the howard university students, staff and alumni. the long road to the passage of civil rights act of 1964 was paved with the countless footsteps of many americans who marched, held sit-ins, staged boycotts and ended freedom rides. the call for comprehensive civil rights legislation gave momentum in 1963. our civil rights activists continue to organize peaceful demonstrations throughout the country. after hundreds of nonviolent protests, president john f. kennedy delivered a nationally televised speech. after president kennedy's assassination, president lyndonb. johnson led a pass sole

judge to pursue civil rights communication. becoming the first of many legislative victories over the next 50 year that is have been critical tools for protecting civil rights. throughout the past 50 years, our university has been grounded by the legacy rendered by the out comes of the dedicated commitment of countless locals, as well as national civil rights activists. signed in law on july 2nd, 1964, the civil rights act outlawed segregation. today's keynote speaker, attorney genric holder has made protecting civil rights a tough priority of his administration

at the department of justice. in his commencement address, he offered the following insight about the future path of civil rights in our country. it is not enough just to open the gates of opportunity. all of our citizens must have the ability to walk through those gates. this is the next and more profound stage of our civil rights. i believe that presentations and discussions in today's symposium highlight the critical importance that must continue to guaranteed justice and civil rights for all citizens. as we reflect on the 50th anniversary of the passage of the 1964 civil rights act, we

celebrate the activists who sacrifices paved the road toward equality. their commitment strengtsenned our nation. let us advance a robust agenda for the future. we must obsess about the journey. and not any specific destination. the passage of the civil rights act was a destination. an important one, albeit, but not a final one. by the virtue of love, this is a journey without an end. it is my distinct pleasure to introduce to you today the attorney general, eric holder. eric holder, jr., was sworn in as the 82nd attorney general of the united states on february 3rd, 2009 by vice president joe biden.

in 1997, mr. holder was named by president clinton to be the deputy attorney general, the first african american name today that post. prior to that, he served as u.s. attorney for the attorney general. in 1988, mr. holder was nominated by president reagan to the supreme district of columbia. upon graduating, he moved to washington as part of the he was assigned to the public integrity section in 1986 and was asked to investigate and prosecute official corruption on the local, state and federal levels. and so it is my distinct pleasure to welcome to the podium, the attorney general of

the united states, eric holder, jr. thank you. [ applause ] >> thank you. thank you. thank you. thank you. thank you. thank you. well, thank you, president frederick, for those kind words. and thank you all for such a warm welcome. it's a pleasure to be here on the beautiful and historic campus of howard university. i'd like to thank the howard university color guard for being a part of this celebration.

and burt cross for that exceptional rendition of the national anthem. i'd also like to thank andrew young, a proud graduate of this university. and i also want to thank every member of the gay man's choralous for making this event so special. john seaganthorn was a passionate journalist, a life rong defender of the first amendment and a fierce civil rights advocate. he was top aid to my predecessor and later served as pal bearer.

he was a truly remarkable man and a singular voice for the cause of justice. a guiding light and inspiration to many, including me. i count myself as extremely fortunate to have known john segenthal and i extend my heartfelt condolences to his family. he will be dearly missed, but his critical work goes on. it is a privilege to be among so many distinguished guests and accomplished trail blazers in the fight for civil rights. young people who will carry on the work that we kmem rate and the single achievement that we celebrate here today. half a century ago this month, president johnson marked an inflection point in a struggle that predated our republic when he signed the civil rights act,

1964. it was a struggle that had begun more nan three centuries earlier. it continued through the expanding colonization of north america. by 1763, the colonial population included over 300,000 africans. the overwhelming majority who were slaves. it wasn't until years later that our greatest president issued an emancipation proclamation and secured the 13th amendment which finally struck this evil from our constitution. but even then, gym crow laws and other measures were engineered to keep millions of african americans in bondage. slavery by another name for a century more.

and intimidation and violence were routinely employed to prevent them from becoming educa educated, to keep them, us, from voting and to keep them, us, from mixing with the white majority. finally, when the unanimous supreme court declared that segregation was unconstitutional, our nation took an important step to reconcile not only two races, but two histories. two americas that had been intensely separate and profoundly unequalled since long before the american revolution. ten long years after that, as long simmering injustice gave way to activism, the civil rights act of 1964 was adopted to forever enshrine american

inequality to american law. this relationship instituted critical employment protections it out lawed discrimination. familiarly society's most vulnerable members. the new statute also created the equal employment opportunity commission, as well as the community relation services. now, securing this law was an extraordinary, extraordinary undertaking, born of a consensus braught by decades of hard work and profound sacrifice.

it required two great presidents, john fitzgerald kennedy who called on us to respond to a national crisis and president johnson who took on after president kennedy's assassination to make that real. it required a fortitude with those who defended a way of life that was founded on bigotry and oppression. it required leaders of commission from medgar evers to dr. king to john lewis to andrew young who were willing to risk and even to give their lives an order that others might live free. most of all, it required men, women and even children. children of tremendous courage and unwaivering faith to endure the unindurable and to advance the cause of justice. these are the heroes whose

legacy we celebrate on this milestone anniversary. orve of course, all who are old enough to remember those days, i will never forget the turmoil and violence that characterized the civil rights era. i will never forget watching on a black and white television in my childhood home, queens, new york city, countless people, rich and poor, black and white, famous and unknown, braved dogs and fire hoses, billy clubs and baseball bats, bullets and bombs to secure the rights to which every american is entitled. these extraordinary citizens streamed into birmingham and marched on washington. they stood up in little rock and they sat in in greensboro.

they faced riots in oxford and walked through a schoolhouse door in tuscalusa. they deared during america's long night of racial injustice, to dream of a more equal society. they risked everything, they risked everything they had to make it so. that was the fight that half a century ago brought nearly a thousand students to mississippi for a voter registration campaign called freedom summer. as the battle for civil rights was waged in the halls of congress and thundered across the streets of america, inch by inch, the nation as a whole moved slowly towards equality. mississippi and other states continued to stand in southern racist opposition. it was made almost impossible

for black men and women to vote. newspapers published the names of registered black voters so they could be targeted and terrorized by those who harbored hatred. yet, hundreds of people came to mississippi in defiance of these threats and in the face of deadly violence to help extend democracy's most basic right to people of color. in the ten weeks of freedom summer, more than 65 buildings were bombed or burned. hundreds of civil rights workers were beaten and arrested. and three brave young men, andrew goodman, james cheney and michael schwarner were brew dalda tally murdered.

more and more brave americans joined the cause. both residents of these communities and students from all races across the country. when they saw that african americans were being deprived of quality educational opportunities, they established freedom schools to facilitate discussion and to encourage political activist. these young people devoted themselves to the hope that they koumd pass on to the next generation a world containing more effect for the dignity of all men than that which was willed to us. the senseless murders of rita's husband and his two colleagues, one black and one white, in a case that became known as mississippi burning, captured headlines and sparked outrage across the country. their tragic deaths moved public opinion.

but their acts made the voting act and the americans with disabilities act of 1990, along with other countless movements for progress. although michael and rita never had the chance to have their own, their work and the efforts of friends and physical lows left a better world for me and for my children and for millions more. without their monoyumtal progress, few of us would be here this morning.

i am just as mindful that none of this progress was pre-ordainez. we know these rights have never been inevitable. every step forward has been hard one. the owners were not automatically imbued with the force of the law. by patriots who never shrink from the possible toy draw this nation closer. now, like you, me and my colleagues are determined to do everything in our power to further these efforts. to protect and expand the work of those who have gone before.

