unemployment rate deflynning since october. correctly judging the strength of the labor market is very important because the federal market committee is tied to the apering of large-scale asset pumps and the normalization of rates to the assessment of the labor market. much of the slack of the labor market is attributed to cyclical factors and believe a monetary policy can strengthen the outlook. however, if a stational proportion of the market is due to factors such an -- as an aging population, maintaining this policy could instead create economic bottlenecks that would trigger price inflation. different policies are required such as reforming transportation and strengthening jobs programs

and modernizing programs to encourage work. it appears on track to terminate these purchase before the end of the year. however, i'm concerned that the stage it will likely maintain is zero interest rate policy long after q.e. ends and well below those --ed normal in the long run. i'm concerned that the changes is undermining the fed's credibility, weakening the confidence of market participants and increasing uncertainty. i believe the federal reserve helped to stabilize financial markets after the panic in the fall of 2008 but extraordinarily low interest rates have done more to stimulate wall street than help hard-working families on main street across america. as i noted earlier, wall street is roaring, up 108.2%, while for

average families and individuals, real after-tax income per capita is only up a mere .2%. the fed had the knowledge, tools, and political fortitude to exit from the fed's extraordinary monitor actions in interest rates and balanced sheet before the inflagsry outbreak. if the fed has an unsatisfactory fed rate, the task is difficult. today, i'm hopeful you can enlighten the committee on several points. how much is due to statistical factors and how much to all-star nes.

can it create a price inflation that may not be fully cap thoroughed by the p.c.i. index. o they reflect the strength of our economy? as it created more uncertainty and under mind credibility. and when will we return to a rules-based monitor policy. fourthly, is the federal reserve bank of san francisco connect that -- correct that higher individual taxes including higher rates on individual capital and dividends are principally the main cause of drag on our economy. is there a greater way than the present sequester and ax of the budget act of 2011.

finally, is the fed willing to make its balance sheet more transparent. lit include holdings of maturity value and purchase prices for each issue and the current market value of each holding. with that, those are a lot of questions, chairman yellen and you don't have to answer all of them this moment, just so you know. members can submit additional written questions for the record. with that, i yield to the vice chairman of the joint committee. >> thank you very much, chairman brady and thank you for holding this timely hearing. i will only add 15 yes -- questions. to his list. no, i won't. i am so pleased you're joining us today, chair yellen. i look forward to your testimony on the short-term and long-term issues facing our economy. over the past five years we've

seen the important impact monetary policy can have on economic growth at a time when congress has been gridlocked on some important things. whether it was the sequestration policy or other fights we've had. the fed has had to step in several times and today's hearing provides a chance to look ahead and what i hope provides a new environment that we finally have a budget in place and other things that we'll be able to move ahead. both of us i think would agree, chairman brady and myself, that the recovery hasn't been as fast as we'd like but i will say that after a long, hard winter, it is good news that the employment numbers are picking up. to hit the lowest unemployment rate in five and a half years is a positive sign as we move into a summer season we believe will bring more construction jobs and

especially my state, more tourism jobs. the economy has added jobs for 50 consecutive months and has now regained more private-sector jobs than were lost during the recession in april alone almost 300,000 jobs were added. as you and i discussed in my state, the unemployment rate is down to 4. % and while i wouldn't say we're roaring, it is a chairman described wreets and the main streets in minnesota, we are moving at a fast clip and major announcements were announced from anderson in just the last few days. the national unemployment rate of 6.3% has dropped almost four percentage points since the height of the downturn. inflation is low, well under 2% over the past 12 months and there's no sign of a rise in inflation in the foreseeable

future. growth domestic product that has grown for 12 straight quarters. i believe that actions taken by the fed, i hope bring about the economic recovery. i believe congress did some good things. i believe we should be doing more. and the chairman has outlined some of them. the fed lowered the short-term interest rates to near zero at the end of 2008 and stated recently that it will keep rates low for a considerable period of time. low interest rates ha helped strengthen the economy by helping keeping borrowing costs affordable for businesses and consumers. because the economy has strengthened the fed announced in december that it was reducing its purchase under quantitative easing. last month the fed announced it would further reduce purchases for 45 billion each month. it has been understood that these efforts would be scaled back as the economy

strengthened. the federal open market committee changed its assessment of the economy saying that "economic activity has picked up recently." the fed also highlighted an acceleration in household spending. even with the economic progress, we all know families who are working several jobs to get by, as well as workors who can't find a job after months and months of searching. though the short-term unemployment rate has fallen to close to its prerecession level. the long-term level is more than double the pre-recession level, which is one of the reasons many of us have continued to work on the unemployment compensation issue. i've been pleased to hear you express your concerns about the long-term unemployed and i'm glad to know that ordering this problem is high on your list of priorities. ordering long-term unemployment has also been a focus of my work on this committee.

-- committee. despite good news recently about job growth, there are 3.5 million americans out of work longer than six months. i look toward the -- forward to hearing your thoughts on increased transparency at the fed and again, i would mention when your predecessor was here, i think there's been major issues with congress in terms of boxing back and forth and careening from fiscal crisis to fiscal crisis. i'm hoping with this period of stability, with the budget in place, with the work since the tragic shutdown, we can work on these issues that will build on the stability we see in the economy. i would list immigration reform, very important in my state, as we have trouble getting in engineers and spouses of doctors at the mayo clinic.

i would also focus with moving forward with exports ptsen, on the job training that the chairman talked about, on comprehensive tax reform and finally, something that was brought up to me recently and that was the issue of the tax incentives and the depreciation insentives for manufacturing equipment and something i think gives good bang for the buck and i'll be asking you about that as well. thank you very much for appearing before us, chair yellen. yellen serves as chair of the open market committee. she's professor emeritus at the university of california berkeley where she was a professor of business and scommicks had been a faculty member for over 30 years. she's served as the chair of economic advisors and is

president and chief executive advisor of the federal reserve bank of san francisco. she served as an economist on the federal reserve's board of governors. she graduated summa cum laude from brown university and received her ph.d. in economics from yale university. chairman yellen, thank you to today's hearing. >> thank you very much, chairman brady. chairman brady, vice chair and other members of the committee, i appreciate this opportunity to discuss the current economic situation and outlook along with monetary policy before turning to some issues regarding financial stability. the economy has continued to recover from the steep recession of 2008 and 2009. al gross commest -- domestic -- domestic product growth

stepped up to an average annual rate of about 3.25% over the second half of last year, a faster pace than during the first half and during the preceding two years. although g.d.p. is estimated to have paused in the first quarter of this year, i see is that ause as mostly reflecting tans transitory factors, including the unusually cold and snowy winter weather. with the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already under way, putting the overall economy on track for solid growth in the current quarter. one questionry note, though, is that readings on housing activity, a sector that has been recovering since 2011, have remained disappointing so far this year and will bear watching.

