continue promoting a robust economic recovery. as you noted, unemployment remains high. a disproportionate share of that unemployment takes the form of long spells of unemployment, around 36% of all those unemployed have been unemployed for more than six months. this is a virtually unprecedented situation, and we know that those long spells of unemployment are particularly painful for households, impose great hardship and costs on those without work, on the marriages of those who suffer these long unemployment spells, on their families. so i consider it imperative that

we do what we can to promote a t spells. on their families. imperative that we do what we can to promote a very strong recovery. continuingg that by our asset purchase program, which we intend -- we put in assuringh the goal of a substantial improvement in the outlook for the labor market. we are taking account of the cost and efficacy of this program as we go along. thehis point, i believe benefits exceed the costs. as that program gradually winds down, we have indicated that we expect to maintain a highly

accommodative monetary policy for some time to come thereafter. the message we want to send is that we will do what is in our power to ensure a robust recovery in the context of price stability. >> what are the dangers of tapering the asset purchases too early? if confirmed, how should the fomc move forward on an exit strategy? >> so, senator, i think that there are dangers, frankly, on both sides of ending the program or ending accommodation too early. there are also dangers that we have to keep in mind with continuing the program too long or more generally keeping monetary policy accommodation in place too long.

so the objective here is to assure a strong and robust recovery so that we get back to full employment and that we do so while keeping inflation under control. it is important not to remove support, especially when the recovery is fragile and the tools available to monetary policy should the economy falter are limited. given that the short-term interest rates are at zero, i believe it could be costly to withdraw accommodation or failed to provide adequate accommodation. on the other hand it would be important to make sure we do withdraw accommodation when the time has come. my colleagues and i are committed to the longer run

inflation goal of two percent. we will need to ensure that as recovery takes home we will bring monetary policy back to normal in a timely fashion. i believe we have the tools to do so. we have been careful to make sure we have the tools available at our disposal and we also have the will and commitment, and i look forward to leading the normalization of monetary policy. >> thank you. >> i would like to follow-up up on the question with you. with regard to quantitative easing, you have indicated you feel as long as the economy remains fragile that we need to

continue with the federal reserve. the fed's balance sheet will reach almost 24% of gdp in the first quarter of 2014. i am concerned about the impact on the economy and the unintended consequences of these accommodations. it seems to me there is a disconnect between what the fed intended to accomplish and the results. even the fed zone economist estimate qe2 as only about .3% to real gdp growth in 2010, and another expert has indicated it contributes to bubblelike markets.

how do you respond to the concerns that quantitative easing is creating serious risks in our financial markets? >> a number of different studies have been done attempting to assess what contributions have been, and this is something we can't know with certainty, but my personal assessment would be based on all that work that they have made a meaningful contribution to improving outlook. the purpose was to push down longer interest rates. we have seen interest rates fall substantially.

lower interest rates, lower mortgage rates have been instrumental. it's not the only factor, but it has been a positive factor in generating the economy of the housing sector. house prices, after having fallen very substantially, are moving up, and i think that is helping substantially, including a large fraction of household. -- households who found themselves underwater on their mortgages. it is improving household finances. i think we have seen recovery in automobile sales spurred by low interest rates. >> how can we operate monetary policy in such extreme levels of quantitative easing.

>> when we initiated it unemployment was 1.81%, and the committee was pessimistic about expectations over what it did see over the ensuing year. the community expected little or no progress brigade down unemployment. -- bringing down unemployment. we indicated our goal was to see substantial improvement in the outlook for the labor market, so the process of this program is data to send and, but we have -- is data dependent, but we have seen improvements in the labor market. >> can it continue indefinite -- indefinitely? if the labor market does not continue to the point where it reaches its target, how long can

this continue? >> i would agree this cannot continue forever. we are monitoring very carefully. you noted potential risk of financial stability. those risks we take seriously. the committee is focused on a variety of risks and recognizes the longer this program continues the more we will need to worry about those risks, so i don't see the program as continuing indefinitely. >> do you have any estimate as to when there will be a beginning of tapering? >> we are attempting to assess. we have seen progress in the labor market. the committee is looking for

signs we will have growth strong enough to promote continued progress. as they indicated in a recent statement we see strength in the private sector are of the economy, and we are expect think progress going forward. while there is no set time that we will decide to reduce the pace of our purchases, at each meeting we are attempting to assess whether or not the outlook is meeting the criteria we have set out since the pace of purchases. >> thank you. >> of the federal reserve has engaged in measures to

strengthen our economy, some critics have argued any growth might somehow be artificial or that low interest rates and cheaper credit might lead to financial instability or asset bubbles if investors make riskier investments in order to "reach for the yield." and the current environment, isn't week demand a greater -- weak demand a greater burden? i look at them pulling back spending, businesses holding off on invest ng because of week consumer and demand. doesn't that change the risk of policy actions? >> i completely agree what we demand is a major

drag on the economy. the purpose of the policies are to bring down interest rates in order to superearths bending, -- spur spending in interest- sensitive sectors. and if we are capable of doing that, that will stimulate a favorable dynamic in which jobs are created or spending takes place, and that creates more jobs throughout the economy. i agree, and our programs are intended to remedy the situation of weak demand. on the other hand it is important to monitor financial risks that could be developing as a consequence of programs or low interest rates are even more broadly of developing financial risks in the economy.

the federal reserve is devoting substantial resources and effort to monitoring those risks. at this stage i don't see risks of financial stability, though there is limited yield. we don't see a buildup of development at risk that i think at this stage poses a risk. >> some commentators have suggested in addition to full employment the fed should also monitor asset bubbles. do you think it is a feasible job and something the fed should be doing? if so, what should be done about it? >> i think it's important for the fed to attempt to find asset

bubbles. we have done a good deal in different sectors. to try to see if there is evidence of price misalignments that are developing. by and large, i would say i don't see evidence in major sectors at least of a level that would threaten financial stability, but if we were to detect other threats to financial stability, as a first line of defense we have our first layer of tools we can use to attempt to limit. i would not rule out using monetary policy as an attempt to address misalignments. because congress has asked us to use those tools to achieve the goals of maximum employment and price stability, which are important goals in their own right, i would like to see monetary policy directed to achieving those goals congress has given us, and to use other tools to try to address potential financial stability threats, but environment of low interest rates can reduce risky

behavior, and i would not rule out monetary policy having a role. and to use other tools to try to address potential financial stability threats, but environment of low interest rates can reduce risky behavior, and i would not rule out monetary policy having a role.

