dangerous government. tonight the citizens of the world should be afraid of such an oppressive an dangerous government. they should condemn this government for its actions, they should stand with this pastor and they should joint hearts with people of all faiths around the world to pray for his life and his safety and every member of this body should adopt this resolution and with that, mr. speaker, i yield back the balance of my time. the speaker pro tempore: the gentleman yields. the gentleman from new york is recognized. . mr. higgins: i yield three minutes to the gentleman from new jersey, mr. andrews. the speaker pro tempore: the gentleman is recognized for three minutes. mr. andrews: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without objection. mr. andrews: tonight we stand united and strong for the release of pastor youcef. although the legal case for his

release is overwhelming, as mr. pitts has outlined, we do not rely on the law in our plea. though our political convictions shared among everyone on both sides of the aisle i believe here are deep, our appeal is not based on politics. instead, our appeal is based on the human quality of the loving bond between a parent and his children. whether one worships in a mosque, a temple, a church, a synagogue, some other form not known to us, whether one chooses not to worship at all, whether one lives on any of the continents of the world and practices any of the political ideologies of the world, is there not a common bond of those

who feel the overwhelming love when they first hold their daughter or their son? is there not a common bond among those who feel the anxiety of learning whether a sick child will be healed? is there not a common bond of immense pride that a mother or father feels when their children achieve some hard-fought goal? is there not a common bond of the empty and hurtful feeling that people know that someday they will have to depart from the children they love so dearly? that day is coming all too soon for pastor youcef. if those who are mothers and fathers who are his captainors do not consider that a human bond? this is a man who tonight sits in prison awaiting execution

because he loved his children enough to insist that they be free to worship as he and his family thought they ought to worship. this is labeled as apostasy. the act of his arrest and pending execution is a mondays strouse act of inhumanity. we do not appeal to the law. we do not deal from political consensus, although i believe it exists in and out of this country. our appeal is based on the simple quality that parents have an inate right to love their children. this man has been deprived of that right. that deprivation should not exist for another hour, another day, another moment. we will stand strong and united in calling for the humane

release of pastor youcef and we pray tonight that wish will be granted by his captainors who must understand they have that same love. i yield back. the speaker pro tempore: the gentleman's time has expired. the gentleman from pennsylvania is recognized. mr. pitts: i would like to ask the gentleman if he is prepared to yield back. mr. higgins: i have no requests for time and i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from pennsylvania is recognized. mr. pitts: mr. speaker, as pastor youcef sits in prison awaiting a manningman's noose, i want him -- hang mans noose i want him to know that we stand with him. our thoughts and our prayers are with him. and i would say to those international guests who might watch this telecast, you will

never understand america until you understand that in our constitution, the very first amendment contains the freedom of religion, not freedom from religion, freedom of religion. it's not our second, our sixth, 16th or 26th amendment, it's our first amendment. it's the first thing mentioned in the first amendment, freedom of religion. congress shall not act to establish a religion and shall not prohibit the free exercise delf and that comes before the freedom of the press or speech or assembly or petition of grievances and so if you want to understand america, you must understand this basic belief that the americans have in the right of the freedom of religion.

and so we ask, we implore the authorities in the iran free pastor youcef. keep faith with the documents you have signed. free him. return him to his family. and i urge support, mr. speaker, and the members to vote for house resolution 556. and with that, i yield back the balance of my time. the speaker pro tempore: the gentleman yields. the question is, will the house suspend the rules and agree to house resolution 556 as amended. those in favor say aye. those opposed, no. -- >> mr. speaker. mr. pitts: i request the yeas and nays. the speaker pro tempore: in the opinion of the chair, 2/3 being in the affirmative, the rules are suspended, the resolution is agreed to, and without objection, the motion to reconsider is laid upon the table. the gentleman from pennsylvania.

mr. pitts: mr. speaker, i request the yeas and nays. the speaker pro tempore: the yeas and nays are requested. all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, the yeas and nays are ordered. pursuant to clause 8 of rule 20, further proceedings on this question will be postponed. the speaker pro tempore: the chair announces the speaker's appointment pursuant to 10 u.s.c. 4355 a clause 10 of rule 1 and order of the house of january 5, 2011 of the following members of the house to the board of visitors of the united states military academy. mr. hinchey. the clerk: mr. hinchey of new york and ms. loretta sanchez of california.

the speaker pro tempore: the chair will now entertain requests for one-minutes. for what purpose does the gentleman from new mexico? mr. pearce: request permission to address the house for one minute. the speaker pro tempore: without objection. so granted. mr. pearce: mr. speaker, less than one month ago, kathleen sebelius issued a finding that said every insurance company in the country would have to offer insurance products, some of which would offend the faith of many people. this is against our constitution. it is against the rights of conscience of a free people. mr. speaker, the people of new mexico and the people especially of southern new mexico across religious lines, catholics,

lutherans, people across racial and cultural lines are gathering this saturday, this saturday to protest, this saturday to stand and say that the government needs to back up out of our church. this is not a republican issue. it's not a democrat issue. this is an issue of the constitution and of a freedom-loving people. so i encourage all across this united states to begin to organ stand in the streets to tell the government that enough is enough. we are meeting this saturday in last cuces, new mexico from 1:00 to 2:30. there will be speakers from both parties, all faiths. we think it is time for americans to be united again as one people against the government that has become too strong. and i yield back the balance of my time. the speaker pro tempore: are there further requests for one minutes? the chair lays before the house

the following personal requests. the clerk: leaves of absence requested for mr. nadler for today. the speaker pro tempore: without objection, the request is granted. the speaker pro tempore: under the speaker's announced policy of january 5, 2011, the gentleman from colorado, mr. gardner, is recognize dollars -- recognized as the designee of the majority leader. mr. gardner: mr. speaker, i'm here tonight for one reason, to stand up for hard-working americans who are spending far too much when they fill up at the pump and i'm here for that same american who turns on the tv or reads the newspaper after a long day at work to see that iran is threatening to cut off our oil supply out of the middle east. and who see continue inaction by

this administration to discourage energy products and energy production that would lower the price of gas here at home. these are americans that are scared. they simply don't have the money in their pocket, their budget, to pay for these high prices, $60 to fill up a tank of gas, $80 to fill up with a tank of gas. i find it increasingly more difficult to explain to my constituents from rural colorado why this government isn't advancing policies to bring down prices at the pump. it pains me to look at people's faces saying they are making $10 and paying $4 a tank for gas. what are they supposed to do? we are facing a significant crisis and it's a travesty, it's a shame. and my colleagues are here to say, we will not stand for it. how do i go back home this

weekend to explain to my constituents why gas prices have risen $1.80 since this president took office? how do i explain that this administration may be willing to tap the strategic petroleum reserve, which is only to be used when there is a severe energy supply disruption instead of opening up more land for exploration, which brings me to my next point. mr. speaker, this administration has alleged it has opened up vast amounts of land for leasing. on february 23, at the university of miami, and i quote, under my administration, america is producing more oil today than at any other time in the last eight years. this is simply false, a false telling of reality. while it may be true that new production is occurring on private lands where the president can't involve his anti-energy administration, federal lands and offshore

development is far below what it has been in previous years. let me cite to you startling statistics. according to an article a few days ago, production of natural gas on public lands and waters in fiscal year 2011, dropped 11% from 2010. that's a drop of 11% on public lands and waters in fiscal year 2011. oil production on federal lands dropped 14% since last year. this reduction was most significant in the gulf, which declined by 17% since 2010. according to a wall street article, since the beginning of 2012, the president has only approved 23%. approval of an offshore drilling plan typically takes 92 days right now, that's 31 days over

average. and in 2000, 12 years ago, 32% of our oil was from federal lands. why? in 2010, that number shrunk to 19% of total u.s. production. let me say that again. in 2000, 32% of our oil was federal lands. in 2010, that number shrank to 19%. we aren't opening up our federal lands for development and that's the reason for the significant drop. the total amount of lands leased in 2009 and 2010 is the lowest in over 20 years. mr. speaker, the president has claimed that he is opening up new offshore areas for production and more land for leases. again, this is false. many of these leased sales were scheduled to take place before he even took office. one was even canceled for a year by the administration and is now being reinstated. his plan even closes the majority of the o.c.s. to new

energy production through the year 2017. and in recent days and months, we have seen the president touting an all of the above energy approach but his actions speak louder than his words and do not promote an all of the above energy strategy. this administration has plocked production on federal lands and blocked energy production across the board and i want to share with you just a few of these examples. . tonight we are joined by the house energy action team, a group of members from across the country who are dedicated to sharing with their constituents in this country the policies that we have passed in this house, with bipartisan support, to encourage energy production, to make sure that we are increasing and encouraging natural gas development, oil development, all of our natural resources in a true

all-of-the-above energy strategy. the heat action team, the house energy action team, is once again sharing that strategy and contrasting ourself with the strategy that this president has presented over the past three years of his administration. and so the president can -- he can claim all he wants to be supportive of an all-of-the-above energy strategy . said it just a few months ago from this podium right behind me in the state of the union address. supporting an all-of-the-above energy strategy. but let's actually talk, let's actually talk about what the president's policies have resulted in. on oil and gas, he's withdrawn oil leases from utah, cogs 3,000 -- costing 3,000 jobs, withdrew oil and gas leases from montana, issued a moratorium on gulf drilling, costing 12,000 jobs. reinstated a ban on drilling off the entire pacific coast. announced he would regulate hydraulic fracturing.

again, the president claims to be a supporter of an all-of-the-above energy policy but on coal he pulled a permit from a west virginia mine costing 250 jobs, announced the merger of b.l.m. and o.s.m. which could move domestic coal one step closer to extinction in this country. when it comes to nuclear energy, this president has blocked uranium mining in arizona for two years. he has permanently abandoned the yucca mountain waste site, jeopardizing the future of nuclear energy in this country. imposed a 20-year ban on uranium -- uranium mining, increasing our 90%, already our 90% dependency on foreign sources.

and even on renewable energy. this president has closed all but 2% of federal lands from renewable energy development. he's left only -- open only 670,000 of 30 million acres of land for solar development. again, the president claims he is for an all-of-the-above energy strategy. when in fact what we have seen is this president is actually for none of the above. this chart, i know it's impossible to read, details the inaction of this administration, in fact, some very harmful actions to our energy policy where he has stopped, delayed, repealed energy production in this country. and again tonight we're going to be hearing from many members

around the country to discuss how we can advance a strong energy policy, one that creates american jobs with american energy, building our energy security for future generations. there is one great way to power our economy and that's to turn to our energy sector to create jobs and opportunity. and with that i yield to another great leader on energy issues, mr. duncan from south carolina. mr. duncan: let me thank the gentleman from colorado for his dedicated service to not only the state of colorado but to our nation. and we have been coming to the floor talking about the increasing prices of energy across america since we came back in january. we've taken to this floor to talk about the very poor policies coming out of the administration and just to give you an example of that, on inauguration day of president obama, a.a.a. says the gasoline

prices in america averaged $1.84 a gallon. today gasoline prices are averaging across this great land $3.73 a gallon. that's 102% increase during the obama administration. but yet he will claim that the administration -- that, the administration will claim that they've increased domestic energy production. they've increased onshore and offshore drilling and apparently oil and natural gas are just bubbling up out of the ground and providing us with -- but, america, that's not the case. that's not the case. gas prices are going up. simply due to two factors. supply and demand. those are the things that attribute to the price of a barrel of oil in the world. supply and demand. now, i admit that world demand is up, even while the united states demand is lower than it was in 2008.

world demand is up. so that's one factor. but the supply factor. americans know that we are tremendously dependent on middle eastern oil. we've got the resources here in this country, if this administration would just get out of theway and allow us to harvest -- the way and allow us to harvest our natural resources, we would be energy independent. but let me tell you what the administration apparently has as a policy goal and this comes from the white house statement on the keystone pipeline. the gentleman from colorado has heard me say this, i think this is the fourth time, but america needs to hear it again. because president obama said this, he said that decisions here in congress to force the decision on keystone pipeline does not change my administration's commitment, this is from the white house website, i recommend you go look at it for yourself, but it does not change my administration's

commitment to american-made energy that creates jobs and, listen closely, reduces our dependence on oil. now, at one time he's talking about these abundant supplies, these increased onshore and offshore drilling production in this country yet his own words say that commitment to american-made energy that creates jobs and reduces our dependence on oil. now when you first heard that you thought, well, i agree with. that he wants to lessen our dependence on foreign oil and middle eastern oil. but, no, no, no, that's not what he said. he said, lessen our dependence on oil, period. not foreign oil, not middle eastern oil. lessen our dependence on oil. so you take that with his secretary of energy, steven chu. before he was appointed as secretary of energy in this country he said this, somehow we have to figure out how to boost the price of gasoline to the levels in europe.

now europeans and england and germany and france, they're paying $7, $8, $9 a gallon for gasoline. america, under these policies, that's where we're headed. under the words of steven chu, the energy secretary, said, somehow we have to figure out who to boost the price of gasoline in this country -- how to boost the price of gasoline in this country to the levels of europe. it shouldn't surprise you that's what they want to do. lessen our dependence on oil, period. that's propagating policies and getting money away to companies that supported him in his election campaign, companies like solyndra, $535 million gone, america. your tax dollars that i know you're working hard for every day. in south carolina my constituents, they go to work every day. and they earn the hard-earned dollars, they go to work and they're thinking, when they're filling up their gas tank at $3.75 a gallon, $4 a gallon diesel fuel, i drive a diesel, so last week i couldn't fill my truck up because i'm hurting just like other americans and how much i have to take out of

my wallet to fill up my truck and what i can use that money for in other ways, whether it's take my family out to dinner or pay off some debt or do some things with that we normally -- things that we normally would do with that money, now we have to take money out of our pocket. so marines are thinking, how -- ma -- so americans are thinking, how many hours am i working just to pay for the gasoline i just paid to get to work and to get home? $4 a gallon gasoline for diesel fuel and, america, think about this. think about the farmers that are putting diesel fuel in their tractors to plant the fool food that you're going to buy at the -- the food that you're going to buy at the grocery store. input cost on the front end affects the price on the back en. but, the -- end. but the secretary of energy said this, he's called for gradually ramping up gasoline taxes over the next 15 years to coax consumers in buying more efficient cars and living in neighborhoods closer to work. this european model where we'll all live close to town and we can walk to work and bicycle.

that's the optimal thing in their eyes. but we don't live that way here in america. we like our freedom, we like to drive ourselves to work. the policy of this administration is affecting what you pay at the pumps and it's very clear using the president's own words about gasoline and about oil. so, we're seeing rising gasoline prices, we've got the power to do something about that here in america. we have the capacity, the resources in this country that far exceed what's found in saudi arabia. far exceed by hundreds of billions of barrels of oil more than what exists in the saudi oil reserves here in this country. we've got them, we're buying a lot of oil from canada, we've talked about keystone pipeline, the gentleman from colorado and i have talked about this numerous times. but -- instead of, you know, pursuing american energy independence, beyond that, why can't we pursue maybe north

american energy independence and buy from canada if our policies are going to keep us from drilling off our coast in south carolina, off the coast of louisiana and mississippi and texas and places where there are proven reserves and we've been pumping oil for a long time or going offshore? north dakota, north dakota has an energy-driven economy. their unemployment rate is 3% or less. they're pumping oil in north dakota and president obama's taking credit for increased oil production in north dakota. but back up. because the oil that's being popped out of the ground in north dakota isn't on federal land and it isn't because of any policies of this administration. the permits were issued during the last administration, the one before that, and we're proy producing oil and state -- and we're producing oil on state and private lands. unemployment is 3%.