and to extend america's populations to populations who have been too long enfranchised. the civil rights act continues to find an arsenal of tools in waging this struggle. as we speak, the justice department is using provisions of this important law both aggressively and innovatively to confront civil rights challenges old and new. the 1964 act reaching the $99 million employment discrimination settlement with the new york city fire department. in 2012, the department used provisions of the act to prevent harassment against leez bsbian,,

bisexual and transz gender. we are fighting for jepder eq l equali gender equality. and ensuring that schools provide safe and equal opportunities for our sons and daughters. the civil rights act offers powerful enforcement authorities to address contemporary challenges and safeguard vulnerable people. beyond the act itself, the justice department has worked with our partners throughout the administration. the department of labor who led not long ago a help to provide. ushering what i'm considering would be an area of historic achievement.

alongside these other age season is, we have worked hard to bring on the spirit of the law by bringing in new legislation and judicial rulings that extend the equality to others. they can finally receive equal opportunities, equal protection and equal opportunity that they deserve. all of this is important, lifetime work. to keep expanding upon the safeguards that it provides. it also shows that our work is far from over. significant challenges remain before us: each year, every american has a great deal more

work to do. we cannot accept these answers as an indication that our work is complete. progress is not the end. as we speak in far too many neighborhoods, far too many people of color are denied hozing. in our education system, state of the union students of color are far more likely to attend poor schools.

when it comes to our most treasured democratic institution, many vulnerable populations, including young people, the elderly and communities of color are now facing a range of new restrictions, levelled under the dubious guys that create significant barriers to the ballot box. i believe our national dialogue in response to these problems would be very different. our society is not color blind, nor should it be, given the december parties that still afliblgt and divide us. we must be color brave that's

why, today, together, we must act not out of self interest, but of national interest. we must take into account not only the considerable step that is we've seen for the last 50 years, but the entirety of the experience that people of color have faced. and we must never hesitate to confront the fact that this undeniable truth stretching back nearly four cinch ris continue to reverberate, these echoes from times passed are happening by too many. they're heard by too many in our nation today. in addressing these lingering effects, there's need for personal responsibility.

there's also a need for societal responsibility. we must be willing to acknowledge the problem that is we face. to talk frankly about inequality and to examine its causes and impacts. we must look on our great nation with open eyes and deep understanding with who we have been, who we aspire to be and who we are today. this is the key to perfecting our union. and form lating policy that is will lead to a better, brighter future for all of our citizens. this is what drives the obama administration's sweeping efforts to ensure that every american has the chance to succeed based on his or her skills, talent and potential and not by the circumstances of their birth.

today, i'm calling on congress to renew the spirit of the civil rights act. by updating fair housing anlaws. [ applause ] by discriminating workplace exceptions against women. [ applause ] >> and to finally end discrimination against lgbt citizens by ensuring equal access to education and promoting non-discriminatory

learning environments and -- and by passing updated voting rights legislation that will enable every voter in every jurisdiction to exercise unincoupu unincouple beryled the right so many have died for to defend. after all, the civil rights act of 1964 was an attempt, and a highly successful one, to con front fundamental question that is have bedevilled this nation since its inception and that justifiably general rate c controversy even today. this morning, we are reminded that the civil rights of every person, no matter where they come from, no matter who they

are, no matter who they love, continues to constitute our most solemn obligation. the true greatness of this country lies in our limitless capacity of innovation, for rebirth and renewal, for reaching greater societies and reaching new frontiers. as a people, we have never been content to tie ourselves to an unjust status quo, no matter how many individuals may have found it 5:00 septemberble. we challenge, we question, we struggle u we quarrel. we bind ourselves to an on going quest of a better future. one nation, indivisible, driven by the pursuit of a perfect union and driven it what it may to achieve it. that is what defines as us as

americans. a nation of equality but built by those in chains. a vision achieved by patriots. activists who fought for equal justice and who challenge us even today to make this promise real. to them, as generations yet to come, we owe our best efforts and deepest resolve. we must take up this challenge and implement this vision. and we must build, in their honor, a world that is worthy of their passion, their sacrifice and their humanity. as i look around this country devoted to truth and service,

i'm really confident to reach that promised land. i thank you for your commitment to the pursuit of progress and justice. i look forward to what we must and will aaccomplish in the months and years ahead. as a nation, as a beloved community, as a united people we shall overcome. thank you. >> please welcome the deputy general of the department of united states justice, james m. cole.

>> history is not just a series of events. it's the people who create those events. it's the impact of the stories told and untold of the many trail blazers and unsung heroes whose tireless sacrifices and relentless dedication have resulted 234 justice, equality, opportunity and freedom for all. looking back, we have seen that the defining moments in american history from the strategic, dedicated and tremendous hard work of risk takers, of visionaries, of leaders, leaders like presidents john f. kennedy and lyndon b. johnson.

congressman john lewis, rosa parks and many of today's participants and guests. and many of you, in this auditorium, as well as countless others, who, in the face of bigotry and violence, called upon our nation to live up to our nation's equality. a one with enormous ramifications for our country and the world. the civil rights movement and the ultimate passage of the civil rights act of 1964.

ambassador young met the challenges of segregation and discrimination with truly remarkable sacrifices helping to transform america into a better, a stronger and a fairer nation. born in new orleans during the depths of depression and gym crow segregation, ambassador young accepted the responseblety of service at a young age. in 1960 after receiving his undergraduate degree right here at howard university, and his divinity degree in hartford, connecticut, he joined the southern christian leadership conference. the atlanta-based civil rights organization, led by dr. king. hi was soon named the director of sclc's citizenship school program where he, like dr. king, employed the concept of violence and non-violence resistance as

an organizing strategy and tactic for social change. later, after becoming executive director of the sclc, ambassador king quickly became a trusted advisor and confident. it was those campaigns, along with other critical events that led to the civil rights act of 1964 and the votes rights act of 1965. e67 after being beaten and jailed, the ambassador's leadership and devotion to public service, to social justice and to human rights never waivered. in 1972, he game the first

african american from the deep south to be elected to the united states congress. and in 1981, he was elected mayor of the great city of atlanta where he served for two terms. in atlanta, where he resides today, ambassador young has continued his service to the civil rights cause. as a college professor at georgia state yumpblt, where the policy school is named in his honor. he's also established the andrew young foundation and he has remained active in local, national, and global affairs. in recognition of his vast contributions, ambassador young was awarded the highest award that the united states has to bestow. and he has received honorary degrees from more than a hundred colleges and universities across

the united states and abroad. just when you thought that his inventory of accomplishments could not extend any further, ambassador young has earned the title of film maker, devoted husband, emmy award winner, author and proud father and grandfather. ambassador young, on behalf of a great nation and everyone here today, i want to thank you for our remarkable service not only to the country, but to the world. your work along with historic efforts of others laid the groundwork for what has become a significant part of the justice' mission to safeguard the fundamental infrastructure of our democracy among us.

our commitment has never been stronger. one that reflects the values enshrined in our nation's founding documents. your par tisz pags serves as an inspiration for this work. please join me in well coming an ambassador for change, an ambassador for equality and for justice, am was door andrew young. >> thank you very muff. >> thank you very much. that was an extremely generous swro duction. but i want to come back to my days at howard university and before howard university.