>> welcome, governor. would you describe the portfolio of the federal reserve as unprecedented? >> yes. >> you are an economist. you have been on the fed. and you are also the chairman of economic advisers? looking back on recent history, have you noticed any portfolio of the fed approaching what it is today? >> not at the federal reserve. >> that is what i mean. >> but other central banks. >> i am asking about the federal reserve at the united states of america. >> no. >> would you describe what you are doing? you describe quantitative

easing. a term that has been made up, i guess. we have all made up terms. is that the stimulus for the economy? you use the term monetary tool. is that what you would use to stimulate the economy? >> it is attempted to push down longer-term interest rates and stimulate demand in spending in the economy. >> is this something they have espoused over the years when you have high unemployment? >> i don't know about if the canes thought about it. friedman, and

keynes thought about it. a number of economists have written about something that is called the portfolio balance effect. it is basically supply and demand, buying asset, then it may be possible to push down there yields. -- push up their prices and push down there yields, and thereby affect financial conditions in the economy. >> it was said several years ago that china was buying our bonds. in other words, we were totally dependent upon china to buy our paper, finance our deficits, as it were. isn't it true the federal reserve is a sickly the buyer of -- federal reserve is basically the buyer of our bonds?

>> senator, we are purchasing -- >> for the most part? >> we are purchasing a substantial wanted tea of -- a substantial quantity treasury and mortgage backed securities, but we certainly are doing so for the sake of helping the government finance the deficit. in circumstances where we have -- we are doing so to achieve the goals that congress has assigned to the federal reserve. in circumstances where we have run out of scope for conducting monetary policy when our overnight interest rate target has hit zero, we really have to rely on alternative techniques, and we are certainly not the only central bank that has recognized this and is undertaking similar programs. >> you allude to other central banks, and i don't know of any other central bank i think we should follow. we should set the example here, and the fed has

darkly. -- has historically. i will run out of time in a minute. unemployment. you mentioned unemployment. 7.2% ornemployment is 7.3%. 7.2%. what is reall -- unemployment, people who have given up looking for a job, frustrated by the whole system? is it around that? >> you are right. there is part-time unemployment around people who want full-time jobs.

significant a decline in labor force participation. part of it reflects an aging workforce, but some of it may be a reflection of a very weak labor market conditions, where people have been unemployed for a long time and feel frustrated about their job prospects. >> could you quickly manage your view on basel three, how important it is for banks to meet the standards of capital and liquidity? and also the other banks in europe -- how important is that? >> it is extremely important for banks to have more capital. higher-quality capital. i, putting those into effect has been an important step. there are steps we have taken to

make sure the institutions whose failure could create financial distress will be used to meet higher standards of liquidity and prudential supervision to make sure they are more resilient. >> what have you learned since you were president of the san francisco-based? -- bank? you were there during the housing bubble. havee you and others learned a lot, not just the federal reserve. you cannot let a bubble continue to continue to grow. >> i think in the aftermath of the crisis all of us have spent a great deal of time attempting to draw the appropriate lessons. there have been many.

the federal reserve is focused on monitoring the economy, a mandate both in terms of our monitoring the economy, attempting to understand the threats that exist in the financial system and to improve our supervision, especially of the largest institutions to make sure we are identifying the threats that can be risks to the economy. >> thank you. >> senator brown. >> thank you, mr. chairman, ms. yellen. when chairman bernanke came before this committee he noted two things. they were clearly aimed at housing.

you have spoken about the real economy. i hope that means an emphasis on manufacturing because of its ripple effect. one concern is the monetary policy doesn't do enough to serve americans. last year a journalist described it as trickle-down economics. it boosts the price of assets like stocks and bonds, and in homes. we can enrich the wealthy on wall street, but it's not clear to me and the many americans who haven't seen a raise in a number of years that this policy increases wages and incomes for workers on main street. tell us how the monetary policy directly impacts families on main street and in ohio? >> to broadly benefit all americans, especially those who

were seeing harm come to them and their families from high unemployment in a recovery, it has taken a long time and has been disappointing. it's true the policies the fed conducts when we implement monetary policy, drop-down interest rates affect assets prices. you use the term trickle-down. we tend to affect interest- sensitive spending. the ripple effects bring benefits to i would say all americans, those who are unemployed and find it easier to

get jobs. you mention wage growth has been weak or nonexistent. as the economy recovers my hope and expectation is that will change. if we can generate price stability all americans will see meaningful increases in their well-being. >> i spent a long time talking to bankers. some of the largest banks, and i hear a concern from so many bankers across the board that to

be to fail still has not been solved. in march ben bernanke said it is still here. last friday, you saw the comments of the new york fed, bill dudley. not exactly a populist firebrand. he said there are deep-seated failures. "they have lack of respect for the law and public trust. he said our current regulatory efforts may not solve these problems. his view is reinforced by the fact that doj has eight separate investigations under a way. -- underway against the largest banks alone. do you agree we haven't solved the problem?

there is an apparent lack of respect for law, regulation, and public trust. what do we do to address too big to fail? >> i would agree addressing too big to fail has to be among the most important goals of the post crisis period. that must be the goal we try to achieve. too big to fail creates a threat to financial stability, and it does unfairly advantage large banking firms over small ones. my assessment is we are making progress. it should make a very meaningful difference in terms of too big to fail.

we have raised capital standards. we will raise capital standards further. for the largest institutions greatest risk, we propose capital surcharges. we have on the current boards the possibility of requiring the largest banking organizations hold additional unsecured debt at the holding company level to make sure they are capable of resolution. right now they have the capacity and legal authority to resolve a firm that finds itself in trouble. this is very promising in terms of the able to accomplish that, so we are working with foreign regulators to improve the resolution and continue to put in place higher standards, liquidity requirements.

we put in subsidiary requirements. a supplemental leverage requirement for the largest banks. i think this will make a meaningful difference, and we are hoping to complete this in the months ahead. >> you said you are looking for something potential he to do further. how will you assess the standards as they go into affect if you need higher capital requirements?

how will you assess the effectiveness of those. >> there are studies that attempt to estimate what the too big to fail subsidy is in the market, and while there are a lot of questions. we can look to see what is happening there. >> do you believe there is a subsidy? >> will the senator wrap it up? >> i will ask my last question. there isave -- believe a subsidy of tens of millions of dollars a year for the largest banks? >> i think there are different methodologies used in different studies, and it's hard to be definitive, but i would say most studies point to some subsidy that a reflect too big to fail, although other factors may also apply.

they may account for the fact that larger firms tend to face lower bargaining -- borrowing costs. >> i want to pick up where my colleague left off. as you know, i share his and many other concerns about too big to fail being alive and well. as both of you noted, there are many studies that document -- even try to measure -- too big to fail and the market subsidy advantage the megabanks found. another is coming out today. gao is releasing the first study senator brown and i asked for. the study confirms this in general. there is a huge market advantage. specifically this recommended the federal reserve warned

dashboard -- federal reserve board finalized policies and procedures related to the emergency landing at doherty and -- authority, and established timelines to ensure compliance with dodd frank compliance. what that means is dodd frank if -- gives you the ability to wind down that emergency lending authority. the board has not acted on that or a established timelines to do that. one obvious question related to this study coming out today -- will you do that as chairman, and when will you do it? >> i think that is in the works, and we will try to get it out soon. >> do you have a time frame in mind?

