on this sort of stuff, how do you approach that? does the president have a good day or that day, isn't like "house of cards," i mean, there could be tv shows based on both of you to down the road. his personality involved, or is the u.s. intelligence not see an machinery so big that human beings in the middle of that really don't matter? >> i think human beings matter tremendously. the relationships that you are able to build in our job, the one i hold and the one that fran previously held is critical. you have to be able to take people around the table, literally and figuratively, and understand rapidly why situation is a what might be, and to be able to relay that to the president and hopefully the right be clear give the -- hopefully be right, be clear, give the best information you can, and it is integrated into all other aspects of the cabinet and it is vital. >> there is so much more that

comes to you then goes to the president. the important point of your job is to filter, and not in a good way, because he only has so many hours in the day, and you have to make judgments about what he has to know so that he is prepared, so for me, the day started at 3:30 in the morning, and i can't speak for you, but i was up at that time to shower and go to the gym and address, and i was in the car by fire lot. longer for the president would get information, there was interaction within the intelligence community. there were questions that i

thought should be added to things, so it was the process to get the right information to him in a timely way that is holy integrated and comprehensive. so he is not getting a single review, but the lease and integrated one. >> it would not be inaccurate to describe this time as a time after 9/11. there was a way that we changed how we did security quite a bit. we change the way we think about intelligence and in my particular view, you see the massive growth of executive power over a lot of issues. we just had the release of the interrogation board, often called the torture report. and i happen to know, fran, you were not involved on it many of these releases.

there is a question of whether or not we had a healthy balance between creating institutions and balances with oversight, or whether we need to go into another phase where the balance is different than we have today. i want to get your take on accurate you have served under two presidents. have you ever had them say i am not getting the oversight that i need, i need to make decisions only? so is there are not a lot of difference between president bush and president obama. my question is, what is healthy? >> frankly, there has been a tremendous amount of back and or your it specifically, between the intelligence community and congress. and i will tell you to the extent that the picture has been painted both recently and historically, that they don't have sufficient access. i think that is unfair. the intelligence community, they

need to have information, but there was the gang of eight, there was a good deal of information act and forth. congress faces the same post 9/11 struggles that everybody else does. it is difficult to have the resources to devote to the time. i think we have to have a better balance of that. i think we have to have a better balance of how wiest began when we speak to the american people about the program. there has been an ungodly number amount of leaks of information, and there are ways we can talk about programs and national security issues that we don't do enough of. >> i agree, and i think to do more. president obama talked about

this change across the board. i think that opened up the debate that we had not had and that the resident called for. i think they are healthy and good and productive ways -- there are healthy and good and productive ways. the president spoke to the spirit and you have seen it involves and it should involve the congress, it should involve them more. and if there is a question about what is a legal precedent, and what can you do or what should you do, the president has spoken on a number of programs about whether it might not be wise whether to put some constraints on and over that legal floor at a policy level, and to discuss those with congress and make sure those are transparent to congress. >> do you think a lot about terrorist and extremism in the world and how to pull the plug on it? fran, you are the president of a new group of the extremism in the world. part of the conceit of the women of washington is that many

others would like to know what your track was, what were the dollars that helped you achieve success as you went along the way? but part of this field is so important is that we see isis, we were just talking about james foley when it happened, with a number of journalists and people who have been kidnapped. thinking about how you pull the plug on. fran, why don't we start with you? >> sure, the part of my project is completely nonpartisan curate joe lieberman and i announced at the u.n. general assembly. before that, i called lisa and center all the information on

the organization. this organization was not meant to compete with government. quite the opposite. it was meant to supplement with what the government does, so what is it? so the idea is that it is really two or three full. it is to challenge bad guys like isis, like al qaeda and their earliest, and do that in the social media world. to actually challenge to shut them down. while we were he in this country, we rightly cherish our first amendment and our right to be, there is no one who would believe, even in this country, that beheading videos and pictures ought to be permitted on social media. by the way, i think that social media companies would be, but they do not have the resources to take it down. we were going to go and hunt them on the internet. we were going to announce them publicly and to the companies, and ask that they be taken down. and we are pursuing that. i will tell you that i know it is been successful because as a result of that, i have gotten desperate -- gotten death threats and continue to do. >> so when you get those, do you think, well i am being

successful? >> i consider it a badge of honor. so we have the technology and the analytic know how to use public source material to go out and actually find the people who are the traitors who are allowing isis to move their oil onto the black market and to out him. or, if we can't out them, and not she's behavior, you can provide the information to governments and service intelligence communities around the world. >> are you surprised about these people you are tracking down. i heard from david cohen who has a lot of was wants ability for targeting sanctions, and i wanted to talk about isis and black market and antiquities. you have to know something about antiquities and sotheby's and christie's and rich people who want to buy antiquities. that requires some degree of education in the world. does that shock you? >> it does shock me. i will tell you the thing that is really incredible to me, when you look at their propaganda, remember that there was the magazine that al qaeda had, it was a magazine that you could talk into your pocket. you can find in caves and in deserts. now we see hollywood style productions.

incredibly professional. they have their own drone footage. they had filming of a raid on a syrian or iraqi military base. it was even set to music. there was a voiceover. it is absolutely professionally done, and it is hard for the u.s. government to compete with that. >> i want to pause with fran with -- i want to applause fran and with what the counter extremists organization has done. sometimes the government is not the best messenger on countering the brutal message that isis is sending. we need muslim voices, we need voices from the arab communities, we need arab communities to join the

coalition, and we need the private sector, nonprofits, other voices out there countering, sending out messages, and using social media for as effectively as the extremists are doing. i think fran would probably agree with me, but the evolution of the threat -- the framework has stayed largely the same. al qaeda, which we continue to be worried about, is still an a northwest territories in pakistan. they have been greatly diminished, and we have distracted your planning. >> can you tell me about the site group -- side group corisan. i would love the leisure why,

this was slipped in under the rug from something we have been watching or thinking about. most of us had never heard of the group. what was your role? >> when i can say is i think it is a good thing that you say that because we were doing our job. trying to disrupt threats before they became public knowledge, and then bad actors cannot take other means and continue. so the course on group -- corisan group is al qaeda veterans who have saw the safe haven of syria. they have gone there to fight aside -- they did not go there to fight aside, but because it

is an i and governed it these are al qaeda veterans plotting against the west and the homeland. >> either other pockets of corsican out there that you are worried about? >> al qaeda in the arabian peninsula. they are the most determined and persistent and frankly skilled actors, particularly when it comes to aviation. that is something that we have not taken our eye off that ball for one minute, even as we are extremely robust on active corsican groups and i sold -- and isil and the unprecedented flow of groups into western iraq. >> when we talk about foreign fighters, it's only people far away. we have foreign fighters in the united states and france has 1500 people there.