it was in 1941 that my sixth grade teacher took me to a federal courthouse and i saw a tall, skinny young lawyer by the name of thurgood marshal. is the 41. 1941. already, howard university had started through its law school laying the groundwork for what was to come. before that, ralph bunch, one of our professors was asked to do the intelligence network to try to understand how america should relate to africa during the second world war, remember, the south africans were supporting hitler. and ralph bunch took a leave of absence from howard university. and spent two years trying to figure out the world. but, in the process, he figured out the united nations.

an i really think that ralph bunch probably has more to do with every word in the united nation's charter and every institution of the united nations that still exists today. i'm saying without howard university. without thurgood marshall and many others, we wouldn't have had any basis for marching. i got out of here 63 years ago. and i said, lord, if you give me one more chance, i promise you, i'll do better.

but i didn't foe what had happened to me here. i say i neglected my studies and none of my teachers knew my name, but i got one hell of an education. and don't plaid yourselves cheap. don't let anyone else define you. now, let me go to december 17th, 1962. fred shuttlesworth churj was bombed. it was bombed for the third time in the last 18 mobts. nobody had ever been charged or investigated. fred shuttlesworth came to see martin luther kick and said, first of all, the house came pleatly down and everybody was sure that fred was dead and he walks out of there with his

shirt and tie on and says if this didn't kill me, you know, i can do anything i want to do. so he kwam to atlanta and got us to say that we couldn't sit back and wait for deseg ra gags. we koupdn't continue to be passively nonviolent. there had be an aggressive non-violent movement. i was surprised. martin luther king was really no mill tant. but on occasion, he said yes, we must. i said oh, lord. but we ended up going to birmingham a few months later. and we had a plan to confront segregation. and you heard about the dogs. and you heard about the jailings and you heard about the fire hoses. that wasn't it.

the plan was that 300,000 citizens of color would not spend a nickel on anything but food or medicine. until the economy changed. and so birmingham was an economic movemented, more than a marching movement. and when you pull 300,000 citizens out of the economy, everybody was under water. my job was to try to negotiate with them to help them to realize that it was really not going to get any better unless they took down the signs, they allowed people to work and they said we can't qualify anybody. that's not true. the maids that you have wearing those white, embarrassing suits, no more than the young ladies that you have coming in from alabama about your departments.

go home and talk to your wives. see who they talk to when they shop at your store and want to know who somebody is. they don't go to the clerks, they go to the maids. they're running your business anyway. anyway, we ended eed one-b helping them overcome the obstacles. there's no such thing as whitewater and black water. take the signs down. it was really very simple. but only because we refused to cooperate with injustice. and, in that noncooperation, will slowly be surely refashioned. noo's about the time the community relation service was born. it was really burt marshall and

others from the justice department that while we were talking with businessmen on one side, they were talking with businessmen on the other side. that it was not a children's crusade. the people that we organized to go to jail were juniors and seniors and high school. who would have been going to vietnam in another year, had they graduated. so, for us, it said why not stand up for freedom in your own home town because you're not going to have a choice. so the president of the student body, the captain of the football team, the leader of the band, a key group of leaders from each high school went to jail: early in april. they had a great experience, they had a religious experience.

they went to jail with the leaders of the civil rights movement. when they came out, they were changed. and their purpose was to organize their high schools for d day, may 5th, 1963. on may 5th, every school closed down. they walked some of them as many as 20 and 25 miles from the center of birmingham to get to jail. by that time, everybody knew it was all over. so the justice department was able, in 1963, to get a hundred businessmen. to sign an agreement that met the challenges that had been offered by fred shuttlesworth and the alabama christian

movement for human rights. but it worked. it changed. people suddenly acted different. and we never even had any problems at the lunch counters. and the reason was that the south was basically very comfortable racially. but for a few hood lems and once the established citizens reigned in a few hood lems, we were able to move forward and with the coming tolgt of the churmgt and the business community, we were able to pass the 1964 civil rights act.

but don't forget that the hundred businessmen agreed to it before it was passed. he said do you think that would work in south africa? i said sure. i said any time a hundred businessmen decide to change society and they're far more vulnerable, you hit a businessman in his pocketbook for 10 pnt and you've got his soul. at least his intention. so we took some of the same ideas into south africa and all around the world. i say that you are a part of changing history.

but we did only two-thirds of our promise. racism is not gone, but it's illegal. war is not gone, but you can't say there is a big difference between 66 million people killed in the second world war and the 5,000-6 5,000-6,000 that the president has been able to limit in afghanistan. and we have a president who is following up as best he can some of the values that we have evolved out of this institution, out of this movement to help make the world a better place.

we didn't understand povrerty because we don't understand economics. the economics that you all are probably being taught is probably i recall el vant to the future of the world in which we live. get mad if you want to, but think about it. you're talking about nationalist, european economics. in a global economy that can transfer more wealth over cell phone that existed at the time your textbooks were written. take us to this next stage and i challenge you for a global vision that feeds the hungry, that clothes the naked that heals the sick. i hope somehow, from some of your minds and souls and spirts. that kind of economy might

emerge in our lifetime. god bless you. >> next, remarks by charles best, the founder of donor's choose dot org. his do donors allow directly from public school projects. this is 15 minutes. >> so, charles best,cover boy. donor's choose is among the most celebrated and innovative ngos anywhere in the world. when i was a public high school teacher in the brox, it was just an experiment that my students and i would work on during our afterschool hours. there was one person and that was darren, who brought me in with my stubts to let people see

what i was up to. >> now you've become very much associated with a new sense of philanthropy. and i want to you to reflect on a quote that i am inspired by and challenged by when i think about our work at the ford foundation. it's a quote by dr. martin luther king, jr. about philanthropy and philanthropists. what he said is philanthropy is commendable but it must not be -- it must not cause the philanthropist to overlook the circumstances of injustice in america which makes philanthropy necessary. so i want you to reflect on that in your own work. you have created a platform that's one of the most popular platforms for micro philanthropy

in the world. are the people on your platform are they thinking about the injustice in american education when they click to buy that playground or that trip to the metaphor a student in the bronx? >> that quote, which weighs on me and inspires me, i think evokes an understandable criticism of donorschoose.org which you are letting private citizens let government off the hook when citizen donors step in where the system is falling short. are you not inviting state legislatures and governments across the united states to stand down now that donorschoose.org is here. of course if that were true we would all quit. and what we see happening is that when someone gives to a classroom project on our site, very often, 70% chance, in fact, that this is their first real encounter with what's going on

in public schools on the other side of the tracks. and they emerge from their giving experience fired up, politically angry because they've just had a much more vivid encounter with the unmet needs of students in lower income communities than if they read statistics in a newspaper article. a large proportion of our donors say they are more likely to vote in an education budget referendum or take some other form of systemic protest as a result of being on our website because it was energizing rather than reassuring when they encountered these classroom needs. there's several more things we're doing to change the system itself but i'll let you go with your next question. >> your moving a movement of angry people about public schools? are you raising the consciousness of these people who, and i'm one of them, who sit in our comfortable homes and

go online and look at your pictures of these terrible places that we can't believe are american schools and try to -- are you moved --iloved -- build movement. your about a movement, or are you a nice platform that allows people to go in and buy classroom products for kids? >> yeah. yeah. you as the audience will be the judges. you each have a $25 donorschoose.org gift card that our board of directors have underwritten so you can choose a classroom project to gift. this is the gift of giving that strength colbert gives to every guest on his show. when you spend your $25 gift card on it let me know on donorschoose.org if everything is now okay or if you've been awakened to needs and challenges