>> i'm not sure, but i will try to make sure. >> if i can ask you to supplement with moore's citrix -- the record following the hearing with more specifics about the fed's plan to act on dodd-frank with regard to that. you also mentioned increased leverage ratios for the biggest banks. i agree the action you supported in july was very positive. i don't agree it was enough. even when you consider the surcharge and other things, more needs to be done. would you support going further in terms of leverage ratio with the largest banks or not? >> i think we will have a very meaningful improvement in capital standards by going the

approach dodd-frank has recommended, which is capital standards. there will be a surcharge. we are contemplating a countercyclical capital surcharge that would add to that. are contemplating additional ways of dealing with problems of reliance on funding that could take the form of the capital charge relating to reliance on that kind of funding, or it could take the role of that kind of requirement. i think when we -- i think a belt and suspenders approach, where we have a

servese requirement that as backup, because there are potential problems with risk- based capital requirements. remember that we also have stress tests, which are yet another approach to assessing whether or not institutions have the wherewithal to be able to. -- to be able to lend. mean to cut you off. i have to follow up before my time is up. i understand the other categories, but considering all those, i think you should go further with supplementary leverage ratio. would you support that as we speak or not? >> i want to see where we are when we have implemented dodd frank and requirements we need to put in place. >> a final question. you have said in the past, i

strongly believe monetary policy is most affect if when the public understands what the public is trying to do and how. -- what the fed is trying to do and how it plans to do it. a lot of us agree, and many think the best way is through openness and transparency at the fed. not just a better-managed tr p.r. campaign, but real openness and transparency. would you publicly support s209? if not, what specific changes would be required to earn your public support? >> i strongly support transparency and openness on the part of the fed. i think in terms of the timeliness of that, we are one of the most transparent central banks in the world.

i would not support any requirement that would diminish the independence of the federal reserve in implementing monetary policy. for 50 years congress has recognized there should be an exception to avoid interference. -- avoid political interference in monetary policy. i think it is critically important to the economic performance of this country, and we have seen it around the world, that allowing the fed to be independent in determining

monetary policy is essential, and i would be very concerned about legislation that would subject the federal reserve to short-term political pressures that could interfere with that. >> thank you. at the end of out over the -- of october, the federal reserve formally applied for membership. -- membership in the international association of insurance supervisors. the united states has membership through the office created by dodd frank. can you tell me why the fed should have its own membership on that board, and furthermore, why there should be a focus on that when domestic oversight

challenges seem to be a higher priority? >> my understanding is now that the federal reserve has been charged with supervising some of the largest insurance companies that have been designated, that we want to be in a position to work with regulators in other countries to make sure we have internationally compatible and appropriate standards. as we have in the case of banking rules. fifo cannot fulfill that need for you? >> i'm not certain. i think it would still be beneficial to take part in that group. >> in our conversations about capital standards appropriate to insurers, i have raised concerns. i have encouraged industry specific guidance for financial institutions. do you agree they have developed guidance and metrics rather than

forcing insurers into a bank centric regulatory model? >> i do believe one side to all should not he the model for regulation and that we need to develop appropriate models for regulation and supervision of different kinds of institutions. insurance certainly has some very unique features that make them very different from banks. we are taking the time to try to study what the best way is to craft regulations that will be appropriate for those organizations. >> you are saying a bank centric model would not work in this country? >> they are very different in terms of is this models we want to expand.

>> i want to discuss the recent decision not to release the research regarding the asset management industry. while the council has publicly indicated he would release any guidance from this for public comment, it has declined to release this study. if you are confirmed as chairman of the fed, will you ensure the council lives up to its commitment of transparency, and will the fed support efforts for studies on which they might be available for public comment? >> i have not purchase abated, but if i do so, i will take such concerns seriously. >> if you are confirmed, you will, and the question is about transparency.

it is a transparency of metrics that are going to be used. people need to have the ability to comment before they are applied. would you be willing to make that commitment to transparency? as it applies to the soc -- the fsoc? >> i will study this more closely in terms of her -- of their procedures, but i feel it should the clear why a particular firm should be designated. >> and the metrics? i just want to thank you for your willingness to work on the issue. -- end-user issue we discussed last week. i very much appreciate it. >> senator kirk. >> a technical question on behalf of large insurers in illinois. to extract a commitment from you to do a cost benefit analysis if we are to require them to

g.a.p.from s.a.p. to accounting, which they have warned me could cost a couple hundred million dollars. >> i am aware there is an issue around different accounting standards and insurance companies. i have not had the chance to study that myself, but i would agree this is something we need to consider very carefully and pledge to do so. >> thank you. mr. chairman, thank you. >> senator warner. >> thank you, mr. chairman. and thank you for being here. i want to ask a series of quick questions. i would like to make a comment. i understand some of the concerns about quantitative easing.

i would make a comment. i would ask for a short response on this. part of our dysfunction in terms of the ability to grapple with getting our countries balance sheet right in terms of a so- called grand bargain, where you get an actual budget in place -- if we were able to meet our functions, wouldn't that allow you to move ahead in the appropriate manner? >> it is certainly the case the economy has suffered a substantial drag from fiscal policy. the cbo estimates the drag amounts to something like one and a half percent on growth. -- 1.5% on growth. as we commented, taking account of that large amount of fiscal drag, the economy is growing at

2% is showing greater momentum. i would expect if there were less fiscal drag the economy's growth rate is going to pick up. certainly that has been a headwind on the economy and they -- and something that we have tried to offset. so obviously our tools to do -- it is not perfect. >> the government shutdown would cost $24 billion or potential default threats don't provide predictability. i want some follow-up as well. i have been disappointed in the ability to be the arbiter around regulatory conflicts.

i simply would say i hope as you move into this role, there will be institutions. -- there will be non-bank financial institutions, such as asset management firms. it did seem to me that the ofr report did not have a lot of clarity, and i would hope in your role -- one of the reasons i wish we ended up with an independent chair, but we try to give some clarity that we realize we give some clarity about how we are going to evaluate those non-bank institutions.