conditions in the labor market have continued to improve. the unemployment rate was 6.3% 1/4 percentaget 1 points below a year ago. gains in payroll employment averaged nearly 200,000 jobs per month over the past year. during the economic recovery so far, payroll employment has increased by about 8.5 million jobs since its low point and the unemployment rate has declined about 3 3/4 percentage points since its peak. while conditions in the labor market have improved appreciably, they're still far from satisfactory. even with its recent declines, the unemployment rate continues to be elevated. more over, both the share of the labor force that has been unemployed for more than six months and the number of

individuals who work part time but would prefer a full-time job are at historically high levels. in addition, most levels of labor compensation has been rising slowly, another signal that a substantial amount of slack remains in the labor market. inflation has been quite low, even -- even as the economy has continued to expand. some factors contributing to the softness in inflation over the past year, such as the declines in non-oil import prices, will probably be transitory. importantly, measures of longer run inflation expectations have remained stable. that said, the federal open market committee recognizes that inflation persistently below 2%, the rate that the committee judges to be most consistent

with its dual mandate, could pose risks to economic performance and we're monitoring inflation developments closely. looking ahead, i expect that economic activity will stand at a somewhat faster pace this year than it did last year, that the unemployment rate will continue to decline gradually and that inflation will begin to move up toward 2%. a faster rate of economic growth in year should be supported by reduced restraint in changes in fiscal policy. gains in household net worth in increases in home prices and equity values affirming economic growth and form -- further improvements in business and household confidence as the economy continues to strength. u.s. financial conditions remain supportive of economic growth in

activity and employment. as always, considerable uncertainty surrounds this baseline economic outlook. currently, one prominent risk is that adverse developments abroad, such as heightened jeo political tensions or an intensification of financial stresses in emerging market economies could undermine confidence in the global economic recovery. another rich -- risk is that the recent flattening out in housing activity could prove more protracted than currently expected rather than ruling its earlier pace of recover. both of these elements of uncertainty will bare close objection. the federal reserve remains excited to policies designed to

restore labor -- levels of inflation to those consistent with the dual mandate. as always, our policy will continue to be guided by the evolving and economic and financial situation and he -- we will adjust the stance of policy appropriately to take account of changes in the economic outlook. in light of the considerable degree of slack that remains in labor markets and continue ways of inflation below the academy's 2% objective, a high degree of monetary accommodation remains warranted. with the federal funds rate, our traditional policy tool near zero since late 2008, we've relied on two less conventional tools to provide support for the economy. asset purchase and forward guidance. and because these policy tools are less familiar, we've been

especially attentive in recent years to the need to communicate to the public about how we intend to employ our policy tools in response to changing economic circumstances. our current program of asset purchases began in september 2012 when the recovery had weakened and progress in the labor market had slowed and we said that our intention was to continue the program until we saw substantial improvement in the outlook of the labor market. by december 2013, the committee judged that the cumulative progress in the labor market warranted a modest reduction in the pace of asset purchases. at the first three immediate -- meetings this year, our asset -- assessment was that there was sufficient underlying strength

in the broader economy to support ongoing improvement in labor market conditions so further reductions and asset purchases were appropriate. even as the committee reduces the pace of its purchases of longer term securities, it is still adding to its holdings and those sizable holdings continue to put significant downward pressure on longer term interest rates, support mortgage markets and contribute to favorable conditions in broader financial markets. a rather important policy tool in recent years has been forward guidance about the likely pass of the federal fund rate as the economic recovery proceed. beginning in december 2012, the committee provided threshold base guidance that turned importantly on the behavior of the unemployment rate. as you know, in our march 2014

we undertook a significant review of the forward guidance. while indicating that the new guidance did not represent a shift in the policy intentions, the committee laid out a fuller description of the framework that would guide its policy decisions going forward. specifically, the new language explains that as the economy expands further, the committee will continue to assess both the real -- the maximum unemployment and two percent inflation. assessing the progress, we will take into account a wide range of information, including measures of the labor market conditions and indicators of the pressures and inflation of expectations and readings on financial developments.

in march and again last april, we stated that we anticipated that current target remains at federal funds rate and it would be maintained in a time of purchase program is, especially if inflation continues to run the load 2%. provided that inflation expectations remain well anchored. the new language information on our thinking the likely path of the race after the committee decides for policy commendations. even after they are near mandate consistent levels, financial and economic conditions may for some time war and keeping the target of the federal funds rate below

levels that the committee views as normal in the longer run. because the pollution is so certain -- they need to watch for signs they was diverging from the waistline outlook and respond in a way to stabilize the economy. for both the purchases and the forward guidance we've tried to communicate as clearly as possible and have changes in economic outlook to dr. policy stance. in doing so, we will help them better understand how the committee will respond to unanticipated developments and reduce the uncertainty. in addition, the federal reserve works for financial stability. focusing on identifying and monitoring vulnerabilities in

the financial system and taking actions to reduce them. in this regard, the committee recognizes an extended period of low interest rates has the potential to induce investors to reach a yield by taking on increased leverage, risks, or credit risks. some behavior might be evident in the lower rated corporate debt markets. issuance have anything high yield bond that has continued to expand briskly. underwriting standards have loosened further. some financial intermediate or's -- intermediaries, it appears modest today.

more generally, valuation for the equity markets as a whole and other rod categories of assets such as residential real estate remain within historical norms. in addition, bank holding companies have improve the liquidity positions and have raise capital ratios to levels significantly higher than prior to the financial crisis. for the financial sector more broadly, measures of short term funding continues to be far below levels seen before the financial crisis. they have taken in a number of regulatory steps, mainly in conjunction with other federal agencies and to continue to improve the resiliency of the financial system.

