president obama: good morning, everybody please have a seat. of the many powers and possibilities that the constitution vests in the presidency, few are more consequential than appointing a supreme court justice. particularly one to succeed justice antonin scalia, one of the most important jurists of our time. the men and women to sit on the court or the final arbiters of american law. they safeguard our rights. they ensure that our system is one of laws and not men. they are charged with the essential task of applying the polls put to paper or than two centuries ago to some of the most challenging questions of our time. so this is not a responsibility that i take lightly.

the decision that requires me to set aside short-term expediency and there are politics so as to maintain faith with our founders and perhaps more importantly with future generations. and that is why over the past several weeks, i have done my best to set up a rigorous and comprehensive process. i have sought the advice of republican and democratic members of congress. we have reached out to every member of the senate judiciary committee, to constitutional scholars, to advocacy groups and bar associations representing an array of interests from all across the spectrum. and today, after completing this exhaustive process, i have made my decision. i have selected a nominee who is widely recognized not only as one of america's sharpest legal minds, but someone who brings to his work a spirit of decency, modesty, integrity, even-handedness, and excellence.

these qualities and his long commitment to public service have earned him the respect and admiration of leaders from both sides of the aisle. he will ultimately bring that same character to bear on the supreme court, an institution in which he is uniquely prepared to serve immediately. today, i'm nominating chief judge merrick brian garland to join the supreme court. [applause] president obama: now, in law enforcement circles and in the legal community at large, judge garland needs no introduction, but i would like to take a minute to introduce merrick to the american people whom he so ably serves.

he was born and raised in the land of lincoln, in my hometown of chicago, and my home state of illinois. his mother volunteered in the community. his father ran a small business out of their home. inheriting that work ethic, merrick became valedictorian of his public high school. he earned a scholarship to harvard where he put himself through and graduated summa cum laude and put himself through law school working as a tutor, stocking shoes in a shoe store and what is a painful moment for any young man, selling his comic book selection. [laughter] president obama: been there. [laughter] merrick graduated from harvard law and the early years of his career bears the mark of excellence. he clerked for two of president eisenhower's judicial appointees, judge henry friendly and then for supreme court

justice william brennan. following his clerkships, he joined a highly regarded law firm with a practice focused on litigation and pro bono representation of disadvantaged americans. within four years, he earned a partnership, the dream of most lawyers. but in 1989, just months after that achievement, merrick made a highly unusual career decision. he walked away from a comfortable and lucrative law practice to return to public service. merrick accepted a low-level job as a federal prosecutor in president george h w bush's administration and took a 50% pay cut. traded in the elegant office for a windowless closet that smelled of stale cigarette smoke. this was a time when crime here in washington had reached epidemic proportions, and he wants to help, and he quickly

made a name for himself going after corrupt politicians and violent criminals. his sterling record as a prosecutor led him to the justice department where he oversaw some of the most significant prosecutions in the 1990's, including overseeing every aspect of the federal response to the oklahoma city bombing. in the aftermath of that act of terror, when 168 people, many of them small children, were murdered, merrick had one evening to say good-bye to his own young daughters and boarded a plane to oklahoma city. and he would remain there four weeks. and worked side by side with first responders, rescue workers, local and federal law enforcement. he led the investigation and supervised the prosecution that brought timothy mcveigh to justice. but perhaps most important is the way he did it. throughout the process, merrick took pains to do everything by the book.

when people offered to turn over evidence voluntarily, he refused, taking the harder route of obtaining the proper subpoenas instead because merrick would take no chances that someone who murdered innocent americans might go free on a technicality. merrick also made a concerted effort to reach out to the victims and their families, updating them frequently on the case's progress. everywhere he went, he carried with him in his briefcase the program from the memorial service with each of the victims' names inside, a constant reminder of why he had to succeed. judge garland referred to his work on the oklahoma city case as, and i quote, "the most important thing i have ever done in my life." and through it all, he never lost touch with that community that he served.

it is no surprise then that soon after his work in oklahoma city, merrick was nominated to what's often called the second highest court in the land, the d.c. circuit court. during that process, during that confirmation process, he earned overwhelming bipartisan praise from senators and legal experts alike. republican senator orrin hatch, who was then chairman of the senate judiciary committee, supported his nomination. back then he said, "in all honesty, i would like to see one person come to this floor, and say one reason why merrick garland doesn't deserve this position." he accused fellow senate republicans, trying to obstruct the qualification, playing politics with judges.

judge garland would be a consensus nominee for the supreme court who would be very well supported by all sides and there would be no question that merrick would be confirmed with bipartisan support. ultimately, merrick was confirmed to the d.c. circuit. the second highest court in the land with votes from a majority of democrats and a majority of republicans. three years ago, he was elevated to chief judge. and in his 19 years on the d.c. circuit, judge garland has brought his trademark diligence, compassion, and unwavering regard for the rule of law to his work. a circuit court known for a strong-minded judges, judge garland has built consensus as a thoughtful, fair-minded judge who follows the law.