energy-driven economy in north dakota. but the oil field extends beyond the borders of north dakota and it goes into montana and other states. well, if you go across that artificial border between north dakota and montana, into the same oil field known as balkan, you're not going to find any energy production over in montana. you know why? it's on federal land. and that federal land has been off the table for energy production and energy exploration but over where it's on state and private land, it's gang busters. it's going gang busters, 3% unemployment in north dakota. that's a telling sign, america, on what you do when you go off your own resources and you produce american resources to meet our energy needs. i heard the gentleman from colorado talk about an all-of-the-above energy strategy and i heard the president here at the state of the union say the same thing. but you know, in my opinion all-of-the-above energy strategy says, hey, first we're going it take care of a proven technology of oil, natural gas, to meet our immediate energy needs. and then we're going to continue to expand nuclear power because it's proven, it's tried and we

can expand that. i applaud the new permit in georgia for a new reactor. we're going to have one very soon in my home state. it would be the second in about 30 years of where we permit a nuclear power plant to provide electricity to this country. but the president, he likes this global warming cap and trade scheme and he says that under his plan of a cap and trade system, electricity rates would necessarily skyrocket. electricity rates are going to skyrocket. but we've got the ability to build more nuclear power plants and permit those that are under way and provide good, stable electricity in this country. so all-of-the-above includes oil and natural gas, energy exploration. offshore, onshore, where we have those resources, expanding nuclear power plants in this country. we can get the things that are tried and true. and allowing the free market, not your tax dollars, america, but the free market to determine the winners and losers with regard to green energy. if it works, if it can be successful, i guarantee you tha

are would invest their own hard-earned dollars at their own personal choice to invest in that technology and they will pick a winner because on the backside they're going to make a profit. but that's not what's happening. this administration is taking your tax dollars and they're making your investment decisions for you to companies like solyndra. they're picking the winners, they're picking the losers. it's wrong, it's got to stop and with that, the gentleman from colorado, i'm here, i yield back some time. mr. gardner: i thank the gentleman from south carolina. i know the gentleman from arizona is going to be joining us in this debate, this conversation tonight. you mentioned some quotes, some statements made by secretary chu. you talked about the statement where the president had said, under my plan, electricity rates would necessarily skyrocket. you talk about secretary chu talking about how he wants to boost the price of gasoline to the levels in europe. have you ever heard this president talk about expanding production in the united states? adding u.s. domestic capacity to actually decrease the cost of

gasoline? >> i never heard him talk about that. the administration talks about the exact opposite them. want to us pay what europeans pay. they want to see us move toward a green energy economy. mr. duncan: and they want to create policies, tax policy and regulatory policies, that are going to force you as americans to buy what they want you to buy. and that is an electric car. . mr. gardner: we have seen gas prices increase dramatically across the country. in south carolina, gas prices increased 10%. the gentleman from arizona who joins us now in the conversation -- new mexico is -- seen tremendous price increases as well and i yield to the gentleman from new mexico. mr. pearce: i would like to be from arizona but i'm representing new mexico. my father -- he worked for the

oil industry my entire life. we grew up in the oil industry in southeast new mexico. back in the late 1970's and early 1980's, the company that my dad worked began to tell all the employees that oil would be out, that it would be finished in eastern new mexico, that they would need to get their affairs ready to be transferred somewhere else. my dad retired in the late 1980's, and the oil fields are still viable in lee county, new mexico, because of increasing technology, the ability to drill laterally has produced energy and the 3-d seismics have been effective at finding new sources of oil. what we're finding the old estimates of how much oil was left in the u.s. has been grossly inadequate. the new finds across the country, this nation could be self-sufficient in oil, except

there are people here in washington who do not want to us to be self-sufficient. for some reason, they believe we should have a level playing field with the european countries that have to import all of their energy. i think america should be allowed to develop its resources that it's blessed with. i believe the american people should be allowed to work in careers and in jobs that pay good money. other people in washington think we should shut down all of the timber production, all of the oil and gas production, all of the mines and convert over to hospitality jobs. they do not pay enough, but they do not pay enough to raise families. we have these different visions of america where one says we are going to shut off the resources and not develop them and the other group says yes, we must have american energy and must have american jobs and we must improve the economy. we are facing times when our

budgets are completely unworkable. this coming year, we are looking at $1 trillion in deficits. we are going to spend $9.3 trillion and going to create revenues of about $2.9 trillion. now people at home can do the math. that's the deficit of $1.1 trillion. magical thing happens when we start creating jobs in america, people are saying can you cut your way? i don't think we have to do that. every time you put someone to work, they come off of food stamps, they come off of unemployment and the cost of the government begins to decrease with every job you create. those people will pay taxes. so if we would allow the jobs to be created, there would be forming daily if we opened the doors to energy production in this country and we would see our economy moving toward balance and that's what we desperately need. we need our checkbook balanced

because that's the only way we are going to sustain the economic future of this country. one of the things that people, i think -- they just can't believe that washington would put oil and gas off limits completely. they can't believe that the country -- that the country's leaders would make life that much more difficult for them. that much more difficult for them to pay their bills, to send their kids to school, to feed and cloth their children. they can't imagine policy makers in washington who would willingly do that and yet you have repeatedly heard the president and his staff say we need the price of gasoline to go up, we have to figure out how to increase it. and they have limited the drilling of it. this year's elections will pin on the cost of gasoline and the functioning of this economy. people across america are desperate for job creation, not

just any job, not just minimum wage jobs, but those jobs where you can get in it and do a career. like my father. it was a good living for his family. that's the sort of jobs that americans are looking for and that's the sort of swrobs we can create. how is american policy makers putting off the oil and gas off limits? for instance, shale. america is the saudi arabia of shale oil. and yet in 2007, the pelosi house passed a bill that put all of the shale production in colorado completely off limits. that's just wrong. we should be exploring every opportunity for energy. the other way they are limiting production is they are not processing the applications to drill. so you have a lot of people who would invest a lot of money creating jobs, but the federal government will not process

applications for permits to drill on federal land. much of the west is federal land. new mexico is 33% of federal lands. some states have 80% of federal lands and those are being eliminated from mining and timber and other jobs that could be created. so we find an administration and a mindset in washington that stays we are going to stall america for jobs and energy and send those jobs overseas. i think americans are waking up and realizing that it does not have to be that way. we don't have to be paying $4 for gasoline, people here in washington say we cannot drill our way out of the problem. i hear that a lot. but if you look at the cost of natural gas, you will see it has diminished tremendously, because we have drilled our way out of the shortage that existed four, five years ago. the price of natural gas spiked around $10. today, it's less than $4.

you have to understand you can produce more energy and get the costs down, but the government has to stand aside and let the people work. i just returned from vietnam, a known communist country and yet they are hungry for production of energy. communist chinese, they are looking for new oil and gas supplies. they are drilling 47 miles off the coast of florida and yet this country will not let american firms drill 45 miles off the coast. we are looking at policies stragg willing the prices of oil and gas. not just the oil and gas, the sad thing they are doing the same thing to electricity. two electricity-generating plants are told to shut down. we suffered rolling blackouts and we are being told to shut down electrical generation.

these aren't generators that will not produce. these are generators that are saying they might be contributing to pollution. the standards they hold us to need to be measured by a computer because the naked eye can't see the difference in hayes they are trying to demand the improvement of. we see policy makers who are willingly making life more miserable and more difficult for the average american. the republicans are speaking up for the average homeowner, the average person that goes to work every day, does their job, goes home and raises their family. we need to support those kind of people and i compliment the gentlemen, both of them, especially the gentleman from colorado for leading this fight for lower energy prices and we need to back him up. thank you and i yield back. mr. gardner: i thank the gentleman. and before he yields the floor i want to ask him a quick

question, you did tremendous work with the western caucus to make sure you are eliminating regulations to do what we can to improve the economy in the western united states. and i want to share with you a quote from senator schumer, february 27, just two days ago, quote from "the hill" newspaper. and i quote. he is talking about trying to find solutions to increasing gas prices and here's what he had to say. to address the situation, i urge the state department to work with the government of saudi arabia to increase its oil production. as they are -- as they are currently producing well under their capacity. so apparently, many of our colleagues, some in the senate, think that the solution to do the way out -- in fact it's creating more dependency on overseas oil instead of developing in areas like the western united states.

and i know you have done tremendous work to open up access. and i don't know if you have seen the comment. mr. pearce: i have not seen the comment. it's standard that comes from those in washington. they are saying they should develop our resources but we should not develop ours. it is that mindset killing american jobs. the american families are struggling, hard-working families are struggling under the demands of just raising their families and it is abysmal that washington policy makers are having that kind of mindset. across the west we see failure to give access to public lands. that's one thing we are fighting in the western caucus. i would refer any of the people in this body or any of the people watching the program to go online and take a look at the western caucus, the jobs frontier, over 40 pieces of legislation that would bring on

jobs, each one of them designed to bring on jobs with no government investment, private money creating private jobs. also, there are bills which are designed to stop the government from killing three million more jobs this year. so the western caucus is hard at work trying to preserve the economy of the united states. and i appreciate you bringing that up. guard grd i thank the gentleman. the gentleman from south carolina, some of our colleagues would like to see energy production increase in saudi arabia, i guess they stand by while this administration knickses vetos and puts a fork in the keystone pipeline and would rather see the jobs go overseas instead of doing it right here in our own back yard. i'm sure our colleagues -- meanwhile, i'm sure they are well intentioned, but i would hope they would produce the energy here and energy policy that is with american jobs for

our security. mr. duncan: you are exactly right, these are about american jobs going overseas and american tax dollars going overseas and american earned income. as i mentioned earlier, you are digging deeper into your wallet. insed of $20, paying $100. americans know what they can do with the difference there. i get passionate with this issue and i apologize to the ladies in this chamber who have to record what i say. i'm not alone. america is passionate as well, because they know we have the resources and they know we can be energy independent and wouldn't be giving money to middle eastern countries who don't like us as well as the canadians and other countries. but i have spouted off some things about federal land and state land, north dakota, so let me just tell you, in 2000, federal oil production accounted

for 32% of the total u.s. energy production. in 2010 after two years of the obama job-droig policies, federal protection accounts for 19% of the total u.s. oil production, 11% decrease. and when i think about the year 2000, i think about some of our friends on the other side of the building and john kerry and some of these guys that said, you know what? we decided to drill today and open up new lease areas whether it's the outer continental shelf, it would won't have any effect because it takes 10 years for it to come on-line. that was 10 years ago. what impact would those policies of drilling on outer continental shelf, what impact would that have had on the price you pay at the pump today? i think we have to get serious

about american energy exploration and production here and the journey of a thousand miles begins with a single step. we need to take that step today and the house republicans have done that with numerous job-creating energy-production bills that have passed out of this chamber and languishing in the senate who fail to take up american energy independence bill, job-creating bills. energy production is down on federal lands and obama administration is taking credit for increased production and saying we have opened up new offshore areas, but you know, the data i have says there are less offshore acreage now than when president obama took office where nearly 100%, 100% of out ircontinental shelf was opened up under the bush administration. they lifted the moratorium.

and listen, i senched for 18 months on what was known then as the mineral mining services of the department of interior, the o.c.s. or outer continental shelf where we looked at the next five-year plan on what areas we were going to open up offshore and what areas were available for us to even talk about were small grid squares in the gulf of mexico, nothing in the eastern gulf of mexico, nothing in the atlantic ocean, nothing off the coast of alaska except for another small square and this was prior to the latter years of the bush administration when he decided american energy independence means we need to open the outer continental shelf and begin energy production. and we looked at these grid squares and we were going to recommend a leas sales and offer it to the energy companies where they could explore and produce those resources but the obama

administration haven't created a new five-year plan. but i believe it's all for looks. the total onshore acreage leased under the obama administration in 2009 and 2010 is the lowest in over two decades. we aren't talking about ultradeep horizon type offshore production. . mr. gardner: he said at the university of miami that we have record oil production. that he's actually leading us out of this energy crisis. mr. duncan: energy production might be up in this country but it has nothing to do with the policy of this administration. it has to do with the previous administration who said, we're going to open up balkan. they found a ton of oil reserves there. in your home state, the oil shale and the rocky mountains, colorado could be the next saudi arabia. if we would allow onshore production for oil shale in

those mountains. i know the gentleman from colorado probably wants to talk about the oil shales of colorado. mr. gardner: i do. this entire country. we actually are home, the united states is home to six times saudi arabia's proven resources, because the potential for oil shale in this country. at one point -- excuse me, 1.5 billion barrels of oil shale. that's six times saudi arabia's proven resources. that's enough energy to power the united states for the next 200 years. the gentleman talked about legislation that we have passed to try to keep jobs, you talked about some of the comments that were made, well, that will im-- won't impact our supply until the next -- sometime over the next 10 years. let me tell you about one bill we passed last summer. h.r. 2021, passed with bipartisan support. that bill was focused on a particular project in the north alaska sea, north of alaska. in the time that it has taken one company to get a permit for that energy development, an area

that's already approved for energy development by this government, it's taken six years to get a permit. in the time that it's taken them to try to get that permit, they still don't have it completely done, by the way, but in the time that it took them to get this far, they've drove over -- drilled over 400 wells around the world, creating jobs around the world, creating energy for other people, creating jobs and resources, economic development for other people, but certainly not in the united states. mr. duncan: you're exactly right. we had a tragic accident. nobody's running from that fact, that deepwater horizon was very tragic in the gulf of mexico and we learned from that. the oil companies, energy production companies will learn from that. but during that moratorium under the obama administration and then later he said he lifted the moratorium but there was a de facto moratorium because they were failing to issue leases and permits for continued drilling out there. companies that had already invested, you know, billions of dollars in purchasing the rights

to those lease areas, to explore for energy and produce energy, they were languishing out there waiting on the drilling permits to come back from washington and the department of energy, the department of interior were slow walking these permits and so at some point in time those energy companies said, you know what? we're going to drag those drilling platforms out of the gulf of mexico and they toed them to -- towed them to the offshore of brazil, to the seas offshore brazil and offshore africa and today, today they are drilling for energy in other countries. other countries. and we had them here in the gulf of mexico producing american energy, to lower the price at the pump for american consumers. it's very expensive to get those drilling platforms back to the gulf. and so it's tragic -- as tragic as horizon was, we learned from it. the obama administration issued moratoriums to stop that drilling and then they said, well, we're going to end the moratorium but then when they

failed to issue the leases, it's really a moratorium. it's instituting their policies and it's going to be very difficult for us to the that production level back in the gulf of mexico because it was expensive for those companies to bring those rigs back. i yield back. mr. gardner: as those rigs have left, as we've seen production occur elsewhere because of the road blocks to domestic energy production, we see other countries, us becoming even more reliant on overseas energy. and just a couple of weeks ago, the federal reserve chairman warned that a major disruption in foreign oil supplies could thwart the economic recovery. so, the federal reserve chairman has recognized that the more dependent we become on somebody else, if there's a disruption in that supply, a disruption in that overseas energy source that we're relying on it -- relying on, it could thwart our economic recovery. mr. duncan:ky remind you that admiral -- can i remind you that admiral mullen said, there can

be no national security without energy security there. can be no national security without energy security. that's a wakeup call, america. i yield back. mr. gardner: it's a great point on national security. because not only do we have economic, you know, economic objectives that we need to achieve, with the national energy policy, where we're relying on our own production, but we have national security implications. if we don't rise to the challenge we're going to be risking our security because of our reliance on other nations. and to go to the point of energy prices, this chart just illustrates how much gas prices have increased. how high they've increased. $1.80 over the past several years. the average price of gasoline has increased 42 cents since february of 2011. that's just on average around the country. the important thing to recognize is, the impact that gas price increases have on the american consumer, on american families, all told each penny increase in the cost of gasoline takes about

$1 billion out of the economy. so as gas prices hit $3.17 in february, just a few weeks ago, $3.18, every penny was $1 billion taken out of the american consumer's pockets -- american consumers' pockets, sent overseas. a 15-cent jump of gasoline prices is sustained over the next year, $70 billion billion would be lost in the u.s. -- billion would be lost in the u.s. economy. this chart says it all. go back to january of 2009. the president takes office, $1.84. if you went and you filled up your car, $1.84 a gallon. as of february 23, just a few days ago, just a week ago, $3.61 . billions of dollars taken away from the american consumer, sent overseas when we could be using that money right here to create american jobs. reducing the price at the pump.

perhaps sometime this spring, according to barrens, gasoline may even reach $4.50 a gallon. these aren't scare tactics. this is reality. that americans are facing each and every day when they fill up at the pump. trying to figure out how to make ends meet, trying to make sure they're able to meet their mortgage it's, pay their bills, put -- mortgages, pay their bills, put food on the table for their family. $60 a dank, $70 a tank to get to work. what tradeoffs are we forcing the american consumer to make, when we have the opportunity to create american energy right here? to build the keystone x.l. pipeline, to develop our federal resources and do it in a responsible manner? do it in a way that creates jobs, giving our own communities the benefit of that exploration, of that development, of the tax revenue that they generate.

$3.61 a gallon. it's unacceptable. and yet we hear talk of increasing production in saudi arabia? instead of doing it here? we hear an administration that says they're for, you know, they were against the keystone pipeline and then they were for it and then they're for part of it. i heard the gentleman from nebraska, mr. terry, who's been a leader on the pipeline -- the x.l. pipeline say that that's a little bit like the rooster trying to take credit for the dawn. we have an obligation to make sure we're developing our resources right here, right now. we hear others talk about tapping into the strategic petroleum reserve. in fact, just a few headlines in recent days, the secretary says, tapping the strategic petroleum reserve is an option that's on the table for the administration. an article in "politico" on february 25, house democrat leaders are urging president obama to open the strategic

petroleum reserves. another article that same day, washington liberals call on president obama to tap strategic petroleum reserve. the strategic petroleum reserve -- mr. duncan: will the gentleman yield? i've gotten facebook posts and phone calls in our office encouraging just that. for the president to tap the strategic petroleum reserves, to help lessen the price at the pump. but let me just tell america that it was during the 1970's oil embargo that i remember as a small tile -- small child that congress created this huge 727 million barrel reserve that was intended for national security emergencies. and before president obama tapped the s.b.r., the strategic petroleum reserve, back in the june of 2011, the reserve had previously only been tapped once for war, the other to combat a natural disaster and the third time quite similarly for political opportunism. and the examples are this. president bush, herbert walker bush, the first bush, used the

s.p.r., the strategic petroleum reserves, during operation desert storm because we were going to war over there and he was afraid that that would disrupt middle eastern supplies and so he tapped those reserves just to make sure americans didn't suffer because of our actions over there in the operation desert storm. and then in 2005 we had down along the gulf coast, which is a tremendous energy production area in alabama, mississippi, louisiana, texas, we had a little thing called hurricane katrina that came through and really disrupted supplies in the gulf states and did a lot of damage there and president george w. bush opened up the strategic reserves to lessen the price at the pump for americans because we knew there was going to be some supply disruptions. so we had a natural disaster and a war. but then in 2000, just another example, president clinton opened up the supply under the strategic petroleum reserve right before a campaign. right before the bush-gore

campaign. there wasn't any natural disaster, there wasn't a hurricane bearing down on us. we were not going to war. he was trying to stabilize the market to help him in a political game and then we see president obama in june of 2011 do the same thing. instead of focusing on american jobs and american energy production and a long-term energy policy they're playing games with tapping the strategic reserves which have an intended purpose and that intended purpose is not to bring the price down at the pump. it's to stabilize the american economy in case of war or in case of a natural disaster. now, we've got these reserves sitting there and we've got a lot of middle eastern unrest with what's going on in iran and iran cutting england and germany or england, france, one of the european countries off from any oil. it's actually a reverse embargo where iran's not going to ship oil to some friendly countries in europe. and so we're seeing this volatility due to the unrest in iran. shouldn't we as america keep