australia has a lot of people there. australia was the first to line up in the coalition against isis to devote fighters and personnel. it has about 60 personnel, 60 people, and about 100 who have been actively financing to stop isis from australia. so how do you deal with that? because that is a very different thing out there, that is an inside problem, right? >> i would say to you, i think people have got to look at this. there are two prongs, in my judgment of this. one is the foreign fighter, right? who may return. i think the immediate problem, which is on australia, that is the self radicalized individual. he or she is harder to catch. there is a shorter loop for lisa and her colleagues.

it is easier to interrupt the loop for the foreign fighter. >> because they are more actively engaged? >> that is when you have a more radicalized individual, you might not have any idea that person is going to go operational. and then it manifests itself. >> the radicalized person is just a criminal and a terrorist. how do you feel about that? >> it does not matter to the people inside the cafe. you have to deal with it as the hand gets dealt to you. >> thereunto prompted this threat to this thread and you have to deal with them at the same time. so the self radicalized one is the one that is closer to home at the moment. >> i think fran and i, throughout our time in the white house, both of our time that we dealt with was the affiliates, that we just discussed, but this other category that we talked about, lone wolves or homegrown extremists. they are sympathetic to radical ideologies and who will turn

potentially after a series of messages and an evolution of a radicalization process. so we have always been concerned about those three groups, if you will. but it is this last one, and i quite agree with fran, which has taken two forms. so for instance, it used to be that these individuals would self radicalized by passively doing something on the internet or a magazine as fran described. now the evolution and proliferation and the prowess of isil using the social media platform has made in the lone wolf or homegrown terrorist threat worse. we are just beginning to understand this. this is a vital part of our

ability to combat that very changed threat. >> which is exactly why we founded this. this is an exponentially greater threat now as a result of that. it was that the private sector needed to play a role there. i've can add -- i can add one other thing. we are fighting isis today in iraq and in syria, there are moving on to the next thing. i think it is worth noting. it is clear from the we see from source material that isis, the islamic state, is already sort of working through their playbook in places like saudi arabia, jordan, lebanon. they are fighting in iraq and syria, and that is the oak is now is there expansion of the caliphate -- and that is their emphasis now is there expansion -- their expansion of the caliphate.

that is a real challenge, it is a challenge for the administration and the intelligence community, and it is a challenge for our allies. >> both of you have dealt with this internationally. as women, and i don't want to presupposes, but it is a field dominated by men. i went through analyst and a lot of other women from condoleezza rice to even hillary clinton to michele flournoy on to elizabeth sherwood and randall and others, including ourselves, it is a substanstive list, but it is not a giant list. it is a nonissue? how do you deal with saudi arabia or qatar or u.a.e.? >> to want to start? [laughter] >> give is a good story.

[laughter] >> i am going to take you back. it is august, or july, of 2003. i don't think i have been in the job three or four months. and we have the infamous 28 pages of the 9/11 report that remain ossified related to saudi arabia. we are sitting in the oval office and the foreign minister of saudi arabia and the president. i am condi's deputy at the time. president bush says he will not declassified. the saudi's get angry. for the first time, there is an official break.

the saudi's have been very aligned after 9/11. this is a turn. i decided i'm going to go and represent the president in saudi arabia. so i have never been. i called everybody. the state department. the cia. everyone would get me ready. they are consistent in one thing. absolutely, you can go. the saudi's will view it as insulting because you are a woman. i don't know, how would i know? so i wait for my right moment to up approach president bush and say to him, looked this is what i have been told. and you are not into her my feelings. maybe this is really important. maybe it is better if you send somebody else.

and you know, i am happy to bow out. the president is quite irritated and says to me, it is not your choice. it is mine. what you don't understand about the saudi's is that they won't care if you kind of were a big purple dinosaur. the fact of the matter is, you -- >> did he just say big purple dinosaur really? >> no, he didn't very -- he didn't. [laughter] >> we almost made twitter news. >> anyway, i spent a tremendous amount of time in the kingdom healing with all levels of government, including there secret service, and i was treated incredibly well. a postscript to that, in my private life now, i also have business to travel to the kingdom, and i have continued to be treated very well. it is not because i am a woman, and my voice or opinions are not taken seriously. quite the opposite.

someone once said to me, you are more effective because saudi society treat you politely, so you have the best of both worlds. >> what is your best saudi story? >> the first time i went to the kingdom, it was in my prior job. i asked for advice, and i would just echo what fran said. the key factor is, you're going as a representative of the president. now, whether it is saudi arabia, which we have a long and productive and close comparative partnership, or frankly, yemen, which i have been more to than anybody else in the administration, they are very different environments, but the key point is, i have been sent as the president's emissary, and that is important to the president with whom i am meeting

in yemen or going to turkey and going to see that king of jordan. the same doors are opened because i am going at the request of the president with a message from the president with civic things to discuss from the president, -- with specific things to discuss from the president. >> to be fair, i don't think we can be fair about michele flournoy's book, she did not like the title, but she said she has two daughters, and there are key moments in their life. but i am just interested, there is this sense that part of the reason that national security positions are nominated by guys is that they are not worded by other responsibilities. so my unfair question to both of you, can national security women still have it all? >> yes. look at something like susan

rice, you know? clearly a national security woman if ever there was one. if having a beautiful and well-adjusted family and being at the top of your game in the national security profession is having it all, then absolutely. >> ditto on the power. there are a lot of examples, which i think proves that we can. look, i think in fairness, to be very kind of, honest, i tell young women coming up, you can have it all, but mostly you have to have it in sequence. it is not about having it all at the same time. in order to do that, to get to these periods with children and a family, everything has --

everyone has to be signed onto that. my children were very little when i was at the white house. i could not have done a if i did not have a phenomenal nanny and a phenomenal spouse who was signed on. i could not take the gift of the doctor, that was just not possible. i could not go to parent-teacher conferences, it was not possible. but people were ok with that. so you can have it all as long as you have signed on to the program for a creative time, and there are going to be sacrifices. the time that i gave up with my children when i was -- when they were little, i can't get back. one is grown and in college now. but we were all proud of the fact that we had done this for a. of time, -- a period of time. >> and i also would say having

it all means making choices. i believe firmly, you do what you want to do. whether that is doing things in sequence, prioritizing at one point in your life or another, having it all is really making those choices, the freedom to make those choices. these are all folks who have had wonderfully supportive houses and the means to do this thing. obviously we have to be realistic about that as well. >> we have to talk about the sony movie. it is a broad issue of cyber. when you look at cyber crime today, a segment on msnbc that was pushed back, talking about the revelation, hacking, and international. despite the humor of it, a lot of big issues related to this. whoever did this nation or group, there is a fragility that seems ready profound in the i.t. and cyber world. the second part is when governments. this is an area where the speed

is rocketing up in terms of the capacity. i am wondering if we are prepared. how much of the dashboard is still with this kind of subject. >> we have taken a lot of steps to harden our own defenses, physical and will, but we have to do a lot more. i think cyber is the place where our two hats and cyber security really comes together, whether it is infrastructure protection on the homeland security side or dealing with international or the threat of terrorist actors using cyber as of that were for the attack. i personally think we need to use the lessons that we have gained from a decade plus of counterterrorism improvements, both structural -- trollope -- structure, policy wise and

culture. i am working hard to drive the policy apparatus and the national security community toward we have to learn the lessons that have been so found -- so beneficial to bring all of the tools, the whole approach, diplomatic, criminal justice, prosecutor it -- prosecutorial resources. >> i think to add on what lisa is saying, this is an area where there has been bipartisan support. the administration talks to many, not just me. we could use a national fiber serif -- national cyber

terrorism. we do not have a single national cyber center. each of the department like the 9-11 counterterrorism days. what's with the legal authorities be? a national center work permit you to do that. it would be nice if we could learn the lesson we learned post mine-11 from a physical attack. >> i read a lot of novels and have been reading david intimations novel lately. it is all about your work. there is one novel blood money and another, the director. in it it is about the terrorism world converging. right in the seat -- sweet spot about what to write about.