that you didn't know beforehand. we can show that crowd funding generally is not just a thousand points of light feel good one to one connections let people ask for stuff, let people be angels, everybody can feel warm and fuzzy. there are three ways we can help change the system itself and i will give you headlines. one is by piloting a third way on teacher pompeii, where teachers get donorchoose.org to give credits. it's a flavor of merit pay that's much more amenable to teacher unions and teachers. letting inventers and entrepreneurs circumvent the educational complex and introduce new inventions and

tools to teachers without having to hire a force of lobbyists. by opening up data so policymakers and budget makers can see what resources teachers most need in brooklyn, or what louisiana high school teachers are thinking about as expressed by the projects that they are creating on our site. we think we can give voice to teachers at the budget making and policy making table by opening up the data generated by the 600,000 classroom projects that a quarter million teachers have created on our site. >> so, what's been the biggest surprise for you? when i first met you you were naive, really naive. and i was so inspired by your naivete and your determination to make a difference in the lives of these kids. so over these years, what's been -- if i were to say tell me

your biggest surprise. >> there are still be district leaders who want to shut down donorschoose.org because they don't like the idea teachers getting funding for books they might not have approved on or going on field trips deviating from the curriculum or any resource that they are not authorizing or controlling. this began in our first year when i was operating out of my classroom in the bronx and another teacher in the bronx got funding for a field trip to go on the hudson river on a clearwater vessel. she had ocean training the year before and she was going to take her students fishing, learning about the hudson river, ecology. parents signed off. parents signed off. when the district administrator heard that this field trip had been funded through our site he told the bus driver to turn around as they got to the hudson

river and 86th the field trip. similar thing happened to a chicago teacher who was told she would be fired if she used our site again. it requested dictionaries. it revealed the school did not have dictionaries. >> we shouldn't be angry about the inequality we should be angry about the system and bureaucracy. i think the question is how do you navigate that politically? because what you're doing is politically very combustible. and very disruptive. >> i think we're still taking some comfort in that naivete. you know, initially we just kind of circumvented the powers that be and the bureaucracy by going directly to teachers. we do keep school principals in the loop every time a project is funded and we tell them what materials are en route to the school.

the teacher does not first have to pay their dues or gotten higher ups to sign off. they were a social entrepreneur when it comes to donorschoose.org. they can create the project. if citizen donors think it's worthy it's coming to life. where we're ignorant is how to get the powers that be to pay attention to what our teachers are trying to tell them in the projects that they are creating on our site. we know we can create killer info graphics when we open up our data that shows what books high school teachers are most effective at getting kids hooked on reading. we don't know how to get policymakers to pay attention. >> you're also not just an innovation platform, you are innovating and actually what the demand is by what you see. i mean you see a lot of things that i would imagine come in trends. and that could certainly be

aggregated with policy implications. and yet you don't have a foot in the policy making. >> that's exactly right. we need to partner -- we think we can be the best at creating an amazingly via vivid giving experience and liberating teachers to tell the world about their best ideas for helping students learn. we'll never be that great at lobbying so we need a partner for that. speaking of the trends we see. i'll give you one example because it shows not just policymakers should be paying attention to what teachers are trying to tell them on our site so too should schools of education that train teachers. we noticed not long ago there were a lot of special education teachers that would request books on our site for students to read, to therapy dogs. because they concluded that special needs students are often very reluctant to read out loud in front of the classroom because they are afraid they will be taunted. but if that same student is

given a book to tread a therapy dog, they have a nonjudgmental rapt audience and this student can blossom as an orator. schools of education are not hit to this discovery. this is what classroom teachers on the front lines using their primary street expertise that only those folks come up with these insights. and yet i think it would enrich training of any special education teacher to know that this is a neat little trick for getting a special needs student to come out of their shell. >> let's switch gears from the bronx to your friend gwenyth. she's joined the charles best band wagon and so what is this goop thing that i keep hearing about? >> she doesn't know me from adam

but she does know donorschoose.org. i was noting that this newsletter that she creates has an incredible following. always been interesting to us to see which media outlets generate the most activity and awareness and inspire the most people to support classroom projects on our site and the media outlets are not the usual suspects that drive the most giving and goop is a good example of that. most people say they supported a classroom project on our site because of this newsletter from gweneth paltrow. how would you counsel them. they don't have the charles best story telling capacity.

but they are doing important work. what's the message to those organizations who are the 99.9% of the education advocacy establishment. >> i'll tell you how oprah came to learn about our site. after 9/11 a lot of the teachers at the schools beside school zero were creating projects on our site to recover from the world trade center. a group of sunts were saved. they wanted to thank the firemen by doing a musical performance. i thought new york media would jump on the story. i called 100 reporters. they hung up on me. my 100th call was to jonathan alter at "newsweek" at the time. called him during my lunch time. he was the first reporter not to hang up on me. he wrote a piece arguing this little experiment growing out of the bronx classroom might one day change philanthropy and oprah's producers read that

story. so i think our example is one of hustle and humility that years later pays off. >> charles, when i met you over a decade ago you were naive in many ways but what i saw was a determination and a commitment to justice and righteousness in this country. and you are doing that with donorschoose.org and making us very proud. thank you very much. >> you saw it first. in a few moments federal reserve chair janet yellen on the economy. in three hours a hearing on the fbi's effort combat cyber crime. after that a national governor's association on the role of education and economic development. >> we are at the henry a. wallace country life center which is 50 miles south and west of des moines. and this is the birth place home of henry a. wallace.

the wallaces of iowa consist of three generations of wallaces. the patriarch was known as fondly as uncle henry and he was the founder of wallace's farmer magazine. his son henry, c. wallace, was u.s. secretary of agriculture under woodrow wilson. and henry c.'s son was born on this farm in 1888. he went on to become editor of wallace's farmer magazine. he was then asked by franklin roosevelt to serve as secretary of agriculture which he did for eight years. then he was roosevelt's vice president. as u.s. secretary of agriculture he is known for the agricultural adjustment act, which was the first time that farmers were asked not to produce.

at first people couldn't believe the things that he was proposing regarding that, but then as prices went up they started to listen to him. and people still refer to him today as the genius secretary of agriculture. >> explore the history and literary life of des moines, iowa saturday at noon eastern on c-span's 2 book tv and on c-span3 on sunday. janet yellen told congress again on wednesday that the economy sim proving but the recovery is not complete. in testimony before the house financial services committee, she said the housing sector is sluggish and that short term interest rates could be increased late next year. this is three hours. >> the committee will come to order. without objection the chair is

authorized to declare a recess at any time. the hearing is for the purpose of receiving testimony on monetary policy in the state of the committee. i now recognize myself for five minutes to give an opening statement. we welcome chair yellen here. not surprisingly it's introduction was met with howling protests in apocalyptic versions from my democratic colleagues. regrettably such reaction has become commonplace on our committee with few exceptions my democratic colleagues show they

don't wish to legislate or conduct oversight. it makes me wonder why they ran for congress in the first place in the answer they wish to in defenders and apologists of the status quo. with 46 million americans dependent on food stamps, real median income having fallen every year of the obama administration the status quo is unacceptable. when the federal reserve helps facility the financial crisis selectively intervenes in the credit markets, facilitates our unsustainable national debt blurs the lines between fiscal and monetary policy and has its power vastly expanded the status quo is unacceptable. a dramatic increase in power calls for a koergd increase in accountability in transparency and that's precisely what the act does. the overwhelming weight of evidence is monetary policy is at its best in maintaining