that oil in reserve just in case there's a problem over there? maybe, who knows, maybe there's further disruptions at the straight of hormuz issue -- strait of who are mizzmuzz issue. -- hormuz issue. mr. gardner: i would make the point that if this administration acknowledges that by tapping into the strategic petroleum reserve they can increase supplies and therefore have an impact on price, isn't it obvious what we ought to be doing as the policy of this country? if supply -- if supply is the answer, tapping into the strategic petroleum reserve, we should increase domestic production. we should increase opportunities in the western united states. on our outer continental shelf. we should utilize the energy that our neighbors to the north are willing to help us out with. through the keystone x.l. pipeline. because if the strategic petroleum reserve is indeed about supply, a political fix to a supply problem -- mr. duncan: a band-aid so to

speak. mr. gardner: why isn't this administration willing to actually do the right thing, do what's necessary to keep our economy afloat, to keep it from running on fumes and make sure that we can produce that energy in our own backyard? increase our opportunities to produce domestic energy. mr. duncan: the gentleman from colorado has been a stalwart and a leader in energy, american energy independence, as a leader of the house energy action team. we call it heat, h.e.a.t. and let me just tell american, if you want to find out some of these detail, some of the facts that we've laid out for you, in black and white, you can go to the website for house energy action time, -- team, unthe house g.o.p. website and find this data out. we're putting it out there for you. we're not shying away from it, we're not -- we're providing this information for you americans to make informed decisions and understand that these energy bills we pass through the house, they have merit. and they would have results if we could get the senate to take them up and let's have a true

comprehensive energy policy for this country that focuses on american energy independence, that does things right for you americans, to lessen the price that you're paying at the pump, to lessen the price that you're paying on your electricity bill every month. house energy action team is focused on this. the gentleman from colorado is a leader on that. our caucus and our conference is a leader on that and with that i'll yield back. mr. gardner: i thank the gentleman from south carolina for his leadership and for -- this is the third time that we've done that this year already, come down and talk as a group about what we can do to get our energy prices down, to relieve the pain at the pump, to make sure that we're restoring our energy independence and so we'll continue this effort. last week i had the opportunity to visit western colorado, the western slope of colorado, vast majority of the land there is owned by the federal government they've seen rigs being sent away, shutdowns, opportunities

of great success where is there a glimmer of hope for increasing development on the western slope of colorado. in my district on the eastern plains of colorado, one company has drilled over 200,000 wells, putting thousands of their people to work, creating economic opportunity, creating jobs, bringing opportunities to the county they never would have had otherwise. when i talk to people, western colorado, eastern colorado they simply want to do what they do best. that's to run their businesses, to do it in a responsible manner, to do what's right for their children and grandchildren and to stop sending the hundreds an hundreds of billions of dollars that we send each and every year overseas to get energy from them. instead of using that money right here on our own families. every year, we send $331 billion to foreign nations.

we can start using that money in our own backyard. the house energy action team is committed to leading this country to a future of economic growth, economic opportunity, energy security, and energy independence. i thank my colleague from south carolina for joining me tonight and with that, mr. speaker, i yield back. the speaker pro tempore: the gentleman from colorado yields back the balance of his time the chair recognizes the gentleman from colorado for a motion. mr. gardner: i move hat house stand in adjournment. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. the motion is adopted.

pizz and the american people are asking for change in congress, and so i'm announcing today that i will leave the congress at the end of this year.

now, i take the unusual step of announcing it from here in the well of the house because i am a proud institutionalist. i believe that this institution is as great as it has ever been. and, mr. speaker, i announce it from here because between the rules committee upstairs where you serve with me, mr. speaker pro tempore, and this is where the people of california sent me to serve them. as we look at the challenges that lie ahead, they are very, very great. i deliberated over this decision, and i have to say that three years ago i contemplated leaving at the end of that congress, but ultimately made a decision that i wanted to continue to serve through this term. and i wanted to do so in hopes that we would win the majority with a goal of pursuing the

four-point platform that i have always run on, a free economy, limited government, strong personal freedom. and, mr. speaker, i wanted to work with not just my republican colleagues but my democratic colleagues as well, working in a bipartisan way to accomplish a number of things. first, it was absolutely essential that we do everything to end the course that we had been on that ultimately brought us an 82% increase in nondefense discretionary spending. and i'm happy to say we've turned the corner on that. second, after years of ling -- languishing we were finally able to pass three trade agreements that will create good jobs for union and nonunion workers in this country by virtue of having passed the panama, colombia and south korea free trade agreements. i also believe that it's very important for us to recognize

as we look at our national security, the notion of people all over the world who are seeking to determine their own futures has created a wonderful opportunity for us and the house democracy partnership, another strong bipartisan organization has just now partnered with its 17th country in central asia to help the legislative bodies strengthen and have the kind of independence and oversight of their executive branch that we have the tendency to take for granted here. and fourth, mr. speaker, i feel very strongly again working in a bipartisan way that it was essential to ensure that both democrats and republicans have the opportunity to have their ideas heard through their amendments on the floor of the house of representatives. now, i do believe, again, mr. speaker, that this is the greatest deliberative body known to man. we have a great deal of work that lies ahead throughout this year, but i'm looking forward to following the madisonian

directive that members of congress after serving here should go out and live with the laws that passed, and i will say that as passionately as we've been pursuing a pro-growth jobs creating agenda i look forward to doing that myself as i move into the private sector next year. mr. speaker, i will say that i want to express my appreciation. i want to express my appreciation, mr. speaker, to lots of people. of course, the volunteers, family and friends, supporters and the people who offered prayers for our country on a regular basis, and i also want to most important express my appreciation, mr. speaker, to the people of california who back in 1978 when i was 25 years old living in a dorm, they gave the nomination for my

party and it's been a very, very exciting time. i also want to say, mr. speaker, that i express my appreciation to the very, very dedicated public servants in my office in california and my offices here in washington for their commitment to do the best job possible, to help me represent the people of california. with that i yield back the balance of my time. i'm coming up next, ben bernanke testifies on capitol hill about the economy and voluntary policy. later, a house. a cruise ship safety and the cost the shipwreck in italy. >> the co-founder of ben and jerry's ice cream is planning to help raise $1.8 million for the occupied wall street movement. and he takes and you can view

the phone calls at 7:00 a.m. eastern. >> about the general is scheduled to reveal his proposal for balancing the budget. it it is mostly cloudy and 37 degrees. >> this weekend, at the explore the history and literary culture of shreveport, louisiana starting at noon eastern. the red river campaign of 1864 them and then in but that the

200,000 books of the nobel collection. then a walking tour of shreveport with neil johnson. it is sunday at 9:00 p.m. eastern. this did the founding fathers autographed collection at the louisiana state exhibit. shreveport, louisiana this weekend on c-span2 and c-span3. >> ben bernanke testifies today before the house services committee. he said they're not planning additional measures to stimulate the economy. he will return to the hill tomorrow to testify before the senate banking committee. this is three hours.

>> this hearing will come to order. we me to read seve the semi annual report to congress by the chairman of the board of the federal reserve system on the conduct of monetary policy and the state of the economy pursuant to committee role 3f2. all statements of the main part of the record. for purposes of our opening statement, i recognize myself for five minutes. in my opening statement, i'm going to avoid making any predictions about future events

since i do not have a crystal ball, nor do you. address tom going to subjects, and the need for long- term entitlement reform and the dole mandate. we have operated in a low interest-rate environment. which is lower the cost of debt services. this will not last forever. thank you. let me start again. for the last three years, we have operated in a low interest- rate environment which is lower the cost of our debt servicing. this will not last forever. chairman bernanke, in each of their past appearances before this committee, you and i have discussed the dangers to the u.s. economy posed by record levels of debt and deficits.

and the critical need for entit. sadly, it to if you appear to be listening to this discussion. -- too few appear to the listing to this discussion. let's have order. we discussed how long-term restructuring of our entitlement programs will have clear benefits for our economy today and will give our country a greater chance of success in the long term. too few in washington appeared to be listening to this discussion. your appearance here today is another opportunity for us to have this important dialogue. it is my hope that congress and the white house will join

together and address entitlement reform. this is not something the federal reserve can do. you kept interest rates low. it is not opportunity that will last forever. your parents is an opportunity for us to have an important dialogue. you discuss this in your opening statement. there is control of the money supply and applies level management. while this makes some americans uncomfortable, there is a general recognition of the need for independent central banks to set monetary policy. if one closely examines the federal reserve posted a mandate a maximum employment, it

quickly becomes apparent it involves monetary policy. you acknowledge this. you state that ", maxim implode and stand on an equal footing with price stability as an objective of monetary policy, the maximum level of employment is largely determined by non monetary factors that affected the structure and dynamics of the labor market." by giving the federal reserve a mandate that includes that, it is fair to ask whether we have surrendered too much control.

the federal reserve would with monetary policy but would not have responsibility of the burden. for the first 65 years of your existence, and the federal reserve did not operate under to mandate. it may be appropriate for congress to revisit the dual mandate with an eye toward refocusing the fed on the mission of long-term price stability. it will focus on employment. it continues to be our response ability to focus on jobs.

i know all of us look forward to your testimony. i recognize the ranking member. >> i except your invitation for the civil debate. this is a great requirements. i disagree with this focus wish to reflect on entitlement reform. before i reduce social security payments, especially those who want to reduce the cost-of- living increase, we have massive compensation. it is a major cause for them. i think we should do this. i support the decision. i know that many as have been critical of that.

we do have to reduce spending. we spend far more as a favor to much of the world on the military then we need to. before i will impose this on elderly americans, i regard the enactment of social security and medicare as to the greatest accomplish sincements of this country. -- accomplishments of this country. the notion that this is the major place, when we continue to spend 5.4% or more less our nato allies spend 1.7%. it is the benefit of an enormous subsidy. when people are critical of the proposal it ought to be done more quickly.

i do not want to raise taxes. i fear for social security and medicare. it would require taggants in those programs that go far beyond efficiencies our efforts to reduce that goes to people in the upper income brackets. i welcome this debate on the dole mandate. i think there is a lack of logic. it is sure the federal reserve has more control of the monetary policy than it does employment. monetary policy is a level of interest rate that has an effect on unemployment. the notion that there are not connected is not the case. let me give an example. we have had a debate about what should have been done because the mortgages being given. one argument has been that the

federal reserve should have shut down the whole economy by raising interest rates. it should have deflated the bobble by raising interest rates. it have an effect. many believe the federal usedve pimshould have what they gave him to prevent the bad mortgages. there should have been more targeted efforts to deal with this rather than deflate the economy as a whole. we do have a series of employment bombs. this should not be a part of the issue. people may forget that mr. bernanke whose work i greatly empire it was one of the highest ranking appointees on economic matters by president george of the best. he is an example -- president

george bush. he is an example. his concern for inflation and employment is a very good one. the notion that we should say ok the you do not pay attention, we will handle that, you should try to prevent inflation invites them to impose an interest rate regime which would be unfortunate. i would contrast the federal reserve with the european central bank until recently with the unitary mandate of inflation. i think the federal reserve record in trying to deal with the balanced economy has been a better one. the european central bank has improved because they have almost explicitly been falling predict following the model.

many of my colleagues want to spend more on the efforts. the notion that the federal reserve is a powerful entity should says it would no regard to their impact, but they seem to be wrong. the country would benefits. >> let me simply say that i think we could address both. i do not think there mutually exclusive. i have a son that served in the marines. >> i was just responding to what you said. you are representative of a large group that talks about entitlements. >> needs to be a grand bargain. i think we agree on that. >> are we going to continue this debate? >> mr. paul is recognized.

>> thank you. over the last 30 or 40 years, i criticize the fed on occasion. congress deserves some criticism, too. this is a creature of the congress. we have the authority. we have the authority to pursue a lot more oversight. although the fed is on the receiving end, when you look at the record, 99% of the dollar value is gone from the 1913 dollar. that is not a good record. there are in stages of a grand experiment.

they have been basing this for hundreds and thousands of years. they always end badly. they always return to market based money. this is something different than we have ever seen before. it started in 1971. there are opportunities to be the issuers of the currency. we had way too many benefits than people realize. it has gone on for 40 years. people keep arguing that it is working. it is doing well. it is building a bigger and bigger bubble. they are the ones that predicted the housing bubble. we never hear from the keynesian economists saying what out. there is too much credit.

there is a housing bubble. the easy we get reassurance from the fed on that. -- usually we get reassert and turn the fed on that. the fed has given responsibility -- usually we get reassurance from the fed on that. the fed has given responsibility. it buys less than the next day. it is like having economic planning. it changes the value of the dollar every single day. this is why we have this in balance. the more debt we have, the more currency they can print. no wonder we are in a debt crisis. it is worldwide. it is something we never

experienced before. the conclusion will be for a sound money or if you win the argument and say we are great managers. we what the credit for getting us out of the time. within a few years we're going to know. i bet the market is martyr. nobody is smart enough to have a central economic planning. i'm waiting for this day. reforms have to come. they have serious discussion on monetary discussion. >> he is recognized for three minutes. >> i thank you the opportunity to substitute for my

friend. he is on able to be here because of a conflict. i am glad to see my friends president paul back from the campaign trail this seems like deja vu all over again since i was the chairman of the said committee. i got to go back to back with him quite often. since i and substituting, i think i can do something out of the ordinary today. that is praised the work of my good friend chairman bernanke for doing his job and not bowling to the political pressure of either the right or left of political pressure since

the federal reserve is supposed to be free of all of those influences. i think he has done a magnificent job of navigating us through some very difficult times even as we will experience today's hearings criticisms about the dual mandate which the chairman has already raised. the federal reserve can 92 a.

there is an easy transparency, involvement with the european union and the rest of the world. there is going to be called gonty of criticism to around. i am pleased to have this opportunity to say thank you on behalf of myself and hopefully some other members of the committee and members of private enterprise to believe that the fed has stayed steady, followed a course of action that has saved our economy rather than leaving us to the kind of the faults and problems that we could have experience. >> thank you.

they gave a very thoughtful statement. i think they would approve of your statement. i will pick up on what mr. watts said. you do have a difficult job. yet the challenges that face the country. the chairman has informed us that they will need to leave at 1:00 p.m. you will now be recognized for a summary of your testimony. >> thank you. am pleased to give the policy report to congress. let me begin with the economic

conditions. the recovery continues. it has been even in modest. they increase that the annual rate in the second half. in the limited information is consistent with growth proceeding in coming quarters at a pace that was registered during the second half of last year. he has seen some positive developments. pirro development has increased on average since the middle of last year. the job gains have been relatively widespread. in the public sector, laos by state and local governments have continued. -- lay offs by state and local

governments have continued. the unemployment rate is somewhat more rapid than is expected given the economy appears to be growing at or below the longer-term trend. continued improvement will likely require stronger growth in production. notwithstanding the recent data, it remains far from normal. it brings elevated long term unemployment near record levels. household spending advanced moderately in the second half of last year boosted by our fourth quarter surge that was facilitated by an easing of constraints related to the earthquake. the fundamentals continue to be

weak. household income in welt were flat. in the housing sector, affordability has increased dramatically. many buyers lacked a down payment in credit history required to qualify for loans. others are reluctant because of concerns about their income prospects and the future path of house prices. it puts downward pressure on house prices.

manufacturing production has increased 15 term since the recession and has posted solid gains in the middle of last year. real business spending rose at an annual rate of around 13% in the second houshalf of 2011. it slowed somewhat over the same period. the members of the board recently projected that economic activity in 2012 will expand above the pace registered in the second half of last year. the projections have a tendency of 2.2% to 2.7%.

this is lower than the predictions. they indicated the recovery have been somewhat slower than previously estimated. in addition, the strings have a way that the growth in problems in u.s. housing is a mortgage markets have continued to hold on not only construction but also household wealth in confidence. looking beyond 2012, and expect that activity will pick up gradually supported by a continuation of the accommodative stance. it is projected to remain closed. they do not expect further substantial declines over the course of the year. they continue to edge downward

toward levels consistent with the statutory mandate. to buy yourortant incoming information. participants agreed that strains in global financial markets pose downside risks to the economic outlook. investor concerns about fiscal deficits have led to substantial increases, stresses in the banking system and a reduction of economic activity in the year area. to help prevent strains from spilling over, at the federal reserve agreed to modify the terms of with other major banks.