from what you can do and also to the point that you realize the notion of liberty we have and a certain degree of freedom, and the ability to be naughty is over in the coming world that people can intervene. you seem so relaxed and nice and cool people. if you know the world is so dark and what is coming, how do you have this detached and relaxed person that i think you are? >> i would be worried i would make a lot of people nervous. i think there would be a lot of people that would question that i am as relaxed and forgiving as you indicate. one of my staff members here may argue with that. we have to learn lessons. we have just someone that can be productive. there is a lot about stuff in the cyber realm and with what we are confronting. >> do you ever wake up in the morning and things feel good? >> no. >> i said this to someone the other day.

i have developed a loathing response to the ring tone on my blackberry. it only goes off in the middle of the night. on a monday night it went off to tell me about the horrific attack. i only get bad news at that time of night. frankly, when i meet every morning with the president, along with susan rice and others to talk about overnight intelligence briefing and the issues we are confronting of the day, it is never good news.

but the plus side is, i have the greatest job description in the world, which is i get to help keep people safe with a huge apparatus and tremendously dedicated professionals and the community across the board. >> the joke was when i would show up unannounced to the door of the oval office, i was a little black cloud. i could kill a conversation, stop by meeting just by walking through the door because everyone knew if i showed up unannounced it is because i needed to speak to the president of the united states at that moment. it was clear the room so i could talk to him. the converse of that is also true. >> so i feel very confident that john brennan does not get to run in and tell the president we have bin laden. good news travels around me. bad news came to me to deliver.

you accepted that in the job. >> 100% true area deciding when to make that phone call. those are key moments. >> how many calls did you have to make? >> the first one was literally my third week in the job. calling the president to tell him one of the boston bombers was dead and another was still at large. it is not a decision i hesitated about, even though i was three weeks on the job and have never woken him up to be sure. >> is he a nice guy at 3:00? >> i think we are divided that part of the conversation quickly. i knew he would want to know because there was a public safety issue. there was a manhunt underway.

we did not know what else could follow. making the decision to go back to where we started, your job is knowing quickly and with relatively little and invariably perfect information, when to make the call, when to interrupt and go to the oval office to be the person who clears the room, and that is something you learn every day. >> i want to ask one last question. and tried to get back to women in these roles. i don't know her name, i don't think any of us do. the woman in the cia that played

such of pivotal role in the intelligence to track the courier. she was the spark who really take things in a different direction in trying to get bin laden. in the limited amount of investigation i have done around the this, i am left with the impression that the cia is a male dominated culture that took a long time if ever to appreciate the role she played and finally left intact because there was no room for advancement. she had been passed over so many times so that story, when he think about women of washington, she would be a woman i would like to interview on the stage. it is not a good one when it comes to these issues. i would like to get your take, not on that particular issue

perhaps but the culture of intelligence. >> interestingly enough, she was not the spark for this. multiple directors have been worried about this issue. as secretary albright, myself, a group of us if we would please look at this in shut -- this issue inside the cia. i think this started with director panetta. we looked at women in the cia, promotion pass, what we could do to encourage it. this is not just a quality issue. a very important issue but also in terms of intelligence gathering, women bring different tools, have different access, especially in this part of the world. so it is an important national resource issue in terms of

making sure women are competitive. i guess the outcome of that is there are changes made. it was considered a problem in the problem that required attention at the director level. multiple directors had taken it on to address it. even though changes take time to bring about results. it is not just an issue of cross but the cia. the other thing i would say about the woman you're talking about, in fairness to the institution, no single analyst, because i was there when we put the pieces together, this is a team. it is to some degree how she was treated was a result of claiming credit for herself that was

shared by a team. when you think about how women in the national security area, how do you break the path that is broken? by him large women i have dealt with in that arena, are that result, not about credit. part of her issue is this is about credit after the fact. it was a team, it really was a team. she deserves a lot of the credit but not all of it. >> i think it is not just an issue in intelligence but law enforcement. the issue up promotion pass, success in -- succession planning, making sure as a leader and organization you are thinking about the past. what i would say, and it will take time to change, i am getting tweets almost daily by incredibly talented women in the intelligence community. that is what i am seeing. it is tremendously exciting.

on the operations side, that may be a different pipeline. there is real talent there and we have to make sure the changes fran is alluding to take root. >> it is worth saying right now, number two and number three are both women. there is a good future including operation. >> and department of defense on an act and basis. >> let me open up the floor. >> it is not so much a question that breaking news. sony noted they pulled the

release and not releasing the sony interview. that just came through. >> i am so glad you brought this up. >> just before we walked in, a number of theaters said they were not going to carry the release. i must tell you how wrong i think it is of sony in the theaters. when you are confronted with aa, the idea is to not kidnap and them in the noise -- in the nose. the notion that sony and the theaters is ridiculous. what will happen if there is a david ignatius novel that pokes fun at the regime in russia and all of a sudden they get attacked by the russians, are they going to pull it then you go i think it is a horrible idea and president. >> we will bring a mic to your. >> >> i work and study in the city. could you take a survey.