were recently, the fed reserve finalized a rule implementing section 165 of the dodd frank act to establish standards for large banking firms in the form of risk-based and leverage capital, liquidity, and risk management requirements. in addition, the rules requires large banking organizations to form a u.s. intermediate holding company and imposes requirements for the company's. looking forward, the fed reserve is considering whether additional measures are needed to further reduce the risk associated with large interconnected financial institution. we have seen substantial improvement in the labor market conditions in the overall economy since the financial

crisis and recession. we recognize that more must be accomplished. many americans who want a job are still unemployed. inflation continues to run above the projected work remains to strengthen our financial system. i will work closely with my colleagues and others to carry out the important mission that congress has given the fed reserve. thank you here i would be pleased to take your questions. >> thank you. i want to get a clear picture of the strategy in a number of areas. can we expect a qe purchase and sometime this fall? >> we have indicated that as long as we continue to see improvement in the week market and we believe that outlook is for continued progress and as

long as we retain you to believe and see evidence that inflation will move back over time to our two percent longer run objective, we anticipate beginning to reduce the pace of the asset rich as is. is something worth to change the outlook, we would consider that plan. if those conditions hold, we would continue. >> i will leave it to my cause to ask about the different changes beyond that. the $7 trillion on the balance sheet is extraordinarily large. when you expect to begin normalizing the size of the fed's balance sheet. is there a range of years? >> when we complete the asset

purchase program, the community has indicated that it expects there'll be considerable time before we begin to normalize policy in the sense of beginning to raise our target for short-term interest rates? >> let's move to that. what is the appropriate size? do you have an appropriate size? >> i can give you a number that would be the inappropriate size. i believe that committee anticipates that our balance sheet over time will move down the extension of the lower levels than it is now whether or not it will ultimately return to pre-crisis levels is something that we will remain and determine as we -- when way that we are likely to turn to normalizing our balance sheet

eventually would be to cease reinvestment of sensible asset as it becomes due. committee is not given definite guidance at this point about when it will take this step of stopping reinvestment or principal and eventually as we come closer to realization, i expect we will get a search guidance. >> when do you expect that to begin? >> what we have said in our most recent guidance is that in determining when that time is right, we would be looking at how much progress we have made

in coming close to our mandate from congress to obtain maximum unemployment and inflation of two percent and we will evaluate the pace of which we expect progress going forward. concretely, the committee indicated that it is a kind of purchase program -- he thinks that it will be a considerable time beyond that before it will be appropriate to begin that progress. under its baseline outlook, we would like to see or expect to see further progress in the labor market and it has emphasized that the level of inflation will also matter. >> if their projections, what is that range if i were to say the would begin normalizing interest rates in 2015, would i be wrong? >> there is no timetable for

when that would occur. >> i know you work through projections going forward. if those were to hold, if there was some range of time to begin that process, what range is it? >> the committee has simply said a time without mechanically stating what that time interval is. >> if i were to say this will begin normalizing in 2016, would i be wrong? >> there is no specific timeline for doing that. individual members of the federal committee every three months provides their own forecast for how they see the economy evil thing under appropriate monitoring policies.

that becomes a basis for discussion in the committee. you can look at those projections that include individual participants. you would see that most members believe that in 2015 or 2016, normalization would begin under their baseline outlook. >> can you put into perspective what year or range of years can we expect that target rate to reach two percent for example? >> i think the answer is that it depends on the evolution of the economy. what we are focused on is adjusting our monetary policy in light of the incoming evidence about the evolution of the economy. >> granted. given your projections, how far are we looking at to move about

halfway to normalization? >> again, i'm afraid i can't give you a timetable, but the committee did try to in its recent statements in march and april provide some guidance to the public about the pace at which it expects interest rates, short-term rates to increase. once that process has started. and what they said is that they think it will take some time, even after the economy is in a sense functioning normally, namely we are operating at full employment and inflation's around 2%, they think it's likely it will take some time to come back to normal or historically average levels of interest rates. short-term interest rates, they

would see as normal levels based on history of something on the order of 4%. and they have indicated that they think it's going to take some time to reach levels like that. i would emphasize that that's a forecast. it's not a promise. but we have had head winds that have acted on the economy and head winds in the global economy and perhaps a slowdown in the pace of growth in the economy and those are some of the factors that lead them to believe a gradual pace of interest rate increases will prove appropriate. >> understood. fed holds about $1.6 trillion residential mortgage bank securities, a large amount. so again assuming the fed's economic projections hold, when do you expect to begin moving them back into the market? reverse, or other approaches? what range of years -- i do

worry i think there will be political resistance when you take those steps, but what years will you see that occurring? >> so we have indicated that we do not intend to steal mortgage backed securities from our portfolio except perhaps when the hole thing's through very small, eliminate some residual holdings. so eventually, and the committee hasn't decided on the timing of this, we are likely to cease reinvestment of principal and at that point our holdings of mortgage-backed securities would begin to decline over time as principal matures. so it would take a period of some years for our holdings to diminish. >> i have a question about bank reserves, $2.6 trillion is for many, including me, potential fuel for inflation. when the economy strengthens and

banks begin to lend, we hope sooner rather than later, to keep rapid inflation in check, will you raise reserve requirements or rate of interest paid on the reserves? do you have a view at this point? >> it's my expectation that when the time comes to raise the level of short-term interest rates, that we will certainly raise the interest rate that we pay on excess reserves and are likely to use a number of complimentary tools that we have developed, including our tool kid includes overnight, reverse repos, term repos, and our terms of deposit facility, we'll use those tools to push up the general level of short-term interest rates, but interest on reserves will be a key tool we will be using. >> what impact will have that on economic growth? >> we'll only be taking that step when we have judged that

the economy is strong enough, that economic growth is sufficient, the labor market has recovered enough, and inflation is moving back toward 2%, we will have judged that the time is appropriate to tighten financial conditions in order to make sure that we don't overshoot our inflation objective. so the effect it will have on the economy is to restrain the economy, to make sure that we don't allow inflation to rise above our longer term objective. >> thank you. my main concern having served on the committee in the early to mid 2000's, very able and highly predecessor sat where you sat and assured the committee maintaining low interest rates for an extended period wouldn't cause general price inflation or inflate -- which didn't prove to be the case.

after the credit fueled housing bubble burst in 2007, the predecessors assured the committee that this would -- the committee, this resulting weakness would be confined to the subprime segment of the housing market and the damage would be limited to about $150 billion. roughly the cost of the s&l crisis. some financial crisis in the fall of 2008 we were repeatedly assured the fed had its strategy exit from a large expansion of the balance sheet to normalize the policy. yet the goal posts have been moved time and time again, now removed. today you have assured the committee once again, and i so appreciate your testimony, that the fed is confident it can exit without sparking high inflation,

but that we can't know the details or the timetable, but that the fed have essentially handled. i don't expect the fed to be perfect. yours is a tough job. theirs is a tough job. but it just strikes me this -- over time this don't worry, be happy monetary message isn't working. at least in my view for the committee. certainly not for the economy at this point. i know my colleagues will ask about today's "wall street journal" where noted economist, federal reserve historian makes a point never in history has a country that's financed big budget deficits with large amounts of central bank money avoided inflation. my worries that the track record of central banks, including the fed, in identifying these economic turning points, acting quickly to prevent inflation, that track record is not as good as we would like. forgive me for being skeptical.