stable prices in maximum employment when it follows a clear, predictable monetary policy rule. i believe the period of great moderation attest to this proposition. had a clear predictable monetary policy rule like the taylor rule been in place throughout the last decade it is likely the financial crisis would have been avoided in the first place or at least downgraded to a garden variety recession. after the passage of the act if the fed wants to conduct monetary policy based upon viewer text messages from the "american idol" television show it will retain the unfettered discretion to do so. if the fed wishes to conduct monetary policy based on a

rousing game of rock, paper and scissors on odd tuesdays at the fomc it will retain the unfettered discretion to do so. the fed can set any rule it wishes. it can change the rule any time it wishes. it can deviate from the rule any time it wishes. it simply has to report and explain this to the rest of us. that's what transparency and accountability are all about. for those who claim this somehow imposes upon the fed's independence i note that the fed chair was the before our committee and our senate counterpart twice a year. the fed chair meets with treasury secretary once a week. and dare i mention the continuing revolving door between federal officials and treasury officials. the threat to the fed's independence does not come from the legislative branch it comes from the executive branch. again, i reiterate, this has nothing to do with the fomc deliberations or micromanagement

of daily federal reserve operations. the fed just wants to keep the curtains closed and keep any outside eyes from reviewing how well or how bad its biggest policies are implemented. who knows whether the fed's engine needs a tune up if no one will let the mechanics look under the hood. oh, by the way that's not my quote. it is from former chairman of this committee, henry b. gonzalez whose portrait sits to my right and who very well may have been the single most liberal democrat to ever chair this committee. my how have the times have changed. as our witness from the cato institute testified last week the reason it's important for the fed to reveal its rule or operating model quote so that it can be examined and tested by those outside fed. only under such examination can we learn how the model captures the real world unquote. the fed is yet to corner the

market on ph.d. economists or monetary policy experts. quite simply the fed's work should bear the scrutiny and critical examination of others. with respect to the other portions of the act it remains an open question whether the fed should serve any role as a prudential regulator, regardless of the answer to that question the fed should no longer be permitted to hide its actions behind its monetary policy independence cloak. this is true when we consider the fed's sweeping powers under dodd-frank to control an increasing share of the american economy. when it comes to prudential regulations it's time to hold the fed to the same openness and transparency that we require of other federal agencies. this includes mandatory cost benefit analysis, also known as common sense. finally many have wonder about the fed's view of the act. i have not. during my congressional tenure i have yet to encounter one federal agency that has

requested less power, fewer resources or more accountability. i doubt that the fed will be first. i yield to the ranking member for an opening statement. >> thank you, mr. chairman and welcome back chair yellen. chair yellen, it's been five months since you last appeared before this committee and in that time you has changed. the federal reserve's program of large scale asset purchases known as quantitative easing is set to end in october. and many are looking to see what the fed will do once the program subsides. the challenges are significant. although employment levels for many sectors have continued to rise, stable and consistent growth is uneven and not a given. in a surprise turn, gdp dropped

stantly in the first quarter. african-americans face an unemployment rate of 10.7%, 7.8% for latinos. so let's be clear. while we've made much progress, the long term effects of the financial crisis, the worst since the great depression can still be felt by working people and people still looking for work. in every one of our communities across the country. of course the problem of unemployment has only been made worse by republican intransigents on any number of measures from refusing to invest in our country's job creating infrastructure, to cutting investments in education that will fuel the next generation of american leaders. to their refusal to extend benefits for our friends and

neighbors suffering from long term unemployment. and other important programs that create jobs and economic growth such as the export/import bank and the terrorism risk insurance act remain needlessly tied up in a republican ideological war creating widespread uncertainty for our nation's job creators. in the wake of legislative uncertainty, and fiscal recklessness, some of my colleagues on the other side of the aisle are likewise attempting to stop the fed from taking action to jump start our economy and preserve economic stability. they recently proposed harmful legislation that would take unprecedented steps to virtually eliminate the federal open markets committee's role in shaping monetary policy. instead, republicans refer to put decisions related to

inflation and employment on auto pilot. determined arbitrarily based upon a rigid set of factors. if enacted this proposal would undercut the fed's ability to respond to emerging threats through rules and requirements designed to paralyze fed rulemaking and curtail monetary policy discretion. this would include concerns emanating from areas like social media, which the fed noted just yesterday appears to be substantially stretched. quite simply, the straight jacket approach taken in the republican bill would leave the fed with few options, powerless to deal with such as an emerging area of concern even if it were to pose a danger to our economy. whether emerging threats to financial stability come from

social media or elsewhere, this short sighted legislation would be a recipe for disaster. chairman yellen i'm eager to hear your views on 0-hour economy who have fared during the crisis and in the future with such a regime in place. finally, i'm very interested to hear about the fed's progress in meeting the heightened regulatory policy mandate entrusted to the institution under the wall street reform act. in particular it to urge the fed to expeditiously implement the unfinished provisions of the act and to faithfully enforce the provisions of the law, provisions like robust, living wills and a strong volcker rule that provide the rules that prevents the next 2008 crisis. thank you, mr. chairman and i yield back the balance of my time. >> the chair recognizes the

gentleman from michigan, the vice chairman of our monetary policy subcommittee and co-author of the federal reserve accountability and transparency act for three minutes. >> thank you, mr. chairman. as predicted the apocalyptic view has emerged already here in regards to my particular bill, but i do have to say that, chair, i give you credit. i watched some of your testimony last evening on tv of what you did in the senate. i give you credit for coming before this committee and giving us time that you've been very generous with that. we both know over the past several years the federal reserve has gained unprecedented power, influence and control over the financial system while remaining shrouded in mystery to the american people. this standard operating procedure i believe can't continue. we must thrift vail of secrecy and ensure the fed is accountable. this is not about your independence or independence of the federal reserve but about accountability and transparency.

i won't go on my oversight rant that i did back at our hearing on the bill where i'm just don't understand why many of my colleagues are interested in embracing the responsibility of their job to go and exercise oversight and have a lack of interest in doing that. but last week my colleague scott garrett and i introducesed hr 5018 and this legislation will pull back the curtain at the fed. the dodd-frank act bestowed massive regulatory upon the federal reserve yet the fed is not required to conduct cost benefit analysis when it considers new regulations such as the sec and ftec. additionally this legislation urges the fed to adopt a rules based approach as the chairman talked about to the monetary policy instead of the continued ad hoc strategy currently being employed. should the fed fail to adopt a rules based approach it would

trigger an audit of the books. unlike the view this will chill this many people believe this doesn't go far enough. i never thought i would agree with the former chairman henry gonzalez of doing an audit of the fed. if it was good enough for him in 1993 it's good enough for us. this legislation urges -- economists across the ideological spectrum called on the fed to set this policy that uses economic data such as rates of inflation and unemployment and to share that rule with public. we cannot have a power entity within the federal government without just operating on a whim. this legislation cod guys the common sense principle of using rules based approach when determining monetary policy. i believe it's time to bring the federal reserve out of the shadows and give hard-working taxpayers with a more open and transparent government. my bill last week was labelled