>> i think that is a fair and reasonable objective. our staff has been working been trying to facilitate the works of those groups. >> we would like to see that transparency, so we all know the rules going forward. one thing is we think about balance sheets and stimulation, i know the fed pays interest on excess reserves.

i believe you are holding $2.4 trillion. i think we pay 25 aces points. points. we have seen denmark and other central banks start to lower those payments. would you consider extending -- in sending -- incenting the banks to get this capital back into the market place to stimulate more private capital into the market? >> that is something they have discussed and the board has considered on past occasions. it is something we could consider going forward. i think they were worried if we were to lower the rate to close to zero it would impair market function, and that has been a consideration, but it certainly is a possibility.

as we >> i just want to ask you to look at that as well. some of my colleagues have expressed concern. >> thank you for being here today. i want to thank your family for taking the time to show support. i think that makes a difference. a full do you follow gold and prices? you >> to some extent. >> do you think there is an economic indicator behind the rise and fall of gold prices? >> certainly it is an asset evil want to hold when they are very fearful about potential financial market catastrophe or economic troubles and tail risk.

often we see gold prices rise as people flee. >> that was a better answer than i got from sherman bernanke last july. i asked him the same question, and he said no one understands gold prices, and i don't pretend to understand them either. do you share that view? clearly, with a few extra tidbits you just shared with us. >> beyond what i shared, i don't have strong views. i have not seen a lot of models that have an successful in predict them. >> you talked about the role of the federal reserve, promoting conditions, maximum employment, a safe and sound financial system.

do you believe we have a safe and sound financial system today? >> i think we need to do more. we are not at the end of the road in terms of putting in place regulation and enhanced supervision. that will make the system safe and sound, as it needs to be to contain systemic risk. >> the reason i raise the question, we had this discussion when you were in my office about community banks. do you have a pretty good understanding of what is going on out west? we have lost half the community banks and credit unions in our communities, making it difficult for housing recovery, getting loans for small businesses. i

guess the question is what steps will you take to avert a culture of consolidation? >> to the extent the large banks have an advantage because they benefit from too big to fail, i think objective should need to put in place liquidity standards so we level the playing field. and capital and liquidity standards. we should make it costly, since those firms do pose a systemic risk to the financial system. we should be making it tougher to compete and encourage them to be smaller and less systemic.

with respect to the community banks, we need a model for supervision of them that is different and has less regulatory burden and is appropriate to their business model. we are proposing much more onerous standards. >> i believe one-size-fits-all is a disadvantage. do you see that cause an equity bubble in the stock market? >> stock prices have risen robustly, but if you look at the ua should and measures, the kinds of things we monitor akin to price equity ratios, you would not cede territory that suggests bubblelike ad additions.

when we think about assets like bonds, the premium is somewhat elevated historically, which suspects valuations not in bubble territory. >> do you think there is a federal role to support the stock market? >> no. >> i do not think anything has come with such substantial qualifications. it's fascinating to read your writing. a number of issues have arisen in the international banking community just since the

meltdown in 2008, including libor rate manipulation, energy market manipulation, issues relating to money laundering. robo signing. fraud on documents. the fed plays an important role in supervision. can the fed help support public faith? >> i think that is an important goal and one i am happy to work toward. i feel that is essential and appropriate, yes. >> i want to ask you to address the rules completed on the folk -- volker rule, or firewall,

which creates a wall on the hedge funds that make risky bets with private investors and commercial banks that have played in them ported role in -- that have insured investments -- insured deposits and can use the federal window, and have played an important role in businesses. there has been a lot of concern the firewall will be compromised. can we count on the fed to work with regulators, to implement it in a fashion keeping up with this goal of systemic risk. >> we are working very closely on this rulemaking with other agencies. we are trying to be faithful to the intent of this rule, which

is to eliminate short-term financial speculation in institutions that enjoy the brick action of the safety net. the devil here is in the he tells. -- the details. they will does permit appropriate hedging and market making activities, and we are trying to devise a rule that will permit those act 70s but be -- those activities, but be faithful to the rules congress put in. commodities, there is a concern that under a certain situation, large banks are able to put their thumb on the scale to the ownership of electric power generation, pipelines, warehouses for key metals, and there is certainly a history in terms of grandfather commodity

investments, and in terms of related activities. but there is concern the ability to influence will affect price and creates a conflict of interest that provides essentially a hidden tax on the american economy, and the fed does have regulatory powers relating to this. we can maybe chew on this a little bit in terms of your perspective. >> we are involved in a comprehensive review of like -- of finance activities in financial holding companies. as you indicated, we allowed some activities we deem to be complementary to financial activities, and we are reviewing

what is appropriate. in addition, congress grandfathered certain activities. they later became financial holding companies. we want to make sure these are conducted in a safe manner, and we want to consider this. >> thank you so much for being willing to take on this role at the fed and bringing your expertise to their and your past but service trade we wish you well.

>> thank you for being here. i appreciate this time in your transparency today. if you would share with all of us how many rate increases you have voted for during your term on the federal reserve. >> i served as a governor from 1994 until 1997, and we had a cycle of rate increases at that time. >> i thought that was just good to get into the record. i appreciate you so much for being here. we spoke about monetary policy and one of the things that we

discussed was my concern. and i think it was yours too. it certainly has not trickle down to the economy. it is a blunt object. would you agree that although it has been an attempt to stimulate the economy, and has not been much better than those at the lower end of the spectrum? >> to the extent that low interest rates have an impact on asset prices, the policy is to

some extent with the stock market, which may be an example of what you are talking about. it is also played in a port role by helping the housing sector and boosting housing prices. i think it has been largely beneficial to all those americans who own homes and has improved to their financial well-being. that is broad-based. >> we talked a little bit about this in the early summer. when the fed began to think about moderating the pace at which it would make purchases. the market had a stringent reaction. the federal reserve appeared as if it had touched the hot stove and that this policy was going to greatly affect the wealthy you are trying to create. the policy of moderating.