i believe we need more specifics and clear timetable on the comprehensive exit strategy. with that again thank you so much for being here. advice chair. >> thank you. as the chairman was talking about with the change to the forward guidance policy in the past it was tied, of course, rising interest rates was tied to the 6.5% unemployment rate, and now the feds said it will consider a wide range of economic indicators and not just the unemployment rate. he questioned you a little bit about this with the other indicators, but could you tell me what you see the benefits of this new approach and what are the drawbacks of moving away from an exact number? >> so let me, if i might explain about the number, the 6.5%, we issued the number 6.5% at a time when the unemployment rate was around 8%, and we were very far

from what anyone could call full employment. which is our goal. we wanted to indicate to markets that we would need to see a lot of improvement in the labor market and assuming inflation was under control before we would dream of raising our target for short-term interest rates. and to make that clear we took the number 6.5%, we felt confident that we would not, if inflation was under control, consider it appropriate to begin that process as long as unemployment -- the unemployment rate was over 6.5%. the gap would be sufficiently wide that something we should -- should consider as a possibility. and so we gave the number 6 1/2

considerable distance from where we were to the public to say we will wait at least that long. now, we did not say that we would raise the -- our target for the federal funds rate when we reached the level of 6.5%. what we said was that would be close enough that we need to look very carefully at what to assess using many different metrics of the labor market, where is it, and what is appropriate policy. now it's appropriate to really look at many more things. and we changed our forward guidance only because we were coming close to 6.5% and we have now crossed it. there's no change in the guidance, we are saying now that we are there, we want you to understand we have to develop a more nuanced approach to what's going on in the labor market. now, the unemployment rate is a good indicator of the state of the labor market, and if i could

only have one, i think that's the metric i would probably choose. but there are different things happening in the labor market we need to take account of. for example, part-time employment that's involuntary. people working part-time, who want full-time jobs. want to work more. it is at exceptionally high levels, 5% of the labor force. it's unusually high relative to the unemployment rate. we have really never seen a situation where long-term unemployment is so large. so large a fraction of total unemployment, around 35%. that's very unusual. other things are happening that we really in evaluating how much slack is there in the labor market? labor force participation rate hags fallen -- has fallen a lot. there's some structural reasons for that demographics, baby

boomers are aging and getting into the years when they retire and their labor force participation naturally declines. so the declines we have seen, it's not entirely because of a weak economy. but i think some of it is because of a weak economy and in a sense it's hard to give you a precise number for how much of that decline is cyclical, but to the extent there is a cyclical decline that's more slack, and that's what we are looking at and trying to judge. we are also looking at wage developments and the level of payroll employment creation. >> let me follow up on a few of those. what do you think the fed can be doing about long-term unemployment which we all acknowledge is too high? >> i think that a stronger economy as we have growth in the economy, my expectation is that long-term unemployment is going to come down. short-term unemployment is

around normal levels. but i fully expect long-term unemployment to decline as the economy strengthens. there is a debate about whether or not long-term unemployment may have less effect on wages and in turn on inflation than short-term unemployment, and that's something that's receiving a great deal of public attention and discussion, rightly so. but i have very little doubt that if growth in the economy picks up and continues long-term unemployment will come down. >> one of the hearings i chaired this last year was with robert rush, it was about income inequality. he talked about how right now we have a situation in our country where the wealthiest 400 have the same amount of wealth as the

bottom 50%. and the international monetary fund recently warned that income equality is actually a drag on our country's economy. why do you think we have seen this rise and how does it affect economic growth on the country as a whole? do you think it's a factor? >> we have seen a trend towards rising inequality in income and also in wealth, and i personally view this as as a very disturbing trend that policymakers should be looking at and considering what is the appropriate response. in part a weak economy, the people who are affected by unemployment are disproportionately people at the lower income end of the spectrum. so a weak economy contributes something to income inequality, and i think what the state can do is to promote a stronger economy, a stronger job market, generally and that will help. but the trends that are responsible for rising inequality go much deeper than the fact that we have had a deep recession.

we can see those secular trends in operation at least since the mid 1980's. there's a great deal of discussion about what they are. but they probably have to do with technological change in the way it's increased the demand for skills in the work force with globalization. so the return to education and to skill has gone up dramatically. there may be institutional changes that are at work as well. so there are deeper forces that are affecting this that go beyond anything that the fed can do. but i really do think -- >> it's something we should be taking up? >> we should be thinking about very carefully.

>> one of the things you mentioned in your opening was about how how the thing has flattened out. could you expand on that? i think what we have seen while the housing market has come back with housing prices in my state's one of the ones where they have gone up the most, residential construction moving up, one thing that's held housing back is the significant drop in household formation which gets to the income equality during and after the recession. about 800,000 fewer households were created each year than in the previous seven years. young people aren't forming households as much and getting new houses. can you comment on this? >> i agree with the data your -- you're citing. we have seen very slow household formation. many young people who are living with their parents, it also is very difficult for people hoe come out of school with heavy burdens of student debt to be able to qualify for morlts. a -- mortgages. >> it's very timely since my

daughter is arriving at 10:00 p.m. she's only a first year in college. still. >> my expectation is that as the job market strengthens and the economy strengthens we'll see household formation pick up. but it's hard to note here exactly what the new normal is. and i think we need to see some pickup in household formation in order to see continued recovery in the housing market. mortgage rates went up quite a lot over the spring and summer. they're still quite low by historical standards so when that -- in that sense housing remains affordable, and i expect housing to pick up, but really it has been -- has flattened out and recovery seems to be in progress really has now flattened out. heavy burdens of student debt to be able to qualify for mortgages. >> the first quarter, as one of

the major reasons we saw a slowdown in the first quarter and will you see anticipation of improvement in the first few quarters? >> yes. we've heard many pieces of evidence as well as what we see in broader statistics that suggests that the weather played a role and recent data is certainly much more encouraging on a wide range of fronts from car sales, retail sales, industrial production. so i'm quite hopeful that we are seeing a pickup in economic activity. >> in my opening i talked about how we don't foresee a rise in inflation in the significant future. do you agree with that? >> that is my forecast. inflation has been running under 2%. we expect it to move gradually back over time up to 2%. there are some transitory things that can give it a boost over the next year or so but my expectation is that it will be gradual, gradually moving back

to 2%, but obviously this is something we will watch very closely. >> yeah. i asked that guy that tweeted me and said i was wrong. i thought i have you -- >> i'm with you. >> so whoever he is with that strange handle he knows the answer now. so, ok, i mentioned -- my last question here. i mentioned in my opening about what we can be doing to continue to -- i mentioned a bunch of things. immigration reform, tax reform, to make the things more straightforward. not playing red light/green light every single year with our tax code and incentives. i mentioned to you as head of