spanish inquisition. it was all kind of other things thrown around. again, i believe it's our job, our constitutional duty, our constitutional responsibility to work with you and to have oversight of what the operations are and with that, mr. chairman, i yield back. thank you. >> time of the gentleman has expired. the chair now recognizes the gentleman from new york, mr. meeks for a minute-and-a-half. >> thank you, mr. chairman. thank you, madam chair. chair yellen it's with great pleasure we welcome you here again this morning. i want to extend my deep appreciation to you and your staff for the significant amount of time you have spent on the hill and welcoming congressional staffers at the federal reserve. that's tremendously important. i too was listening to some of your testimony yesterday before the senate banking committee. and you mentioned that the united states labor markets are far from healthy. i applaud your remarks and i think that you're absolutely

right. the latest data from the bureau of economic analysis show americans personal income is barely growing at a tepid rate of only 0.3%. in fact other reports indicate that the american real wages are still lower than before the crisis. members of this chamber are closest to the american people who we represent in congress. i can assure you we hear loudly and clearly from them they are not feeling this recovery. in fact, when preparing for this hearing i took to social media just asking them to ask, well what questions they would like me to ask you and what were their current conditions. and they said too many said especially the younger americans are struggling to get jobs. when they do get jobs the wages are barely sufficient to make end meet. too many have been unemployed for more than two years, three years or more. they have exited the job market out of frustration. too many are concerned about their job security and their ability to save or invest in

their future. thank you and i wait to hear your testimony. >> the time for the gentleman has expired. the chair recognizes the gentlelady from alabama. >> mr. chairman and ranking member i want to add to the voice, add my voice to the choir of those welcoming chair yellen here today. today's hearing is critically important as we receive an update on the state of the economy and federal reserve's central role in our economic recovery. i want to applaud the chair lady and entire federal reserve for their diligent work towards fulfilling its congressional mandate to help maximize employment, stabilize price. thanks in part to the federal reserve's insight and pragmatic monetary policies our economy continues to experience positive and steady economic growth. i also want to encourage the federal reserve to work as quickly as possible to enact rules that fulfill the promifs strengthening our financial system and protect our consumers. as this committee continues to

engaging conversation with key individuals surrounding the state of our national economy we must be ever vigilante to work to ensure we avoid any economic set backs. it's important we hear from chair yellen and work to pass legislation that fosters a stronger and more resilient financial system rather than enacting strict policy rules that would impair the federal reserve's ability to do its job. we must develop and promote fair and balanced monday taxpayer economic policies that ensure the long term growth and vitality of our economy. the american people deserve nothing less. thank you. >> gentlelady yields back. before introducing our witness i wish to make a scheduling announcement. contrary to the chair's last appearance, where she stayed to answer all member questions, she's requested to be excused at 1:00 p.m. for today's hearing and for future hearings, wish to alert members of that. i have neither the desire nor the ability to hold the chair

against her will. but i ham disappointed in the change of heart. not with standing my disappointment, chair, you're nonetheless welcomed. we welcome your testimony today. chair yellen has previously testified before our committee, so i believe she needs no further introduction. without objection chair yellen's written statement will be inincluded in the record. chair yellen, you're now recognized for your oral presentation of your testimony. >> chairman, ranking member whatters and members of the committee, i'm pleased to present the federal reserve's semiannual monetary policy report to the congress. in my remarks today i will discuss the current economic situation and outlook before turning to monetary policy. i'll conclude with a few words about financial stability. the economy is continuing to make progress towards the

federal reserve's objectives of maximum employment and price stability. in the labor market gains in total nonfarm payroll employment averaged about to 230,000 employment in the first half of this year. and brought the total increase of jobs in the economic recovery thus far to more than 9 million. the unemployment rate has fallen nearly 1.5 percentage points over the past year. and stood at 6.1% in june. down about 4 percentage points from its peak. there's notable improvements over the past year. real gross domestic product is estimated to have declined sharply in the first quarter. the decline appears to have

resulted mostly from transitory factors and a number of recent indicators of production and spending suggests the growth rebounded in the second quarter. but this bears close watching. the housing sector, however, has shown little recent progress. the sector has recovered from it's earlier trough, housing activity levelled off in the wake of last year's increase in mortgage rates. in readings this year have overall continued to be disappointing. although the economy continues to improve, the recovery is not yet complete. even with recent declines, the unemployment rate remains above federal open market committee participants estimates of its longer run normal level. labor force participation appears weaker than one would

expect based on the ageing of the population and the level of unemployment. these and other indications, the significant slack remains in labor markets are corroborated by the continued slow pace of growth in most measures of hourly compensation. inflation has moved up in recent months but remains below the fomc's 2% objective for inflation over the longer run. the personal consumption expenditures or pce price index increased 1.1% over the past 12 months. increases in food has accounted for some of that. core inflation which excludes food and energy prices rose 1.5%. most committee participants project that both total and core

inflation will be between 1.5 and 1.75% for this year as a whole. although the decline in gdp in the first quarter led to some downgrading of our growth projections for this year, i and other fomc participants continue to anticipate the economic activity will expand at a moderate pace over the next several years, support by accommodating monetary policy, waning drag from fiscal policy, the lag effects of housing values and strengthening foreign growth. the committee sees the projected pace of economic growth as sufficient to support ongoing improvement in the labor market with further job gains and the unemployment rate is anticipated to decline towards its longer

run sustainable level. consistent with the anticipated further recovery in the labor market, and given that longer term inflation expectations appear to be well anchored, we expect inflation to move back towards our 2% objective over the coming years. as always, considerable uncertainty surrounds our projections for economic growth on employment and inflation. fomc participants currently judge these risks to be nearly balanced. but to warrant monitoring in the months ahead. i will now turn to monetary policy. the fomc is committed to policies that promote maximum employment and price stability consistent with our dual mandate from congress. given the economic situation that i just described, we judged that a high degree of monetary

policy accommodation remains appropriate. consistent with that assessment, we have maintained the target range for the federal funds rate at 0 to .25% and continue to rely on large scale asset purchases and forward guidance about the future path of the federal funds rate to provide the appropriate level of support for the economy. in light of the cumulative progress towards maximum employment that's occurred since the inception of the federal reserve's asset purchase program in september 2012, and the fomc's assessment that labor market conditions would continue to improve, the committee has made measured reductions in the monthly pace of our asset purchases at each of our regular meeting this year. if incoming data continues to

support our expectation of ongoing improvement in labor market conditions, and inflation moving back towards 2%, the committee likely will make further measured reductions in the pace of asset purchases at upcoming meetings with purchases concluding after the october meeting. even after the committee end these purchases the federal reserve sizable holdings of longer term securities will help maintain accommodative financial conditions thus supporting further progress in returning employment and inflation to mandate consistent levels. the committee is also fostering accommodative financial conditions through forward guidance that provides greater clarity about our policy outlook and expectations for the future path of the federal funds rate. since march our post-meeting

statements have included a description of the framework that is guiding our monetary policy decisions. specifically our decisions are and will be based on an assessment of the progress both realized and expected towards our objectives of maximum employment and 2% inflation. our evaluation will not hinge on one or two factors but will take into account a wide range of information including measures of labor market conditions, indicators of inflation, and long term inflation expectations, and readings on financial developments. based on the assessment of these factor, in june the committee reiterated its expectation that the current target range for the federal funds rate likely will be appropriate for a

considerable period after the asset purchase program ends, especially if projected if affiliation continues to run below the committee's 2% longer run goal and provided that inflation expectations remain well anchored. in addition, we currently anticipate that even after employment and inflation are near mandate consistent levels, economic conditions may, for some time, warrant keeping the federal funds rate below levels that the committee views as normal in the longer run. of course, the outlook for the economy in financial markets is never certain and now is no exception. therefore, the committee's decisions about the path of the federal funds rate remains dependent on our assessment of incoming information and the implications for the economic outlook.

