frank act. this hearing is three hours. >> the committee will come to order. without objection, the chair is authorized to declare recessed at any time.

testimony from the federal reserve's supervision and regulation of the financial system. threerecognize myself for minutes to give an opening statement. the dodd frank act requires the federal reserve vice chair to testify before our committee twice a year regarding the supervision and regulation of financial institutions. passage ofafter the dodd frank, no such person exists. president obama has been unwilling or unable to follow the law and appoint a vice chair. we can no longer wait for the president to do his job so that we can be allowed to do ours. thus, chair yellen appears before us today in substitution. dodd frank rewarded the federal reserve with the vast, new, sweeping regulatory powers despite its contributions to the last financial

what is clear is despite the largest monetary stimulus in our nation's history, middle income are not getting ahead and the poor and middle class are falling farther behind. the gdp is coming in at 1.5%. every man, woman, and child is thousands of dollars poorer than they should be. millions could be fully

employed, who are not. millions of dollars of capital remain sidelined, due to a regulatory tsunami, much of it dictated by dodd frank. serious questions must be asked. why isn't the fed subject to costs? to findhe fed yet any connections in the drop of bond market liquidity? why do regulators punish banks for failing to meet standards that are never stated either in advance or after the fact? the fed has a lack of transparency with its new authority under dodd frank.

if we are not careful, our central bankers will become our central planners. the house will soon have the opportunity to reform the fed and make it more transparent with the federal oversight reform. yield five minutes to the ranking member for an opening statement. >> thank you, mr. chairman. and thank you to federal reserve chair yellen. the 2008 financial crisis inflicted staggering damage to our economy. unemployment tops 10%. home closures is placed millions of families. entire industries are on the brink of collapse.

congress responded by passing the most comprehensive overhaul of our financial system since the great depression, the dodd frank wall street reform and the consumer protection act. the act interested significant responsibility to the federal reserve and directed them to improve its supervisory program, so another crisis of such scope will never happen again. recognizing that the federal reserve failed to apply appropriate standards to large banks, congress erected the fed it to impose enhanced to ensure that no large bank or group of banks, could again endanger our economy. i am eager to hear from chair yellen on the progress of these reforms. along with a description of how the fed is using the flexibility embedded within dodd frank.

permittedpecifically the fed to differentiate among companies on an individual basis, or by category. likewise, dodd frank provided the fed with new responsibility to collectively regulate the such ases of entities insurance companies, aig. i very much would like to hear from chair yellen about how the fed has bolstered its expertise. i am expressing my concern. the legislation would like the

-- to other legislation would undermine the financial stability of oversight cancels. the ability to identify the gaps. finally, as we just surpassed the five-year anniversary of dodd frank, i think it is important to remind the committee and public to be ever vigilant of the threat of another crisis. we must guard against complacency. among the law enforcement, we must hold institutions and individuals accountable.

this is something that we did not adequately do. us to congress must be mindful of the attempts to defund dodd frank. the american economy has made substantial progress, but that will be threatened if we do not protect these reforms both in statute and practice. thank you, mr. chairman. a yield back. we recognize the gentleman from texas for two minutes. you, mr. chairman. today marks the first time since the passage of dodd frank that th someone from the federal reserve has testified. testified was not confirmed for that position. i remain baffled that the president has failed to put forth a single name to serve in this important role. governor,l reserve

who serves as the chairman on the internal commission, can already exercise these actoorities in a defec authority. over the past few years we have seen significant rulemaking, driven in large part by the federal reserve that has significantly altered the rank capital structures. testing, arguably the most important process the bank must do, remains completely opaque. to gather these important regulatory operations of the federal reserve to serve much of our needed attention.