and number of constructive policy actions have been taken in europe including the european central banks program to extend loans to european financial institutions. european policy makers agreed on a new package of measures for greece. critical fiscal and financial challenges remain for the eurozone, the resolution of which will require concerted action on the part of european authorities. further steps to be required for competitiveness and a number of countries. we are in frequent contact with their counterparts in europe and will follow this closely. as they discussed, inflation picked up during the early part to 2011. a surge in the price of oil put upward pressure on motor vehicle

prices pushed overall inflation to an annual rate of more than 3% or the first half of last year. as we expected, they appeared transitory. it is close to the average pace in the preceding two years. the committee anticipated that over coming quarters inflation will run at or below the 2% level. the central tenancy of participants for inflation in 2012 range from 1.4% to 1.8%. looking farther ahead, said they expected the subdued level to persist beyond this year. since they were made, a gasoline prices have moved up. it is a development likely to push up inflation temporarily. we will continue to monetary

markets carefully. longer-term inflation expectations is measured by indicators and appear consistent with the view that inflation will remain subdued. against this backdrop of restrained growth, the committee took several steps to provide additional accommodation during the second half of 2011 and an early 2012. the steps included changes to the guide and adjustments to the federal reserve holdings of treasury and agency securities. the target range remained at zero-1.4%. in august comment they committed the guidance and to economic conditions including low rates in a subdued outlook for inflation were likely to give

low levels to the fund rates through the middle of 2013. by providing a longer time horizon, the statement and it to put downward pressure on longer- term interest rates. at the january 2012 meeting, the amended it further, extending it over which they expect economic conditions to warrant low levels of the funds rate through late 2014. in addition to the adjustments, the committee modified the policies regarding the holding of securities. the committee put in place an extension program that combines purchases of longer-term treasury securities with sales of shorter-term treasury securities. the objective is to lengthen the average maturity of our holding without generating a significant change in the size of our balance sheet. removing longer-term securities should put pressure on longer- term interest rates and help

make market conditions more supportive of growth than they otherwise would have been. to help support conditions, at the committee decided to reinvest principle preseason and the holdings rather than continuing to reinvest in longer-term treasury securities. the seven the practice since august 2010. -- this had been the practice since august 2010. the plan to adjusted to promote a stronger economic recovery. how like to say a few words about longer run goals. the statement reaffirms our commitment to our statutory objectives given to us by the congress of price stability and maximum employment. the purpose is to provide

increased effectiveness. the statement does not imply a change. transparency is enhanced by providing greater specificity about our objectives. because the inflation rate is determined by monetary policy, it is appropriate for the committee to set a numerical goal. the fomc judges say an inflation rate of two% is measured by the price index and is most consistent over the long run with the statutory mandate. on maximum employment stands on an equal footing with price stability as an objective, the maximum level of employment is nongely determined by my no monetary efforts. the committee can estimate the level a maximum employment and use it to inform its policy

decisions. in our most recent projections, the estimates of the longer run had a tendency of 5.2%. the bubble a maximum employment in an economy is subject to change. it can be affected by ships in the range of economic policies. if they estimated that the maximum level had increased, we would adjust accordingly. the dual objectives are generally complimentary. the committee judges that sustaining a highly accommodative stance is consistent with promoting both objectives. in cases where the objectives are not complementary, the committee follows a balanced approach and following them purin.

there are potentially different time horizons a reds their projected to return. thank you. i will be pleased to take your questions. >> thank you. the biggest driver of the ever increasing deficits faces is the runaway growth. you have repeatedly stressed that the united states needs to return the federal government to a sound footing over the long term. 2013administration's political budget does nothing to reform these programs are written in their cost. we did address military spending what are some of the

consequences? if we do make major long-term changes, do you see immediate or short-term benefits? >> you talked about the importance of establishing the long run the stability. if you look at the budget office's, what you see is that under current law is that over the next 10 or 15 years you see an increasing exploration. it is not going to be sustainable. there is the ability for the government to maintain fiscal stability.

there are numerous risks. the most extreme case of a financial crisis. the interest-rate above levels and they normally would be. they also may borrow from foreign link lenderlenders. it is important to address this issues. one point i will make is that there may be some problems with the focus on the 10-year window that is part of the effective analysis of congress. many of the problems are becoming most severe after 10 years. i would ask congress to consider

not just the window, but the longer horizon implications of their policy decisions. i think that a credible plan put in place that would strengthen the view that the united states to be fiscally it sustainable, it would have benefits. >> thank you. you are a member of the financial stability oversight council which is charged with responding to threats of financial stability and mitigating the problem of too big to fail. the congress publicist a piece called "to big not to fail. -- "too big not to fail./"

" it will outweigh and what they may come of it. will the council consider the threat and financial stability that the cost and complexity of dodd/frank poses to the financial system and find out how to minimize that cost and complexity? how do you view the fed's role? >> i have been quite pleased with the functioning. we have met regularly. every principal comes to every meeting. we have extensive discussions among the senior staff. there's been a lot of interaction. there are a lot of benefits. we have talked about making sure our policies are as consistent as possible.

we want to avoid redundancy. we supported the basic goals of dodd/frank which are to create a more macro approach. it is very important to make sure that we get the best results. we need to make sure that we are putting out roles that are effective at reducing the risk of financial crisis and that minimize the regulatory cost, burst go the before the smallest banks. >> thank you very much.

>> thank you for that reputation of the notion that the board is causing these problems. it is bipartisan in nature. when the major contributes was an appointee sheila bear. i was at the treasury department yesterday and noted the portrait of hank paulson that has gone up. he noted his reforms that wanda and the financial reform bill. he was also there. i do want to go back to the deficit. the chairman said he agrees. he talks only about the entitlements. we talk about the level of reduction, if you are going to get that all all, you're going to be doing damage.

you start with overseas military expenditures. given the importance of a longer-term policy, there are policy preferences than i know you do not want to get into. from the macroeconomics standpoint, would it be different if they came from reducing the cost-of-living increases or for some change in the tax code? would there be any macro economic difference? >> the main thing is to retain sustainability. that means the deficit's come under control. it is important to make good decisions about how you spend your money. >> a want to go back to this question of the door mandates. the notion that somehow cannot do much about it. you have done this in practice.

about a year ago, they did a paper about how the recession was put to an end. he has been bipartisan. they talk about aggressive fiscal and monetary policy that are resulting in the beginnings of a recovery. only defied these into two components, we estimate that the latter was substantially more powerful. this assessment of how we did better said that monetary policies or even more important than the stimulus. this effort to denigrate the role seems to be greatly mistaken. i can without a chart to the press. as you look to look to page 17

of your report. there is a chart. that change shows that it measures monthly job loss. the worst monthly jobs loss comes in early 2009. we get one of the steepest rise is i have ever seen. he get a very substantial increase in employment. it takes a place in the numbers moving. it goes into a positive thing. it levels off. this starts to rise. not only does this show a very sad again position there's a

point now where the monthly increases in 2012 are equal to what they were in 2005. the total losses were so great. i also know that you correctly point out that we had done substantial improvements. it has been diminished somewhat by reductions in state and local governments. if hiring can -- have been even, the unemployment would now be under seven%. one of the major problems we've got that may keep us from a continued upward trends would be troubles in europe. the role that you in your agency

have played in helping to give europe to avoid greater troubles has been very helpful. it is striking that you are getting criticism for a series of very constructive actions. i want to express my support. the greatest threat to the american economy is in europe. i should know. the american economy is the best performing economy of the developed world. you have been developing that. the attacks and what the fed has been doing to try to keep you from doing the right things are a spot as disastrous a prescription. >> thank you. would you tell me whether or not you do your own shopping at the grocery store? >> i do. >> you are aware at the prices.

this argument that they're going up, the people on fixed incomes are really hurting. they're losing trust in government. this whole idea about pricing, if you're lonely $100.20 years and a few 90 back, you'll be upset. we pan back that money. if it is worth 20% less. nobody seems to do anything about it. it is very upsetting. if i do not give you your $400 back, i'm stealing's $10 funny. someone is doing well. it is very upsetting. in january, you said that you put a little bit of fun at people.

if you say it is too and i say it is 9, it is compromise. it is not hurt you unless you're one of the people that stick your money in the mattress. where are you going to put a? are you going to put it in a seedy and not make any money at all? it does not make any sense. is not encourage savings. i do want to make a point about prices. prices go up. that is that the insulation. that is one of the bad consequences of the inflation. it is one of the bad effects. he took over the fed in 2006. i have a silver ounce here. this ounce of silver bat in 2006 would buy over 4 gallons of gasoline. today it will buy almost 11

gallons of gasoline. that is preservation of value. that is what the market has always said should the money. money comes into effect in a natural way. it is money. why is it that we cannot consider the two of us an option. you a paper money. i the money should be honest. why don't we use it? why don't we allow currencies to run parallel? they do around the world. as much as i would like to do something with the fed, i say the fed will self-destruct eventually anyway when the money is gone. why wouldn't we legalize competing currencies? why can people put this in a the record of what you

have done and the last six years is destroy the value of real money. at the same time a money is preserved. a competing currency, we already have a silver eagle. it is legal tender for a dollar. some people say it is legal tender, it is a dollar? they use it and they get into big trouble. did the government closes them down. you can get arrested. what would be around with talking about competing currencies? this is something that i think would be a compromise and that we could work along. >> it is good to see you again. [laughter] just one word on the inflation. these are independently constructive. i think they're done in a serious and thoughtful way. on alternative currencies, and nobody prevents you from holding

out the silver or gold if you want to. it is legal to do that. you are privately find to hold other currencies. in that respect, you can do that. >> that >> but that is not money. and when you pay taxes, you have a point, and you pay a capital gains tax. but when you settle a lawsuit it is never settled in the real contract. that is nothing your money. when it is illegal to use it. but to do it, you would have to repeal the illegal tender laws, you have to legalize it, you'd have to get over the sales taxes and capital gains taxes. even in mexico they are talking about this. they are trying to have competing currencies that have been wiped out too many times. with inflation that wiped out the middle class, they are allowing people to start to save in the silver currency.

i hope we can move along in that direction because we should not see any overwhelming changes for all the sudden. people could vote on it. maybe they will give up on the federal reserve and vote on real money. >> i would be very happy to talk to you about it. >> thank you. >> let's make an announcement on the democratic members. we will follow it on the policy side. our policy will be, when mr. bernanke canvasback for the second appearance this year, -- comes back for the second appearance, we will lifstart of where we left off. they will ask the second question when we start. >> it is nice to see mr. paul and chairman bernanke getting along so famously. ms. waters, we hope you will continue. >> thank you. i am interested in housing. everyone agrees that this economy is not going to rebound

until the housing market is vigorously operating. i want to find out a little bit about what is happening with the services, and maybe something about principal reduction. on february 9, the federal reserve assess monetary penalties totaling $776 million on the five largest markets services. pursuant to the orders you issued in april, 2010. these five services also happen to be part of this element between the state attorneys general and the federal government announced on the same day. the penalties paid by the services under the consent services can be satisfied by loan modifications that they made under the state ag settlement. in other words, unless the services that fail to comply with the summit, with a.g.'s there will be no monetary penalty for servicing penalties

under the consent orders. but we do not know all the details yet because the state ag settlement has not been released. it can satisfy at least some of the requirements of the '87 by writing down loans, including investor loans and loans that they service. the will services -- eight servicers be able to write down all loans in response to the unsafe and unsound practices? that is the first part of my question. >> and no, we are part of the overall agreement. and by the way, we have just released our letters of engagement and action plans for those companies that we oversee. the banks will have to verify that they have reduced their own holdings, their own assets by the amount that they are taking credit for.

and if they do not meet the full amount, then they will have to pay the rest in cash. >> on the issue of whether to pursue principal reduction modifications on residential mortgages, your report to -- your federal reserve white paper result -- report acknowledges some of the negative equity, but never endorses the stabilization strategy. and with that said, i wanted to ask you what you thought of a speech by the new york fed president trebek shafter your report came out. he suggested loans could minimize the loss of value on the delinquent loans that they guarantee and a shared appreciation approach could help give certain homeowners a windfall. he also suggest a limiting the principal reduction to people who are current on their payments. and what you think of those proposed by mr. ladley in his

speech? -- mr. duprey in his speech? couldn't this shared appreciation approach discourage homeowners from defaulting when they could otherwise pay their mortgages? >> first, the fed has no principal reduction policy and we were careful not to make expensive to recommendations -- make explicit recommendations. i think is a complex subject. it is not that we disagree in the goals. we want to reduce foreclosures and a link with these. the one to help people who want to move to be able to do so. there are a number of alternatives in different situations. for example, if the idea is to be able to move, then a short sale may be the biele to do it. if the goal is to reduce payments, then a loan modification might be the most effective way in terms of the dollars spent. there are some interesting questions from the perspective of the policy about the best way

to proceed, whether that is the best cost-effective approach or not. >> we are interested in principal reduction, many of us. and you note in your report that the principal one modification for all underwater bar wars would be too costly, but identifying those without print production is too difficult. if you are not supporting principal reduction and if you are not talking about how homeowners can get out from under this foreclosure problem, what are you suggesting we do to improve this housing market? >> we discussed a variety of things in our white paper. again, with the proviso that our goal was to provide background analysis that would help congress make wise decisions. for example, we have a big overhang of homes in the market.

one idea that we have discussed is moving real estate owned to rental. that is something that the fha has begun a pilot program on. we have tried to identify some of the barriers to doing that on a large scale. that is a potential direction. there are a lot of issues with the tightness of mortgage standards where people are not able to get mortgage credit, even when they meet the gst standards. we have talked about clarifying the representations and warranties that are part of the mortgage contract. fhfa and the gse's have looked at that as well since early last year we have put consent orders on all the major servicers requiring them to improve their practices, their principal points of contact for individual

borrowers to provide more counseling, but controls and so on. there are a variety of things to be done. not all of them are congressional. some of them are old -- are our own responsibilities as a ators. >> mr. hand tooling is now recognized for five minutes. >> -- mr. hensley and is now recognized for five minutes. >> you describe the recovery has moderate with his work terms. you add in those that are underemployed, those that have left the labour force due to giving up, the true unemployment rate is 15.4%. half of all americans are now classified by the census bureau has either low-income or in poverty and one in seven have to rely on food stamps. from the perspective of my constituents, then use of the

term modest is, indeed, modest. i would like to return to the subject of our structural debt. one of the major players in our economy is "the major driver of our long term liabilities." everybody knows here that is medicare and medicaid and our health care spending. nothing comes close. that, of course, was our president, barack obama. i would suggest to the ranking member, when convenient, he first debate the president on the subject before he debates us. i would ask the simply, mr. chairman. even if we cut the pentagon by 25% -- make it 50%. have we solved the long term structural debt crisis in our nation? yes, that is to you. >> you refer specifically to health care. this is an area where costs have been going up much faster than gdp. the output of the health-care

industry is not that markedly better than other countries. clearly, not only for fiscal issues, but also private sector productivity is an important issue to address. as a matter of arithmetic, it is true that over time, increasing shares of the federal government will be going to medicare and medicaid and other costs related programs. it is important to address that. >> in page 7 of your testimony, in dealing with your dual mandate, you said that the maximum level of employment in and the economy is largely the a -- largely determined by non- monetary factors. in my remaining time i want to pursue this thing. i agree with the assessment, but my question after three years and the most highly accommodative monetary policy in the nation's recent history, and the announcement and we'll continue this policy for two more years -- i know according to your own statistics, companies are now sitting on $

2.1 trillion in excess liquidity. banks have $1.50 trillion and liquidity. it seems to suggest that perhaps monetary policy is not the challenge that we have today. it recently, richard fisher made me aware of a harvard business study showing the greatest impediment to job creation been taxation, red tape, uncertainty. a recent gallup poll of small businesses shows that roughly half believe that government health care regulations is what is causing them not to hire more workers. you have a job creator after a job creator, like bernie marcus, and home depot, saying, i can tell you today that the impediments the government imposes are impossible to deal with. home depot would never have succeeded if we tried to start today. i would add the voices of just about every small business person i have talked to in the fifth congressional the chicago

-- congressional district of texas that i represent. it begs to the above questions. number one, the limits of efficacy of monetary policy, and frankly, the risk as well. it was brought up earlier that we have retirees that are being squeezed, pension funds, sabres. certainly you know that community banks are being squeezed. many are lending out on the risk curve. i am very grateful that you have shown your concern and anxiety over the structural debt, but to some extent, you are one of the major players by creating these artificial rates that i would argue mask the true cost of our fiscal folly. and to a certain extent, by keeping rates artificially the slow, aren't you simply postponing and exacerbating -- this low, are interested in postponing and exacerbating the unintended consequences another

asset bubble -- of another asset bubble? and you share these consequences -- these concerns? >> you raise a lot of good point. first, i do believe the monetary policy has been constructive in bringing employment back toward the maximum employment level. congressman frank, ranking member frank, shredded -- pointed out the sharp move of march, 2009. since qeii of 2010 there have been 2.5 million jobs created. it has been constructive. but you are right, in terms of what long term employment productivity gains can be sustained by this economy, monetary policy is not the answer. the answer is certainly, the private sector, but in partnership with other economic policies, ranging from trade to regulate -- trade to regulation

to education to tax structure and so on. i am agreeing with you that monetary policy is not a panacea that can help offset cyclical fluctuations and financial crises like we have had. but the long-term health of the economy depends mostly on the decisions taken by congress and the administration. >> thank you. miss maloney? >> thank you, and welcome, and thank you for your public service. in your testimony today, you had some encouraging points, specifically that in january the private sector gained over to its 60,000 private-sector jobs -- 260,000 private-sector jobs. in the last two months we have seen a game in private-sector employment, over 3.7 million new jobs gained.

i believe your chart that the ranking member pointed out is very graphic. we were losing 700,000 jobs a month when president obama took office, and we have been moving forward with economic recovery. i thank you for your leadership, really, your brave and innovative leadership during this time. we are still facing many, many challenges, including the challenge of the long-term unemployed that seems so persistent and deep and strong. over 40% of those unemployed have been so over six months. i would like to know if you feel this is structural, or is this something we can address with improved conditions in our overall economy? and i am deeply concerned about the fact that we are facing the largest income disparity in the history of our country.