the mappings federal reserve talked to me in my office last week was the section 179 deduction limits for depreciation of business investment, that they were increased to $500,000 in 2010 but the increased depreciation deduction expired at the end of the 2013. and when i -- ironically after i met with him i met with small businesses through the next few days. as they had said to me during the height of the downturn they thought this was a very useful thing to stimulate investment and add more jobs. and i wanted to get your thought about that as we look at these tax extenders. >> so you know, i think the cost of capital is an important factor that influences investments although the state of the economy and business confidence and optimism about growth is a very important role as well. and the tax provision that you mentioned is something that was put into effect at a time when investment spending was very weak and i can't quantify what its impact was but it probably played a role in having it pick up. there are a number of different tax provisions that affect the

cost of capital and so tax policy generally, including the provision that you mentioned, are definitely relevant to the strength of investment spending. >> thank you very much, chair yellen. >> thank you. members should note we've been very generous to make sure the chairman has plenty of time to answer questions. we will be returning to the five-minute question period. representative hanna. >> thank you very much. thank you very much for being here. i want to follow up on something that chairman brady talked about briefly. milton friedman once said inflation is always and everywhere and today we see that the united states department of agriculture estimates that food costs may go up as much as 3.5% this year and that is the highest potential rate in the last i think three years. in this morning's "wall street journal" allen melzer, a distinguished federal reserve

historian writes, the fed focuses far too much attention on distracting monthly and quarterly data while ignoring the long-term effects of money growth. beyond the pure inflationary concerns, he said some of the side effects of the fed policies has the ugly consequences which is the low interest rates for retired persons that forces them to take substantially greater risks than bank c.d.'s and that many of them relied on in the past. he says -- goes on to say -- this usually ends in tears for a lot of people. and we see people who planned on retirement and simply based on historic rates and they are just not there for them anymore. is maintaining an extraordinarily low interest rate for a decade creating market distortiones that will have long-term effects on the economy? and you know, it's nice to talk

about being able to control inflation going forward and you'll respond to keep it below 2%. last year it was a percent and a half. account federal reserve identify, you think accurately, a change in economic conditions and execute an exit strategy before inflation occurs? just as mr. brady said, never anytime in history of this country that finance big budget deficits with large amounts of central bank money avoided inflation. >> well, i do believe that we have the tools and absolutely the will and the determination to remove monetary accommodation at an appropriate time to avoid overshooting our inflation objective. everybody on the committee, the experience for them was the 1970's when we saw very high inflation and a huge effort by chairman volcker to tighten monetary policy to bring it down. we lived through a period in which fed policy wasn't sufficiently tight and high

inflation led to a rise in inflation expectations. we saw that those inflation expectations could become a persistent source of high inflation and that it could be very costly to lower inflation. the lessons from that period are very real for all of us, and none of us want to make that mistake again. i do believe we have the tools and the determination to avoid that. we indicate inflationary developments and inflationary expectations are part of our

focus. as we watch what the likely evolution of inflation is and i can't say that, you know, that we will get it perfect but i can tell you that the committee has adopted 2% inflation objective in order to make clear our commitment to achieving that objective and to be held accountable for it and we're determined to have that happen. >> of course, if we raise interest rates, our debt payments, our interest payments will exceed our national defense budget i think within eight or -- seven or eight years. i think 2021 is the estimate. so all of that working together we really need to grow our economy to afford to be able to

manage that. >> we want to be able to, and we expect as the economy recovers that a point will come when it will be appropriate to raise short-term interest rates , long-term interest rates are likely to be rising over time as that occurs, and this is something i think congress should certainly be taking into account as you look at what fiscal burdens will be down the road. >> thank you. my time has expired. >> thank you. representative delaney. >> thank you, mr. chairman. and thank you chair yellen for being here. i also want to comment, i was stunned at how remarkably clear and linear your remarks have been here today. it is good to see firsthand. you touched on some deeper structural trends going on in the employment market and the

job market and you tied those i think very appropriatery to the trends of -- to the macro trends of global technology. which as we all know have benefited people with terrific educations or with access to capital or with highly refined skills but they have been very disruptive to the average american. and in my judgment this is the root cause of some of the concerns that we have around income inequality and job creation, particularly job creation of jobs that have decent standard of living. we're created high skilled jobs and low skilled jobs. is it possible -- and you hate to use those four words that people always regret, quote, this time is different, is it possible that these trends, as they continue to play out in our economy and in our job market put us in a position that we have -- the fed would have accommodating monetary policy for a sustained period of time as we work through

these things? particularly absent congress doing things like immigration reform, greater investment in infrastructure, more targeted weighted work through these challenges, is it possible that that is the new norm and that the size of the federal verve's balance sheet in fact stays quite large for a reasonable period of time? which i don't think necessarily is a problem which is my second question. i would be curious on your thoughts on that. >> so -- i think these longer term trends have to do with relative wages in the work force and have been going on for a long time for reasons that you stated. i don't think that those trends are ones that the federal reserve can really address the appropriate policies where they may have to do with education and training. in that sense, when the labor market has returned to normal, in the sense that most people who were looking for work are able to find work for which they are suited and skilled in a reasonable period of time, there really won't be much more that is in our domain that we can do. so we wouldn't keep our balance sheet large or refrained from

raising interest rates for that reason. but there are some people who have suggested that the distribution of income and rising inequality are pulling down spending and holding down spending growth. and it's hard to get clear evidence on that. to the extent that that's frew, it would be a way in which inequality would be slowing the pace of recovery and that would be how long we would hold interest rates where they are. >> and my second question is around -- and you mentioned in your testimony how you think about certain financial indicators at the polls in particular because we've definitely seen in the last couple of years a delinking that's gone on between leverage spreads and leverage, right,

which as leverage goes up others go down? just as we have seen the delinking of market values with corporate earnings. so this delinking i think more as froth as opposed to formation asset bubbles. how do you think about these things or what kind of benchmarks do you use to indicate that we may in fact be using asset bubbles? >> so we can't detect within any certainty whether or not there is an asset bubble. but we can look at a variety of different valuation metrics akin to price earnings ratios in the stock market. a variety of ways of measuring

those and we can look to see how valuations in that sense moved out of historically normal ranges. and i would say for the equity market as a whole, the answer is that valuations are in historically normal ranges. now, interest rates, long-term interest rates are low, and that is one of the factors that feeds into equity market valuations. now, interest rates, long-term interest rates are low, and that is one of the factors that feeds into equity market valuations. so there is that linkage. so there are pockets where we could potentially see misvaluations in smaller cap stocks, but overall those broad metrics don't suggest that we are in obviously bubble territory. but we don't have targets for equity prices and can't detect if we're in a bubble with certainty. >> thank you very much. >> thank you. senator coats. >> thank you, mr. chairman. thank you, chair, for your

presentations here today and the answers. i want to just ask you if you'd be willing to step aside for a moment in terms of just responding in terms of representing the fed and give us some of your personal thoughts if you think it's appropriate relative to a couple of -- well, this question in particular. as i travel throughout indiana and talk to businesses, large, small and everything in between so many of the c.e.o.'s and owners of those businesses almost to a person indicate that they're underperforming and they're underperforming because of the uncertainties that they face relative to fiscal policies, relative to prospects of uncertainty about what their taxation is going to be and particularly regulatory policy.