the policy was pulled back. it seems to me, and you discussed this a little bit, the fed has become a prisoner to its own policy. to step away from qe3 was going to shatter the markets and take away from the wealthy fact. can you talk a little bit about some of the escutcheons that were taking place during that time? >> i do not think we should be or can be a prisoner of the market. >> do you agree that it affected the fed? >> we do have to take account of what is happening in the markets. market conditions and the effect that they are likely to have on spending in the economic outlook. it is the case and we highlighted this in our statement when we saw the

picture of interest rate jump greater than we would have anticipated from the statements we made in may and june. in particular, we saw mortgage rates increase and rise in the space of a few months by over 100 base points. we had to ask ourselves whether or not the tightening of conditions in a sector where we were seeing a recovery, and a recovery that could really drive a broader recovery in the economy, we did have to ask ourselves, whether or not that could potentially threaten what we were trying to achieve. overall, we are not a prisoner of the markets. i continue to feel that we are seeing an improvement in the labor market. that was a goal of the program.

we will continue to evaluate that through incoming data and make decisions on the program going forward. >> thank you. i want to make sure i fully understand. my last question is, you talked a little bit about monitoring the financial markets. you spoke about using monetary policy as a blunt instrument. you are credited in 2005 that the house is that housing market was bubbling in that part of the country, the question is, do you believe that under your leadership the fed would have the courage -- i know you only have some influence -- would the fed have the courage to print those bubbles and ensure that we do not create another crisis? >> no one who lived through that financial crisis would ever want to risk another one that could subject the economy to what we are painfully going through and

recovering from. we have a variety of different tools that we could use if we saw something like that occur. they include supervision, and monetary policy. >> you would have the courage to do that? >> i believe that i would. i believe that this is the most important lesson learned from the financial crisis. >> mr. chairman, thank you for having this hearing. i very much appreciate your candor and transparency. i really do. i appreciate the conversation, both in the office and -- i want to thank you for giving us the same answers today that you gave in the office. >> thank you very much senator. i appreciate that. >> senator hagan?

>> i want to echo what everyone has stated. the depth of your background, your experience and expertise. we are very honored to have you here. thank you for your testimony. i wanted to talk about the section in dodd frank where it is required that banks would access deposit insurance and what if it, federal reserve discounts. an plain vanilla derivatives such as equity, to push them out, to separately affiliate them. this move would raise costs without significantly reducing risks to the financial system. when i spoke to ben bernanke, he has consistently stated that the federal reserve had concerns about the swap push out rule prior to the enactment of dodd frank.

they still have concerns about it today. are your views on this issue consistent with chairman bernanke's? would you share the view that it is a good idea to repeal parts of this? if that did not take place, what would the markets to? >> senator, as you indicated, the federal reserve and other agencies did have concerns about this role. they expressed them when dodd frank was being considered. we are working very hard to address the concerns around this rule. we think that we are likely to be able to do so. we want to address the concerns that people have so that it won't be necessary to repeal the rule.

that is my hope. they're certainly trying to do that. >> what is your timeframe on that? once you are confirmed? >> this is something we hope to get out hopefully later this year. >> you said you could do that without changing the section in question? >> i believe that is the case. we will be able to address those concerns. i understand the concerns. we are trying very hard. i've see share chairman bernanke's viewpoint? >> i believe so about those concerns that are there. we need to address them. we need to do so and we will. >> since the start of the qe, the financial markets have

responded to pronouncements by the fed. are you concerned that the markets are too driven by speeches and pronouncements from central banks around the world? if the suggestion of tapering can contributed to volatility, can we expect more volatility in the future? >> well, the federal reserve, and i think this is true of other central banks, we are trying as hard as we can to communicate clearly about monetary policy and our goals. we are trying to communicate about our intentions and how we carry out programs. this is challenging. we are i in unprecedented circumstances. we're using policies that have never been tried before. multiple policies. we are trying to explain to the public how we intend to conduct these policies.

so it is a work in progress and sometimes miscommunication is possible, but i think we certainly want to diminish any unnecessary volatility. sometimes there is volatility because we all hear news about the economy that changes our views over the course of the economy and policy. it is natural to see a response. to diminish unnecessary volatility, i think we have to redouble our efforts to communicate as clearly as we possibly can. that will be my emphasis. >> thank you, mr. chairman. senator to me >> thank you for being here. i want to go back to some of the issues that senator corker was raising regarding monetary policy. first i think it is important to

stress and you are very well aware of this, but the adverse consequences that we are already experiencing as a result of the monetary policy. they are problematic. we continue to have this artificially suppressed cost of funding these excessively large deficits that we run. it contributes, i would argue to fiscal imbalances. we are punishing middle-class savers for years now. people who spent their entire working class lifetimes to forego consumption so that they would have a little bit of income in their retirement. now they have no income because they have earned nothing on their savings. they have watched it gradually get a road it, even by a low level of inflation. we have exacerbated the problems of underfunded pension plans. these are all the things that have been occurring and continue to occur. what worries me perhaps more is

the point that senator corker was getting to i think. what happens when does morphine drip starts to add? at some point, some time, we are going to move away from this i assume. everybody believes that. the assumption seems to be that the markets will behave very benignly when this occurs. we have seen some worrisome glimpses that maybe that is not a safe assumption. back in june, at the mere suggestion that members of the fed might be contemplating stepping back a little bit earlier and the treasury goes back 100 basis points. yesterday, with the release of your testimony, doesn't this feel like there's something a little artificial here? isn't it possible that well you have many tools available, the market may not respond very well.

we could end up creating a real problem as we try to exit from this. >> senator, you made a number of different points. i think the first point you mentioned is the low rates. low rates give rise to fiscal irresponsibility. that puts pressure on congress. we have established low rates in order to get the economy moving. that is the country's mandate to us. it is important for congress to recognize that as the economy recovers, both short and long- term rates will go up. a situation in which the government's funding cost remains as low as it is, we must achieve our goal of getting the economy back on track. this is a very temporary situation. i believe members of congress should be looking out a few years to a time when rates are

going to be higher. low interest rates, that is absolutely true. this is a burden on people who are trying to survive on the income from cd's. there's not much they can get. when you think about how we will get things back to normal, i would argue that we cannot have normal rates unless the economy is normal. we do not have very much investment. there are fundamental reasons here when rates are low. i think pursuing a policy of low rates to get the economy moving will best enable us to normalize policy and to get rates back to normal levels over time.