today, i hope chair yellen will address some of the most t integral points. i hope to gain a better understanding of how she sees each capital working together. we have already seen unintended consequences into the bond market. i look forward to her thoughts c-car moremake see transparent. thank you, mr. chairman. i look forward to this important hearing. >> we look forward to the testimony of the honorable janet yellen. she has testified before this committee. without objection, chair gallon,

written -- chair yell and your written statement will be made part of the written record. think you need to hit the microphone there. yellen: i appreciate the opportunity to testify on the federal reserve regulation. one of our most fundamental goals is to promote a financial system that is strong, resilient and able to serve a healthy and growing economy. we work to assure the safety and soundness of the firm's we supervise and also to make sure they apply to applicable consumer protection laws so that withmay, even when faced financial conditions that are stressful, continued serving customers, consumers, and

communities. weould like to discuss how have transformed our regulatory and supervisory approach in the wake of the financial crisis. he for the crisis, our primary goal was to ensure the safety and soundness of individual financial institutions. a key shortcoming of that approach is that we did not focus sufficiently on shared reform abilities across firms. consequences of the distress. failureall of 2008, the or near failure, of several of these firms, many of which we did not supervise at the time, sparked the panic that engulfed the financial system and much of the economy. today, we aim to regulate the supervised financial firms in a

manner that promotes the stability of the financial stump as a whole. -- financial system as a whole. as my written testimony describes, we have introduced a series of requirements. in addition, we now supervise financial institutions on a more coordinated, forward-looking basis. at the same time, we have been careful to make more measured changes in our approach to regulating and supervising firms and the other end of the spectrum. we are committed to ensuring that the supervision of smaller institutions is tailored to the business model and activities of individual and to editions. -- individual institutions.

our approach aims to target risk areasto hire ch and two in short banks maintain risk management capabilities. community banks many important roles and provide economic support across the country. the supervision of community banks must be balanced and measured. we have adopted many reforms since the crisis. proposedss the risks by large institutions anin two ways. reducerms the possibility -- the reforms reduce the probability that the large banks will fall.

we recognize that we cannot eliminate the possibility of a large institution's failure. second aim has been to limit the systemic damage that would result if a large institution were to fail. my written testimony provides more details that i wish to highlight for you. we have two examples at how we are addressing this too big to fail challenge. a adopted resolution plan ruled that requires large banking organizations to show how they could be resolved in a orderly manner. a bank just last week proposed a rule.

with the new requirements, its losses would have wiped out a firm's capital. long-term amounts of debt would provide a mechanism for absorbing losses and withoutlizing the firm generating contagion across the financial system and damaging the economy. theddition to strengthening most large and complex institution, we have transformed our supervision of these firms. our work is more forward looking and multi-disciplinary, drawing on a wide range of staff expertise. we put this new approach into operation with the creation of a large institution supervision coordinating committee, which is charged with the supervision of

impose elevated risk. we have annual horizontal programs that examine the same firms at the same time on the same set of issues, in order to promote the better monitoring of trends and consistency of assessments. example, our comprehensive capital analysis and review ensures that large u.s. bank holding companies have rigorous forward-looking capital plan processes and have sufficient levels of capital to operate through times of stress. an increase of almost $500 billion has been found.

a new regulatory and supervisory approach are aimed at helping in remain strong.ms more work needs to be done, but i hope you will take away from my testimony just how much has changed. our supervisory approach is more comprehensive and worked looking, while also tailored to fit the level of oversight to the scope of the institution and the risks it poses. the federal reserve is committed to remaining vigilant as regulator and a supervisor of the financial is the tunisians that serve our economy -- the financial institutions that serve our economy. thank you. >> chair yellen, the first couple of questions i have deal with the concerns. hasn't the fed crossed the line from being regulator to manager? we have had a number of

individuals come to our committee to tell us that fed officials have regularly attended corporate board systemicallyhe important financial institutions under the fed's purview. is that true? chair yellen: i am not sure if that is true. >> you were unaware of any fed officials attending board meetings? chair yellen: it is conceivable that that might have occurred. i am not saying that it did not occur. >> is it did occur, what legal authority would you site for having employees of the fed invite themselves into corporate boardrooms? chair yellen: i don't know what the circumstances are in question, but i can for example tell give that when i was president of the san francisco fed that i occasionally would attend a portion of a board meeting of one of the firms we