he has shown a rare ability to bring together odd couples, assemble unlikely coalitions, persuade colleagues with wide ranging judicial philosophies to sign on to his opinions. his habit, to borrow a phrase from former justice john paul stephens, of understanding before disagreeing. and then disagreeing without being disagreeable. and speaks to his ability to persuade, to respond to the concerns of others with arguments and air-tight logic. as his former colleague on the d.c. circuit and our current chief justice john roberts said, any time judge garland disagrees, you know you are in a difficult area.

at the same time, chief judge garland is more than just a brilliant legal mind, but he is someone who has a keen understanding that justice is about more than just abstract legal theory or a dusty case book. his life experience, his experience in places like oklahoma city, informs his view that the law is more than an intellectual exercise. he understands the way it affects the daily reality of people's lives in a big, complicated democracy and in rapidly changing types. to find someone with such a long career of public service, marked by complex and sensitive issues,

to find someone who just about everyone not only respects, but genuinely likes, that is rare. that speaks to who merrick garland is, not just as a lawyer, but as a man. people respect the way he treats others. his genuine courtesy and respect for his colleagues and those who come before his court. they admire his civic mindedness, mentoring clerks, throughout their careers, urging them to use their legal frame in their careers. he set an example by tutoring a student in north washington dc every year for 18 years. they are moved by his deep devotion to his family. lynn, his wife of nearly 30 years, and two daughters, becky and jesse. as a family, they indulge their love of hiking, skiing and canoeing and their love of america by visiting our national parks.

people respect merrick's deep and abiding passion to protecting our most basic constitutional rights. passion i am told that manifested itself at an early age. and one story is indicative of this. it is notable. as valedictorian of his high school class, he had to deliver a commencement address. the other student speaker spoke first and unleashed a firey critique of the vietnam war. hearing the controversy that might result, several parents decided to unplug the sound system and the rest of the student's speech was muffled. and merrick didn't necessarily agree with the tone of his classmate's remarks, nor his choice of topic for that day, but stirred by a fellow student's voice was silent, he tossed aside his remarks and delivered on the spot an impromptu defense of our first

but to go down that path would be wrong. it would be a betrayal of our best traditions. and a betrayal of the vision of our founding documents. at a time when our politics are so polarized, at a time when norms and customs of political rhetoric and courtesy and comity are so often treated like they are disposable, this is precisely the time when we should play it straight and treat the process of appointing a supreme court justice with the seriousness and care that it deserves.

because our supreme court really is unique. it is supposed to be above politics, it has to be. and it should stay that way. to suggest that someone is qualified and respected as merrick garland doesn't even deserve a hearing let alone an up-or-down vote to join an institution as important of our supreme court when 2/3 of our americans believe otherwise, that would be unprecedented. to suggest that someone who has served his country with honor and dignity, with a distinguished track record of delivering justice for the american people, might be treated, as one republican leader stated, as a political pinata, that can't be right.

tomorrow, judge garland will travel to the hill to begin meeting with senators one-on-one. i simply ask republicans in the senate to give him a fair hearing and then an up-or-down vote. if you don't, then it will not only be an abdication of the senate's constitutional duty, it will indicate a process for nominating and confirming judges that is beyond repair. it will mean everything is subject to the most partisan of politics, everything. it will provoke an endless cycle of more tit-for-tat and it make impossible for any president, democrat or republican, to carry out their constitutional function. the reputation of the supreme court will inevitably suffer.

and our democracy will ultimately suffer as well. i have fulfilled my constitutional duty. now it's time for the senate to do theirs. presidents do not stop working in the final year of their term. neither should a senator. i know that tomorrow the senate will take a break and leave town on recess for two weeks. my earnest hope is that senators take that time to reflect the importance of this process to our democracy, not what is expedient, not what is happening at the moment. what does it mean for our institutions, for our common life? the stakes, the consequences and

the seriousness of the job we all swore an oath to do. and when they return, i hope that they'll act in a bipartisan fashion. i hope they're fair. that's all. i hope they are fair. as they did when they confirmed merrick garland to the d.c. circuit. i ask that they confirm merrick garland now to the supreme court, so that he can take his seat in time to fully participate in its work for the american people this fall. he is the right man for the job. he deserves to be confirmed. i could not be prouder of the work that he has already done on behalf of the american people. he deserves our thanks and he deserves a fair hearing. and with that, i would like to invite judge garland to say a few words. [applause]

judge garland: thank you, mr. president. this is the greatest honor of my life, other than my wife agreeing to marry me 28 years ago. it's also the greatest gift i've ever received, except, and there's a caveat, the birth of our daughters, jessie and becky. as my parents taught me by both words and deeds, a life of public service is as much a gift to the person who serves as it is to those he is serving.

and for me, there could be no higher public service than serving as a member of the united states supreme court. my family deserves much of the credit for the path that led me here. my grandparents left the pale of settlement at the border of western europe and eastern europe in the early 1900's, fleeing anti-semitism, and hoping to make a better life for their children in america. they settled in the midwest, eventually making their way to chicago. there, my father, who ran the smallest of small businesses from a room in our basement, took me with him as he made the rounds to his customers, always impressing upon me the importance of hard work and fair dealing. there, my mother headed the local pta and school board and directed a volunteer services agency all the while instilling in my sisters and me the understanding that service to the community is a responsibility above all others.