if the labor market continues to improve more quickly than anticipated by the committee, resulting in faster convergence towards our dual objectives, then increase in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned. conversely, if economic performance is disappointing, then the future path of interest rates likely would be more accommodative than currently anticipated. the committee remains confident that it has the tools it needs to raise short term interest rates when the time is right and to achieve the desired level of short term interest rates thereafter even with the federal reserve's elevated balance sheet. at our meetings this spring, we have been constructively working through the many issues associated with the eventual

normalization of this dance of conduct of monetary policy. these ongoing discussions are a matter of prudent planning and doesn't imply of any imminent change in the stance of monetary policy. the committee will continue its discussions in upcoming meetings and we expect to provide additional information later this year. the committee recognizes that low interest rates may provide incentives for some investors to reach for yield. in those actions could increase vulnerabilities in the financial system to adverse events. while prices of real estate, equities and corporate bonds have risen appreciably and valuation metrics increased they remain generally in line with historical norms. in such sectors such as lower rated corporate debt valuations appear stretched and issuance

has been brisk. accordingly we're closely monitoring developments in the leverage loan market and are working to enhance the effectiveness of our supervisory guidance. more broadly the financial sector has continued to become more resilient as banks have continued to boost their capital and liquidity position and growth in wholesale and short term funding in financial markets have been modest. in sum, since the february monetary policy report, further important progress has been made in restoring the economy to health and in strengthening the financial system. yet too many americans remain unemployed. inflation remains below our longer run objective and not all of the necessary financial reform initiatives have been completed. the federal reserve remains committed to employing all of its resources and tools to

achieve its macro economic objectives and to foster a stronger and more resilient financial system. thank you, i would be pleased to take your questions. >> chair now recognizes himself for questions. chair yellen my inquires question has to do with the legislation. on the one hand it's only been in the public domain over a week. it's only 31 pages long. have you had a chance to read and review this legislation? >> i have had a chance to less view the legislation, yes. >> yesterday, before senate banking, you opined that under this legislation the fed would not have had flexibility to take the actions that it took during the financial crisis. i would commend for your review section 2e, subsection c of page 7 of the legislation entitled

changing market conditions which reads in part nothing in this act should be construed that the plans with respect to the systematic quantitative adjustment of the target be implemented if the federal open market committee determines that such plans cannot or should not be achieved due to changing market conditions. i personally don't believe the language could have been any clearer. it is not the intent of the legislation and would certainly welcome any policy feedback from your experts to assure that it achieves that purpose. but i believe the language is about as clear as the language could possibly be. chairman yellen, let's talk a

little bit about independence. larry summers in a famous paper in the journal of money credit and banking on central bank independence measures independence as quote, the institutional relationship between the central bank and the executive. the procedure to nominate and dismiss the head of the central bank. petroleum of government officials on the central bank board and the frequency of contacts between the executive and the bank. do you agree or disagree with his characterization of federal reserve independence? >> i see federal reserve independence -- of course, i mean we are a creature of congress. we have responsibility to report to congress, and you use the term executive branch, i any in the material. >> i use the term that larry summers used in his paper, yes. >> so i see us as needing to

report regularly to congress about our conduct of monetary policy in the economy. >> let me ask you this question, chair yellen. i think it's well established -- i'm under the impression again you're required to appear before our committee and senate banking on a semiannual basis. is it true that there's a weekly meeting between you and the secretary of treasury? >> many weeks. >> most weeks. >> many weeks we get together and confer about matters of mutual concern, but we're completely independent from the executive branch -- >> speak being of matters of mutual concern and independence, i'm certainly not interested in a transcript of a private luncheon, but would you be willing to report to this committee on the matters of mutual concern that were discussed in any agreements

reached between treasury and the federal reserve? >> i'm not willing to report on a regular basis on private conversations that i have. but any agreements that were reached certainly would be in the public domain. but our conversations -- >> how would they get into the public domain? >> well -- >> if you don't report them how do they get in the public domain? agreements between the federal reserve and treasury. >> i mean there was, for example, during the financial crisis a question as to what is the appropriate role of the federal reserve in lending programs and when does the treasury need to be involved, when is there a fiscal component and those discussions led to a formal agreement between the treasury and the federal

reserve. >> my time starting to wind down. if i corks another matter on page 3 of your testimony, it reads quote, even after the committee ends these purchases, so we're speaking of tapering, quote the federal reserve's sizable holdings of longer term will help maintain conditions. and thus returning employment and inaffiliation to mandate consistent levels. is there any current plan or any current commitment to reduce the fed's balance sheets to historic levels and i'm not speaking of what you may want to do or what you might do, but is there any current commitment or plan to reduce the fed's balance sheet to historic levels? >> well the fomc stated in 2012, i believe, we issued a set of exit principles in which one of

the principles was that over time we sought to normalize the size of our balance sheet and to bring it down to the smallest level consistent with the efficient and effective conduct of monetary policy. >> chair yellen, would you characterize that then as a current plan or current commitment to reduce the fed's balance sheet to historic levels? >> i would characterize it as a current plan. we're discussing our principles for normalization of policy and as i indicated in my testimony, i expect we will be able to give more complete guidance later this year when those discussions are complete and i fully expect that we would reiterate an intention over time to reduce the size of our balance sheet. >> thank you. the chair now recognizes the ranking member. >> thank you very much.

legislation that was offered by the republicans in our committee last week would require the federal reserve's federal open market committee to issue a rule to dictate the course of monetary policy. in your view, how feasible would it be to design a rule that would act as an appropriate substitute for independent judgment and discretion in the determination of monetary policy? and do you expect that such a rule could adequately respond to the range of economic data that affect the economy on any given day? >> i feel, congressman, that it would be a grave mistake for the fed to commit to conduct monetary policy according to a

mathematical rule. no central bank does that. and i believe although under the legislation we could depart from that rule the label of short term scrutiny that would be brought on the fed in real-time reviews of our policy decisions would essentially undermine central bank independence in the conduct of monetary policy, and i believe that global experience has shown that we have better macro economic performance when central banks are removed from short term political pressures and given the independence to, within a framework in which their goals are clear and in our case those are specified by congress given operational independence decide how to conduct monetary policy.

the federal reserve is the most transparent central bank, to my knowledge, in the world. we have made clear how we interpretty our mandate and our objectives and provide extensive commentary and guidance on how we go about making monetary policy decisions. we do, i should say routinely consult the recommendations of a whole variety of rules in thinking about monetary policy and i indicated previously in speeches i've made that these can be useful starting places or guides to policy. so i'm not 100% negative on using rules in thinking through what we should do. but i think it's a very important to understand that had we followed in the aftermath of the financial crisis the recommendations of any of the

simple rules that are widely discussed, the outcomes would have been even more disappointing than what we experienced. with the federal reserve's conduct of policy departing very substantially from what those rules would have recommended, we have had a long, slow grind to get this economy recovering. now, we actually could not have fold the recommendations of the simple rule. almost every rule would have called during, for example, 2011 and 2012 for negative interest rates. something that's impossible. and that is one reason that we began to buy asset purchase. we needed a further tool. given the fact that we have had unusual head winds constraining this recovery, i believe it's

utterly necessary for us to provide mormon tear policy accommodation than those simple rules would have suggested and i think -- i think history would show that following any of those simple rules would have given us very much worse performance. so, i feel it would be a mistake, although those rules sometimes do have merit in kind of normal times, during the great moderation when there were relatively few shots and the federal reserve's behavior the did, was very rule like. it corresponded to some of those rules and they can work well. but not always. and we can't be mathematically bound to a simple formula. >> i would like to thank you for that explain acceleration.