and that the gap seems to be getting larger and larger, and the challenges for the middle and moderate and low-income people become stronger for them to make progress. the administration has announced that their number one priority is creating jobs, growing our economy. what are the things that we could accomplish in order to stabilize our economy and create the conditions that would improve the opportunity for more job growth? i obviously believe in a dual mandate. and specifically, do you think that at this point in the cycle that we need the kind of budgetary tightness or shrinking of the government that my friends on the other side of the aisle are advocating for? doesn't it make more sense in terms of our fragile economy to have more fiscal stimulus, to

pass the transportation bill, to help or create jobs and improvements in our economy? and again, thank you for your service. >> thank you. it is a very worrisome problem, the very high levels of long- term unemployment. as you say, 40% or more have been unemployed for six months or more. it is highest by far in the post-war time frame. i think that happened because the decline in the economy was so sharp and so severe in 2008 and in 2009 that firms, in a panic stricken know, just cut many, many workers. many of those people have not found work in now maybe three years. this has a lot of potentially serious long run consequences. for individual workers, if you lose a job and are out of work for a long time and you find a new job, it will typically be a much lower paying jobs or much less secure job. the concern in particular, is

that people that are out of work for six months or more will be starting to lose skills, will be losing attachment to the labour force and will not know what is happening in their field or off industry. that is one of the reasons for urgency to get jobs created and get things back to normal for labor markets. that is something that we are paying a lot of attention to. there is obviously no easy solution. if you ask about fiscal policy and i have tried to make three points about fiscal policy. one, as we are talked about, achieving long run sustainability and providing comfort to the public and the markets that deficits will become under control over a time frame. that is very important for confidence and for creating more support for the recovery. at the same time, i think you also have to protect their recovery in the near term. under current law on january 1, 2013, there will be a massive fiscal cliff of large spending cuts and tax increases.

i hope that congress will look and -- and figure out ways to achieve the same long run fiscal improvement without having it happen all in one day. attention should be paid -- >> but mr. chairman, my time is running out. in some ways, monetary policy has replaced fiscal stimulus. when the recovery happen faster if we had -- wooden to the recovery happen faster if we had a balance between the two? could you comment on the need for more fiscal stimulus? or do you believe we need more? >> if you do that, it needs to be part of a two-handed plan, so to speak. the actions that you take in the short run, whether they be infrastructure or education or tax reform or whatever they may be, i hope that they are considered and wisely chosen. but it is also important that we keep in mind a long-term necessity of making fiscal policies sustainable.

you need to think about those two things together, i think. >> thank you. >> the jaret this time recognizes the chair of the subcommittee -- the chair at this time recognize the chair of the subcommittee on financial institutions. ms. baker has done some very good work on housing issues. >> thank you, mr. chairman. i would like to return to housing at the moment. today, after fha and a rhs and fannie and freddie and the federal government and taxpayers, it is nearly at 100%. it is a 90% of residential mortgages. is it healthy for the economy? and what are the barriers for private capital of in lending and the secondary market for home loans? >> you are correct that government-supported agencies are now the -- pretty much the entire securitization market. they do not make all of the

loans, but they do securitized and by most of the mortgages in the economy. obviously, that is not healthy. we would like to have a more diversified system with greater private-sector participation. we are not seeing that. the reasons are not certain. i think, in part, the private label so-called mortgage markets are still recovering from the shock of the financial crisis. there is still a lot of uncertainty about where the housing market is going. therefore, the uninsured securities that are put together by non tse -- gse securitized are not as appealing as they were before. there is some uncertainty about the from work -- regulatory and legal framework for securitization in the future. there are a lot of reasons. we would want to have a more diversified system. >> does daud-frank help or hurt the entry of private after will

-- private capital into the market? >> it is important to create more certainty, and we are not there yet. there is still discussion -- for example, the federal reserve and others are still discussing a requirement. it would be helpful to get greater clarity. i think it also would be helpful to get greater career -- greater clarity about what the long run mortgage market will be. there has been discussion in this committee about gse reform and covered bonds and other types of structures. there is still a lot of uncertainty about which way that will go. >> thank you. the dodd-frank effective date for the vocal role will be july 21. we have heard that regulators think this is a daunting task to complete by then. do you have plans to phase in any implementation of the

volcker role? >> yes, the statute allows for a two-year transition time frame. we will be giving institutions adequate time to adjust and adopt -- at that to whatever ruled -- adapt to whatever role is put out. >> thank you. i have heard from some of my constituent insurance companies that fed staff has been deployed to insurance companies. what is the purpose of their presence, given that the insurance companies are regulated by the states? is the fed simply increasing its insurance expertise? or does dodd-frank have the authority to regulate insurers? >> no, we do not have the authority to regulate insurers, and less in the future a systemically critical company is so designated -- unless in the

future a system andically critical company is so designated. >> what i'm alluding to is there are insurance companies where 10 of your staff have just kind of move in and taken a presidency. they do not exactly know why they are there. >> i will find out and communicate with you. >> i appreciate that. >> what kind of discussions are you or your staff having with the new federal insurance office, which was designated to be a federal insurance expert on national and international issues? >> we have been interacting with them on fsoc. on the previous question, it could be that they have -- that they hold true spirit in which case, we would have some

oversight -- that they hold at thrifts. in which case, we would have some oversight. >> thank you. i yield back. >> while credit conditions for small businesses have improved over the past year, a number of smaller loans, loans of $250,000 or less, remained below pre- recession levels. as you know, these are the types of loans that are important too early stage and start-ups -- are important to early stage and start-ups. do you think this will ever fully respond -- redound to the levels before 2007? >> absolutely. there are reasons that they remain lower. first, given that the economy is not that strong, demand for loans is not quite what it was. secondly, of course, lending standards have tightened since before the crisis, and some of that is appropriate because as

you know, credit standards were on the whole to recede before the crisis. -- too easy before the crisis. there is someone in that will, no doubt, improve over time. -- there is some lending that, no doubt, will improve over time. but the pendulum has swung a little bit too far and we are certainly working with banks, particularly small banks. i will reiterate the point that it is incredibly important for banks to take a balanced approach and for examiners to take a balanced approach. so that on the one hand they take -- make safe and sound loans, but they are also lending where it is important to to borrowers. >> if you look at the loans that banks are making, they are the big loans, because they are unprofitable loans. in the regard, this is why we passed the small-business lending bill, where the feds

were lending community banks money that they used to pay tarp money back, but they did not pay what we were expecting them to make. given that, you think it is still important and a meaningful role for the federal government to play in providing lending programs that will fill the gap that exists from the private sector? >> we have had a good relationship -- the fed has had a good relationship with the sba, the small business administration. there were some predict -- additional provisions during the crisis that gave them some flexibility and more funding. that might be an area worth looking at. >> under your leadership, the fed has significantly increased its commitment to transparency, holding more press conferences and releasing interest rate forecast for the first time in

its history. while these policy tools are good for the financial markets and wall street firms, they are of limited use to the general public. would you consider we listing guidance for small households and businesses and what changes to monetary policy means to them? >> that is an interesting idea. we have many speeches, and i'm here giving a report to congress about monetary policy. i would like to think about what that would look like. but obviously, we are trying to communicate to the broad public. i have been on some tv programs and the like. and in fact, later this spring, i will be giving lectures at george washington university, which will be available to anybody on line. about the fed and the financial crisis. we are working to camp -- to improve our communications and your suggestions are more than

welcome. >> thank you. >> thank you. mr. cotter. >> thank you, mr. chairman. we heard much talk about a wall street reform bill, and we will continue to. it was said that the bill was bipartisan and that the nature of that should not be overlooked. i would like to put -- to point out for the record that the bill is so bipartisan is called dodd- frank. [laughter] mr. bernanke, thank you for being here. in your testimony and written remarks there are some things coming from michigan, a very hard-hit state that is struggling to come back in this economy. there are -- there are some things that bear repeating. on page, i believe, two. "the economy appears to have been growing at that time frame or below its long-term trend. mdot -- continued improvement in the long-term market will require stronger growth and production. notwithstanding the recent data,

the job market remains far from normal. the unemployment rate remains elevated. long-term unemployment is still near record levels, and the number of persons working part- time for economic reasons is very high. the fundamentals that support spending continue to be weak. real household income and wealth were flat in 2011, but access to credit remained restricted for many potential borrowers. consumer sentiment that dropped sharply last summer has since rebounded, remains a relatively low." my concern is that -- just a question about how this

operates. it says on page 6, the target range for federal funds for the rate remains at zero to 0.25%. when that type of range remains in effect, does that have an affect on the personal savings on interest -- on individuals who bank debt? and if that is the case, does it stop them from getting a higher rate of return? with that not constitute essentially subsidizing the operations to try to get money to the banks, or to other people who are still not getting the credit? and that's the lead to the horrible things i started off my remarks with. >> on the latter point, we are certainly paying attention to the effects of lower interest rates, not only on sabres, but other financial interest-rate and the like. the banks claim that reduces their net interest margin. is not profitable thing from their perspective.

from the point of view of savers, though, for most of them, something on the average of 10% of all savings for retirees is in the form of fixed instruments like cd's. remember, people also own equities, money market funds, mutual funds. they have 401k oppose the and a variety of things. -- they have 401k's and a variety of things. those assets depend on how strong the economy is. in trying to strengthen the economy, we are actually helping savers by making the return tyre, and we can see it in the stock market. >> excuse me, but this is a very important point. i personally do not subscribe to the point that because it is 10%, it would be ok to have the rate of return artificially lowered. i think you are saying is that,

yes, they are subsidizing this, but in the long run it is better for them because you believe it will lead to economic growth. although -- and this will get to the second part of my question -- that very much remains in doubt, doesn't it? >> well, the economy -- the economy has been recovering. i believe the policies will help the economy recover. again, you cannot get good returns in the economy unless you have good growth. the other thing we are doing is we have set an inflation target and we are committed to keeping inflation low and stable, and that is also good for savers because it is the adjusted rate of inflation that matters in the end. >> if i can give to the and, in short, it is almost as if you have decided that you will determine what their potential interest rates in their return will have been into the recovery of the economy. and by year on a mission, it is at or below the long-term trend. -- buy your own admission, is at

or below the long-term trend. we are still struggling to grow the economy and get jobs back. and we do not see long-term unemployment dropping any time soon. it does not seem to be a good investment. >> we are not spending anybody's money. it is arguable that the interest rates are too high, that they are being constrained by the fact that interest rates cannot go below zero. we have an economy where demands fall far short of the capacity of an economy to produce. and we have durable goods spending that is far less than the capacity to produce. we cannot make interest rates lower, of course. they can only go down to zero. again, i would argue that a healthy economy with good returns is the best way to get savers -- you know, get returns to savers. i would make one observation that was in the news this

morning, the bank lending increased last quarter, the fastest rate since the recession. >> thank you. the housing market declined in, 19 of 22 markets. we are seeing some signs of deflation. >> mr. chairman, i just wanted to let my friend knows that protocol has been to name bills after the people who have the jurisdiction, which is why the bill was called dodd-frank. we have the majority in the house and the senate when a west -- in the house and senate. when it was split, it was our brains oxley, which he does not like anymore, i guess -- sarbanes oxley, which he does not like any more, i guess. we are following the same

protocol. >> is the gentleman will yield. of course, you know, we did not vote for it either. >> the name of the bill that was voted for his part of the bill. you lost that vote. and nobody has reversed its yet. >> if the gentleman would yield. >> let me get on to what we are here for. chairman bernanke, one of the problems with setting these horizons out so far is that when you said -- said kennecott and accommodative an policy our, the private sector starts to expect that. and if circumstances change, crawling back off that limb

could be very difficult from a private sector perspective. what if things do change substantially in a different direction? i assume the fed has given itself enough leeway to say, we can go back to a more aggressive, less accommodative policy, i presume. is that correct? >> yes, sir, the policy is a conditional policy. it says, based on what we know now, this is where we think we will be. if there was a substantial change in the outlook, we would have to adjust accordingly. >> good luck, if it does. i know the private sector relies on accommodative policy. we do not need to go any further on that. i just want to make sure that everybody knows that you can go

in the opposite direction. the fed has the authority to go in the opposite direction. on page 5 of your statement, you talked about continuing to monitor energy markets carefully. one of the real uncertainties out there is gas prices. and the extent to which we rely on gas prices as an indicator of how the economy is going, and what we can do in our own individual lives. are there any things that we can do, as congress? i know you cannot do anything as the fed, but are there things that we can do? is there a menu of possibilities that we might consider on the energy side? >> there are many things that you can debate about long term

-- about, long-term development of natural resource, hydrocarbons and so on. in the short run, i think the main problems are coming from some supply disruptions, or the fear of supply disruptions, particularly iran. the best thing to do would be to resolve that situation, but obviously, that is well beyond my capacity. or anyone's capacity probably. i'm not sure what can be done to provide substantial relief in the very short term. >> i guess, president gingrich is getting ready to tell us at some point out to solve this problem, although he did not solve it as the speaker. maybe he thinks he can solve it that way. let me ask one other question. europe, obviously, is the major

-- even more major than oil prices is what happens in europe. are you satisfied that they are taking steps in the right direction to satisfy their problems? and have we done as much as we can reasonably do to help with that? >> they have taken suspect -- some positive steps recently, as i mentioned in my testimony. the ecb had a long-term refinancing operation today, it 3-year lending to the banks. they are still working to get the greek deal done. a number of countries in fiscal trouble have been taking strong steps to try to improve their budget balances. there has been some progress on a fiscal contact whereby there will be more coordination among countries. but there is still a lot to be done, in the short term. there still needs to be more effort on providing so-called firewalls providing financial

backstops in case there is a default or financial contagion. in the long run, a very serious problem that has not been solved is that many of these countries are not only physically challenged, but they are not competitive. they have large current account deficit, and their costs are too high. that process could take a long time to fix. >> thank you, mr. chairman. i yield back. >> let me point out one thing about energy that we all need to look at, and that is natural gas. i think it was 1985 we estimate reserves. tcf's of it is now 2500. we ought to take advantage of the price differential, and i know we do that with natural gas vehicles. it could be a game changer. miss hayworth. >> thank you, mr. chairman. and welcome, chairman bernanke. it is always a pleasure to hear you, because you are eminently

sane about all of these issues. i have heard from our life insurers and providers of annuities that they are very concerned, as you can imagine, about an interest-rate squeeze that may occur in the future. it almost feels predictable in certain respects. how do you recommend that they proceed, that they anticipate the challenges that we are facing because of the way in which we have to have accommodative monetary policy? >> we have had numerous discussions with insurance companies and pension funds and others. there certainly is a problem in the sense that under current accounting -- accounting rules, their obligations to put funds are with lower interest rates. i believe that is a problem and when we have discussed with them.

going back to my discussion with mr. carter on the other side, we are trying to strengthen an economy that will give them higher returns on their portfolios. it cuts both ways. i have talked to insurance companies. they recognize that lower interest rates are not a permanent condition. at some point, the economy will get back to a situation where interest rates can be more normal. we are trying to help the economy and we recognize there are some side effects of lower interest rates. we are in attendance to that. our first responsibility is to meet our dual mandate and try to support the economy and keep inflation near it started. -- its target. >> a similar question could be asked on behalf of our community banks who are concerned about their long-term loans that are being offered at very low interest rates. a same sort of approach, i assume? >> yes, i actually discussed

this point in a speech i gave a couple of weeks ago at the fdic. i made essentially the same point, that the net interest margin has two parts, the difference being between deposit rates and saif rates, but also with the saif rates and loan rates. the difference depends on a healthy economy. in the short run, the cost should be worth if we can get the economy moving again. >> chairman, if i may, a bit broader question, or perhaps, more of a 30,000 ft question. you have many, many times, including here today, pointed out how important it is to have federal policy that reflects the impending crisis that we face in terms of managing the debt, and how that weighs on economic growth. do you ever feel as though you

are talking past your administration and congress, that we are talking past each other? how can we make your message resonate? people like me are very sympathetic to it, obviously. >> these criticisms are easy for me to make. i do not have to deal with the politics. i know they are very difficult. it is always hard to explain to people why you have to tighten your belt one way or another. on the one hand, educating the voters is an important thing, and making sure people understand what the trade-offs are. if they understand it, there will be more so that it to the tough choices we face as a country. but i also think there is some scope for bargaining within the congress. we have had some very close calls recently, in terms of making progress. as i mentioned before, this fiscal cliff on january 1st,

that might prove an opportunity to negotiate a better, longer term outcome. we will see. but i think those are the two directions, one, debates in congress with a set of goals, for example, and the other is to get voters on our side after education. >> i sympathize very much with that point of view and have said so myself as well, that is about education and awareness. the fiscal cliff to which you refer would be the normal -- enormous tax increase that we face? >> a number of measures, including both tax increases, expiration of the payroll tax cut, the sequestration that comes out of the super committee negotiations, all of those things are hitting on the same day, basically. >> thank you for emphasizing how important that is. thank you for your great work.

i yield back. >> a very good point, mr. chairman. and miss hayworth. i appreciate your thoughtful questions. >> thank you, mr. chair. mr. chairman, i want to pick up where congressman what left off. i am the lead democrat on the europe eurasia subcommittee, so europe is very much on the mind. we just recently came back from a trip over in europe where there economy was much discussed. i would like to ask, too, because i know i have limited time, two questions and see if i have anything left thereafter. first, given the close linkage between our economies, it seems access to the fed's swap lines is crucial in times of market attention. can you discuss how american companies benefit from the

ability for the fed to swap lines with foreign central banks, and the difficulties u.s. companies and workers would face if those swap lines did not exist? and secondly, could you also tell us what would be the exposure of u.s. financial institutions to european sovereign debt? can you categorize our financial systems -- would you categorize it as exposure that is significant? >> very good questions. on the swap lines, european banks have -- and do significant business in dollars. they need dollars in order to conduct that business. they were having great difficulty accessing those dollars. what those dollars are used for -- about half of them are for making loans in the u.s. they directly affect credit of of-credit availability in the u.s., and then they therefore affect households and businesses in this country. the rest goes for trade finance, which helps facilitate

international trade and prosperity. it creates confidence in the dollar that those markets are working properly. these swap lines seem to be very successful. they have reduced stress in the dollar funded markets, and it looks at this point that demand for those swaps is starting to go down as stress has been reduced. in terms of u.s. financial institutions, we are monitoring it very carefully. we continuously look at bank exposures. we are making them do stress test of european banking exposures. our initial conclusion is that direct exposure to european sovereign debt is quite limited c'mon particular -- quite limited, particularly on the periphery. exposure to italy and spain is somewhat greater, and obviously to the smaller three countries. we think the banks generally have done a pretty good job of hedging the exposures that they

have to sovereign debt to the extent that it is european banks. the sec has provided guidance with their exposure to the market and to the public. having said that, if there was a major financial accident in europe, the main effects on our banks would not so much be through direct exposure as it would be through general contagion, flight from risk- taking, loss of faith in the financial system, economic stress and so on. i think there is a significant risk, even though we have done what we can to make sure banks are managing their direct exposure to banks and sovereigns in europe. >> [inaudible]

>> we are obviously very integrated. about 2% of our gdp is in the form of exports to europe. europe has -- if you're has a significant slowdown, we will feel that. -- if europe has a significant slowdown, we will feel that. our companies are highly integrated. you think of companies like ford and gm, which produce their as well as in the u.s. however, we think that europe has a mild downturn, which is what they are currently forecasting, and if the financial situation remains under control, the effect on the u.s. might not be terribly serious. at least, it probably would not threaten the recovery. but nevertheless, it would have an effect, certainly. >> one of the things that we discussed over in europe was the fact that they said that greece equaled about 2% of the economy. and they were going to keep them so they would not have to

lose the europa, but they said if they did have a great default, there would not be contagion. they thought it was pretty much contained and they were looking at what was happening in italy. i would like to get your opinion. if greece were to default, the uc the possibility of contagion to italy and portugal and -- and do you see the possibility of contagion to italy and portugal and spain? >> if you would just give a brief answer. >> i would say that leaving the bureau would be a -- be very difficult, and an uncontrolled disorderly default would create problems. >> the jump from new york is recognized for five minutes. >> thank you, chairman. if i could switch gears a little bit and ask -- obviously, the volcker rule is a topic of discussion in the financial services industry. in section 619, it becomes effective this july. just last month, the federal government's role unmentioned

that it probably would not be completed until january, 2013. when do you expect the volcker rule to be finalized? and do you expect there will be a reproposal for public comment? >> i do not think it will be ready-ready for july. just a few weeks ago we closed the comment timeframe. we have a lot of difficult issues to go through. i do not know the exact date, but we are working on it as fast as we can. as i understand it, the volcker rule includes a two-year transition time for in, starting in july. for example, starting with the interchange fee, where we were also laid relative to the statute. we will make sure that firms have adequate time frame to adjust their systems and comply with the rule. i am assuming that you will not be strictly enforcing a rule that is not in place yet.