now, essentially they say it's a disincentive to the private sector business investment which as we know is the foundation of job creation. your predecessor -- i asked your predecessor the question of whether or not -- what his opinion was relative to the policies that really have fallen and his answer was, we pretty much exhausted the major tools that we have to address some of these problems. he agreed these were disincentives for investment. sitting on an awful lot of unused capital. he said really that's a function for you people at the other end of constitution avenue, and he's right, it is. my question is -- i think it was in your statement the new

york fed, you made reference -- see if i can find it here. you made reference to the fact that it's going to be -- i quote you here. a gradual return over the next two to three years of economic conditions consistent with the fed mandate. and given that, would you be willing to give us some direction relative to the -- what legislative policies we could take or not fake and the consequences of either accelerating that movement to where we want to get to beyond the two or three-year period or disincentivizing, perhaps, pushing that out? what would you say that is causing a lot of businesses to underperform? >> so i agree with you.

my own discussions with businesses, i hear exactly the same things that you're citing. concern about regulations, about taxation, about uncertainty, about fiscal policy. i guess one recommendation that i would give you is that long-term budget deficits, we can see in, for example, c.b.o.'s very long-term projections that they remain -- there is more work to do to put fiscal policy on a sustainable course, that progress has been made over the last several years in bringing down deficits in the short term.

but the combination of demographics, the structure of entitlement programs and historic trends in health care costs, we can see that over the long term deficits will rise to unsustainable levels relative to the economy and putting in place a package of reforms. ones i know these are very controversial matters but that would probably help confidence. as regulators ourselves in the aftermath of financial crisis, we also can see very clearly, for example, that the kinds of regulations we're putting in place during the process of doing that create uncertainty and burdens. we hear this, for example, from community banks all the time. and, you know, here i would say to some extent the regulations, we're doing this for a very

good reason. we had a financial crisis. it's important to make the financial system safer and sounder. and for our own part, we will try to make sure that we worry about regulatory burden, we try to design regulations that are different and appropriate for different sectors of the economy. i think it's important for us, too, to be sensitive to regulatory burdens in order to minimize its impact on the economy. but we are doing things that are important to make the economy safer and sounder. >> well, thank you for that answer. in closing here, because i notice my time is up, you join a long list of very responsible americans who have the experience and the expertise to give us some warnings about what may happen in the future

and the consequences of our inability to act over the last several years now in addressing these major problems that are going to have significant consequences on the economy of this country and on future generations. i don't know what it's going to take for us to summon the will to do what we all know that we need to do, but we -- i appreciate your adding your name to that long list saying you have a responsibility up here and you're not fulfilling that responsibility. thank you. >> senator casey. >> thanks very much, mr. chairman. madam chair, thank you and welcome. it's good to be with you this morning. i wanted to ask you a couple of questions about jobs and manufacturing. i'll start with that and ask the question about the preparation for job growth and some of the investments i think we're not making in our children.

but i'll start with the job picture. we had a lot to be positive about with all of the cautionary notes that your testimony articulates. when i think about it from the national perspective, both good job numbers in the last couple months and even the recent report a lot less in the way of good news in terms of the labor participation rate, which i'm told is at a 35-year low. i noted, though, in your testimony that you said on page -- page 1 you said, and i'm quoting, during the economic recovery so far payroll employment has increased by about 8 1/2 million jobs since its low point and the unemployment rate has declined about 3.75% since its peak, unquote. so that's good news in terms of the recent news as well as over a number of years but we still got a long way to go. i guess the real cautionary note, though, or the reason for concern or main reason for concern would be on labor force

participation. can you speak to that in terms of what you would hope to see or what you're concerned about with regard to that number? >> so, we have seen a substantial decline, especially over the last year or so, in labor force participation. i think it is clear that part of it is demographic, secular and will continue. it purely reflects the fact that we have an aging population and as people move into that 60's-plus age bracket, the amount they work declines notably in spite of the fact that current retirees are working more and participating more in the labor force than earlier vintages. but nevertheless, if we had a strong economy, even for that group, it would not surprise me at all if we didn't see more participation in the labor force by retirees. in addition, we're seeing for

all age groups, prime age workers and younger people, reduction in labor force participation. for young people it's partly related to going back to school but eventually, of course, those people will enter the labor force and seek jobs. especially in those nonretiree demographic groups, to me it's clear that the weak state of the labor market, partly explains why we're seeing a decline in labor force participation. so i will be looking very carefully at trends in labor force participation as the economy strengthens, as the unemployment rate comes down. we need to really figure out what portion of the labor force participation decline is secular and what portion is cyclical and that's what we're going to be looking at very closely. i guess i would expect as the

economy recovers we might see labor force participation strengthen rather than continue to decline. >> one thing we talk about a lot is the skills gap and the disconnect there between the jobs that we need to fill or the need -- that need to be created in the future and the skill level of folks that are seeking those jobs or looking for work in the marketplace. i guess one of the questions that i have for you, you look at trends all the time. you look at the economic impact of policies that we put in place here, and you see those trends and the kind of skills that folks would need for jobs of the future. i guess i'd ask you. my youngest daughter is a junior in high school. if she were 3 or say, 2 or 3 years old right now, what do you hope she would get to be placed in the high-skilled jobs that we hope we have policies that has a

strategy to get us to the point where we no longer have that skills gap? what would you hope that either i or -- in terms of a healthier smart start? >> i hope that you and society at large will make sure that she has access to a good college education. the gap in earnings between those with a college degree and those with less education has increased enormously. good opportunities to get advanced training in skills i think will clearly -- every bit of evidence suggests that will make a difference to her life-long earnings. >> i'll send you some questions for the record as well. thank you very much. >> thank you. >> don't worry, madam chair. knowing senator casey, she will get a good education.