i only wish that my father were here to see this today. i also wish that we hadn't taught my older daughter to be so adventurous that she would be hiking in the mountains out of cell service range when the president called. [laughter] it was a sense of responsibility to serve the community instilled by my parents that led me to leave my law firm to become a line prosecutor in 1989. there, one of my first assignments was to assist in the prosecution of a violent gang that had come down to the

district from new york, took over a public housing project, and terrorized the residents. the hardest job we faced was persuading mothers and grandmothers that if they testified, we would be able to keep them safe. and convict the gang members. we succeeded only by convincing witnesses and victims that they could trust that the rule of law would prevail.

once again, i saw the importance of assuring victims and families that the justice system could work. we promised that we would find the perpetrators, that we would bring them to justice, and that we would do it in a way that honored the constitution. the people of oklahoma city gave us their trust, and we did everything we could to live up to it. trust that justice will be done in our courts without prejudice or partisanship is what in large part distinguishes this country from others. people must be confident that a judge's decisions are determined by the law and only the law. for a judge to be worthy of such trust, he or she must be faithful to the constitution and to the statutes passed by the congress. he or she must put aside his personal views or preferences and follow the law, not make it. fidelity to the constitution and the law has been the cornerstone of my professional life. and it is the hallmark of the kind of judge i have tried to be for the past 18 years. if the senate sees fit to

confirm me to the position for which i have been nominated today, i promise to continue on that course. mr. president, it's a great privilege to be nominated by a fellow chicogoan. [laughter] i am grateful beyond words for the honor you have bestowed upon me. [applause]

we will start with the senate majority leader mitch mcconnell. leader mcconnell: the next

justice good fundamentally alter the next direction of the supreme court and have a profound impact on our country. so of course, the american people should have a say in the court's direction. it is a president's constitutional right to nominate, and it is the senate's constitutional right to act as a check on a president and withhold its consent. as chairman grassley and i declared weeks ago and reiterated personally to president obama, the senate will continue to observe the biden rule so that the american people have a voice in this momentous decision. the american people may well elect a person who decides to nominate judge garland for senate consideration. the next president may also nominate somebody very different. either way, our view is this: give the people a voice in filling this vacancy. let me remind colleagues of what

vice president biden said when he was chairman of the judiciary committee here in the senate. here's what he said. "it would be our pragmatic conclusion that once the political season is under way, and it is, action on a supreme court nomination must be put off until after the election campaign is over. that is what is fair to the nominee," he said, "and is central to the process. otherwise, it seems to me," chairman biden went on, "we will be in deep trouble as an institution. others may fret," he said, "that this approach would leave the court with only eight members for some time. but as i see it," chairman biden said, "the cost of such a result, the need to reargue three or four cases that would divide the justices 4-4, are quite minor.

compared to the cost that a nominee, the president, the senate, and the nation would have to pay for what would assuredly be a bitter fight no matter how good a person is nominated by the president." chairman joe biden. consider that last part. senator biden said that the cost of the nation would be too great no matter who the president nominates. president obama and his allies may now try to pretend this disagreement is about a person. but as i just noted, his own vice president made it clear it's not. the biden rule reminds us that the decision the senate announced weeks ago remains about a principle and not a person.

it seems clear that president obama made this nomination not, not with the intent of seeing the nominee confirmed, but in order to politicize it for purposes of the election. which is the type of thing then senate judiciary committee chairman biden was concerned about. the exact thing chairman biden was concerned about. the biden rule underlines what the president has done with this nomination would be unfair to any nominee and more importantly, the rule warns of the great cost the president's action could carry for our nation. americans are certain to hear a lot of rhetoric from the other side in the coming days. but here are the facts they should keep in mind. the current democratic leader said the senate is not a rubber stamp.

and he noted that the constitution does not require the senate to give presidential nominees a vote. that's the current democratic leader. the incoming democratic leader did not even wait until the final year of george w. bush's term to essentially tell the senate not, he said, not to consider any supreme court nominee the president sent. the biden rule supports what the senate is doing today. underlining that what we are talking about is a principle and not a person. so here's our view. instead of spending more time debating an issue where we can't agree, let's keep working to address address the issues where we can. we just passed critical bipartisan legislation to help address the heroin and prescription opioid crisis in our country.

let's build on that success. let's keep working together to get our economy moving again. and make our country safer. rather than endlessly debating an issue where we don't agree. as we continue working on issues like these, the american people are perfectly capable of having their say, their say on this issue. so let's give them a voice. let's let the american people decide. the senate will appropriately revisit the matter what it considers the qualifications of the nominee the next president nominates. whoever that might be. this morning, president obama nominated his choice to fill the vacancy created by the death of justice antonin scalia. the president exercises support under the constitution to nominate somebody to this vacancy.