-- >> i am assuming that you will not be strictly enforcing a will that is not in place yet. it does leave some ambiguity in market writing. -- market underwriting. that contributes to uncertainty. i would emphasize that bringing uncertainty to the market's should be part of the goal. >> it is. >> thank you. mr. volcker was unable to give a clear definition. it was "i will know it if i see it." that is about as uncertain as you can get. do you have a definition of what proprietary trading is? >> it is short-term trading in the financial assets for the purposes of the profits of the bank itself, as opposed to the customer. that is my best definition. of these the, it is hard to know in every case whether it fits that definition or not. >> but you believe this is the

definition that regulators will use in enforcing the rule? >> the most difficult distinction is between proprietary trading and market- making. in market-making, firms often have to buy assets, which they hold for a short time and then they sell to a customer. the question is, the date by the asset for proprietary purpose for a market-making purposes -- and did they buy the assets for proprietary purposes or a market-making purposes? we will have to determine those. >> switching gears again, i am concerned that the president proposed budget for 2013 could lead to massive increases in capital gains, i think, as much as triple from 15% to almost 45%. i believe a dramatic rate increase like that will discourage investment in a entrepreneurship. over the long term, i think it would be detrimental.

your views on increasing capital gains that much significantly, do you think it could have a negative effect? >> a tax on investment, that is for sure. i have been advocating, at least, consideration of doing some more comprehensive type of reform. we have a lot of inconsistencies, let's say, between the way corporations are taxed and the way private individuals are taxed. for example, if you eliminate the deductibility for interest at the corporate level, and then you still have private individuals paying taxes, then you are double taxing interest i think these decisions are ultimately congressional decisions. it would be useful to put this all in a broader framework and try to find a reform that both the corporate and individual tax code that fits together and achieves both the equity and efficiency goals. >> from a purely economic

boycott -- point of view, from an economist's point of view, we are seeing that in the u.k., they raise the top fed -- top rate to 50% and in the first month they took in less revenue than before the increase. is it logical to say that is a strong possibility if we were to raise our rates substantially and see the reduction? >> yes, in the short run, because people can choose when to realize a capital gains. if they decide to delay their realization, that could affect the short run. in the long run, in my be less elastic. >> i see my time is expired. i will yield back. >> the gentleman from texas. >> thank you, mr. chairman. chairman bernanke, i want to thank you for coming before our committee and giving us your thoughts. i would like to thank you and your staff at the federal reserve for offering your insights on the dry and in the

housing market and the economy in the recent white paper. that paper explains that foreclosures are considered dead weight losses to the economy. meaning, they cost everyone, the banks, the government, families, and society. i think there is no better word for the glut of vacant properties in my district in deep the south texas. i think they are being dragged by this deadweight of foreclosed homes and the head winds of negative equity. project rebuild would put americans to work, refurbishing and repurchasing currently foreclosed properties to help ease the shortage of affordable housing options. my question is, if programs such as the real estate loans -- the

real estate owned to read program, and the project rebuild would be enacted and fund it, what do you predict would be the effect of not all of the housing market, but the rental market? >> first, i agree that foreclosures impose a lot of cost not only on the family, the borrowers and the lending institution, but also on the neighborhood and the community and the national housing market. >> that is right. >> it is very costly. i am not that familiar with the specific programs you are referring to. we have discussed in the white paper the idea of rental. it would seem to make sense to remove artificial barriers to let the market do what it seems to want to do, which is giving higher rent and low house prices. it seems like it would make sense to take some of those empty houses and put them into a rental. are doingw, the gse's a private program to see if that

will work. the issues have to do with whether or not there are enough foreclosed homes in a local area. is there refinancing available for mass purchases of homes? are there supervisory restrictions on banks that would on banks that would prevent them? there are some areas we could remove that might make this -- we might see the private sector undertaking this. part of that would be refurbishing and repairing dilapidated homes. >> the biggest barrier ic has been the lack of community banks giving loans to those who want to carry out those programs. let me move to another question that is of great interest to me. i have served as ranking member of the higher education subcommittee. i am concerned about the cost of higher education and the increasing amount of debt that our students are burdened with. last year, students received

more than $100 billion in college loans. the spending is expected to track -- pass $1 trillion. default rates on college loans have jumped up. i would like to hear inside on the possible effects of such an unprecedented student college loan debt on our economy and the possibility of a student loan bubble crisis here in our country. >> student loans are becoming a large category of loans. my son in medical school recently informed me that he expected to have $400,000 in debt when he graduates from school. i do not know about a bubble. going forward, most of the new lending is done by the federal government. there could be losses that might affect the taxpayer. that program is not adequately

managed. i think it does require some careful oversight. there may be ways to -- on the one hand, it is good that people who do not have the means can obtain the means to go to school. that is important. student loans play an important role. one might consider whether there are ways of tying up repayment to financial conditions, for example, as a share of income earned. there are various ways to look at have to repay student loans that might better adjust the cost of the loans and the capacity of the student. they are a good thing in principle. the program has to be well managed. it has become a federal responsibility to do that. >> the time has expired. >> thank you.

>> the gentleman from texas is recognized. >> thank you. thank you for being with us here today. allen nation's fiscal health is in bad shape and only getting worse as medicare and social security begin to absorb all of the baby boomers entering into the system. former white house budget director and the senate budget chair said that while the budget stabilizes debt over the next decade, the real problem arrives after as entitlement cost spiral out of control and revenues are inadequate to deal with a wave of retiring baby boomers. you said that congress needs to act now to put our house in order. would you agree that in order to do that, congress must address the and sustainability of medicare and social some -- the and sustainability -- un

sustainability of medicare and social security? >> entitlements are one major category of spending. i do if congress to not be constrained by the 10-year budgeting window, but to think further. the lunker in advance economic changes, the more time there is for people to adjust to them. >> so your answer is yes. >> especially on the health care side, costs are very high. >> in your opinion, was the budget passed last year a serious effort to address our nation's fiscal problems? >> those are congress's decisions. my role is to encourage you to address the long-run

sustainability issue. >> i hope i'm not putting you in a political situation. i highlight the word serious effort. would you say that any legislative effort to deal with our nation's long-term fiscal health that is not addressed medicare and social security is not a serious proposal? >> it is a fact that health care costs, medicare and medicaid, have become a large part of the federal budget. unless you are willing to have the government be a bigger share of the economy than it is now, those programs would squeeze out the other components of federal spending. >> we will see a situation where our entitlement programs are 90% or 80% of the budget, and the rest we will have to fight over. has the administration put

forward a plan to address the bankruptcy of medicare and social security? >> i think the focus has been in the next 10 years. the administration has addressed the long run issues to some extent through some of the aspects of the affordable care act that has oversight boards and other things that would reduce cost. it is still a major challenge for congress to reduce health care cost. >> would you say that the administration's budget would not address our long-term deficits because it does not address of entitlements? >> i would reiterate that the budget they put out was for the next 10 years. by definition, if you are only looking at the next 10 years, you are not addressing the long- run implications. >> thank you. let me go to regulations. i do not know if you read this

cover of last week's "economist ." it presents a dark portrait of our financial system in the wake of dodd-frank. i think the last sentence of the et al. sums it up, "-- of the article sums it up, "ambition is everything is -- overwhelmed." dodd-frank required regulators right over four hundred rules for the financial system. would you agree that this lack of clarity is a hindrance on the financial sector? >> i think so. we are working as fast as we can. we want to create clarity. some of these rules are complex.

it is important to do a good job. >> the time of the gentleman has expired. >> thank you. >> the gentleman from missouri is recognized for five minutes. >> thank you chairman and thank you chairman bernanke for your return. unemployment is declining and is now at 8.3%. we can get pretty technical in these hearings. my constituents in st. louis would like to know what we in congress and you at the federal reserve can do to put americans back to work in ways that we can all understand. what do you suggest? >> well, from the federal reserve's point of view, we haven't been keeping interest rates low -- we have been

keeping interest rates low and trying to create a financial conditions that will foster entrepreneurship. that should help bring the economy back to a more normal level of functioning. the fed bank cannot affect the long-run health and productivity of the economy. that is up to congress. having a fiscal program that achieves fiscal sustainability and its protective of the recovery, which is still not complete. we need to talk about skills. we need to talk about the tax code. infrastructure that allows the economy to function. there is a lot to be done. i guess i would put the fiscal stance first from the congress oppose a point of view. >> -- congress's point of view.

>> it has been suggested by the house budget chair that if interest rates remain low until 2014 this will hurt the dollar. do you think that is accurate? would it risk fuelling an asset bubble? >> i would like to make a distinction that is not often made. when people say heard the dollar, there are two definitions of the dollar. what is the buying power. does the dollar by more today than it did yesterday. the of the definition is the dollar reverses other currencies. if in fact, our policies have been accommodative since 2008. on both counts, we are doing ok. inflation has been about 2%, which is lower than previous chairman. at the same time, the dollar, in

a foreign exchange sense, is roughly where it was three years ago. i do not think that is a big problem. those two components -- you asked about interest rates. >> will it risked fueling an asset bubble? >> that is something we have to pay close attention to. we have expanded our ability to monitor the financial system probably to take a macro approach. -- broadly to take a macro approach. we do not see any bubbles in the economy. that is something we are going to need to continue to monitor. >> thank you. many citizens are concerned about the rise in gasoline prices at the pump. especially the working class. what measures can the federal

reserve to take to stabilize the recent rise in gas prices? >> we are concerned about it as well. it has a direct effect on inflation. it is bad for growth. it takes away buying power for households. it is a real concern for us. overall inflation is low and stable. it is a question of this particular product becoming more expensive. again, the main reason for it is the higher price of crude which relates to a number of factors, among them is uncertainty about supply in iran and in africa. i do not think the fed bank can do too much about the price of gas. i think it is more important -- i do not think the fed can do too much about the price of gas. i think it is more important we

focus on demand. the united states has been reducing its dependence. we have been importing less. >> if i asked, would you suggest tapping into the reserves? >> that is for the administration to decide. the reserves are typically used for destructive situations where there has been some breakdown in supply chains, during katrina, for example. again, that is an administration decision. >> thank you. >> the gentleman from ohio is recognized. >> thank you. thank you for the chairman for coming to testify. i want to ask you about one big picture question and then talk about some things that are important in my district. i have been here 13 months. i have realized that the only things that happen in this town

are the things that have to happen. you have heard some robust debate in this committee about how we might solve our fiscal crisis. you have admitted it is the thing we should stay focused on. i believe the best way to fix it is a balanced budget amendment. that does not say how we will balance the budget. it requires it to happen. i do believe we can do that in a thoughtful way. usually, you punt these questions. i am going to ask anyway. what the think about a balanced budget amendment as a technique or solving our fiscal crisis long-term and forcing it to become one of the things that have to happen? >> there is evidence that rules or structures are helpful in getting better outcomes. for example, things of that sort -- i think one year might be too

short of a time. over a longer period of time, some kind of rule, i do not know if you want to go the amendment route, some kind of rule for the congress to provide a guidepost for its own deliberations and for the public's awareness could be a helpful structure to make things happen. >> thank you for that thoughtful answer. i do want to follow up on a question. i ask you this last year. i know labor statistics does both of your measures that the measure yourself against, unemployment and inflation. i want to ask you to continue to pay attention to the way they measure things. the unemployment number does not count the people who are no longer looking for work. it does not account for under employed folks.

-- uner-employed folks. i am worried about the way they count. i am worried about the way they account inflation. the reduction in the prices of housing is masking the increases in commodity prices, including oil and gas. if you think about the way that people in my district and the rest of this country manage their finances, they lock in long-term rates on their houses. they have a known amount they are going to pay, changes only a minor amount. the thing which changes -- their real inflation is commodity prices. i know the bureau of labor statistics does that work for you, i learned a long time ago in the military, what the measure is what you count -- what you measure is what counts.

i remind you to review how they measure it. >> i would comment that the bls does have measurements that do take into account other workers. >> the last thing i would like to talk about is community banks. you mentioned it in your testimony. community banks were not the cause of the crisis in 2008. they bear a disparate impact of many of these regulations because of their size and the fact that they do not have a compliance departments. i will tell you a story and then remind you to talk to your friends at the fdic and occ. i have not heard a bad story about fed regulators. i have heard horror stories about the fdic. i will tell you a new one. there is a community bank that

recognized a borrower was in a deteriorating position. they asked him to put money in an account and a sign and forbearance agreement -- and sign a forbearance agreement. the fdic ask them to put all that money towards principle and write the loan them. -- down and downgrade the loan. they know the loan is going to be good for a year. the man's financial condition may change in the year. the fdic has forced them to do things that were irresponsible. my time has expired. i would ask you to go back and ask them not to encourage our community banks to do things that hurt borrowing and our economy. thank you. >> the gentleman from california

is now recognized for five minutes. >> i want to commend you on everything you have done to keep short and long interest rates as low as possible. we face a difficult circumstance. the fed is doing more than any other agency of government to try to get us out of it. i will have a question for the record for you on the volcker rule and applying it to international situations. my first question is about the society for worldwide interbank financial communications, -- telecommunications, swift. i am on a bill to expel the run from swift. -- iran from swift. do you agree it -- think that we

can exclude a alliranian banks from swift instead of just those under eu sanction. >> on swift i will say the fed is one of the supervisors of swift. we work with the bank of belgium and other international supervisors'. my understanding is it would be feasible. it is a very important system. it is part of almost every international money transfer that occurs. it could be a real problem for iranian financial markets or institutions if they were banned from using it, yes. >> let me assure you that every institution of the federal government that is involved in national security policy would like to see iran as financially

isolated as possible. well you do not have a national security staff, whether it is the foreign affairs committee of the house, the full house, the senate, the state department, i think you should use your position at swift to achieve what is already the national security policy. >> we will do whatever congress it instructs us to do. >> i want to commend you for your white paper on the u.s. housing market. i think it is appropriate for the fed to comment on the housing sector. there is this program of going reo to rental. i think it is important that we not sell these homes in such large packages that only huge wall street firms are likely to bid. i think it is important that you sell packages of homes in the same area so that the same

management company could administer 20, 50, 100 homes. i think it is important you deal with local investors who have a stake in the local community. i do not know if you have any comment. >> we are running a pilot program. the trade-off is you need to have enough homes that it is economic for the management company to maintain them. otherwise, i think it makes sense not to over-concentrate the ownership. >> i think whatever package you have ought to be in the same area. >> certainly. >> mel, we have seen adjustments to the llpa from the fanny and the freddie, the gse's. congress needed to fund the

lower security tax. we hit another basis point for the next 10 years. d c s hurting the housing market -- do you see as hurting the housing market if we go back to that -- do you see us hurting the housing market if we go back to that well again? >> here is the trade-off. the benefits of a higher fee by the fiscal benefits, increasing the profits -- are the fiscal benefits, increasing the profits. by raising those fees, he may begin to bring in private competitors into the market. -- you may begin to bring in private competitors into the market. that is part of the strategy. if you make it more costly to

get a mortgage, that will hurt the demand for housing, which is already pretty weak. >> another decline in housing prices or if it to stabilize would be very bad for the economy, and for the people i represent. i yield back. >> the gentleman from california is now recognized for five minutes. >> thank you. i would like to go back to that chart, government spending as a share of the economy. the congressional budget of this put this together every year. -- budget office puts this together every year. they show the point at which the general fund transfers to entitlement equals the total tax revenue for the federal government. i would ask you, is this production sustainable? is this situation sustainable? >> i do not think it is.