i was thinking about the remarks, specifically the associated forces elements. could you take a look at that? also, the team had a note about the president's judicial nomination. 305, which beats this point for any of his predecessors. >> could you explain the acronym is -- acronym some as we go through. >> he is tremendous. on the piece, authorization for the use of military force, the president has stated quite clearly he wants to work with congress. he would have strong bipartisan support for military action for the work in theory a indirect. i took my lawyer had off when i went to the white house. i think it was great congress was able to push through a huge chunk of judges into the system

because we need them desperately. >> dedicated denial of service attack. that is when you try to log on and will not come off, there is

some failure. there is a flooding to deny it by traffic. we saw this in the financial services sector leading up. miraculously the attacks stopped once we had those negotiations. you will see more of this. frankly, what you hear on the private sector, financial services in particular, there needs to be a better, stronger relationship with the government. the government understands those sorts of attacks are generally used against the private sector to put pressure on the government. this there's a burden in the

private sector. there is a tremendous cost to that that companies bear and while there is a dialogue, there needs to be more. >> sarah harvard, the huffington post. could you speak about that terrorist nation and how this affects u.s. policy. two key u.s. partners in critics than have been removed from tier three status and how the concerns may be affecting other potential u.s. partners. the other question i have is about how concerns around gender-related violence with the islamic faith and how that

affects you in u.s. foreign-policy. >> whatever designated list and gender related violence. >> on the designation blessed, i am not familiar with what you are referencing, but it is one of the tools we used to great effect. you mentioned david:, who has done wonderful work in this arena. -- david cohen. i think we need to do more. if we can stop the flow of money, that is a key ingredient to depriving the actors from the lifeblood that allows them to perpetrate really heinous crimes. >> does cuba automatically, the state-sponsored terror list -- terror list. it is a separate announcement today that he asked secretary kerry to undertake a review, review asset that is guided by a statue. he will move out on that. >> did you want to comment on the gender issue. one of the concerns is there are a number of female hostages, violence, rapes, forced slavery, modern slavery. we all know that is horrible,

but to the degree you begin thinking about how you undermine the legitimacy in the eyes of the region -- what would be your advice? >> again, i think there are several issues to look at when you consider this. just last week isis release of pamphlet for how to treat women. you can rate them. -- rape them. basically women are the spoils of war. as horrible as that is, understand when you're talking about taking the enemies women and raping, murdering, torturing and abusing them, it is part and parcel of a genocide.

i am not going to simply conquer i enemy, i will eliminate my enemy. we have to understand it is part of the strategy. somebody said to me it is a cultural issue. would we say slavery or racism is a cultural issue cap of this is a human rights issue. we have to approach it just as we what any of the other issues and take it on directly. i do think in terms of the narrative piece, this is part and parcel of how you counter the narrative and have people understand the moral bankruptcy of what they are suggesting. i want to make this the context of an islamic religious argument. this is not. this is a moral argument to me him and we have to be willing to confront them on that. we need all of them to tackle this. >> well, yale. -- will. can you talk about the factional fighting in libya? >> this is something that france referenced, the intent is almost to branch out, whether it is in libya, taking up the calls for allegiance, from the extremist group in egypt, engaging to form these links.

i think that is a huge area of concern. both expanding and this seems to be happening, right? throughout africa you see groups mimicking isis and also making efforts to court made and communicates with isis. have you shut that down? >> this goes to the effort fran talked about with counter extremism. goes to the narrative of reducing that they're somehow in sensible. we saw them making a series of inroads and have freedom that was not checked. and gaining currency amongst

others in iraq. we have done a lot to push back on that. to one that we had to do more into it with a range of voices and partners. you saw the first military action taken this summer, late summer in september with five goals countries, including a woman pilot. >> the islamic state came out and said they wanted to crucify. >> derek quick. -- very quick. >> earlier you mentioned the new political actors you call terrorist. unfortunately for you you work

as a bureaucrat -- you have to start thinking like them and be creative. >> thank you. >> i am chris with the virginia quality bar association and will turn it back to sony because i spent 18 years in hollywood. it was really interesting the progression and i totally agree was should not given to the people but this morning talking about losing $100 million. then they canceled the new york premiere, and now they have canceled the entire thing. on the one and we cannot given to them but on the other and they are creating a huge potential problem financially in the financial markets. almost 7% they have lost.

>> let me take your question and piggyback. because when janet napolitano letter job, one of the discussions we had with her was how you balance responding to threats in a way, and yet you realize the society and the strength is running normally, and not being believed -- being bullied. put it into the broader issue or how you look at the whole swaths of your jobs. how do you create a healthy balance? there are people that only think about the problems. interesting that tony abbott told everyone what you can do is to continue to go out and live your life normally. it is holiday time, enjoy. how much of that becomes your discussion internally? does that ever affect the decision you make as to whether

you announce or not? >> you have to do that to make sense and be safe. i think we have evolved in favor of giving more information in doing so responsibly. there is to challenges. one is strategic that you just mentioned, and day to day dealing with the crises that come up of invariably. it is a very tough challenge. i face it and assume fran did and making sure you are taking the steps you need to to respond to an individual crisis and not losing the strategic focus because you will need that when you need to respond to a particular crisis because you

have to be concerned about the second, third, fourth order effects of any action you take. >> when the prime minister made the statement, i hearkened immediately back to right after 9/11 when president bush signed keep shopping -- that keep shopping, go out and was criticized and made fun of. the point to that is right. you have to have confidence and a sense that your government, people like lisa, and the tens of thousands of public servants like lisa are dedicating themselves 24-72 dealing with the problem and threat so that you can go about living your life. there is going to be an impact on sony. sony bears the responsibility for that. in terms of measures they took or took inadequately to detect the system. there will be an impact there.

there will be an impact on the financial services sector. there is a balance and cost to it but i do think this sends a horrible message, because this is not a one-off. the studios will face this problem again so we need a better framework. will >> does there exist an arm within counterterrorism and homeland security for the islamic leaders, organizations or institutions domestically here to work with you on strategies in the narrative in the war against terrorism? >> before you answer, i will grab a couple in the lightning round because i feel guilty. >> i am linda, and i want to say i dance in the periphery of intelligence and two of the most

respected individuals i know. my questions on russia, if you could touch on that because it is going downhill fast. >> reporter with foreign policy magazine. a few weeks ago vice president biden spoke about the roles of some of our allies having important rebel groups in serious and was criticized for having spoken about that, but a lot of it was mentioned before. some of the american allies this english between the good terrorist who support certain political objectives that a particular ally has versus bad terrorist who they want to go after. i am particularly talking about the case of pakistan. >> good terrorist versus bad terrorists.

>> we have a couple of questions that i will attack on my own. or in the first part of the obama administration you did not see much backstabbing going on between the national security divas and the team. the bush administration was right with backstabbing. -- ripe with backstabbing. i am interested in whether you think in addition to asking about the good terrorist versus bad terrorists question, russia and whether there is a new arm and homeland security about what environment is better for smart national security making? is a better when you have a competition of rivals or better to keep it all fields and bottled up? >> i challenge the premise. i think more and better and robust views in argument are

always going to be better. that is what i am trying to get at the situation room. >> interesting. >> with regards to homeland security arm, we are doing a lot in an effort to deal with communities on violent extremism and you'll see more of that in the coming months. >> i would say to you, welcome to the past two years of any president who serves two terms. >> i do think some of that is almost inevitable by virtue of time. i do not think that is unique from one president to another. we need more outrage, involvement of the islamic community, and i think we need the same thing right here.

i would encourage the administration to do that. russia, i am deeply worried that putin has taken that signals or misread signals from us as we miss so he sees an opportunity and lack of engagement. watch this space because i think our allies in eastern europe feel full marble. i think putin will continue to be aggressive. good terrorist that terrorists. when i sat in the seats i used to say there is a real thing difference between those who simply hate us and those that want to kill us. i was about those who wanted to kill us.

while the people who hate us are offensive, in terms of bandwidth and hours in the day, you have to pick your battles. you are both extraordinary. thank you for your candor and humor. happy holidays. thank you so much. [applause] >> at the end of the year, the last women of washington, thank you to -- for being here today. thank you to everybody. on the next washington journal, the obama

admnistration's foreign policy challenges. leahey. conversation. >> thursday, the international -- look atre on c-span, a us china relations. that is live at 5:30 eastern.