judge garland is a proud son of illinois. he is the grandson of immigrants who fled at the somatic persecution. he was born in chicago to parents who ran a small business and volunteered in their community. he graduated at the top of his class in high school, received his undergraduate law degree from harvard, clerked for a justice william brennan of the u.s. supreme court. he has an incredible legal resume. he worked in private practice before he was nominated for the d.c. court. president obama today told the story about how they were set down after the oklahoma city bombing to handle the prosecution and how he carefully and deftly and professionally handled that prosecution in a way that it would stick, and it would not be overturned because

of legal mistakes. president obama has filled his constitutional responsibility, and now the senate must do this say. article two, section two of the constitution provides the requirement that the president shall -- shall -- a point the nominee to fill the vacancy on the u.s. supreme court, and the president did that today.

that same section of the constitution goes on to say that it is the responsibility of the senate, the senate, to advise and consent to the nominee. there is no requirement that we approve the presidents nominate. he wants us to. i hope we do, but what it says is we have a responsibility under the constitution, the same constitution we swore to defend. they will not even meet with the president's nominee. in the history of the united

states of america, there has never been a situation where the president sent a nominee to the supreme court where there was not a hearing. never. and now, the republican majority here has said ignore history. nor the constitution. we are not going to let this president to fill this vacancy. let the american people decide. there is an election coming. it will be in november. let them pick a president who will then pick the supreme court nominee. sense had president barack obama been re-elected in 2012 to a term of three years and two months. he was re-elected to a four-year term by a five million vote plurality. he is the president. and to argue that in his last year in office, he should have no authority or power in the constitution to exercise what is required of him is to ignore the

obvious. by what right do we in the closing year of a well, that is an interesting approach. it might have made some sense if president barack obama had been reelected to 2012 for a term of three years and two months. he was reelected to a four-year term by millions. he is the president, and to argue that in his last year of office you should not have the authority of the constitution to exercise what is required of them is the obvious. by what right do we have in the closing your of a senator's term on the floor of the senate? if we are disqualified for making important decisions in the last year of our office or term? so the president has sent this name, and now it is up to the senate. the judiciary committee plays an important role in this decision, and i am honored to serve on it.

in 2001, the then chairman, patrick leahy, from vermont, joined with ranking member orrin hatch of utah, in 2000 one, they sent a letter to the senate about this issue for filling supreme court vacancies. senator leahy and senator hatch, saying we both recognize and have every intention of following the committee in the senate with considering supreme court nominees. we should hold a hearing without delay. now, that was the case 15 years ago, and senator hatch, who has been the ranking republican, joined with senator leahy, the democratic chairman. what has changed? the only thing that has changed is we have a president named barack obama. you see, in 1987, there is a

vacancy on the supreme court. ronald reagan was president. in 1988, he sent the name to this chamber of anthony kennedy to fill a vacancy on the supreme court. the senate at that time was under the control of the democrats. ronald reagan, a republican president, sent his nominee to the democratic senate, and what happened? did they say we are not going to fulfill this question work we are to wait until the election? no. no. the senate held a hearing for anthony kennedy and passed him unanimously to serve on the u.s. supreme court, and now, look at what we are facing. republican colleagues who refuse to do their job in the constitution. obviously, for political reasons. standing on principle that the president should not get to name a supreme court justice in his final year. that principle has no history, no precedent, and is virtually impossible to defend.

i suggest a different approach to my republican colleagues. since judge garland is unquestionably qualified, and you would legally vote to confirm him under the next president, why wait? why not vote to confirm him under this president?

i could go on and on. for maybe 20 or 30 years. and would get together compromise and put together a bill. court inat the supreme

a way that is unprecedented in our history. the important decisions in our lives. we can expect them to comport with modern expectations of transparency. >> sunday night on q&a. at a news conference today, federal reserve chairman janet yellen said the fed would keep the federal reserve would keep the rates -- this is one hour. ms. yellen: good afternoon. today, the federal open market committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent.

our decision to keep this accommodative policy stance reflects both our assessment of the economic outlook and the risks associated with that outlook. the committee's baseline expectations for economic activity, the labor market, and inflation have not changed much since december. with appropriate monetary policy, we continue to expect moderate economic growth, further labor market improvement, and a return of inflation to our 2% objective in 2-3 years. however, global economic and financial developments continue to pose risks. against this backdrop, the committee judged it prudent to maintain the current policy stance at today's meeting. i will come back to our policy decision momentarily, but first

let me review recent economic developments and the outlook. the labor market continues to strengthen. over the most recent three months, job gains averaged nearly 230,000 per month, similar to the pace experienced over the past year. the unemployment rate was 4.9% in the first two months of the year, about in line with the median of fomc participants' estimates of its longer-run normal level. a broader measure of unemployment that includes individuals who want and are available to work but have not actively searched recently and people who are working part time but would rather work full time has continued to improve. of note, the labor force participation rate has turned up noticeably since the fall, with more people working or actively looking for work as the prospects for finding jobs have improved. but there is still room for