in terms of rates, as the economy recovers, we will need to withdraw monetary accommodations that we have put in place. we will make every effort to do so at a pace that is appropriate for continued recovery and to maintain price stability. we will continue to communicate that plan to markets. as we've seen and as you've indicated, it is possible for rates to jump. that is not as true now, but in previous tightening cycles like the one we had from 1994-1995. low rates moved up over the span of six months over 100 basis points. we have tried to make sure the financial system is more

resilient. we have contested and continue to do so to make sure that banks are appropriately managing interest rate risk. that is a risk that we will try to mitigate, but it is inherent in any tightening cycle. >> i know i am running out of time, but two quick points i would like to make. i would like to express my concern which is the exact opposite of the concern that was raised by the other senator. the danger of the implementation of the volker rule. i think the decision by congress to exempt u.s. treasuries it knowledge is that when you ban trading you make it less liquid and more expensive for issuers. the next rule may exempt others. that is another implicit acknowledgment of this problem. it is a problem for corporate

issuers in america. i am concerned that we do not unnecessarily raise their cost of borrow him. i am also deeply concerned about the consolidation that is happening in small banks and the lack of new small banks. we used to routinely launch hundreds of new community banks. i was told by the fdic that there is not a single community bank that has been launched since 2010. the systemic risk to the economy is way overboard. i hope you will make an effort to diminish that burden. >> i promise to do so. >> senator warren? >> there's been a lot of talk today about the fed's use of quantitative easing to help the economy get on its feet. the truth is, if the regulators had done their jobs and reigned in the banks, we would not need to be talking about quantitative easing. we could've avoided the 2008

crisis altogether. i want to focus on the fed's regulatory responsibilities to keep the big banks and check. i am concerned that those responsibilities are just not a top priority for the board of governors. earlier this year, the fed reached a settlement with 13 mortgage servicers in a long list of illegal foreclosure activity. the settlement was for the sum of $9 million and directly affected more than 4 million families. they never voted on whether to accept the settlement. the fed has smart, hard-working staff, but the board of governors would never delegate critical monetary policy to them.

even now, after the biggest financial crisis in a generation, the board things less than willing to delegate critical regulatory and supervisory decisions. i think we need to make raining in the banks a top priority for the board. i know the board meets regularly to discuss monetary policy. do you think the board should have regular meetings on supervisory and regulatory issues as well? with that make it clear that both of those are important to the fed? >> i absolutely believe that our supervisory responsibilities are critical. they are just as important to monetary policy and we need to take them just as seriously and devote just as much time and attention to them. the board operates under a variety of restrictions. you may know about the government sunshine rule.

when you suggest that the board meets to discuss regulatory matters, our ability to do so outside of open meetings is very limited. we tend to handle those issues by meeting individually with staff or meeting in small groups. we have a committee system where committees are put in charge of managing particular areas and making recommendations to the board. i remember in the 1990's, the board did meet regularly to discuss i supervisory issues. there are confidential supervisory information in those issues, and it is easier for us to have a meeting. i consider those very valuable. it is a worthwhile idea. i should just say that when

there are delegations to staff in the board of governors, that does not mean that the board members are not consulted. those with the expertise may have played a critical role with important input, even when there is no formal involvement. >> fair enough. but i think it is an important signal here. i'm glad to hear that you are thinking about this and the question of the appropriate delegation and when it is appropriate. i would just like to say something briefly about that. when it is appropriate to delegate to staff and when you have to retain the board itself. very briefly, because i would like to get onto one other question. >> under lock on whether certain

matters the board must vote on. supervisory mergers and so forth. rule changes. typically we delegate enforcement matters to the staff in the area of supervision. >> i'm glad to hear that you want to continue to think about that. i want to ask you one other fundamental question here. that is, do you think the fed's lack of attention to regulatory and supervisory responsibilities helped lead to the crash of 2008? >> you know, i think in the aftermath of the crisis, we went back and tried to look carefully at what he should have been doing differently. there have been important lessons learned. we have massively revamped our supervision, particularly of the

largest institutions. we now organize those institutions through a process called the list in which we are simultaneously reviewing all of the largest institutions simultaneously. the federal reserve system works jointly on these reviews. we no longer delegate to individual reserve banks the supervision of 1 or 2 of these large institutions. it has become an interdisciplinary matter. with economists, lawyers, and others involved in this. we have learned a lot about supervision. one of our top priorities now is ramping up our monitoring of the financial system as a whole. that is something we were not doing on an adequate basis before the crisis.

we miss some of the important links by which problems and mortgages went through the financial system. >> thank you very much. i just want to say, dr. yellen, when you are can armed, i am glad to hear that you will make it a top priority of the federal reserve to engage in supervisory and regulatory responsibilities that help keep our financial system safe. that cannot be something that is merely an afterthought. it has to be a primary effort on your part. >> thank you senator. i completely agree with that. >> thank you very much. mr. chairman and governor, you have demonstrated your wisdom earlier. everything else is anti- climatic. when you are confirmed as the

chairman of the federal reserve, it will be consistent with your record, selections, and wise choices. chairman bernanke has indicated that many times our fiscal policy and monetary policy have been working at opposite purposes. they've been trying to get an expansive policy in place. we anticipate, and i hope we can avoid this, unemployment trends. how would your job and obviously the size and scope of your portfolio and everything else be affected by our decisions today? >> i agree that fiscal policy has been working at cross

purposes to monetary policy. i recognize the importance of the objective of putting the deficit and debt on a sustainable path. congress is worried about that and i think it is important to do so. some of the near-term reductions in spending that we have seen have certainly detracted from the momentum of the economy and from demands. it makes it harder for the fed to get the economy moving and it makes our path more difficult. it would be helpful going forward if it were possible for deficit reduction efforts to focus on achieving gains in the medium-term horizon.

those aspects of fiscal policy that give rise to concern about sustainability in the medium- term, while not detracting from the impetus that we need to keep financial recovery moving forward. >> such a fiscal policy would help you in terms of what we all anticipate is the point at which you have to begin your tapering. basically this balance would allow you more flexibility and more confidence that when you start to taper, it will lead to a reverse in the economy. >> that is fair senator. >> that is fair senator. we are worried about a financial recovery. we need a fiscal policy that has less tried and does no harm -- that would make life easier. >> let me shift gears.