>> what impact might continuing on this trajectory have in terms of interest rates? say that the bond vigilantes' start to turn on us the way they did on europe based on the projections. what impact could that have on the cost of borrowing? >> if market a dispensed by not persuaded -- if market participants are not persuaded, something will give. >> since this is a projected budget, what do we do, and what responsibility do we have to elevate this issue and get americans and get the congress to realize the necessity of dealing with reform on this front? >> it is one of the most fundamental as possibilities of the congress to manage our finances.

-- fundamental responsibilities of the congress to manage our finances. it is politically very difficult. part of the problem is the public may not fully understand the issues. they need to be further educated. >> part of the responsibility also lies with the central bank, the federal reserve in terms of demonstrably explaining to the public the consequences of this. your colleague, the head of the ecb, he made headlines last week. he said he had some harsh words for member countries of the ecb. he said there is no trade-off between economic overhauls and fiscal building. he had some harsh words for the future of the european state. i would like to get your thoughts about the comments.

in light of the 2012 projected deficit, 8.5% of gdp. i am looking at these numbers, for the big nations, it is worse. looking at what you described as the sizable structural budget gap under current policies, and looking -- beginning to compare that, i ask, structurally, is there any material difference between us and these nations? is it simply that the markets turned on europe? they turned their but they have not yet turned on us? let me get your thoughts on that. >> there is a structural difference in europe. they have a common monetary policy but not a common fiscal policy. the united states is a single state. social security and medicare payments still get made.

there is no a equivalent of a federal government in europe. part of their reform process is to see to what extent there should be greater fiscal union. europe does not have a bigger deficit than we do. that is true. all i can say is that he is right at least for the peripheral countries, like greece and portugal and ireland, which have no alternative but to tighten the belt of immediately. there may be more flexibility in other countries. >> without debt to gdp -- with our debt to gdp, with structural deficits, at what point do our calls for debt reduction become more in line with the comments that your counterpart is making? at what point do we say, the long term structural adjustments

have to be made? >> imagined 8.5%, part of that it -- you mentioned 8.5%, a part of that is cyclical. part of that is structural. you have to pay attention to the recovery. you cannot ignore that. it is important to create a credible plan as soon as possible. that would remove a risk to our economy. >> i agree. to the extent you explain this to the public and explain it bubbly and more demonstrably i think they could understand the need -- and explained it loudly and more demonstrably i think they could understand the need for structural reform. >> thank you. thank you, mr. chairman, for your willingness to help the committee.

your remarks, he cited the concern regarding the downside risk of the economic outlook duties besses in the european banking system and the eurozone -- due to stresses in the european banking system and the eurozone in general. there was an agreement between the greek government and private bondholders with a greek government would impose a hair cut of over 50 -- bond holders where the greek government would impose a hair cut of over 50%. there is a clause that says once a certain amount of the old bonds are redeemed, then the government will impose a collective hair cut across all of those bond holders. there is a question here, i guess you could say that, charitably, there is a default here. i guess there is a controlled

the fault. what remains that it is unclear is whether these bond swaps will constitute a credit event. whether it will trigger a payout on a credit defaults lot on greek debt. -- the payout on credit default swaps on greek debt. what that means to u.s. bank's exposure to greek debt. whether credit defaults swaps are still a mechanism -- default swaps are still a mechanism for protecting against that event. does this make you concerned about what does balanchines look like -- what those balance sheets look like?

>> there is a private sector body that determines whether a credit event has happened. i do not know what they will determine. if they invoke the collective action clauses and forced the breakdown on all private lenders, there is a high probability that body would invoke the contract. that would be my guess. in terms of u.s. banks, their exposure is either hedged or un- heads. it is very small. i do not expect any direct impact. it is important to maintain market confidence more broadly, the idea that whatever happens in greece stays in greece and does not spread to other countries. that is why i talked before about the need for financial fire walls or other protections

that would prevent contagions from greece to other vulnerable countries. >> i guess -- what if the decision goes the other way? what if they say a default has not occurred? there is no pay out? i know that is hypothetical. i know the derivatives association will probably not come out that way. what if we ended up with that scenario? with that undermine the idea of this protection? >> in some people's minds, i am sure it would. it is up to this group which is interested in maintaining confidence in the contracts to make that determination. >> thank you. i yield back. >> the chair now recognizes the chairman of the capital market subcommittee. >> thank you. i appreciate your stamina for

being here. i would like to talk to you about what is necessary in some economists's view to get the economy going, and that is dealing with the money multiplier effect and for the need for that to expand. it would appear that the decline in the multiplier effect is related to or has some correlation to the fact that the fed pays interest on reserves. the purpose of doing that is to pay interest on -- is to do what? create a floor, if you will. you have already created a floor by where interest rates are now set. can you elaborate as to why the fed continues to see the need to pay ior? >> yes.

we have looked at the possibility of not paying that 25 basis points that we currently pay. would it be beneficial to the economy? the federal funds rate is currently around 10 basis points. eliminated that might lower it further, but not below zero. the stimulus of fact, the limiting that, or the effect on credit extension would be small. on the other side, we have concerns about the affect of the almost zero rates on various financial institutions. also, the functioning of the federal funds market itself. we have weaker guidance from the market in terms of what the funds rate actually is. the participants, there are fewer participants because the

rates are so low, it does not cover the cost. we think there are some financial side effects which would be negative. the benefits to the economy would be small. for that reason, we have not reduced. >> am i correct to understand, what you are doing is incentivizing the banks. you are incentivizing the banks to keep their excess reserves? that contracts their ability -- their incentive to lend. is that not counter to what your policy should be? if you did away with it, there would be less of an incentive for me as a bank to leave my reserves with you and to lend with a business. >> quantitatively, it is trivial. the banks also have to pay an

assessment. they are getting one-tenth of 1% return to hold the money with us. that is not going to prevent them from making good loans. >> if i am a bank, that is still a better bet than what i am getting elsewhere? if he did away with that, with i have an incentive to try to find that? -- if you did away with that, would i have an incentive to try to find that? >> it is pretty small. >> it seems that would run counter to what your opening statement was, as far as the incentive and the money market. it is only the minimal amount. >> remember, loans are typically a year or more. money market funds are typically under 30 days. the federal funds market is an overnight market.

>> another question, you talked about this situation in greece. my only concern is that you have an open swap line, not just with greece, but with europe. could you comment as to why we should not be concerned about the potential for contagion if things did not stay in greece and europe, that the swap line may be negatively impacted as asset outliers got over there? >> the swap line -- asset values drop over there? >> on the cost side, it is a safe proposition. our counterparty is the ecb. it is well-capitalized and has behind it the national central banks of over 17 countries. the swaps are also collateralized. in addition, the contracts are such that they pay us back in

dollars in interest rate that is determined in advance. we have no credit risk. >> the time has expired. the chair now recognizes the gentleman from georgia. >> thank you. wellcome chairman bernanke. very good -- welcome chairman bernanke. very good to have you. i think it is no small measure, your monetary policy of accommodation and creating credit facilities and insuring liquidity for borrowers. unemployment is going down. we are at 8.3%. we are averaging two hundred dozen new jobs each month. we are not -- averaging 200,000 new jobs each month.

we are not out of the woods, but it is important to recognize your contribution. let me ask you about these stringent credentials standards that you are required under dodd-frank and under section 165. you were given the opportunity to differentiate among companies on an individual basis or by category, taking into consideration the capital structure, risk, and complexity. congress put this in because we expect you will differentiate between the largest and most complex bank holding companies and those with more traditional activities, who also exceed the $50 billion level in assets. can you tell us, have you established, conceptually, the different categories or tears or

subcategories, including specifically with regards to capital that will exist for the bank holding companies that have access above $50 billion? >> the sections, we have put that out for comment. we are still receiving comment for that. we have also made public of discussions on the capital rules, basel iii. both of those called for an application to banks with the highest application to the largest and most complex banks and less going down. that will be in true of supervisory efforts and in terms of capital. i involves a capital surcharge. that will be determined by a

formula that will put the highest surcharge that only the most complex banks -- it will be graded down to 0 when you get to a less-complex bankless comp. it will be gradated in terms of size. >> let me turn to the volcker rule. let me add, i think your policy of the fireball to keep what is going on in greece in greece -- firewall to keep what is going on in greece, increase -- how is spain doing? i think spain's situation is the next most egregious. is this fire wall doing a good job? >> the fire walls, which are european funding to stand as a

backstop unless there is a contagion, we think more needs to be done there. the europeans will be looking at that. i think there is more to be done there. spain, on the one hand, spain is doing better. they have made progress in terms of their fiscal consolidation. they are taking actions to strengthen the banking system. the cost of credit has gone down, probably in part because of fundamentals, and in part because of the ecb's operations. >> let me ask you about the volcker rule. i am curious as to why you believe it is appropriate to extend the jurisdiction of the united states throughout the world? it seems to me we should wait to see what other countries are doing in this regard so that we do not put the united states capital market for investors at risk.

are other countries planning to adopt an approach like the volcker rule? >> not to my knowledge. we are not extending jurisdiction outside the country except in so far that american based banks will have to follow the rule in their worldwide operations. we are not going to require european banks operating in europe to obey the rule. >> but where our banks operate, they will. >> yes. >> the time has expired. the chair recognizes the gentleman from texas. >> thank you. it is good to have you back again. i have two or three questions. the g-8 had expanded their balance sheets to about $15 trillion over the last two years.

what do you see looking for? how much more expansion in these balance sheets, in these central banks do you see? what could be some of the consequences of that? >> i do not know what the expansion may or may not be. the japanese have begun some asset purchases. the ecb half a trillion euros of bank lending. it does not all reflect a larger balance sheet. each of these central banks is dealing in a similar way. the federal reserve is not unusual. they are trying to find more accommodation where interest rates are close to zero. cutting the federal funds rate does not work. all of the central banks have similar tools to the ones we have, including the ability to

pay interest on reserves, the ability to sell assets, and the ability to sterilize their balance sheet. we all have tools to withdraw that accommodation and to shrink the balance sheet. i think this is currently with the best available approach is in a world where rates are close to zero. we cannot go below 0. >> keep printing, basically? >> i know there has been some debate, getting used to the word printing. the amount of currency in circulation has not been affected by any of these policies. what has happened is that the amount of electronic reserves held by banks has gone up by a great deal. they are sitting there. they are not doing much. so far, we have not seen any

indication that they have proved inflationary. >> does the federal reserve own goal? >> no. maybe a little bit. looking for my colleagues here. i do not think so, no. >> somebody asked me to ask the that. >> i am told we have gold certificates. >> what do we do with that? >> they are part of our reserves. >> the great bulk is held by the treasury, not by the fed. >> we have been trying to track the camilla the affect of the dodd-frank bill. -- the cumulative effect of the dodd-frank bill. recently, we have reached a

milestone. we are a third of the way through. it was alarming to find that the regulators themselves published that it would take 22 million man hours per year to comply with the first 140 regulations. we are headed to a lot of compliance ellis. it was interesting to note that it only took 20 million man hours to build the panama canal. i would think that most people would agree that 20 million man hours spent -- greeted more economic opportunity than 22 million man hours compliant -- created more economic opportunity than 22 million man hours complying with regulations. i you concerned that this kind of burden -- are you concerned

that this kind of burden is healthy? >> i do think it is important to point out what we are trying to prevent. we had a financial crisis that has created enormous amount of hardship. it is with some cost to make sure that does not happen again. yes, those regulations are costly. speaking for the fed, we have taken a lot of steps to minimize those costs, including grouping rules together in packages so we can look at the interaction among them. doing a lot of cost benefit analysis. having long tradition periods. we need to do what has to be done to prevent another crisis. we are trying as best we can to carry out the statutory obligations that the congress gave us at the lowest cost to the industry. >> the time of the gentleman has

expired. the chair recognizes another gentleman from texas. >> thank you. i thank you, mr. chairman, for being here today. we greatly appreciate your attendance. you always share a great information with us. mr. chairman, the financial stability oversight council, to you find it beneficial to meet with the other credential regulators? could you elaborate on this? >> it has been beneficial. there are 10 voting members. we have been meeting on a frequent basis. as i mentioned earlier, every principle is there at every meeting. the leadership is really there to talk. it has had two other benefit. one is that we have extensive

staff interaction. there is that interaction going on between meetings, which has been very useful. in addition, while there has always been a certain amount of inter-agency cooperation and joint rules, i think that has been picked up and been improved in been helped by the fact that we are working together in this context. i think it has been helpful. >> is it fair to say he did not have a similar circumstance prior to dodd-frank? a similar meeting abridgment comparable to what it provides? -- meeting arrangement comparable to what it provides? >> not exactly. we did have a lot of bilateral discussions over various rules. we did not have a single place where all the major regulators got together. >> are these meetings well coordinated? did it take place at the specific times, such that it

becomes a part of your agenda? >> it is not a specific date. they are set up by the treasury. sometimes they are hard to schedule. we have been making more frequently than quarterly. the meetings are quite substantive. it had a private session and a public session. -- they have a private session and a public session. >> are you better position to deal with systemic risk then you were pryor? -- prior? >> i believe so. each agency, if they have an issue, they will make a presentation. we will all be informed about what the sec is doing. >> let's talk about cutting a way to prosperity.

-- our way to prosperity. is there a downside about cutting our way to prosperity? that will start to decrease the number of jobs, we are cutting -- that we start to decrease the number of jobs. we talked about systemic risk. not wanting to provide too much stimulus. can we also moved to a point where we are cutting -- can we also moved to a point where we are cutting so much -- we also move to a point that we are cutting to a point that we are hurting the economy. >> i have advocated a two-part process. one is making sure we have a fiscally sustainable path going forward in the medium to long- term. at the same time, we pay attention to the recovery and

make sure we do not snuffed it out. >> -- snuff it out. >> there was a chart from the monetary policy report. this was no. 30. this chart release speaks volumes about what has happened and what is happening. if you consider zero above water, we were sinking fast. we were falling off of a cliff. now we are coming up. we are above water. not where we would like to be. we are clearly moving in the right direction, if done is bad and up is good. -- down is bad and up is good. it is simple to see where we are. if down is wrong and up is right, if down is worse, but is

better, i hate to use this highly technical terminology. [laughter] some people may not comprehend all i am saying. i thank you for the chart. >> the time is expired. the chair recognizes the gentleman from new mexico. >> thank you mr. chairman. we were asking about the european exposure. you were pretty soundly -- you were recommending that the european banks are pretty sound. did i hear you correctly? you are saying that they have stable in the i was talking about the european central -- stable -- >> i was talking about the european central bank. they are being asked to raise more capital. their liquidity situation is

being satisfied by the european central bank rather than by private market. >> i was a little confused. you are talking about, you continue to monitor the european exposure. that would be that. how long have you been watching the exposure of u.s. firms to finance -- to the european financial? >> the european situation came about two years ago. through that period. >> my question is then about the new york fed that it primary status to and of global -- that gave primary status to mf global. two years ago would be when they

were making application. february, 2007 is when they got the application done. it is watching of exposure, mf global had gone up by $4 billion. why did not the new york fed cat this exposure if this is something you are concerned about? >> we are regulating banks. we are looking at bank exposure. mf global was not a bank. >> they had to take a look at them. >> only as a counterpart. they met the criteria for size and capital and experience. >> they had been turned down several times before. >> i do not know. >> i am telling you, they were turned down several times before. >> they met the criteria. it has been our goal not to restrict the primary dealer

status to just two of the largest institutions. we want to have a number of institutions there. they met the status. it was not the new york fed's response ability to supervise them. >> -- responsibility to supervise them. >> use significant words regarding what is done stream from us if we continue the spending by the -- is downstream from us if we continue the spending by the government. you use terms that were almost catastrophic. >> there is a significant risk that if fiscal sustainability is not achieved, markets might decide it is never going to be achieved. we would face a crisis of confidence. that is always a possibility. >> the spending we are doing,

you would say it is borrowed money except that no single country has the ability to loan one trillion dollars. when you are running $200 billion deficit, china could lend us the money. china does not seem able to lend at one coleen dollars. -- lend one trillion dollars. the federal reserve is facilitating the spending. it seems like you have the capability to give some discipline into the institutions here in washington. even if it is only a 10% reduction. say, we and not going to buy that many treasuries, do that much quantitative is in. why do you not say no?

>> because our mandate is to try to achieve maximum employment and price stability. that is what determines our interest rate. >> you have already said we are facing serious things if we keep spending what we are spending. >> that is why i am advocating action. >> you are not indicating any discipline. thank you. >> the chair now recognizes the gentleman from colorado. thank you for being in staying here. i usually ask questions right at the end. i appreciate the stamina. this is a storm that none of us quite understood what was coming. you can always look back.

we can look it up in this monetary report. we can see the storm. we can see the drop in employment. we can see through this storm. >> i just want to compliment you. i do have a few questions. i do not know if you had your report in front of you. 23 is the receipt of expenditures. chart 24 is consumption investment. what i look at 23, i see a continued reduction in revenue to the federal government.

i see a huge spike at the fall of 2008 in 2009 as these services went up. would that be fair? >> yes. >> and 24, there has been a reduction in federal expenditures. >> that is a lady sending out. states and economies cut back spending. >> let's talk about what is common at the end of this year. if our goal is to pay down the country debt coming due have more revenue and less expensive as opposed to what we saw in

charge 23 or we have less revenue. and i am not mistaken, you call it a clip. you have revenue increases. we can start paying down the debt. he said that it may cause a major contraction. can you explain that? >> i do not think i use those words exactly. >> user on words. >> was talking about the authority of the cbo. they have to make projections based on current law. they assume the current expiration of the tax cuts and relief all came into play in 2013.

their economic production was 41% growth -- for 1%. it is a logic that if the cut spending and cut spending he will pull demand out of the economy and it will hurt the recovery. it is important to address these issues in the medium to long term. it may very hard to adjust to that. >> we have these two things out there. if we have the opportunity, we ought to be a little more refined. that is how i am understanding it. >> it is the same long-term benefits to more grassroots. >> i have a question on page 2. there is a statement that additionally they made a significant injection of liquidity via the first three- year financing operation.