supervised to make a presentation to the board about our supervisory findings and the emphasis -- >> but you were unaware of any fed employees attending these board meetings? chair yellen: i really don't have the details about any officials. >> we would appreciate it if you could look into this and get back to the committee on this matter. we have also heard from individuals with respect to the stress test, with which we have had both public dialogue on and private conversations. many of us on this committee consider that to be a rather opaque process. and so, this committee has a number of questions. a would also have number of employees who have

been on the receiving end of these stress tests. we have been informed by numerous individuals that they have been told by the fed not to speak to members in congress about the stress test. do you have any knowledge of this? chair yellen: i have no knowledge of that. >> is it the policy of the fed to instruct members of banks subject to the stress test not to speak to members of congress. chair yellen: i strongly doubt that that is our policy. >> you are unaware of that being a policy. would you object to these people speaking to members of congress? private citizens can interact with members of congress. >> are you willing to direct your employees to ensure that dialogue can take place? chair yellen: i will certainly look into that. >> with respect to the stress

test and again, great concern with how opaque and nontransparent these matters are, i guess the first question is, we don't doubt that you have regulatorys, smart, employees that handle these matters, but we don't know much about this. how are market participants supposed to be convinced that we have less systemic risk when they have no insight into these tests. members of congress have little to no insight. however as opposed supposed to reaffirm market confidence? deal yellen: we do a great in my opinion, to explain the methodologies that we employee. overviews ofshed the methodologies that we use. we update those every year.

they include detailed information about the scenarios, the analytic framework, that we use and information on the models. ofdetail may be in the eye the beholder because members of congress still don't understand this. in our dialogue with banking organizations, they still don't understand either. i have one last question. the stress tests have become your main supervisory tool for the large banks. my concern is, if you have one youralized view of risk and are imposing that view on our large banking organizations, to some extent, isn't that exactly bozzle 2 did.

how can the lower systemic risk if we only have one centralized view of risk and it may be wrong? i wouldllen: i guess dispute the idea that we have one centralized view of risk. the purpose of this exercise is to help the firm's. m to developm to their own capability. it helps them to develop a robust capital planning process, which is what we evaluate in our exercise. conclude thecould same thing, but we have insufficient information about your test. the chair now recognizes the ranking member for five minutes. >> i am pleased to see you chair yellen. unlike the chairman, along with many of my colleagues, we have heard from regional banks about

the comprehensive capital analysis and review of stress have complained that they are not sufficiently calibrated to the unique profile of large bank holding companies that focus on traditional banking activities. i have no indication that they tove been told not t talk to us. they talk to us plenty. can you discuss why hr1309, a bill debated by this committee yesterday which addresses this topic, would be severely damaging to the fed's ability to respond to systemic risk on a

comprehensive basis? will the federal reserve commit usingng further tailoring the existing authority provided by section 165 of the dodd frank act? your microphone. chair yellen: i am concerned the process that would require, as i understand 1309, would require the board to use a statutorily set of factors or make findings based on factors to decide whether or not to check firms to higher standards. i would see such a process as inhibiting our ability to take necessary supervisory actions to address a firm's risk.

we do do a great deal of tailoring of our supervisory approach to make sure that it is appropriate to the size, riskexity, and systemic proposed by a particular firm. we are looking at further ways in which we can tailor our supervisory approach. particularly, the process we were discussing. we have ideas about how we might to apply, particularly to smaller firms. we have indicated that there are some constraints on our ability to tailor our supervisory firms,h for the smaller subject to the 165 requirements.

in particular dodd frank requires that we administer the stress test and receive plans.ion our experience and thus far is that the safety and soundness value of those requirements or the smaller of those firms probably is not sufficient to justify the cost imposed on them. and if so, we would value for the firms on the smaller end of the spectrum, being able to relieve them of those requirements. i do want to make clear that we do tailor our supervisory approach according to the complexity of the firm. >> i am so pleased to hear that because what we heard constantly yesterday was that you do not.