improvement. involuntary part-time employment remains somewhat elevated, and wage growth has yet to show a sustained pickup. the improvement in employment conditions so far this year has occurred as economic growth appears to have picked up from the modest pace seen in the fourth quarter of last year. household spending is expanding at a moderate rate, supported by continued job gains and increases in inflation-adjusted incomes. in contrast, business investment has been weak, in part reflecting further reductions in oil drilling as a result of low oil prices. net exports also remain soft as a consequence of subdued foreign growth and the earlier appreciation of the dollar. looking ahead, the committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand

at a moderate pace and labor market indicators will continue to strengthen. ongoing economic growth and additional strengthening in labor market conditions are important factors underpinning the inflation outlook. overall consumer price inflation -- as measured by the price index for personal consumption expenditures -- stepped up to 1 1/4 percent over the 12 months ending in january, as the sharp decline in energy prices around the end of 2014 dropped out of the year-over-year figures. core inflation, which excludes energy and food prices, has also picked up, although it remains to be seen if this firming will be sustained.

in particular, the earlier declines in energy prices and appreciation of the dollar could well continue to weigh on overall consumer prices. but once these transitory influences fade, and as the labor market strengthens further, the committee expects inflation to rise to 2 percent over the next two to three years. the committee's inflation outlook rests importantly on its judgment that longer-run inflation expectations remain reasonably well anchored. however, the stability of longer-run inflation expectations cannot be taken for granted. survey-based measures of longer-run inflation expectations are little changed, on balance, in recent months although some remain near historically low levels. market-based measures of inflation compensation also remain low.

movements in these indicators reflect many factors and therefore may not provide an accurate reading on changes in the inflation expectations that are most relevant for wage and price setting. nonetheless, our statement continues to emphasize that, in considering future policy decisions, we will carefully monitor actual and expected progress toward our inflation goal. this general assessment of the outlook is reflected in the individual economic projections submitted for this meeting by fomc participants. as always, each participant's projections are conditioned on his or her own view of appropriate monetary policy, which, in turn, depends on each person's assessment of the multitude of factors that shape the outlook. participants' projections for growth of inflation-adjusted gross domestic product or gdp

are just a touch lower than the projections made in conjunction with the december fomc meeting. the median growth projection edges down from 2.2% this year to 2% in 2018, in line with its estimated longer-run rate. the median projection for the unemployment rate falls from 4.7 at the end of this year to 4.5% at the end of 2018, somewhat below the median assessment of the longer-run normal unemployment rate. the median path of the unemployment rate is a little lower than in december, in part reflecting a slightly lower median estimate of the longer-run normal unemployment rate. finally, with the transitory factors holding down inflation

expected to abate and labor market conditions anticipated to strengthen further, the median inflation projection rises from one point two percent this year to 1.9 percent next year and 2 percent in 2018. the median inflation projection for this year is a little lower than in december, but thereafter the median projections are unchanged. since the turn of the year, concerns about global economic prospects have led to increased financial market volatility and somewhat tighter financial conditions in the united states, although financial conditions have improved notably more recently. in addition, economic growth abroad appears to be running at a somewhat softer pace than previously expected. these unanticipated developments, however, have not resulted in material changes to the committee's baseline outlook.

one reason for this is that market expectations for the path of policy interest rates have moved down, and the accompanying decline in longer-term interest rates should help cushion any possible adverse effects on domestic economic activity. indeed, while stock prices have fallen slightly since the december meeting and spreads of investment-grade corporate bond yields over those on comparable-maturity treasury securities have risen, mortgage rates and corporate borrowing costs have moved lower. of course, the committee will continue to monitor these developments closely and will adjust the stance of monetary policy as needed to foster our goals of maximum employment and

2 percent inflation. returning to monetary policy, as i noted earlier, the committee decided to maintain its target range for the federal funds rate. this decision partly reflects the implications for the u.s. economy of the global economic and financial developments i just mentioned. in addition, proceeding cautiously in removing policy accommodation at this time will allow us to verify that the labor market is continuing to strengthen despite the risks from abroad. such caution is appropriate given that short-term interest rates are still near zero, which means that monetary policy has greater scope to respond to upside than to downside changes in the outlook. as we indicated in our statement, the committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.

the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. this expectation is consistent with the view that the neutral nominal federal funds rate --defined as the value of the federal funds rate that would be neither expansionary nor contractionary if the economy was operating near potential -- is currently low by historical standards and is likely to rise only gradually over time. the low level of the neutral federal funds rate may be partially attributable to a range of persistent economic headwinds that weigh on aggregate demand, including developments abroad, a subdued pace of household formation, and meager productivity growth. there is considerable uncertainty regarding the evolution of the neutral funds

rate over time. however, if these headwinds abate, as we expect, the neutral federal funds rate should gradually move higher as well. this view is implicitly reflected in participants' projections of appropriate monetary policy. the median projection for the federal funds rate rises only gradually to 0.9 percent late this year and 1.9 percent next year. as the factors restraining economic growth are projected to fade further over time, the median rate rises to 3 percent by the end of 2018, close to its longer-run normal level. compared with the projections made in december, the median path is about 1/2 percentage point lower this year and next.