a few years ago -- we were discussing the possibility of default. the markets were beginning to react. given the central role that the treasury securities play, not just in funding the government, but also the markets, the collateral markets across the globe, were you beginning to see in the fed, ominous signs of a potential catastrophic impact of default? >> i do not believe that a default would be catastrophic. we did see some signs in the run-up to the debt ceiling. they suggested that financial markets were taking notice. there were preemptive protective actions that market participants

were beginning to do. they were trying to protect themselves from what could have been catastrophic consequences. more generally, we did see an impact on consumer and business confidence. we also saw a general willingness to make investments and the economy. >> a final point. we've been talking a lot about the size of your portfolio. essentially, the benchmarks that typically you are looking at is an inflation and deflation and unemployment. for a while, under chairman bernanke, there was a big shift and deflation which would have had adverse consequences. we have avoided that. we have avoided inflation pressures. will we have not done is get the employment numbers to a level. the focus, the traditional and

appropriate focus, is on those measures. not the absolute size of your portfolio. is that sensible? >> that is sensible. we are focused on avoiding deflation. we have an objective. we're trying to get the economy back to old when met. -- back to full employment. i think we have made progress, but we are not there yet. if we recognize from the outset from the assset purchase program, there are costs and risks associated with large balance sheet. >> thank you. >> nice to see you again. >> thanks for stopping by the office. i think we had a good conversation. i would like to continue, if i

could, with a few questions along the lines of what we spoke about in my office. i found her testimony about asset levels to be interesting. just before the chairman turned to me i looked at where the dow jones is out. it's about 15,850. an economy that thomas quite honestly, everyone would recognize as too much unemployment as an economy where people continue to struggle. it is economy where we will continue to see where the growth will be. we are continuing to see real estate wars just like we had in the old days now that is confined to cities and a certain areas of the country.

we are now starting to see private equity firms who i think are very good. that is a shocker to me, having owned a few rentals in the past. dr. yellen, i kind of look at these factors and i wish i could going on with other items. what am i missing here? i see asset bubbles. you're going to bring the asset balance sheet down from $4 trillion to zero even if you said over the next four years we would bring it down from from $ 4 trillion to $0.

>> with respect to real estate, you mentioned real estate markets and we are seeing, as you mentioned, private investors come in to invest often in the all cash in certain markets in the country. is this evidence of an asset bubble? if you look at the markets where that's occurring, it's some of the hardest hit markets where prices dropped the most, las vegas, phoenix, the areas that had the biggest crashes with the largest number of foreclosures with houses being put on the market and the borrowers where many of these housing markets

where the investments are taking place are ones where you have a substantial fraction of underwater borrowers and individuals who have bought houses, whose credit is impaired, who are not in a position to be buying houses. these investors are taking very low prices for cash and renting them out over a reasonable time. >> dr. yellen, i don't want to be rude and interrupt you but i'm running out of time.

i think you would agree with me that you probably would not in a public setting, but if i were to say to you, why don't you announced today that you are going to draw this down over the next 24 months from $4 trillion to zero, i think you would see the impact of your policies on the value of real estate all across the united states, not just of the hardest hit areas. i think the real estate that i and others own would go down in value. i think the stock market would have the same sort of reaction that it has had when chairman bernanke just suggested that there might be a phase down here. here's what i'm saying because i am now out of time.

i think the economy has gotten used to the sugar you put out there and i'm just worried that we are on a sugar high. that's a very dangerous thing for the person out there just trying to change the bills and maybe put a dollar away for retirement. the flipside of your policies that you are advocating for are very hard on certain segments of our society. explain to the senior citizen who was just hoping the cd will learn some money so they don't have to dig into the principal what impact you are having on a policy that says we are going to, for as far as the perceivable future, keep interest rates low. >> i agree. savers are hurt by the policy, but if we want to get active

business as usual in the normal interest rates, i would say would need to do that by getting the economy back to normal. that is what this policy, i hope, will succeed in doing. the savers play many different roles. they may be retirees who are hoping to get part-time work in order to supplement their income. there may be people who have children who are out of work and you are suffering because of that or grandchildren who are going to college, coming out of college, and hope to be able to put their skills to work on finding jobs in the market when it strong.

when they think about themselves as savers, taking into account the broader array of interests they have and a strong economy, they would see that these policies, even though it may harm in one respect, are broadly beneficial to them, as i believe they are to all americans. >> my time has expired. thank you, mr. chairman. >> thank you, mr. chair, and thank you, dr. yellen, sticking through so the end of the desk and ask you some questions as well. i went to get to the fed goal of unemployment. give me a picture on what you consider to be full employment. >> i don't have a precise estimate, but every three months all of the participants in the

fomc turn at and indicate what they think normal, long-term levels of unemployment is. in our most recent survey in september, the range of opinion was 5%-6%. >> what you believe the real unemployment rate is today? >> the measured unemployment rate is 7.3%. as discussed previously, we have very high incidence of involuntary part-time employment. we have all too many people who appear to have dropped out of the labor force. >> would you agree that it is close to or probably over 10%? >> by broader measures, if that high.

>> would you also agree that right now in america we have the greatest income disparity that we have had since the great depression? >> we have had widening wage inequality and income inequality going back to the mid to late 80's and it continues. >> i just want to take a minute to speak for those who are on the lower rent due the cap the fed policy, look at the stock market, and do not have a stake as they see it, as you just explain. the day to day, they do not see their economic condition getting any better. certainly, they don't see their unemployment opportunities getting any better especially those for low job skills. what have you done to address unemployment disparity, income disparity in this country?

what would you suggest the fed pursue to avoid long-term income disparity? >> i think you are asking about something that is a very deep problem that has affect other advanced economies. they have spent a lot of times to understand what's responsible for widening inequality. many of the underlying factors are outside of the federal reserve's ability to address. >> do you believe your policies have added to the problem? >> i believe the policies we've undertaken have been meant to generate a robust recovery. i would like to see the u.s. economy and the job market appear that it helped.

as we saw when we still had trends toward widening inequality, we did have real wage gains when we had an ever stronger job market. foster growth in the united states will help a faster job market. when the economy recovers, we are going to see firms be more willing to undertake trading where they cannot find workers. they are going to be willing to invest in people and to make capital investments who will make workers better on the job and we will see better wage gains. >> i would suggest that those at the bottom are not feeling the effects of these policies.

the trickle-down hasn't happened for them. they struggle every day. they may not see their wealth grow because they don't hold a lot of assets. anything that you can do taking a look at this broader issue because this is an issue that will affect the economy for years to come and affect our competitiveness in years to come. we are getting resources for those who did consume. we look forward to a long relationship with you. >> thank you, senator. >> senator manchin. >> you've done a great job today. i enjoyed our visit. i look at you and think there's a person involved in last time we had a balanced budget. the last time that we would have been on track to be debt-free.