somehow, they kept talking about one size fits. using your not tailoring authority. so thank you for explaining that to us. we are absolutely supportive of your being able to do that. we think it makes good sense. perhaps, what we needed to do is work with your staff a little bit more to understand what ever restraints there are involved in authorityand whatever and flexibility you have. thank you for clearing that up. you know you have the authority. you understand that dodd frank gives it to you. you use it. the welcome any questions from this committee about how you use it and how you can't. the yield back. recognizes thew gentleman from texas. >> thank you, mr. chairman.

chair yellen, it seems like there are many different regulations all trying to drive at the same thing. for an outsider, it is hard to see how they are for donated. weone broad area of capital, the annual stress test on ccar. can you walk me through how all of these capital rules could to get there and what each is trying to address? certainly.n: we do see these rules as fitting together. most of the requirements that you just mentioned are imposed g68, larger u.s. firms. given the risks that the failure of one of these firms would

impose on the financial system, it is important that they be subject to more stringent capital requirements, liquidity requirements, and ability to stressed event. we think the various things that you mentioned coordinate with one another. in particular, we have put in place so-called surcharges that impose additional high quality capital standards. ofis based on our estimate the impact that the failure of one of those firms will have on the overall financial system. ratiopplementary leverage is a backup tool that works in a

coordinated way. we see those as working together. tests we impose our very robust. they have a forward-looking approach for assessing whether or not firms could survive a very adverse stress scenario. and could they continue to serve the credit needs of the u.s. economy? these are coordinated approaches, these requirements that you mentioned, they are the requirements we think are necessary so that one of these firms were to fail, in spite of all of the resilience that we expect of it, that it would be possible, as dodd frank

requires, to resolve that firm under bankruptcy or under orderly liquidation. >> at what point does the ccar process override all of the other requirements? compliance with these other requirements, but they could fail there ccar. ccar driving in the regulatory process? or are these standards you are putting in place driving the regulatory process? chair yellen: i believe they are complementary. i believe that ccar is a valuable process because what we expect firms to do is not simply to be able to meet some standard, a minimum capital standard. what we want them to have in place is the internal ability to analyze the risks that face the

unique organization and have a rigorous capital planning process that that firm is using to make sure that, whatever our rules may say, we want that for to make sure they have adequate capital to survive a severe stress. process areand ccar looking to make sure they have governance and risk management that are and plays designed for that organization, and for the unique risk profiles that they are manageing their risks in the way we think a systemic firm should be able to do. >> each entity is different. you are imposing any of these standards on all of them, i assume on a consistent basis. ccar or stress one business

may go under is different from another. ccar? big test here the chair yellen: we believe it is a built in system. we believe they work together in a coordinated fashion. >> the time for the gentleman has expired. the chair recognizes the gentlelady from new york. chair yellen, i will get to questions about regulation in a moment. first, i would like to ask one question on monetary policy. when you testified in july, you said in response to one of my questions that's one of the advantages to raising rates a little earlier is that, and i quote, we might have a more gradual path of rate increases, end quote. one of the down sides is it

could end up hurting the fragile economic recovery. boehner recently said raising rates to early could end up prematurely taking up its port. it has been so critical to the economy's vitality. do you think the risk of raising rates and december, before inflation reaches the fed's 2% target, outweighs the benefits? chair yellen: what me say that i see the u.s. economy as performing well. domestic spending has been growing at a solid pace. our trade performance net exports is soft, but the committee judged in october that some of the downside risks had diminished relating to global

economic and financial developments. i see under utilization of labor resources as having diminished significantly since earlier in the year. we have, it recently seen some slowdown in the pace of job gains recently. ith that backdrop in mind and inflation, as you mentioned running significantly below our 2% objective, never the less, the committee judges that an important reason for that relates to the climbs in energy prices and the prices of an on energy imports. as those matters stabilize, inflation will move back up to our 2% target. with that economic backdrop in mind, the committee indicated in

our most recent statement that we thought it could be appropriate to adjust rates next. no decision at all has been made on that. what it will depend on is the committee's assessment of the economic outlook at the time. informedssment will be by all of the data that we have received between now and then. committee has been ing is that the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term. if the incoming information supports that expectation, our statement indicates that december would be a possibility.