the median longer-run normal federal funds rate has been revised down as well. in other words, most committee participants now expect that achieving economic outcomes similar to those anticipated in december will likely require a somewhat lower path for policy interest rates than foreseen at that time. i would like to underscore, however, that the participants' projections for the federal funds rate, including the median path, are not a plan for future policy. policy is not on a pre-set course. these forecasts represent participants' individual assessments of what appropriate policy would be given each person's own current projections of the most likely outcomes for economic growth, employment, inflation, and other factors. however, considerable uncertainty attaches to each participant's forecasts of economic outcomes.

hence, their assessments of appropriate policy are also uncertain and will change in response to adjustments to the economic outlook and associated risks, as was the case between december and now. also, it is important to note that the committee makes its decisions on a meeting-by-meeting basis and does not and need not decide on a likely future path for the federal funds rate. indeed, the future path of policy is necessarily uncertain because the economy will surely evolve in unexpected ways. as we note in our statement, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data. finally, the committee will continue its policy of reinvesting proceeds from

maturing treasury securities and principal payments from agency debt and mortgage-backed securities. as highlighted in our policy statement, we anticipate continuing this policy until normalization of the level of the federal funds rate is well under way. maintaining our sizable holdings of longer-term securities should help maintain accommodative financial conditions and should reduce the risk that we might have to lower the federal funds rate to zero in the event of a future large adverse shock. thank you, and i'll be happy to take your questions. >> madam chair, as you know, inflation has gone up the last two months. we had another strong jobs report. the tracking forecast for gdp was 2%.

and yet the fed stands pat in what it calls a process of normalization. fed have a credibility problem in that it says it will do something and not do it? and if the current conditions are not sufficient for the fed to raise rates, what with those conditions look like? ms. yellen: yelp me start -- let me start with the question of the fed's credibility purity you used the word promises. as i try to emphasize in my opening statement, the paths participants project for the federal funds rate and how it will of all are not a preset plan. indeed, the median should not be interpreted as a committee endorsed forecast.

there is a lot of uncertainty around each participant's projection. they will evolve. the assessments are completely contingent on each participant's forecast of the economy and how economic events will unfold. they are, of course, uncertain. you should expect forecasts for the appropriate path of policy on the path of participants will of all over time as shocks, positive or negative, evolve. you have seen a shift. as i tried to indicate, i think

that largely reflects a somewhat slower projected path for global growth. growth in the global economy outside the united states. and for some tightening in credit conditions in the form of an increase in spreads. those changes in financial conditions and the path of the global economy have induced changes in the assessment of individual participants in what path is appropriate to achieve our objectives. that is what you see. now, i guessed you asked me also, what would we need to see to continue raising rates. i think it is worth pointing out here that the committee participants continue to

envision if economic developments unfold as they expect, further increases in the federal funds rate will prove appropriate over time. most participants anticipate that. the pace will be gradual. as i emphasized, most empirical work attempting to assess what the equilibrium level of the fed funds rate is, a level that would be neither expansionary nor contractionary, those levels are low at this time. we do expect over time that neutral rate to move up, but we are not positive what the pace of change of that will be over time. but given that t economy is

now close to our maximum employment objective, hopefully inflation is moving up. as you mentioned, recent readings on inflation have moved up. i want to warn that there may be some transitory factors. that are influencing that. certainly, our projections are for a gradual increase in inflation. the committee, at least most participants, continue to expect that if we follow along this course, some further adjustments in the federal funds rate will be appropriate but gradual. >> sam from financial times. the numbers have been ticking up, as you said. somewhat at least. you said also, we are at the point where we have close to full employment. is there a risk we are heading for an overshoot in inflation?

is there a greater tolerance for a modest overshoot, especially given the long period of under shoots we have been through? ms. yellen: i want to make clear our inflation objective is two percent. we are projecting a move back to 2%. we are not trying to engineer an overshoot of inflation. not to compensate for past under shoots. we certainly don't seek to overshoot our objective. some under shoots and overshoots are part of how the economy operates.

error tolerance for those is symmetric with respect to under and overshoots. we did take note in the statement of the fact that inflation has picked up in recent months. i see some of that as having to do with unusually high inflation readings in categories that tend to be quite volatile without much significance. i am wary and have not yet concluded we have seen any significant uptick that will be lasting in, for example, core inflation. we note, the committee notes, as it did in december that we continue to monitor development trends. that includes the fact that readings have been on the high

side. readings on measures of inflation compensation in some survey measures have been on the low side. in that sense, there are risks around the inflation forecast in both branches. >> your statement did note that inflation has picked up in recent months. you still do see it going back to 2% over the medium-term. and yet, policymakers have downgraded gdp growth forecasts for the year. that would indicate a weakening economic environment. i am wondering how in that environment you justify the possibility of two rate hikes. ms. yellen: there has been a slight downgrading of the

