freedom. mr. schaffer analyzes a range of foreign policy issues focusing pry maimarily on the united nat and affiliated funds and programs and frequently speaks and publishes on issues related to the world body and its activities. in 2009, he edited the book "conundrum: the limits of the united nations and the search for alternatives" which features several fellow experts examining an array of international activities and responsibilities conducted by the u.n. he's a frequent visitor to the subsaharan africa as well and written extensively on economic development, peace and security issues in that region. he first joined us here at heritage in 1995. from march 2003 to 2004 he worked at the pentagon as an assistant for international criminal court policy before returning here to heritage.

please join me in welcoming brett schaffer. brett? >> good afternoon. welcome to the heritage foundation. as we as you know, in recent years, there have been a number of various stories, reports and other sources revealing a troubling number of scandals, misha mishaps, misappropriation by the united nations, and i'm going through a few of them just to give you a sechbs nse of what w seen. over the past few years, the director general of the world sintellectual property organization has been accused of covertly authorizing the use of

dual use technology enacting illegally in efforts to identify the author of anonymous levels of sexual harassment. recently re-elected to be director general of wipo. in 2013, two whistle blowers who were retaliated against for exposing evidence tampering by a top human official charged with retaliating against by that top official who was their superior. the former spokesperson for the u.n. mission in darfor recently revealed 245 the u.n. has routinely denied, conceald or refused to report evidence of a tax on civil yanls in order to make the situation appear more

stable than it actually is. . today, we have three speakers. two in person and one, unfortunately, is going to have to appear by skype due to personal reasons. he focuses on representing whistle blowers, staff members and third parties working for or injured by international organizations such as the u.n., wipo, the world health organization. james wassastrom is a u.s. d diplomat who currently serves 234 afghanistan. while assigned to kosovo, he

blew the whistle on what he alleged was a conspiracy to senior u.n. officials. he's experienced the u.n. policy for dealing with whistle blower retaliation firsthand and can offer insights to similar procedures. finally, robert appleton was an attorney with the u.s. department of justice before being asked to serve as chief legal counsel for the independent inquiry investigation. his distinguished surface in that role led to his being named the chairman of the u.n. procuremented task force which was responsible for investigating fraud and corruption in the u.n. peace keeping operations. due to unexpected events, he will be appearing by skype.

following presentation, we'll have time for a few questions and answers from the audience. unfortunately, they were not able to provide one. without any further adieu, ed, would you lead us off here? >> sure. welcome, everyone. i just want to thaurng and the heritage foundation for inviting me today. i feel a bit of a pica here. i'm just a toiling lawyer trying to help some people in the field. but unlike jim and bob, i've also never worked for the u.n. i did try to get a job when i moved to geneva 20 years ago. he told me if i was 10 years younger, he might have hired

ple. as brett said, i represented a number of staff members and staff associations during the 20 years that i've been in geneva both internally and in u.s. courts and the european court of human rights. one of my several more notable cases was the case of cynthia berzack versus rude lovers, d hot commission of refugees who was accused of sexually assaulting.

they put the report in the trash bucket. she then came to me and then because we really had no remedy in the internal system, nor could we bring any case in geneva. so we then tried to bring a case in the u.s. federal dpis trikt court. we then went to the second circuit and challenged 2 immunity as unconstitutional. i still personally believe that the immunity of international organizations is unconstitutional to u.s. law. and i think eventually, it will be overturned whether hopefully in my life time or my client's lifetime. that remains to be seen. i'm also working on -- well, i'm

preparing an amicus brief for a case now pending also in federal district court in manhattan brought by a number of hatian survivors and victims of a cholera epidemic that was allegedly introduced in haiti after the earthquake by u.n. peace keepers which caused approximately 8,000 deaths and 750,000 illnesses or sickness. people were hospitalized and whatnot. the u.n. has refused to empanel late the dispute resolution body which is set up in the general convention on privileges and immunities. so the haitians have been left to bring an action in u.s. district court. so, right now, the case is at the district court level. the uchlt n. has challenged the case on the basis of immunity. i expect the case will be dismissed and then it will be appealed, pree soup bli, to the

second circuit. and i will probably be writing an amicus for -- several years ago, i founded an ngo called the center for accountability organizations in geneva. on behalf of that, ngo will be presuming that the case is dismissed, which, based on the jurisprudence of the u.s. law to this point, i think will probably happen. brad asked me just to open briefly about what the problems are for u.n. staff members whistle blowers and whatnot. as a practitioner, the big problem is that you have a system of immunity where the international organizations are not subject to local laws at all. whether you're sitting in new york, geneva, nirobi, anywhere. it doesn't matter. your subject only to the u.n. internal rules and regulations. and that obviously creates a problem, particularly if you have a criminal activity.

the u.n. doesn't have any criminal code. so as in the case, a staff member -- well, the commissioner -- commits an alleged criminal act, the only recourse of the victim is either internally, or to try to go to the local courts. but, then, because of the immunity, it has to be lifted by, in this case, by the secretary general. but that very really happens. so you have an internal system set up in all the organizations. the defendant is also a judge, in a sense. they run it, they fund it, they create the rules. it's not a fair system. many have said that there's no kwaumt of arms what so ever in this system. so you have proversion outcomes. what ice happened recently in

many of my cases, i mostly litigate with the u.n. proper and the administrative office also based in geneva. there are about 40 different international organizations, intergovernmental organizations that subscribe to the jurisdiction of the ilo. you wait on the merits, whether it's an employment case or an injury case. you then get dachblgs. and you have no other recourse, that's the problem. now, what i've tried to do more recently is challenge the u.n.'s immunity before the european court of human rights.