importantly, we have made no decision about it. it is, you asked about the timing of such a move. the committee does feel that fashion, iftimely the data and the outlook justify enth a move, is a prud 'llng to do because we b be able to move at a more gradual pace. we expect the economy will it evolved in such a way that we can move at a gradual pace and so, wese, after we do will be watching very carefully, whether our expectations are realized. mentions thatgue inflation is low, if we were to move in december, it would be based on an expectation that i believe is justified.

with an improving labor market and transitory factors fading, inflation will move up to 2%. if we were to move, we would need to verify over time that expectation was being realized and not just policy of appropriately. i know there is a great deal of focus on the initial move. it has been a long time that interest rates have been at zero. markets in the public should be thinking about the entire path of policy rates over time and the committee's expectation is that that will be a very gradual path and will depend very much on the actual performance of the economy. >> the time for the gentlelady has expired. the chair recognizes the gentleman. day aboutd the other

all of the benefits that came out of dodd frank and all of the work the fed is doing overall. i want to look a little deeper on that, individually and emotive late. passed acongress regulatory improvement act. that applies to all federal fed,ies, including the which says, you shall consider the causes and burdens that will be placed on institutions. you have to look at the cost of regulations and also, the benefits. we do hear about the benefits. i ask is this question of the governor. individualne those cost of benefit analysis? i did not get a clear answer from him. very briefly in a sentence, do you believe that the development act applies to the fed? as such, you are required to do

a basic cost-benefit analysis each time you do a regulation. that is a yes or no i guess. we follow rules of the administrative procedures act and always request public comment on -- >> so you do an actual analysis. did you do an actual cost benefit analysis? chair yellen: we did do an actual cost than if it analysis. >> do we have a copy on that? chair yellen: it is described in the proposal we issued last week. in some cases, we have done a cost-benefit analysis. >> in other cases you do not? chair yellen: very often what we are doing is putting into effect or rule, what congress has directed us to implement

changes. right, but you are doing to the rule and under lockdown rule --under the regal act does not set you can pick or choose as to when you can do a cost-benefit analysis. it says you shall, not made y, consider. it sounds like you are doing it in some cases. let me move on to the broader issue. i asked your predecessor, has anyone done an analysis to all analyses fortive dodd frank? his answer was no.

i will throw the question out to you as well. everybody else says you have not done it. have you done a cumulative cost-benefit analysis on the regulations? answerellen: i think the for the kind of analysis you have in mind is probably no, but we are carefully monitoring the effects of these rules. >> i appreciate your candor. if you have not done a cost-benefit analysis ly, there is nothing in this report that the negative effect on the economy. there are about one dozen different factors that he came up with. and he is right. the regulatory burdens are not listed as a factor. now i understand why. thatse you just told me

they never did a cost-benefit analysis cumulatively. ,f you have not looked at it then of course it will not be in your summary as one of the impacts. because you are not even studying it. this report is a little useless, isn't it? if you are not going to study the problem, you don't know what it is. chair yellen: it is important to take a step back and realize that we lived through a devastating financial crisis. to cost of that crisis households, businesses, to the u.s. economy was enormous. --do have a summary of the chair yellen: we have done basic analysis when we put in the capital rules and liquidity requirements. >> i appreciate that, but you just told us that you have not

done an individual analysis and you have not done a cumulative analysis. if you have not done the study, then your analysis is basically useless. the time for the gentleman has expired. we now recognize mr. sherman, from california. >> let me give you advice in the other direction. there are a host of titles and provisions in dodd frank. the fact that they come to you in a political package called dodd frank or in another political package is of interest to politicians. just because a provision was in dodd frank does not link it to another provision or de-link it to another process passed later. i would hope you look functionally because your purpose is to give us advice.

have you improved depository institution regulation? leave it to the politicians to second-guess bills named for politicians. we do get one benefit from the fact that the vice chair for supervision has yet to take office. we get to spend another day with you. this is a great personal joy to me. from your standpoint, you get to spend another day with our chairman, who is the most prominent american who does not use point tomation spell his name. you came here and july and i spent my five minutes laying out reasons why you should not then increase interest rates. my most gullible friends believed i was successful and have said, that is why interest rates have not gone up. but i want to keep doing it.