could you not be clearer. and you could not have explained better to this committee why you certainly could not freight with some cookie cutter rule when, in fact, as you explained the head winds that you were confronted or that feds were confronted with required discretion. it absolutely required that you have the flexibility to deal with unforeseen circumstances in having to make your decisions. i want to thank you very much. and i yield back the balance of my time. >> chair now recognizes the gentleman from michigan, vice chairman of our monetary policy committee. >> thank you. i have a quick question. have you read my bill? >> i have looked at the bill. >> you have looked at it. okay. well, that's good news. i will then, i guess, just refresh your memory and address my colleague from california, we anticipated that that might be a concern of yours.

so on page 8 of the bill, under subsection 2 the gao approval of an update and we won't get into whether there should or shouldn't or shouldn't be the r or does the rule go far enough, et cetera, et cetera. however, it does say upon determined the plans described in paragraph one cannot be achieved the federal open market committee should submit an explanation for that determination and anidated version of the directive policy rule to the controller of the united states and appropriate congressional committees. it goes on to say that then if they determine that you're not in compliance with the new rule, then you get audited. all right? it does not say that you cannot change the rule. what it says is you have to notify us, and notify them. now, i'm a history buff. so i went back and did a little history. we got to where we are today

because of the employment act of 1946, where congress felt it needed to lay out what fed policy was. in the '70s, they felt congress, congress, my colleagues, felt it was too vague and therefore created a bill that would strengthen and clarify the 1946 act. it actually had three goals, not two. it's not a dual mandate. it's actually a trimandate by congress. stable prices, maximize employment, and moderate long-term interest rates. okay? so on page 3 of your testimony, you're talking about, and i'm going to quote, the second par graf down. the federal reserve's sizable holdings of longer term holdings will help accommodate conditions and returning employment to mandate consistent levels. where in the humfry-hawkins act was signed -- i'm sorry, my colleagues, signed by jimmy carter in 1978 after democrats

in,and senate passed the bill, where in the humfry-hauwkins ac do we lay out a 2% inflation rate? do we do that? >> you do not make specific in the legislation. >> do we lay out exactly what employment rates or unemployment rates should be? >> the fomc has -- >> i'm sorry, congress, the bill that was passed by democrats in the house and the senate and signed by jimmy carter. does that mandate what the employment rate should be? >> the bill uses the term as you said maximum employment and price stability. >> okay, so we don't prescriptively say it's going to be a 2% inflation rate target and 5% or 6% unemployment rate. >> it's obviously with language of the type that's in the legislation, we need to -- >> do we lay it out? >> you do not. >> okay, all right, there we go.

so i am curious how us requesting a rule, a simple step in most people's view, a simple rule based policy, how is that different than the mandate, the tri mandate that was laid out in humfry-hawkins and defended every day by others in this committee? how, when we're haasking for wh the rule is, not telling you what the rule is, not being prescriptive or even descriptive but just saying sellt a rule an then let us know so we can have oversight. i hear we'll reference my rant on over sight to my colleagues who can go back and watch it in youtube if they weren't in the committee room. so if we can get as detailed as the humfry-hawkins act or lack of detail, why can't we have a rule and have you all at the fed accept that? and if you're not willing to accept it because you're concerned about your independence, is that one -- i

don't want to put words in your mouth. is that one of the reasons why you don't want to sign on to the garrett-huizenga bill? >> i'm not aware of any literature that establishes that adopting a central bank whether it makes it public or not, adopting a rule is the most desirable way to run monetary policy. and i would say that many -- >> might want to talk to the europeans about that and a lot of other economists as well. >> well, what the europeans do is the ecb has been given a great freedom and they have defined a price stability objective. >> all right, well, here's my last request. if the garrett-huizenga bill isn't good enough, i would like to know when the fed is going to call for a resention of the humfry-hawkins act. >> the time of the gentleman has expired. the chair now recognized the gentlelady from new york, ms.

maloney. >> thank you. and welcome. madam chair. i'd like to ask you about the fed's exit from its monetary stimulus. as you testified, the fed is currently on pace to wind down its qe-3 purchased by the end of october. but right now, the market isn't expecting the fed to start raising interest rates until the third quarter of 2015. so between october of this year and the third quarter of 2015, what are the main tools that the fed anticipates using to exit from its monetary stimulus? >> well, thank you. as i indicated, if the committee continues to see improvement in the labor market and continues

to forecast ongoing progress in the labor market over time, and inflation moving back toward 2%, it is our intention to wind down our asset purchases to conclude them after the october meeting. beyond that, we would maintain the zero to quarter percent range for the federal funds rate we have maintained now for many years. and eventually, as the economy makes further progress, would begin to raise our target for short-term interest rates. and while we have not laid out a specific timeline for doing that, we have given a general principle which is, we will be assessing what our actual progress is and then our expected future progress is toward obtaining the two

objectives of maximum employment and price stability. so we will be looking at how far are we from our objectives and how rapidly are those gaps closing? now, that's a matter that we can't be certain about. we make forecasts but incoming data causes us over time to change those forecasts so i can't be specific about what the timing of an ultimate increase in our target for short-term interest rates would be. but we will be assessing incoming information. now, we do give participants in the fomc, these are not fomc policy statements, but we have provided in the monetary policy report and we provide every three months information about each fomc participant's assessment of both the economic outlook and their views on the

likely path of monetary policy. so again, this is each individual's view walking into our june meeting as a committee. we have to transform that into a single policy. but it gives some indication, i think, and given their expectations for progress in the labor market and inflation, at the beginning of our june meeting, fomc participants almost all of them, saw it appropriate to begin raising our target for the federal funds rate some time during 2015. the median participant saw the federal funds rate by the end of that year standing around 1%. so while there's no exact timing of obviously in 2015, it's not -- it's in some sense roughly consistent with what you said, but market expectations

are, but again, i want to emphasize that the actual progress we see in the labor market and inflation and our general assessment of the labor market could change that over time so there's no mechanical formula and no clear date. >> okay. will the fed start changing the interest rate on excess reserves held at the fed during this time? >> when we decide to raise our target for short-term interest rates, a key tool will be to raise the interest rate we pay on excess reserves. so we would only raise the interest rate on excess reserves when we have determined that the time has come to begin raising short-term interest rates more generally that will be a key tool that we will use. >> last week, a federal reserve vice chairman stanley fisher gave a speech in which he suggested that adding a

financial stability mandate to the overall mandates of all the u.s. financial regulators could help improve financial stability. can you comment on the effect that adding an explicit financial -- i guess i'll get that in writing, my response. my time has expired. thank you. >> time of the gentlelady has expires. we recognize mr. backus, the chairman emeritus of our committee. >> cherry allen, let me begin by saying this will be my final federal monetary policy hearing that i'll participate in as a member of congress since i'm retiring at the end of this year. during my 22 years of service on this committee, including my six-year term as ranking member and then chairman, i have heard testimony from the federal reserve chairer

attorney's program.