assessment of economic growth for this year, but none the less growth is expected to run somewhat in excess of potential so that the labor market is expected to continue to tighten. by the end of the year, even edge below levels of the unemployment rate that are estimated to be longer in the normal run. and installation is -- and inflation is expected to move back to 2% over time. we have, weighing on inflation, the influence of earlier declines in energy prices and a prolonged effect on the depreciation of the dollar. we expect those transitory influences to fade and with

continuing improvement in the labor market, i think we will see upward pressure on inflation. in that context, the committee sees it appropriate, if things unfold in that way, to have further increases in the federal funds rate. it remains accommodative. as the committee indicated in december, we want inflation to go back to 2%. we want to be careful not to see some significant overshoots so we get behind the curve. potentially be faced with a need to tighten in a rapid fashion later in a way that could undermine the sustainability of the employment gains we have seen. we have seen continued tightening in monetary policy to be appropriate.

>> peter barnes of fox business. could you get more specific about the global and economic developments that pose risks to the economy? you mention the strong dollar and slowing global growth. are you specifically concerned about china, the emerging markets, and the eu? could you expand on the risks? ms. yellen: there has been, by many forecasters, slight downgrading of forecasts for global growth over the several years. the imf and other international agencies have downgraded their estimates. chinese growth has not proven a great surprise. we have anticipated it would slow over time and it seems to

be slowing as well. japanese growth in the fourth quarter was negative. that was something of a surprise. with respect to the euro area, recent indicators suggest slightly slower growth. we are suffering under the weight of declines in oil prices that are affecting their economic activity, our neighbors, both to the north and south, canada and mexico, are feeling the impact of lower oil prices on their growth. so, our projection for global growth for those reasons is slightly lower -- not dramatically lower -- but enough glowing to make some difference

to our forecast. as i indicated, i think that part of the reason, along with the associated increase we have seen in spreads that are involved in corporate borrowing rates, and can affect investment decisions, it is a reason to think that a slightly lower path to the federal funds rate will be appropriate to achieve our objectives. what you see here is a virtually unchanged path of economic projections, and a slightly more accommodative pass that most -- path that most participants are going down to achieve that. >> thank you. madam chair, you have emphasized repeatedly that every meeting is a live meeting. is it possible you could get

enough information between now and then, for the next meeting, to get you comfortable at the raising rates again in april? what would you need to see? chair yellen: i will say again that every meeting is a live meeting. april remains alive --a live meeting, and we will be tracking incoming data. there will be additional data on the labor market, and on various factors that pertain to inflation. that is certainly a live possibility. >> two questions. the lower oil prices, a lot of people expected to leave more consumer spending.

how do you see and how do you explain that it has not worked out as well then what people expected? also, if oil prices were to pop back up, what impact would that have on inflation? would you be paying more in -- attention to the overall inflation rate, or would you be looking at the core rate to determine what the fed's policy would be? chair yellen: let me start with the impact of oil prices on consumer spending. i have to say, it is very difficult when you look at patterns of consumer spending, since there are many factors that influence it. to definitively say that lower oil prices have not boosted consumer spending, i'm not sure we can really arrive at that conclusion in any rigorous way. the average household in the united states, with oil prices where they are now, it's

probably benefiting around $1000 a year. and some very detailed micro-data that i had seen on household spending patterns suggests that there may be a link, as you mentioned, from reduced demands that people pay at the pump, to other spending like eating out at restaurants and other things. but the aggregate data is not as strong in spending as it could be, given the decline. and of course on the other side -- it will maybe take a while, and it is something that we will slowly strengthen overtime, if oil places -- prices stay low.

on the other side, we have seen a marked decline in oil drilling activity, which is a depressed expending, and substantial layoffs in the energy sector. with respect to impact on oil prices on inflation and what would happen if they move up, the committee has generally tended to look through movements in the oil prices, whether they were on the upside or the downside, viewing it as a factor that should have a transitory influence. when i say that, what i mean is that, if oil prices move up during the time it is moving up, it raises inflation. but they don't need to move down again to the previous levels for that influence to disappear. they only need to stabilize at a higher level. similarly, oil prices have

obviously moved down a great deal over the last year. we are not expecting them to move back to their previous levels, but to stabilize it some, they are obviously volatile -- but as they stabilize, the influence will move out of both headline inflation and, that is what you see in the forecasts of participants. if oil prices were to increase to around $50, that would probably slightly move up our expected path for core inflation. i would not think it would be something alone that would have great policy significance. >> you said in the policy

statement in december that the risk to the outlook work balance, and you raised rates. that phrasing disappeared in january and march. could you talk a little bit about that? in your comments today you seem to be indicating that not much has changed. could you help us understand what needs to happen to get back to balance, and is that the language we need to look forward to see the next rate hike? chair yellen: let me say that in recent weeks, i think the committee certainly thinks that risks to the outlook have diminished. nevertheless, we continue to serious -- to see risks, which we have highlighted. i would point out that we decided not to describe the balance of risks as weighted to the downside, so the committee did not reach that judgment.