>> here's a look at some of the programs on c-span christmas day. the lighting of the national christmas tree followed i the christmas decorations with first lady michelle obama and the lighting of the capitol christmas tree. after 12:30 p.m., celebrity activists talk about their causes. and samuel alito and former florida governor jeb bush on the bill of rights and the founding fathers. at 10 a.m. enter into the art of good writing with steve pinker. at 1230 see the feminist side of -- in the secret history of wonder woman. and on american history tv on c-span3, the fall of the berlin wall with footage of george bush

and bob dole. with beaches from presidents john kennedy and ronald reagan. and representing the styles of the times in which they lived. and tom brokaw on his more than 50 years of reporting on world events. on the c-span day networks. for a complete schedule go to c-span.org. >> wednesday, federal reserve chair janet yellen spoke to reporters following the federal open market meeting announcing shat they would be no rate hike and discussed oil prices. this briefing is an hour. >> good afternoon. the federal open market committee concluded its last meeting of the year earlier today. as indicated in our policy statement, the fomc reaffirmed targetw that the current

range for the federal funds raised remains appropriate. the committee updated its forward guidance to the federal funds rate indicating that the committee judges that can be patient and beginning to normalize the stance of monetary policy. this new language does not represent a change in our policy intentions and it's fully consistent with our previous that it which stated likely will be appropriate to maintain the current target range for the federal funds raised for a considerable time after the end of our asset purchase program but with that october,aving ended in and the economy continuing to make progress toward our judgeives the committee

that some modification is appropriate at this time. i will have more to say about our policy decisions in a moment but first let me review recent economic developments in the outlook. market, progress continues towards the fomc's upset -- objective. the pace of job growth has been strong recently with job danes averaging nearly 280,000 per month over the past three months. job the past 12 months gains averaged nearly 230,000 per month. the implement rate was 5.8% in november. latest ratingthe available. broader measures have shown similar improvements. the labor force participation rate has leveled out.

noted in the fomc statement, underutilization of labor resources continues to diminish. even so, there is room for further improvement with too many people who want jobs being unable to find them, too many who are working part-time but would prefer full-time work, and too many who have given up searching for a job but would likely do so if the labor market were stronger. real gdp is reflecting solid consumption and investment spending. smoothing through the quarterly ups and downs earlier this year, real gdp expanded around 2.5%

over the four quarters ending in the third quarter. indicators suggest that economic growth is running at roughly that pace in the current quarter. the committee continues to expect a moderate pace of growth going forward. inflation has continued to run but -- below the 2% objective and the sizable declines in oil prices will likely hold down overall inflation in the near term. but as the effects of these oil price declines and other transitory factors dissipate, and as resource utilization continues to rise, the committee expects inflation to move gradually back toward its objectives. forecast, the committee is mindful of the recent declines in market based measures of inflation compensation. the committee views these movements as likely to prove

transitory. surveyed -- survey-based measures have remained stable. developments in this area obviously bear close watching. outlook is reflected in the individual economic projections submitted in conjunction with this meeting by the fomc participants. each participant must projections are conditioned on his or however -- his or her own view of monetary policy. the central tendency of the unemployment -- unemployment rate projections is slightly lower. 5.3% atstands at 5.2 to the end of next year. longer with an estimated than normal level. theittee participation see rates declining over 2016 and

2017. the central tendency of the projections for real gdp growth to 2.4. up the bit over the last projections. the projections for real gdp growth run someone above the estimates of longer runs on normal growth. finally, although fomc participants project inflation in the near term to be lower on account of that the 1 -- decline in energy prices, they continue to see inflation moving back to percent. the central tendency of the projections is 1.0 to 1.6% next in 2017.ng to 1.822% as i noted earlier, the committee reaffirmed its view --t the current search one

target range remains appropriate. ourrding forward guidance october statement indicated that it likely would be appropriate to maintain the target range for the funds rate for a considerable time following the end of their asset purchase program especially if projected inflation continues to run below the 2% longer run goal. today's statement which indicates the committee judges they can be patient and normalize the stance of monetary policy does not signify any change in the policy intentions as set forth in its recent statement. the judgment is aced on the assessment of realized and expected progress toward its

objectives of maximum employment at 2% inflation. an assessment that is based on a wide range of information laboring measures of market conditions, indicators of inflation pressures, and inflation expectations and readings on financial developments. given that the committee is not singling change in policy, why did we ate our guidance? the reason is with the asset purchase program having been wound down in october, it seems less helpful to continue to communicate about the possible rateg of our first increase with reference to an event that is receiving -- receding into the past. instead we have shifted to language that better reflects the committee's focus on the economic conditions that would make lift off appropriate. employment is rising at healthy

rates and the u.s. economy is strengthening, reflecting in part highly cut -- accommodative monetary policy. inflation has been running somewhat below our goal of 2%. but we project that cap to close gradually over time. as progress in achieving maximum employment and 2% inflation continues, at some point, it cash appropriate to release policy accommodation is based on its current public to committee judges that the patient doing so. in particular, the committee considers it unlikely to begin the is process for at least the next couple of days. assessment is completely dependent.

if coming information indicates faster progress toward the committee's employment and inflation objectives, then the committee now expects that increases in the target range for the federal funds rate are thany to occur sooner currently anticipated. conversely, if progress proofs slower emma increases in the target range are likely to occur later than currently anticipated. remove policy accommodation a continues to be the committees assessment that even after employment and near mandate consistent levels, economic conditions may for some time -- they were not taking the rate below levels the committee views as normal in the longer run. this guidance is consistent with the paths for appropriate policy

given by participants. assuming that the economy evolves in line with participants expectations, almost all participants believe that it will not be appropriate range foraising the the federal funds rate in 2015. there are a range of views on the appropriate timing of lift off within the year. in part reflecting differences in participants' expectations for how the economy will evolve at the time of lift off, participants- expect to see some decline in the unemployment rate and additional improvement in labor market conditions. they also expect core inflation to be running near current foresee being confident in their expectation that inflation will move back objective overtime.