>> the european banks are having trouble raising funds. some of it is in dollars. they have lent $1 trillion year rose for three years. this has greatly reduce the problem that they have in raising the funding. in order to get dollars, the federal reserve has what dollars for euros. it freebies' them of their

dollar funding problems. it helps relieve the funding for this. >> the are recognized for the remaining time >> and it is

proposed a write them down. yet they have not been. what other ideas deal have regarding the housing market? it is the one thing that seems to be dragging the economy down. it is not just construction jobs. it is a loss of equity. they are preparing. that law, only question. >> the federal reserve put out this without making recommendations. there are a whole range of issues. one problem is getting the excess supply of housing up the market.

one way to do that is to concurrence the housing. he can also get rid of the dilapidated housing. we have not taken a position. we have looked at various alternatives to foreclosure. short sales allow people to get out of the house. a final area is about availability or access to mortgage credit.

it provides greater assurance. another way to improve it is to reduce uncertainty about servicing obligations between the various agreements that have occurred recently. current discussions, some is being removed. there are varieties that need to be done. >> thank you. >> the gentleman has any of it back. we thank you for your testimony today. some members may have additional questions which they may wish to submit. the hearing record will remain open.

some at written questions to the witness. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> ben bernanke returns to capitol hill tomorrow to talk about the federal reserve pesto a letter of policy report. we will have live coverage of the testimony on the website beginning at 10:00 a.m. eastern. >> with a firm confidence and freedom and peace on earth, it will raise the heart and hopes of mankind for that day when no one drags the chain. >> we but back at 14 men who ran

for the office and lost. go to our website to see video of the contenders to have a lasting impact. >> it is because of republicanism. there is the tyranny of man over man. it is in our cause to dispel this. it was somehow mysteriously resolve itself. >> tonight the white house hosted a dinner in honor of iraq war veterans. 200 servicemen and their guesses or in attendance. they offered posts at the black- tie event. this is 20 minutes.

>> i came because i was expecting a duet tonight. i thought maybe we were going to hear you and my irish friends saying. i am betting on me. you. let me say a special thanks to generous casey and austin. the good news is that the only had to see me four times. i want to say suit all of the brass in here, we owe you a debt

of gratitude. you have trained the fine is generation of warriors. this is not hyperbole. the finest generation of hyperbole in the history of this country. i would argue the finance in all oferation of warriors history. i get frustrated when i hear talk about generation x and how it is not ready for all the travails of thprevious generations. most of this room are made about the 9/11 generation. you're the most incredible generation the shop has produced. they have 2.8 million of your generation, and men and women, joined the military and knowing and hoping that you would be

sent into harm's way. more than a million of you walked over the sands of iraq would temperatures up to 135 degrees. over 1 million of you. this journey began nine years ago and armored vehicles rumbled across the board of kuwait. all of you sitting at our table tonight, you know better than anyone that it was sometimes an impossible mission. sometimes it was impossible to determine who the enemy was. that is a few short years ago there are literally hundreds of bodies a day being piled up in the baghdad war.

it is one the most dangerous places in the world. every conflict was a test of faith. the saddled up every single day. after cleaning out the vehicles, you saddled up the next day. able a slip in an envelope. it became an unmistakable warning that they had to leave the house and the neighborhood where they would die. what they may have been steep, your also made to master the local iraqi politics. you are incredible. you adapted. he succeeded. you defeated the tyrant. you be back extremists. the most remarkable thing you did because of the breath of

their capability, if you're unable to a country that had not been governed in any reasonable way for four decades. you help them set of institutions and train the military that gives them a real fighting chance. today because of you, there is a prospect of stability and prosperity. that was not locked or an accident. it is your sacrifice and hard work that made it possible. it never be forgotten. president truman was described the end of the war as a solemn but glorious honor. -- solemn but glorious hour. i believe that he meant that honoring those that fall means remembering those

that were lost. 4475. the exact number is important. 4475 fallen angels. more than 30,000 wounded. some of you in this room. others bear the invisible scars of their experience. the president will speak for himself. we're both odd by our sacrifice -- awed by your sacrifice. not just those who are deployed but your brothers, sisters, bombs, dad's. john milton once said they also serve only stand and wait. they also serve who only stand and wait. we owe you your family members

almost as much as we owe you. every morning i would walk-in and jill will be getting her cup of coffee over the sink mouthing a prayer. wives and husbands, there is not an hour a day that did not flash across your mind. it is my husband, wife, daughter, ok? it is an incredible thing to ask of so many people. now and the finest american condition, you come home. it is good to see you here. like every american before you,

you left iraq taking nothing with you but your experience, achievements, and the pride associated with knowing what they did an incredible job. that is an american tradition, is taking nothing but your pride. on behalf of a grateful nation, there's never going to be a way we can truly be pay you. there's no way to fully pay you. let me simply say thank you and your family for the heroic work you have done. you have made a difference. i think you help chart a different course. the man i sat with every day for the past three years or so, i was still making decisions about war and conflict. i have watched how he has done it.

i know every one of these decisions had to be made in hanging heavy in his mind and heart. there is no one i had encountered, and i have been here, you cares more about you than all of you who continue to serve than this man. i am proud to introduce to you your commander in chief and my friend, barack obama. >> thank you. thank you very much. thank you so much. please come everyone have a seat. thank you. thank you for not only house

dinner remarks but the extraordinary leadership you have shown in helping thto guide our policies. it's all the commanders who are here and did so much under such extraordinary circumstances to arrive at an outcome in which the iraqi people have an opportunity to chart their own destiny. thank you. i thought he was going to burst into song. you have not lived until you hear him belt out an irish ballad. his voice is better than mine. your wives are there to cut you down a peg. this house has stood for more

than two centuries through wars and peace, a hardship and prosperity. these rooms have posted presidents, prime ministers, kings, and queens. there has never been in i quite like this. men and women from every quarter of our military, every branch of our service to answer the call. who go to war to defend the peace. a culture that celebrates fame and fortune, yours are not necessarily household names.

there is something more. the patriots to serve in our name. after nearly nine years, it is right. tonight is an opportunity for us to express our gratitude and once more, welcome home. this is not the first time we have paid tribute. this will not be the last. history reminds us of our obligations in moments like this. this year will mark the 50th anniversary of the vietnam war. a time when our veterans and not always received the respect that they deserve. i've seen americans come together.

we want to express those of simple words. thank you. it did you carry your own story. the pride of a job well done, , a pain of losing a friend, comrade. this figure world can never be known. tonight what we can do is convey what you meant to the rest of us. there the desk and the din and the fog of war and glories of your service, yet always shown it.

it sustains america. matatus about duty -- you taught us about duty. you know that freedom is not free. you volunteered any step forward and raise your hand. you took an oath to protect and defend, knowing in a time of 4 it could be in harm's way. you talk is about resolve. the insurgency and strife. he persevered. the were mindful that even as they gather here, and one of our

nation's longest wars, you're among the most extraordinary chapters. now the iraqi people have a chance to forge their own destiny. everyone his serve their can take pride in knowing that you gave the rockies their opportunity. he succeeded in intermission. -- you succeeded in your mission. you talk to us about -- you taught us about devotion and family. i know some of the hardest days with the momentum is back home. birthdays, anniversaries, when your little girl or boy to their first steps. behind every one of you, was a parent, spouse, a son or a daughter. the pri for the day you come home safely.

that is why they have made it their mission to make sure america takes care of your family is. they inspire us as much as you do. that is why i would ask families to stand up and accept our gratitude for your remarkable service. you look so good tonight. [applause] you top this about sacrifice. -- you talked about sacrifice. you're willing to give your allies for its. with a tribute to all that did. remember the first day of war.

we remember others. supper i did by nearly 9 million years they're bound for all time reduce separated by nearly -- separated by nearly 9 million years, they gave all they had. we will never forget their sacrifice. he taught us about strain, the kind that comes from with in, it the kind we see in our wounded war years.

if you're coming home was the toart of another balance, o serve again. we do not give up. just as the winds of war can last a last time, so can americans commitment to you, it to give you the care you earned and the opportunities you need as you begin the next proud chapter in your lives. all of you taught us a lesson about the character. as you look across this room, you look at our military. we draw strength from every part of our american family. every color, creed, a belief. and every day you succeed

together as one american. i cannot be more proud as your commander in chief. as an american, as a husband and father of two daughters, i cannot be more grateful for the kind of country we can be. i want to capture the. from that day when the last convoy rolled out. they are young. they are shoulder to shoulder, prowl, head held high. there as what it was like to be literally the out of iraq.

one of them gave a simple reply. we completed the mission. we completed the mission. we did our jobs. i propose a toast. to the country we love, the men and women who defends her, the fundamental american faith that cessna mission is to hard, in a challenge is to great, we were stronger than we were before knowing that america's greatest days are still to come. they are great because of you. god bless you and your families. may god continue to bless those in uniform and the united states

of america. thank you very much everybody. >> next, a house hearing on a cruise ship safety and the shipwreck in italy. they testify at a house hearing. part of tonight's white house dinner in honor of returning iraq war veterans. >> if you had said that the world would be used force in the middle east within 3.5 years, we would have said you were crazy. >> is not only an advisor to the romney campaign but also served

on secretary of state clinton's advisory board. >> there is a lot of broad consensus. what you're saying is the consensus in the foreign policy. there is a lot of overlap between the two policy. it is sunday night at 8:00 a.m. eastern on c-span's q&a. >> rick santorum delivered a full defense of religion. he appealed to the social conservatives and revised his presidential campaign. he responded to comments by president john f. kennedy. >> the separation of church and state is absolute. knowing to tell the president should he be catholic or how to

act. no one would tell them for him to vote. when they are granted in a public bonds, and were no man is tonight from his office near the because of the presence. >> you can watch more of this speech at a website and our video library. the confide this in our archives. >> the testified that they were telling passengers to go back to their cabins more than hour after the ship ran aground the house transportation subcommittee held a hearing today on cruise ship safety but also include a witnesses from the u.s. coast guard and the cruise ship industry. this is just under three hours.

>> more than 10 million u.s. residents. it is a huge number. this activity generated more $37 billion for the u.s. economy and sustain nearly 330,000 american jobs. they must continue to work together to ensure that taking a cruise remains one of the safest and most enjoyable ways to travel. a lot to think the witnesses for traveling today. we want to know that we understand very clearly that there is an ongoing investigation. we understand the witnesses today may not be able to answer all of the questions and have about what happened. we will continue to monitor the

investigation and look forward to a full accounting of what happens. we will look for ways to improve passenger safety based on what we have so far. with that, i like to yield. >> allow me to express my prayers and thoughts. i want to thank you for scheduling the morning hearing to double the safety cruise vessels. before i begin my remarks, i like to extend my condolences to the families of the 25 passengers and crew members died as a result. and also the seven other families from their loved ones are accounted.

i want to welcome to passengers aboard. this remains relentless and ever present of a threat. they are capable of sinking even our most morning ships. it'll be a least a year before the italian government completes the investigation and the chairman's bass circumstances. there is no reason for us to assess the present regulatory regime. if anything, reports of another crucial have drifted into pirate infested waters due to an onboard buyers to further focus our attention.

i welcome this opportunity. they exceed all standards for safe construction. the traveling public expects no less. all forms of transportation are successful only to the extent the public purse season to be safe and reliable. this is considered a safe leisure. it also has substantial economic benefits. $18 billion.ed 3 and 29,000 jobs were generated it is creating jobs

and generating tracks spending in washington. lot the state economically and also the lives in the safety of the more than 11 million passengers in 2011. there is a trove of wonderful vacation members. it provides us with a new impetus. it is whether we remain vigilant or complacent. that have operated a demand to the high standards. this is a special for emergency evacuation our passengers

boarding ships given indoctrination concerning evacuation drills and how might it be proposed that these some of the questions that immediately come to mind. i will be interested in hearing from the industry with respect to progress in implementing a requirements. the best way to ensure long-term economic health is to ensure means are properly regulated and that the public considers it a safe and secure form of travel. with that, i yield back. i have one announcement since.

>> first of all, thank you for yielding to me and mr. larsen for complying to conduct this hearing this morning. i thought the call committee was incumbent upon the committee to review both this incident and where we are with cruise ship safety in light of this. i must first also identify my remarks with the others today who have expressed their sympathy. we have learned the high praise that has been paid by the men

and women that served as every day. incredibly, i am sad to hear of your loss. as mr. larsen said, led the same holds true for cruise ship passengers and others that were lost at the concordia tragedy. as far as trichet safety. it canu have a new one,

swim or sink. there will be an investigation as to their responsibility. our response ability has to do it u.s. citizens. they have the safest experience possible. congress has provided an updated the balls, regulations. they make sure in the protections are in place. the cruise industry is one of the most incredible entrepreneurial achievements by

the private sector that i have seen in my lifestyle. my great grandparents are by steerage. another passenger was limited to the region. there are few pleasurable experiences of their lifetime. i've been on cruises and the jewish people have. they save their money all year to go on a cruise and an incredible experience that makes their dreams come true.

this is an industry. they have a rival educations. this industry is huge not to mention the great expanse of pleasure. we will make sure that this experience is safe. irresponsibility is not just the united states. it is also the international organizations. i asked the chairman to take from this hearing information. we need to make certain our

international organizations also set standards and are updating them. we cannot do this just by ourselves or put in place laws that just protect americans. we have a responsibility to work with the international organizations to make sure they all of day to their standards. that means that we also have a new era of cruise ships. some have five or 6000 people. i believe this one has over 4200 people. we also saw a cruise ships that is the length of aircraft carrier. when it hit the rocks and celtic, it certainly got everybody in the world -- and

tipped over, it certainly that everybody in the world's attention. it landed on some land and rocks. the number would have been incredible. another thing that would have been astounding when you go over sideways, everyone thinks of the titanic and the way it sank. when a mega liner till it's megalinerediately, -- magdalen half of over, you lose the safety evacuation ships.

i think we can take from this some positive improvements. i am at a great personal loss to some families. hopefully we can make this experience which we have relied and that we have grown to take for granted and even a safer experience. we look forward to their recommendations. we yelled back. >> our first witness today is the deputy commandant for operations.

thank you for the opportunity to discuss issues related to a cruise ship safety. thank you for your expression. events like this touches all very deeply. passenger ships operate from the port. they embark approximately 11 + 5 million passengers. the crews that operate these vessels has been a long standing one. they comply with all the united states and international safety, security and environmental standards and ensures that their careers are real change.

-- their crews are reatrains. i am responsible for conducting investigations when accidents are violations of standards occur. a responsible for the policy regarding the conduct a search and rescue. the recent casualty of the concordia is of great interest to us. we are certain there will be much to learn. we're open to the possibility that our regulations in the international regulations produced may need to be strengthened based on the outcome of the investigation. we have offered to assist. there are a number of citizens on board.

that condolences to the families and friends of the missing and lost. the this year marks the 100th anniversary of the loss of the titanic. despite a century of technological improvements in maritime passenger safety, all our new technologies are taken for granted. they lead the u.s. efforts. the focus on standards is important. there are fervently passengers which otherwise have no u.s.

connection. as the agency responsible for verifying the safety, the coast guard has established the most rigorous program in the world. all cruise ships and passengers controlled the verification before they are permitted to operate. this is comprehensive in nature. it includes concept reviews. it is followed by periodic examinations for however long it operates. during these exams the also continuous security procedures including those required under the vessel safety and security act. now 2009, they established the national center of expertise. they were the focal point.

it serves as an indicator for how seriously we take a responsibility para when the greatest challenges we can take is a massive rescue operation involving a cruise ship. we continue search and rescue. we hold copy of the plants. we periodically test them to ensure seamless coordination. the coast guard has conducted 36 rescue exercises. each district authorized by congress focus on this responsibility. we do not have the facts.

it has an immediate measure. this contracts with the requirement with the mustard drill. but as new policies requiring mandatory muster drills for embarking passengers quired to departure. it exceeds the international program. i want to ensure that the coast guard use the safety of passengers as is highs maritime one. we had the best program in the world for verifying the safety. we were diligently rid carla's of where they go.

meanwhile, we have taken measures to implement the cruise ship. they enhance the personal protection of passengers and crew ships. the maximize the vessel safety security and environmental protection. thank you again for the opportunity to testify today. >> thank you. your statement covered in line of questions. does the coast guard have any plans to conduct an independent investigation? >> are conducting an investigation. where in the process of

interviewing all of them. standard series of questions that we're asking each of the passengers to a participate. from that we expect a picture of what a place on board and to truly understand some of the factors that were critical. >> to be very interested. >> he may have commented on this. i just want to make sure i understand. has the coast guard reached down to offer your assistance? >> we have. they have indicated that they will welcome our participation.

there also saw the same status. they indicated they will do that. with us for the same status. -- we have asked for the same status. >> to get any authorities that would not share their final reports? >> there would be full disclosure. -- thank you. that is all. >> thank you. >> as the coast guard have any history?

>> it was initially intended for service. they have an initial examination. it is never completed. the company's plan change. it never came to the united states. we have not had any contact with the other vessel at all. >> is the process a very formal? >> it is based on a casualty could put forth by the maritime organization which has procedures for cooperation. we are using the provisions to make the approach for the government. they have rede