as i argued then back in the summer, god's plan is not for things to rise in the autumn. as a matter of fact, that is why we call it "fall." nor is it his plan to have things rise in the winter. in plan is that things rise the spring. if you want to be good with the almighty, you might want to delay until may. many economists say we should not move forward now. the managing director of the imf has been candid. we have a that growth report. you are aware of it, but you probably won't estimated as highly as i will because of my occupation. don't underestimate the ability of politicians in europe and the united states to screw things

up. psychological interest to retirees with nominal interest rates of 5% so they can live on their retirement savings without a nominal invasion of principal. that is not in the gdp statistics. they are not going to psychologists and spending money. it does enhance. finally, as i pointed out to you and i do want to talk to you privately about this, there is hurt thelion change to economy. and decidetoo soon that you did, you put yourself in a position where you have a zigzag policy and will face criticism. second, if you then want to go

and the other direction, you only have a quarter point to play with. if you hit the break too soon, you don't have any gas. with that in mind, i am concerned about the effect raising interest rates would have on the real estate recovery and i would ask you what you would think the impact would be of raising interest rates on the housing recovery and what we squeeze credit worthy borrowers out of the housing market? you have made a large number of very good points and indicated many relevant considerations that the committee is trying to weigh and balance. with respect to the housing market, of course, the level of

rates is relevant to housing. we are very aware of the sharp rise in mortgage rates could have a negative affect on housing. we do however, have a recovering economy where employment is going up, income is going up, households are in better shape to form households. whether it is, they are moving into rental properties, the millennials seem to have a later preference for house purposes. we do envision gradual recovery in the housing sector. let me come back to the point i made earlier. the committee anticipates a very gradual increase in interest rates. we are not envisioning that when we begin to raise rates we are

going to be looking at a very ratespass of interest that will cause the kind of harm you are wearing about for the housing sector. that whole path matters and it is a gradual path. >> the time has expired and the chair recognizes the gentleman from missouri. >> it is always interesting to listen to the gentleman from california. he is a very bright guy with interesting correlations, that i have never heard of god's plan for the seasons correlated to the fed raising interest rates. this morning i want to talk a little bit about the designation of insurers. we are concerned that this has become the rubberstamp for the financial board. the extensive analysis from the

ispanies, other than what publicly available. if you did not receive information from companies, how did you come to the conclusion that they posed a risk to the global system? chair yellen: in every case there was an extremely detailed evaluation that was done. the summary of the evaluation is publicly available. it didn't in default interaction with the company. involve interaction with the company. the fas the analysis of soc. had very detailed assessments of what the consequence would be for the u.s. financial system.

that is not the answer we get from the company's side of this. did you solicit information from them? chair yellen: we have detailed interactions with the companies. ,art of the designation process there have been detailed interactions with the companies. they have provided information. they have at every opportunity to weigh in and offer their views. >> it is interesting though, that one individual who has insurance background is the one who said, no. yet they went ahead and did it. can you enlighten us as to why that occurred?

we have a great deal of expertise in insurance among the staff who look at this. wet i can assure you of is have very detailed analysis done. it is specific analysis with the failure ins of the mind. firms have the opportunity to weigh in. respect, i am not sure they have plenty of time to respond because now they are going to court to resolve the situation. if they could have responded, there could've been an ongoing discussion to minimize this and they would not have gone to court. they could have agreed with your analysis. chair yellen: they disagreed, but they did have a good opportunity to weigh in. in the case of one firm, i was only involved myself in the

designation of one firm. my firm had the entire opportunity. >> i recently had the opportunity to meet with some of the international folks. theas very concerning to way they went about it. to take their analysis without our own is very concerning. chair yellen: we have done our own analysis. to one otherd issue, yesterday we passed a bill to deal with the specific designation for banks. in the bill, we have guidelines that you actually used, the fed uses in their own analysis. concerned about the way