emphasized, the path ofs well as the the target thereafter are contingent on economic conditions. by late 2016, the median projection to the federal funds rate at 2.5% remains more than a percentage point below the 3.75% run value of projected by most participants. even though the central tendency of the unemployment rate at that time is slightly below its estimated longer run value, and the central tendency for inflation is close to the 2% objective. amc participants provide number of explanations to the federal funds rate running below run level atnger

that time. in particular, the residual crisis of the financial which are likely to restrain household spending. as these factors dissipate further, most participants expect the federal funds rate to move closer to its longer run normal level by the end of 2017. finally, the committee will continue its policy of reinvesting proceeds for maturing treasury securities and principal payments from holdings of agency debt and mbs. the committee's sizable holdings of longer-term securities should help accommodate financial conditions and promote further progress toward our objectives of maximum employment and inflation of 2%.

thank you and i will be happy to take your questions. >> a number of fed officials have projected in the lead up to this meeting that most likely timing for liftoff was around the middle of next year. i wonder if you could clarify that. you said in your statement that -- the forecast seem to be consistent with something like a middle of the year lift off. speaku speak to that end to the downdraft we're seeing in inflation. in particular, rocket-based inflation expectations and whether that gives the committee -- hesitancy toward lifting moving toward liftoff. the statements that

the committee can be patient should be interpreted as meaning that it is unlikely to begin the normalization process for at least the next couple of meetings. any does not point to preset or predetermined time in will normalization is -- begin. there are a range of views on the committee and it will not be datadent on how incoming errors on the progress the economy is making. first of all i want to emphasize that no meeting is completely off the table in the sense that if we do see faster progress than weur objectives currently expect, it is possible that the process of soonerzation would occur

than we anticipated. and the converse is also true. at this point, we think it unlikely that it will be appropriate that we will see conditions for at least the next couple of meetings that will make it appropriate for us to decide to begin normalization. a number of committee participants have indicated that in their view, conditions could be appropriate by the middle of next year but there is no preset time and there are a range of views as to when the appropriate conditions will likely fall in place. that is something we will be watching closely as the year unfolds. you asked also about inflation. especially with the downward pressures on inflation that we expect to see

for a while because of declining oil prices and falling import prices, we certainly expect headline inflation to be under downward pressure for a while. most envision, that conditions will not be appropriate to begin normalizing policy. they do largely expect that , coreion will be inflation will be running close to its current level. and headline inflation could be lower. is ahey will want to have feeling of reasonable confidence that when we start the process of normalizing policy that it will be moving up over time. of course if labor market conditions continued to improve,

history suggests as long as inflation expectations remain well anchored, that that is likely to occur. >> given what is happening with fed,ransition with the there seems to be a pattern developing that the market expects big news to come when you have a press conference. is there any thought to starting to have a press conference at every meeting? >> i would like to discourage that expectation. is a meeting that we have live meeting at which the committee could make policy decisions and we will feel free to do so.

i would like to strongly discourage the expectation that policy moves can only occur when there is a scheduled press conference. and we have long had in place the ability to hold a press conference, a call red then in person press conference and we did do so on a number of occasions in earlier years. committee clearly would want to be able to explain its reasoning as we begin the process of normalizing policy. every meeting is life. if we were to decide at a meeting to begin to normalize policy, i expect we would hold the press conference call.

>> the signal coming from markets, lower oil prices and shouldk was one that overshadow the concerned about inflation on the other side. >> we are very attentive to the global development and certainly discuss them in a meeting. the very substantial decline that we have seen in oil prices is one of the most important developments shaping the global outlook. it will have different effects in different regions and could have effects on financial markets as we are seeing. i think the judgment of the committee is that from the standpoint of the united states and the u.s. outlook that the decline that we have seen in the oil prices is likely to be on the net a positive.

it's something that's certainly good for families and households and it is putting more money in their pockets having to spend less on gas and energy. so in that sense it's like a tax cut to boost their spending power. the united states remains although the production of oil has increased dramatically we still remain a net importer of oil. of course there may be some offset in the form of reduced drilling activity and possibly some change, some reduction in plans in the drilling area. but on balance i would see these developments as a positive or the standpoint of the u.s. economy.

with respect to deflation, we see downward pressure on the headline inflation from declining energy prices and we certainly recognize that that is going to be pushing down headline inflation. and may even spell over to some extant to the core inflation. but at this point also be we indicated that we are monitoring inflation developments carefully. we see these developments as transitory. and the committee continues to believe especially in the improvement that we are seeing in the labor market which we expect to continue that inflation will move back up towards the projected objective over time. as i indicated, i believe that

people will expect to deal reasonably confident about that when the process of normalization begins, but we do expect them to be transitory. >> there is a gap between -- our markets misunderstanding your intentions? >> >> that is difficult for me to say. what i want to say is our objective is to communicate as clearly as we possibly can about our plans and how we see the economic environment unfolding. when the participants in the committee fill out the they are asked to give the federal funds rate and the various economic variables that they consider most likely they are not asked to talk about all the different things that could happen, recognizing there is uncertainty

and the funds rate that they would consider appropriate if those other alternatives were to happen. but other alternatives i think are priced into the market and one reason that they may be different than the committee's is because the probability on other outcomes that looked different than what they regard as the model forecast. they may also have a different expectations about how the economic outlook and how it is likely to unfold. i recognize that there are significant differences. i cannot tell you exactly what they are due to but what i do want to do is communicate as clearly as i can and how we would set the funds rate over time.

>> [inaudible] >> there are a number of different factors that are bearing on the path of market interest rates. i think including global economic developments. it is often the case that when oil prices move down and the dollar appreciates, that tends to put downward pressure on inflation compensation and on the longer-term rates and the flows that may be affecting longer-term treasury yields. we are trying to communicate our thoughts as clearly as we can. >> steve -- i was hoping you

could go into more detail even though you see it as transitory. does that give you more room to keep rates low in the next few months and if the prices bounce back what is that going to do to the ability to change rates to react to that? >> i would say i think that's that what we have seen since the mid-80s is that in the environment where the inflation expectations are anchored that movements in oil and commodity prices and import prices tend to have transitory effects on the inflation outlook. there were many years in which we had unanticipated increases in oil prices really beginning in 2004, 2005 that put upward pressure on headline inflation

and even spilled through into core. typically the committee looked through those impacts in the view that they would be transitory. i think that is the committee's expectation here. inflation has been running below the objective and movements in oil are now down and will move inflation around. certainly headline inflation. but the committee finds those to be transitory. so, as long as the participants feel confident that the information projection is one that we expect to meet our objective over time i think they will be looking at things as we decide on the path for the funds rate.