if you go back to those days, there were naysayers then who said we could not do it. but you did it. and then we went off the tracks. what i'm asking is how we get back on the tracks. you and i have a little difference of opinion on this. i have a concern but you have a broader view of what has worked and not worked around the world. we spoke about japan and why you believe that what we are doing needs to be done. if $85 billion a month in quantitative easing has not really given us the results that we desire, why wouldn't you recommend doing $200 billion a month? why not $85 billion? i have concerns continuing it because as another senator said, you have done everything possible to prop up this economy and we have failed is oblivious

congress to do our job. to me, to get even a budget, we don't have a budget. people would think we are crazy. it would be too harmful to have a balanced budget. those of us who come from the executive branch, that's all we understand. we had to by law. and then to even think we could be debt-free in the next generation are beyond. you think those are impossible, unreachable goals? >> it's an exceptionally important goal. >> can meet balance the budget again? >> it requires very tough decisions. >> you made very tough decisions

in the 1990's. >> congress and the administration made very tough decisions and they did it in a way that would set a model for this congress. president clinton was elected and the economy had high unemployment. it was just beginning to recover. the administration and congress wanted to achieve deficit reduction but to do so in a way that would not harm the economic recovery so they agreed on a set of tax increases and spending cuts, not all of which came into effect immediately. at that time, there had been a lot of uncertainty among businesses about whether or not the government would ever balance its budget.

and now the fed had scope to use monetary policy to offset any adverse impact on the economy but we really did not feel a lot of that adverse impact because the economy enjoyed a long and robust boom. >> you having that experience, you lived through it, worked through it, and we have the utmost respect for the reserve, your self, and you see that we have the utmost respect for you. we just need you to speak out and help us a little bit more, challenge us to do our job. if people like yourself are in the know, we do not have the political will to do it needs to

be done. every citizen in america has to face a budget. every one of them has to live within that budget and we are unwilling to make that difficult decision. we will go into sugar shock ready soon. unless we hear the unbridled truth from people in the know, people who have been there, it's not like it's the impossible dream. we have not had a budget for five, going on six years. i would like to get back to that again. i would like to think that people like you could help steer us back in that direction. be bold. >> senator schumer. >> thank you, mr. chairmain, and thank you everyone. i want to follow-up on a question that heidi hyde cap brought up.

i agree with senator manchin, it's not upgraded problem. our greatest problem is that middle-class incomes are declining. the amazing thing is that they decline not just because of the recession but they actually declined between 2001-2007. the person who alerted me to this was a professor at harvard law school was elizabeth warren who wrote articles about this one before being a senator was a gleam in her eye but it's one of our most serious problems. if middle-class incomes continue to decline and decline close to 10% between 2001 and today how much it's going to be a different america. what's all of this populism about?

the american people are a generous people. they don't mind if the people at the top income goes up one percent of theirs goes up 3%-4%. my question to you is how concerned are you about this he? what impact will this have on growth and economic attention he? is the fed have tools to do this? i understand this relates to some of our republican colleagues's skittishness about maintaining growth but given the seriousness with i regard this problem that the fed really has a dual mandate which i know you observe which is not simply keeping inflation down and not simply monitoring the budget deficit and its effects on our economy but trying to get jobs and middle-class incomes back again. no one gives it the attention that it needs.

>> senator, i would echo my agreement with you that this is a very serious problem. it's not a new problem. it's a problem that really goes back to the 1980's in which we've seen a huge rise in income inequality. as you said, for many years, the middle and those below the middle actually losing absolutely a disproportionate share of the gains. we have not had very strong productivity growth but a disproportionate share of those gains have gone to the top 10% and even the top 1%. these are very worrisome problems. there has been a lot of debate about exactly what the causes of

this problem are, perhaps having to do with the nature of technical logical change with globalization, institutional changes in the united states including the decline of unions. there are many things that are involved with this problem. what can the fed to? we can change all of those things including education, early childhood education, job training. what we can do is try to achieve a robust recovery so that we have a stronger job market and in a stronger job market, people who are having a lot of trouble getting jobs will be drawn into jobs. they will get better jobs.

there will be more training. people will move up the job ladder. opportunities will increase. it's not going to put an end to the problems or the long-term structural problems driving this but it will be helpful and i think it is the contribution the federal reserve can try to make. >> on my colleagues have criticized you for keeping rates "artificially low," but is in the zero lower bound on the short term interest rate and summarize also artificially? but say rates were 5% today but we have high unemployment and low inflation, wouldn't you lower interest rates? if you did not do quantitative easing, would interest rates be artificially high so to speak? >> i think that's fair. if you judge what is high or low by the needs of the economy, people sometimes talk about the equilibrium real rate.

what is natural given the levels of saving and investment in the economy when this a lot of saving and not very much investment which is where we are now in a weak economy. the natural forces of the economy are fishing interest interest rates down and it is these forces that we are trying to go with. if we were going to try to push rates up when the economy has that much saving and such weak investment, we would truly harm the recovery. having pushed rates to zero, we would ideally have negative short-term interest rates. of course we cannot achieve that. that's when we are trying to push down longer-term interest rates. >> i think you'll make a great chair and your brooklyn wisdom

shines through. >> i never forget my roots. thank you. >> thank you for your excellent testimony. i asked the members of this testimony submit any written questions for the record for dr. yellen by close of business tomorrow. dr. yellen, please respond promptly so that the committee may proceed to a markup as soon as possible. this hearing is adjourned. [captions copyright national cable satellite corp. 2014]

>> the senate returns at 2:00 eastern tomorrow. on the agenda -- an extension of bottom ointment benefits and

debate on the nomination of janet yellen to be the federal reserve chair, with a confirmation vote scheduled at 5:30. they return, tuesday for a pro forma session and they will gavel in a 2:00 eastern. and will recess until 6:00, hold votes for the call of the house to mark the start of the second session of the 113th con gress. they plan to vote on two bills related to the security of the federal health care law. live coverage of the house on c-span. on the next " washington journal," we will look at what is on the agenda for the second session of congress. as both chambers returned from the winter recess this week. brian -- bryan bender and janet hook join us. after that, we talk about the health care law and what is happened for those who started

receiving health care insurance coverage on january 1. government accountability office discusses a recent report done by the agency regarding revenues from oil and gas companies that drill on federal land. we will also look for your hone, e-mail, and twitter on "washington journal," live every day at >> our guest on "newsmakers" is michael needham. he is the founding ceo of the group started in 2010. it is a policy advocacy organization. nice to have you with us. let me introduce our two reporters, neil king and karen tumulty. >> let's start with the new year. we are going into an election year. the new health care law is