>> i have no doubt. >> senator wicker. >> thank you, dr. yellen. this has been very enlightening. let me first just try to clean up a few things. in his very fine opening statement chairman brady got to a point where he said he was hopeful he would enlighten the committee on six specific points. there's no time for you to answer those. i would like to submit those questions as my questions for the record and ask you if you'll answer them on the record, will you do that? >> i'd be glad to. >> and the last is about transparency. also, i understand your reluctance to be tied down to specific predictions of when this or that will happen. but i do think we got a yes from you on one thing and that is when the asset purchase program will end. as i understand it, you have a set of expectations for the rest of the year. and if those expectations are

met, you expect the asset purchase program to end this fall. is that a yes? >> that is correct. if the labor market continues to recover and we continue to see -- see the evidence as pointing to inflation moving up over time to 2%, the committee is likely to continue taking further steps that would end the program next fall. >> in the fall of this year? >> correct. >> ok. and so -- and senator klobuchar said she saw no sign of inflation in the foreseeable future. you don't agree with that. and ideally inflation should increase to 2% and that would be a better result as far as you're concerned? >> 2% is the committee's longer term objective, and we would

not want to see a persistent deviation either below or above 2%. so it won't be at that level at every moment but we expect it to move up gradually over time back to 2%. >> great. you mentioned during your testimony today, maximum employment and full employment. would you just define those for the committee? >> i'm using those terms interchangeably. maximum employment is the wording that's used in the federal reserve act. it's our goal that congress defined for us. i'm using the term -- >> and what is -- could you use that to a percentage rate, what is maximum employment? >> so i determine maximum employment as meaning a level of employment in the labor market where people are able in a reasonable amount of time to gain work -- >> so -- >> they're qualified.

>> for today's purposes, you're not going to put a percentage point? >> i'm not going to put a percentage point. >> in terms of economic -- income inequality -- and let's get back to the metzer article in today's "wall street journal." he suggests that actually the policies of the obama administration and the federal reserve are responsible for the income inequality, and he says ironically despite often repeated demands for redistribution to lower income groups that policies pursued by the obama administration, supported by the federal reserve, have prished the -- accomplished the opposite. he goes on to say, voters should recognize that goosing the stock market through very low interest rates, not to mention the subsidies and handouts to cronies, have contributed to that result. we'll leave the subsidies for another discussion.

but don't you acknowledge, dr. yellen, that the interest rates, which you've achieved, have driven people to the stock market, therefore, goosing the stock market and contributing to this maldistribution of income? >> well, i would not deny that the level of interest rates affects the stock market. i would hardly endorse the term goosing the stock market. we have no target for stock prices. the policies that we've undertaken are meant to ease financial conditions in a whole variety of ways that will be conducive to generating greater spending and greater spending

means that we create jobs throughout the economy. so to think of that as something that is promoting an increase in income inequality i would take issue with. i think a stronger economy brings benefits to a wide variety of households throughout the economy, including lower income households who are gaining jobs. so we do probably have an impact on the stock market. we also an an impact on stock -- on housing prices, and house prices have come back up again. and for so many households, middle income households, that's their most important asset. that return of house prices to more normal levels i think has been a major benefit to many, many american households. they've seen themselves move from situations where they're underwater on their mortgages to being, you know, back in the black.

and it also helps give them access to credit if they want to send a kid to school or have an emergency or want to start a small business. and so there have been benefits in this policy and the policies we've pursued for main street as well as for those who hold equities in their portfolios. >> thank you. >> thank. senator sanders. >> thank you, mr. chairman. dr. yellen, welcome, and good luck on your new endeavor here. >> thank you. >> mr. chairman, with your permission, i'd like to put into the record a recent bbc article entitled "study: u.s. is an oligarchy, not a democracy." mr. chairman, can i place that in the record? >> without objection. >> thank you. madam chair, in the u.s. today, the top 1% own about 38% of the

financial wealth of america. the bottom 60th own 2.3%. one family, the walton family, worth over $140 billion. that's more wealth than the bottom 40% of the american people. in recent years, we've seen a huge increase in the number of millionaires and billionaires while we continue to have the highest rate of childhood poverty in the industrialized world. despite this, as many of my republican friends talk about the oppressive obama economic policies, in the last year charles and david koch struggled under these policies and their wealth increased by $12 billion in one year. despite the oppressive obama economic policies. in terms of income, 95% of new income generated in this country in the last year point to the top 1%. now, a study, which i just introduced into the record, by

two professors from princeton university, professor martin gillens and northwestern professor benjamin paige basically suggests that while historically we have considered our society to be a capitalist democracy, we may now have entered into a phase of an oligarchic society. given your power held by the billionaire class and their political representatives, are we still a capitalist democracy or have we gone over into an oligarchic form of society in which incredible economic and political power now rest with the billionaire class? >> so, all of the statistics on inequality that you cited are ones that grately concern me and i think for the same reason that you're concerned about them, they can shape the

determined availability of groups to participate equally in a democracy and have grave effects on social stability over time. and so i don't know what to call our system or how to -- i prefer not to give labels, but there's no question that we've had a trend toward growing inequality, and i personally find it very worrisome trend that deserves the attention of policymakers. >> thank you. i think the point that the professors are making and others have made is that there comes a point where the billionaire class has so much political power, where the koch brothers, now because of citizens united, able to buy and sell politicians, they have

so much political power, at which point is that revirsible? that is a great concern to me. i want to go to another point. some of my colleagues, especially in the house, believe that we can improve lives for the middle class and create jobs by completely repealing the estate tax which applies now to perhaps less than .1% of the wealthiest families in this country. would it make sense for you to give enormous tax breaks for the families of the top 1% of people in this country? >> so i've indicated that i share your concern with inequality, but i just i'm going to say on this that it's up to the congress to decide what's appropriate. there are a number of different ways to address it that certainly is on the list. >> all right. well, let me ask you another question. some of my friends in the house, the ryan budget and so forth, suggests one way to

stimulate the economy, to create decent-paying jobs is to give more tax breaks to the wealthiest people in this country and the largest corporations despite the massive wealth and income inequality we have right now. if we give tax breaks to the koch brothers who are worth $80 billion, do you think that will create jobs in this country? >> i think most of the evidence we have suggests that transfers to lower income people tend to be spent a larger fraction of the dollar is spent than when there's a transfer to a wealthy individual. but changes in tax policy -- so that's from the demand side. tax policy also has supply side effects that one should take into account. >> ok. thank you, mr. chairman. >> thank you. representative paulsen. >> thank you, mr. chairman. dr. yellen, thank you for being here and offering your testimony today. you mentioned several times that the unemployment rate is still too high and clearly we as elected officials who represent our constituency would agree with that. in april, you made some remarks to the economic club of new york. at that time, you said that the

central tendency of the federal market committee participant projections for the unemployment rate at the end of 2016 -- so this is still out a year and a half -- would be 5.2% to 5.6%. for inflation, the central tendency is 1.7% to 2%. you kind of mentioned the 2% today. if this forecast were to become reality, you mentioned, the economy would be approaching what my colleagues and i view as maximum employment and price stability for the first time in nearly a decade. so i guess i'm kind of wondering because you didn't want to put a number on maximum employment. in light of the unemployment being -- full employment or maximum employment is significantly higher at 5.2% to 5.6%, is that the new normal that you're potentially targeting for full employment? >> so this is a number that is purely a guess based on empirical evidence that every member of our committee is asked to give each few months. it's what they think would be consistent with stable

inflation rather than gradually rising inflation over time. and based on the evidence that they see -- these are just estimates and something that changes but their best assessment, most of them are in a range of 5.2% to 5.6%. now, when unemployment was as low as 4% previously, to some extent, that may be overshooting. nothing that says that 5.2% to 5.6% is a floor on how low unemployment can go.