>> you called the decline transitory. you were talking about expectations that inflation would be below target. some market participants see this as evidence of declining credibility any long-term objectives. why do you still view that as transitory? >> your first question is why

does the committee see inflation declining slightly below the long-term natural rate. the reason is inflation is running below our objective. the committee wants to see inflation moved back toward our objective over time. a short time of undershoot will facilitate faster return of inflation to our objective. it is very small. in a situation where there is great uncertainty about exactly

what constitutes maximum employment. we also do see the different measures of slack in the labor market. pointing to different assessments of what maximum employment is. the standard unemployment rate for quite some time now has been signaling a little bit less slack in the labor market than measures that are somewhat broader, for example, include the unusually large number of people who are part-time employed but would prefer full-time jobs. and the portion of the decline we've seen in the labor force participation that looks like it would disappear in, or be eroded in a stronger economy, and so it may be that with a very small undershoot of this longer run normal level of the unemployment rate is measured by the standard

unemployment rate, we'll be seeing some further progress on those margins of slack. but it's important to point out that the committee is not anticipating an overshoot of its 2% inflation objective. [inaudible] what i would say, we refer to this in the statement as inflation compensation rather than inflation expectations. the gap between the nominal yields on 10 year treasuries, for example, and tips have

declined, that's inflation compensation and five year, five year forward as you said have also declined. that could reflect a change in inflation expectations, but it could also reflect changes in assessment of inflation risks, the risk premium that's necessary to compensate for inflation that might especially have fallen if the probabilities attached to very high inflation have come down. and it can also reflect liquidity effects in markets and, for example, it's sometimes the case that when there is a flight to safety, that flight tends to be concentrated in nominal treasuries and could also serve to compress that spread. so i think the jury is out about exactly how to interpret that downward move in inflation compensation, and we indicated that we are monitoring inflation developments carefully. >> madam chair, bloomberg television. want to follow up if i could on

firming going forward on the normalization once liftoff takes place. i know you said it will be data dependent. does that suggest to markets to those watching that the measured pace we've seen in the previous tightening cycle, those quarter-point increments, that's not something markets should expect? what's your own take away about how effective that measured pace was back in the previous tightening cycle? let me follow-up on the dissent of this meeting, three dissents a notable number. what does that say about the debate around the table in your ability to forge consensus going forward? are you disappointed a number of dissents> >> so let me start with the number of dissents. there is a wide range of opinion in the committee. i think it's appropriate for people to be able to express their views, and in the sense you see dissents on both sides, i think the statement, does a good job of reflecting what the majority of the committee thinks is appropriate policy.

so you know, at a time like this where we are making consequential decisions, i think it's reasonable to see divergents is of opinion. just remind me, what was the measured pace. there certainly has been no decision on the part of the committee to move at a measured pace, or to use language like i think quite a few people looking back on that language, i can't remember if it was 12 or 16 meetings with over 25 basis point moves, would probably not like to repeat a sequence in which there was a measured pace

in 25 basis point moves at every meeting. so i certainly don't want to encourage you to think that there will be a repeat of that. many members of the committee participants have said that they think policy should be based on the actual evolution of economic activity and inflation which tends to be variable over time, and that's why i said i anticipate it will be data dependent. we have continued to provide guidance, the same guidance that we have for some time, that says the committee anticipates that even after employment and inflation are near mandate consistent levels, that economic conditions for some time warrants keeping the target funds rate before the levels the committee considers normal in the longer run. i know that's a mouthful but says in effect that the committee believes that the economic conditions that have

made recovery difficult were getting beat on them. they are optimistic that those conditions will lift. they see the longer run normal lift interest rates as around 3.75%. so there's no view in the committee that there is the secular stagnation in the sense we won't eventually get back to pretty historically normal levels of interest rates, but they have said, you know, the economy is required to get where it is, a good deal of monetary policy, accommodation. we expect to be able to normalize policy, but until

those conditions have lifted that have held back economic activity, monetary policy will need to stay accommodative. so in that sense perhaps that's equivalent to saying that the path of normalization is anticipated to be relatively gradual. but again, the path of rates will depend on how economic conditions actually evolve. that's nothing more than an expectation on the part of the committee. [inaudible] >> dow jones newswires. enough about rates. the new york fed has been in the news a lot lately. president dudley was invited to congress to testify about conflicts of interest there. you have things like the cigar tapes, abide report and most

recent the revelation that former new york fed official was exchanging information with someone at golden sachs who was also at new york fed connections. i just wonder, and also there was scant during the crisis regarding the new fed and its purchase of goldman sachs stock. pc then you bed as a blackboard on the fed system because of these regard scandals? have you talked to bill dudley about reforming the image of that particular regional fed? do you think a person that spent 21 years of his career at goldman sachs is in a position to regain public credibility about conflicts of interest? >> well, let me say that i think it's very important to the federal reserve system to have confidence in the quality of its supervision. and i do have, i have a good deal of confidence in the quality of our supervision program, for the banking organizations we supervise in general, and that also applies to the largest banking organizations. we rely on examiners who were in the field and at the reserve banks to be providing information about what's happening in those

organizations. organizations. but that information feeds into a process in which it is not individuals at any single reserve bank, but at the board, it's a board led process, and it involves senior officials at a number of different reserve banks. it's also a multidisciplinary process that involves not only people from supervision, but those from markets, from economic research, experts who focus on financial stability all come together to evaluate the information that they have, and to assign supervisory ratings and decide on the appropriate program for all of those large institutions. we have strengthened the process of supervision enormously since the crisis, and i feel, i feel a very good sense of confidence in how we are carrying that out.

now, it is important to make sure that we have fed into this process all the information that's relevant to making the right decisions. and when there are individuals who are examiners who may disagree with others in their team about how to interpret

what's going on at a particular institution, it's important that there be channels by which they can make sure that disagreements are fed up to the highest level. this is true throughout the work we do. we do economic forecasting, and the fomc receives information to help us make decisions. but obviously there are disagreements about, among economists about how to interpret developments. it's also important for us there to make sure we understand alternative views. so this is important in supervision. we've announced that the board has undertaken a review of whether or not there are appropriate mechanisms in place in all of the reserve banks that individuals who disagree with decisions can make their own views known and feed into the process. and we've also asked our inspector general to look into that. >> "bloomberg news." i would also like to get off monetary policy and ask you

about the federal research relationship with congress. specifically, how worried are you about legislation that has been proposed and may be proposed again in the next congress that would reduce fed independence? would you see yourself trying to fight back or would you see yourself trying to go to congress to work with them to do more with transparency or something else to reduce their concerns? without making them law. and if there were bills sent to the white house would you talked to president about the joint them, or give any confidence that he would veto bills that would reduce independence? thanks. >> so, let me simply say that congress has assigned us important tasks in monetary policy and in other roles that we perform, and the federal reserve is highly focused on attempting to carry out the mandates that congress has given us in the area of monetary policy.