ith discussion went wit respect to the ranking member. we try to tailor a supervisory program that we think is appropriate, given our full understanding of the risks. >> this significant ones you believed need to be used to provide the guidelines -- so make the designation. chair yellen: we look at those factors, but we tailor an entire program that is specific. youn previous testimony agree to that those are important criteria and supported the bill. time for the the gentleman has expired. the chair recognizes the gentleman from massachusetts. ansome of us do use

exclamation point at the end of your name. some of us use hashtags as well. mr. chairman: as long as you spell it right. >> thank you for being here again. it is a pleasure to see you. i have a few questions and we will start on one that has concerned me. sectionrequirements to 956 b of the dodd frank act. i want to be clear. i for one do not care how much anyone in this country makes. how much is not my concern. the how is my concern. it is a concern in law because of the incentives that may be involved. some of us think those incentives have to do with the

problem. and yet, the law says 90 days. fine, ok 90 days. hundred 80 days. ears? y and we do not have a regulation on this issue. i am just wondering, could you tell me, when do you think we might have one? chair yellen: if i might start by saying, from a supervisory perspective, many years ago we put into effect guidelines pertaining to incentive compensation. our supervision is very attentive to aspects of incentive compensation that could lead to excessive risk-taking. it is not focused on the total overall level of a, but on the potential adverse incentives that could be embodied in that pay.

>> that is not the regulation called for time off. very yellen: it has been challenging and there are many agencies involved in trying to come up with this. who do we have to kick to get this done? what is the hold up? chair yellen: i can't give you a good answer. >> have you done your job? chair yellen: we have been working with the institutions now for many years. and the law says 90 days. at some point, regulators have to regulate. i am not complaining it is 91 days. 65am not complaining it is 3 days. tell me who it is. if it is not you, maybe it is my friends at the fcc. simply allow us to know the

incentives that are involved. have you done your job? chair yellen: we have tried to work constructively with the other agencies. >> i love the way you never give answers. i think the fed has done a good job. i am not complaining about the fed, but this one is long overdue. each and every regulator that comes before me, i will ask. i am not asking you do a specific item. incentives the e appropriately placed so the american taxpayer does not get put on the hook again. everybody agrees this item was a problem and it should be relatively easy to fix. chair yellen: i agree with your assessment that it was an important problem. that it is a central to address it. supervision weur have addressed it and we do feel

we have seen a meaningful change. >> one, i want to talk just base ically to the results of the current next it race of living wills. back a few years ago when we had them they were all called not credible. in the living will provision, in dodd frank as you know was pretty important to many of us. we think it is a way to avoid too big to fail. they're all called not credible, that's a problem. i know you're in the process now. do you have any idea what the time frame might be when you're nto the second chance? >> so last year working jointly

sent very detailed evaluations the living wills to the firms. and directed the firms to take action to improve their resoveability that were quite specific. >> and quite detailed. we've received those plans. we're evaluating them jointly with the fdic. and we will be making decisions in the coming months. >> the time of the gentleman has expired. the chair now recognizes the gentleman from michigan,. >> thank you, mr. chairman. i am happy to rescue you from the hostile questioning my democrat friend over there. don't take it personally. he is that way with everybody. but i do actually want to kind of follow on on something that he had point of interest and frustration for a number of us

speed g to do with the or lack thereof where there has been some very specific things that were laid out for the fed to do and specifically i want to talk about section 133. the fed dodd frank required the fed to adopt regulations "as soon as practcabble. " and that was five years ago. there have not been final rules plemented to what federal, fed reserve restrictions you yourself were going to put and glines as far as utilizing 13.3. so i'm very concerned that that has taken that long. when is it that the fed is going to issue those final rules? >> we expect to issue the final rules by the end of this month.

>> i will point out to my friend from massachusetts, just talk nicely and she will give you a great answer. my next followup question on that is, will the rules address the concerns that senator warren, the chairman and others have put forward regarding whether your earlier proposal leaves the door open to future wall street bailouts? >> let me just say that we regard our emergency lending powers as very crucial powers. it's very important that, god forbid there should be a future financial crisis, we hope that won't occur. but if there is, that's why the federal reserve was created, to provide liquidity when there is a financial panic and lenders are worried about the state of