for example, in the late 1990's unemployment fell well below those levels, but there may have been special factors. an increase in productivity growth and a strong dollar appreciation, the dollar that was holding inflation down and made that happy coincidence of very low unemployment and stable inflation possible. so at the moment, this is their best guess and it's where they envision the economy is being in 2016. >> you mentioned, too, it was nice -- well, in general with the april jobs numbers that came out it was nice to see the unemployment fall, right, to 6.3%, but the labor force participation rate which you said you wanted to look at the details of that labor force participation rate, it fell to essentially tying a low. that was the most concerns for me, 800,000 people that have now left the work force, right, or the labor force has declined

by 800,000. that's a pretty significant number. what do you envision the labor force participation rate be if we hit that 5.2% to 5.6% unemployment rate? >> it's hard for me to give you an estimate of that. we had a huge move. it is very unusual to see a .4% decline in the unemployment rate in a single month with a comparable move in labor force participation. we always tell ourselves and i'll state i think one should not make too much of any single month's numbers. my preference would be to look at those labor force and labor market statistics over three or six months to get a read on things. if we do that, what we see is the unemployment rates come down. for the last six months, job growth has been -- employment has been gaining about 200,000 jobs a month and somewhat

higher over the last three months. the labor force participation rate, it's bounced around, but it's been roughly stable. so it came down. it had gone up previously. over the last six months, it's been roughly stable. which is -- i think there is a declining labor force participation rate as a trend, so a stable labor force participation rate could signify that some cyclical slack in the labor market is gradually diminishing over time. so looking over three to six months i would say the patterns we're seeing are consistent with improvement in the labor market. >> ok. thank you. >> thank you. representative cummings. >> chairman yellen, in february, senator elizabeth warren and i wrote to you urging that a formal vote of

the board of governors be required before the fed entered into consent orders over $1 million. my staff reviewed all fed enforcement actions between 1997 and 2013 and found that only about 2% resulted in penalties over $1 million. during a hearing before the senate banking committee on february 27, senator warren asked whether you agreed with our proposal. u.n. said you didn't think it is appropriate to make changes and you fully expect that you will. yesterday, we received a response letter from you in agree it isote "i appropriate for the board of governors to be fully involved in important decisions is related to the enforcement and supervisory matters." already underway to develop new processes and procedures for review." can you tell me what specific steps are underway?

beh the board procedures changed to require formal votes on all major enforcement actions and it's so what date will not occur? if this is not a procedural processes andew procedures for review and approval of enforcement actions will be introduced? so, we have met and it is in the public record that we have meetings at this point over the last couple of months to discuss enforcement actions. are participating in those discussions with our staff early so that we can guide their hands in these matters. i think this is fully appropriate and i pledge we will continue to do so. we have taken a vote on at least one very important enforcement

matter. , i want to take a little more time working with the staff to decide exactly what the guidelines will be for when we should delegate and when board action is required. you suggested a particular cutoff and i want to think more carefully about how to define precisely which actions should require board of votes when it is appropriate for us to vote. what i do want to pledge is that the board will be very involved to discuss major enforcement actions. we have done so. >> you were vice chair of the board of governors when the fed and occ terminated the independent foreclosure review and agreed to a settlement with the mortgage service companies in january 2013. the board formally approve the amendments that terminated the

ifr? >> the board did not vote on that agreement. under the procedures in place, this was a matter that was delegated to the staff, but the staff consulted mostly with members of the board before they took those actions. input on and have informal way when those decisions were made. there was no formal vote. by oversightd chairman in a letter requesting that both the fed and the occ produce documents relating to this decision and the occ produce those documents several weeks ago. we received of the fed's documents yesterday. the documents produced by the occ showed there are no reliable data or rates at the time you but there the ifr, are preliminary data showing

that double-digit rates in some categories in some services. there's a plan to identify the full extent of harm but they could not get completed. the jew know that? -- did you know that? >> it was terminated because it was decided the process was too slow in terms of its timeframe and its ability to get our money ato the pockets of -- it was decision the occ took the lead withd we went along after looking at the process that was taking place with the independent consultants reviewing these files.

outcome. a horrible is a very sad commentary on what happened. i will send you some follow-up questions along with senator warren. >> i would be hands -- happy to answer them. >> thank you for being here today and for your testimony and ask when questioners -- answering questions. we look forward to future hearings. the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014]

>> marco rubio is in new hampshire yesterday speaking countyrocking him dinner. here's a brief portion. >> they claim they're fighting for the american people but if you look at the policies there a following, it is policies that say this is the new normal. what we need now is a big powerful government to make it easier for us to accept the new normal, to alleviate the pain

and make us more comfortable. but will never admit this, in their policies be admitted and it is even worse. their ideas are stale and they never worked in the 20th century, much less the 21st. they're threatening to nominate someone who wants to take us to the past. to an era that is gone and never coming back. the 20th century is gone. we live in the 21st century. a time of extraordinary challenges and opportunities. that is where armors party -- our party must be. the democratic party is a believe something that you don't commit but they believe the 21st century will be a post american era. we believe the ferc -- the 21st century will be another american century because everything it will take to succeed in the 21st century happens to be the things that americans are best that -- competition, investment, creativity, entrepreneurship.

that is what the 21st century will be about and there is no nation and no equal double do it better than america. [applause] >> you can watch all of senator rubio's remarks tonight at 8:00 eastern on c-span, part of c-span's road to the white house coverage. this week, the national association of attorney generals's post -- so citizen combs em -- a symposium. the eric holder spoke about the importance of racing -- racial disparity in sentencing disparity. >> good morning. we have to stop meeting in those back rooms. i want to thank attorney general van hollen for that kind introduction. also for your leadership as

president of the national association of attorney generals. like to recognize district attorney henry garza for his service as president of the national district attorneys association. i want to thank the leadership team, the professional staff and the dedicated members of both organizations for the really outstanding work that you perform everyday and for all that you done to bring us together for this really important symposium on the reduction of crime. as staunch volunteerings -- advocates for the rule of law, state authorities across america, you are two really remarkable organizations have for decades provided leadership and guidance in advancing our dialogue about criminal justice issue. through the work of the national attorneys general training and through gatherings like nad.