to promote maximum employment and price stability, and that's what we are working on. you know, i would say that the ability of the central bank to make the decisions about monetary policy, that he it regards as in the best longer run interest of the economy, free of short run political interference, is very important to the effective, conduct of monetary policy, and i think history shows not only in the united states, but around the world that central banks independence promotes better economic performance. so i do think central bank independence is very important, and and it's important to make sure that we can make the

decisions we think are best, free of short run political interference. with respect to monetary policy. we should be accountable, and we are accountable, to congress in explaining what we do. i believe strongly in transparency, and i believe strongly that we should communicate as clearly what we are doing in the rationale for doing it and am very open to looking for ways ourselves to improve our communications and transparency and working with congress to do that. but i would be very concerned about actions, back in 1978, congress explicitly passed legislation to ensure that there would be no gao audits of monetary policy decision-making, namely policy audits. i certainly hope that will

continue and i will try to forcefully make the case for why that's important. i cannot speak for the white house, wouldn't attempt to do that. >> i will stay off interest rates and first want to wish you a happy holiday. >> thank you. >> second want to ask you about the russian economy. did that come up in a meeting in a discussion of global economic developments? as you know there's a lot of concern the drop in oil prices the russian economy could be in

some trouble. russia owes a lot of money to u.s. and foreign banks and russian companies. is there any concern about default? any concern about possible contagion? and if so, is the fed taking any steps to prepare for that? thank you. >> well, we certainly did review global economic developments, including developments in the russian economy. clearly, russia has been hit very hard by the decline in oil prices, and the ruble has depreciated enormously in value. and this is posing a series of very difficult economic conditions in the russian economy. of course, we discussed what the potential spillovers are to the united states, which could occur both through trade and financial linkages. but these linkages are actually relatively small. russia accounts for less than 1%

of u.s. trade volume, and u.s. banks exposure to russian residents is really quite small in terms of relative to their capital. in terms of the portfolios of u.s. residents, there are russian securities, but they account for a very small share. so i expect that the linkages backed the spillovers to the united states, both through trade and financial channels would be small. europe, of course, is somewhat more exposed to russia, both russia is an important supplier of oil and natural gas to europe, and the financial linkages are somewhat greater. but in the case of the united states, i see the spillovers relative, it is pretty small,

but we are obviously watching that closely. >> also happy holidays. >> thank you. and to you. >> there's a contagion risk from low oil prices that people are talking about in the market. what does it mean to the banks that have lent into the oil patch with a low oil prices? i guess, you know, your warnings about leveraged loans, you've made warnings over the past year about leverage lending. are you worried they have not been heeded? >> so, i mean, there is some, in the united states exposure? we have seen some impacts of lower oil prices on the spreads for high yield bonds where there's exposure to oil companies that may see distress or a decline in their earnings. and we have seen some increase

in spreads on high yield bonds more generally. i think for the banking system as a whole, the exposure to oil, i'm not aware of significant issues there. this is the kind of thing that is part of risk management for banking organizations, and the kind of thing they look at in stress tests. but the movements in oil prices have been very large, and undoubtedly unexpected. in terms of leverage and whether or not leveraged entities could

be badly affected by movements in oil prices, leverage in the financial system in general is way down from the levels before the crisis. so it's not a major concern that these would be badly affected by this, but we will have to watch carefully. there have been large and unexpected movements in oil prices. >> good afternoon, chair yellen. i will go back to interest rates if you don't mind. actually it's a question about balance sheet effects on the over all appropriate level of monetary policy and reaffirming the investment policy, the fomc says once again that this will help maintain accommodative

financial conditions. in the past it said that the large portfolio securities will exert a downward effect on long-term interest rates. as you look forward to raising short-term rates, to what extent does the fomc need to take into account the sort of residual accommodative effect of maintaining a large balance sheet? >> i agree, and that's why we stated it, that we typically think of the monetary policy impact of our asset purchases as depending on the stock of assets that we hold on our balance sheet, rather than the flow of purchases. and so we are reminding the public that we continue to hold a large stock of assets. and that is tempting to push it down term premiums and longer-term yields. we made clear when we come or

tried to make clear, when we issued our normalization principles in september that we intend to use changes in our target for the federal funds rate as the main tool that we will actively use to adjust financial conditions, rather than actively planning to sell the assets that were put onto our balance sheets sometime after we began raising our targets for short-term interest rates, depending on economic and financial conditions, we are likely to reduce or see three investment and gradually run down the stock of our assets. but our active tool for adjusting monetary, substantial monetary policy, so that it is appropriate to the economic needs of the country.

that will be done through adjusting our short-term target range for the federal funds rate. >> i can't believe nobody has asked the most important question about what's going on with your san francisco 49ers, but since everybody already wish you happy holidays. can you talk about housing? a few things are more important to americans and their wealth creation than housing. you in your statement noted it continues to be a drag. mr. dudley was actually relatively upbeat in his forecast. i don't know if that's a cute shirt on the committee. what you think is holding housing back. what can congress do.

what can you tell cox in the coming year. the clarification on the deadly question, you didn't mention him by name by calling a supervision. are you pleased with mr. dudley's handling of these events? >> so let me start with that. i have great confidence in president dudley. he's done a fine job of running the new york fed, and i want to be very clear that have great confidence in him. he's a distinguished public servant, and he has worked very hard in the aftermath of the crisis to make sure that the new york fed is doing all that it needs to do to continue to the work that we do both in financial stability and in supervision. and the other question you asked was about housing. you know, i have been surprised that housing hasn't recovered more robustly than it has.

in part, i think it reflects very tight credit, continuing tight credit conditions for any borrower that doesn't have really pristine credit, you know, credit ratings. and my hope is that that situation will ease over time. in addition, household formation has been very depressed. my expectation is, as the labor market continues to improve and households feel better about their financial condition, that we will see household formation pick up and somewhat stronger recovery than we've seen thus far in housing. >> okay, thank you. [captions copyright national cable satellite corp. 2014] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

text and to the release of american gntest or -- contractor alan ross. who we hear from mr. gross reporters. and marco rubio on his opposition to the white house's pensions and then the speech by a president. raul castro. on the mcglothlin report on cia interrogation techniques. d then a discussion by david

rothkopf. then mark leahey. you can join the conversation when we take your calls, facebook comments, and tweets every day on c-span at eight -- 7 a.m. eastern. economicrector of the committee talks to politico about the president economic agenda. atn the conversation live 8:10 a.m. eastern on c-span two. at 1 p.m. eastern, the director and chief of the u.s. army aviation gives an update on the army's aviation restructure plan. that event from the center for strategic and international studies live at 1 p.m.. >> this month is the 10th

anniversary of our sunday prime time program q&a and we're featuring an encore presentation from each year. from 2005, kenneth feinberg's interview on the september 11 victim compensation fund. from 2006, the importance of the african-american experience to u.s. history. from 2007, robert novak on 50 years of reporting in washington. from 2008, the value of higher education in america and from essie kaup. p.m. eastern. >> next the announcement would normalize relations with kim a -- cuba. houseke from the white following the release of alan

gross and an unnamed intelligence agent. this >> good afternoon. today, the united states of america is changing its relationship with the people of cuba. in the most significant changes in our policy in more than fifty years, we will end an outdated approach that, for decades, has failed to advance our interests, and instead we will begin to normalize relations between our two countries. through these changes, we intend to create more opportunities for the american and cuban people, and begin a new chapter among the nations of the americas. there's a complicated history between the united states and cuba. i was born in 1961 -- just over two years after fidel castro took power in cuba, and just a