there is no collective judgment in this statement on whether the risks are balanced or not. we declined to make a collective assessment. my guess is that some participants see them as balanced, and some see them as weighted somewhat to the downside. but i think it is important to note a couple of things. first of all, the u.s. economy has been very resilient in recent months, in the face of shocks. we highlight that right at the beginning of our statement, where he say that economic activity has been expanding at a moderate pace, despite the global economic and financial developments of recent months. that is important that the u.s. economy continues to do well. second, i would say that while global developments do post some

downside risks, the risks are not all one-sided. a number of countries, including china, the euro area, the bank of japan, have taken measures to stimulate the economy, so there is also outside risk to the economic outlook. in addition, oil prices have rebounded from their lows, and that eases concerns about the financial condition of some energy firms, and the stresses facing some oil-producing economies, and at the same time, oil prices continue to boost household purchasing power. so there are risks. we are attended to them. we have not described them as unbalanced to the downside, and they are two-sided. one can identify both of light and downside risks -- both upside and downside risks here.

>> wage growth so far has been disappointed. it has been very uneven. disappointing figures in last month's jobs report. why'd you think that is, and how important is sustained wage growth to removing your wariness on inflation? chair yellen: i must say, i do see broad improvement in the labor market, and i'm somewhat surprised that we are not seeing more of a pickup in wage growth. i have to say, in anecdotal reports, we do hear quite a number of reports of firms facing wage pressures and broad-based, slightly faster increases in wages, wage increases that they are granting. but in the aggregate data, we don't see increasing evidence of a pickup in wage growth.

it is mainly isolated to certain sectors and occupations. so i do think consistent with a 2% inflation objective, that there is certainly scope for further increases in wages. the fact that we have not seen any broad-based pickups is one of the factors that suggests to me that there is continued slack in the labor market. but i would expect wage growth to move up some. >> chair yellen, numerous polls show that the u.s. economy is american voters' number one concern. there is a lot of negative sentiment about the economy. unemployment is low, job gains have been pretty good over the past year, and consumer confidence has picked up. why is there disparity between the progress between the economy, and how voters feel?

my second question is how does any negative sentiment of the economy factor into your economic outlook and the decisions you make? chair yellen: let me start with your second question, if i might. in trying to judge the outlook for the economy, we do look at measures pertaining to consumer sentiment, and they are in solid territory. household balance sheets are much improved. gains in inflation-adjusted disposable income are running at a healthy pace. as i mentioned, households have benefited pretty significantly from lower oil prices, and measures of consumer sentiment do reflect that. they are not at low levels.

really, the labor market, i think, has improved a great deal. every demographic group that we tracked regularly has seen improvements in their labor market situation. perhaps not all equally, but almost all demographic groups have seen improvements. i think it is right to say the economy is improving, and most groups are seeing benefits. that said, we know that inequality has been rising in the united states over many years, not just the last several, but going back to the mid-80's. there has been downward pressure on real wage gains for groups, particularly those that are less skilled and educated, and those longer-term trends may be associated with a number of factors.

technological change, globalization have been a concern for many years. that may be part of what we are seeing expressed. >> thank you. chair yellen, there seems to be growing sentiment that even if the direct and that's economic ties between the u.s. and either -- other economies are still relatively modest, that the impact through financial markets and exchange rate has become more robust. because of that, it is becoming more difficult, or will become more difficult, for the fed to diverge from other major central banks with market interest rates. would you generally agree with that sentiment? why, or why not? and if i may, in your mind, does

it undermined in any way -- undermined in any way the standing of the federal reserve as a nonpartisan institution when one of the members contributes to a major campaign? chair yellen: pertaining to exchange rates, we have global capital markets. in a world with highly integrated capital markets, monetary policy actions in any country have effects, and spillovers to other countries. that is true of our monetary policy, and through of other countries as well. in part, that shows up through movements and exchange rates, and those movements are a factor that any country needs to take into account in deciding what is

the appropriate stance of monetary policy. the fact that there are these linkages is an important factor in designing and monetary policy. but it does not mean that u.s. monetary policy is somehow constrained in a way that makes it impossible for our monetary policy to diverge from policies abroad. there are many periods when monetary policies in different countries have moved in different directions, and the united states has been growing more strongly, and has better success in the labor market than many other advanced countries. at this point, it is natural that there should be some divergence in our monetary policies.

movements in exchange rates partly reflect that. i would not want to endorse the notion that if you are suggesting that our policy is in some way crippled by the fact that there are these inter-linkages that simply have a global financial system. this is one reason we meet frequently with other economic policymakers in other countries, exchange notes about how we see economic developments involve, -- he bought, and try to keep one another apprised of economic developments and policy responses. your second question concerning the political contributions. i want to start by saying that i have been involved for many years in the federal reserve system, and we are a nonpartisan, independent

institution, devoted to pursuing our congressionally mandated objectives, and i have never seen political views in any way influence the policy judgments made inside the federal reserve. i want to say that emphatically. the political activities of governors, participants, government employees, are governed by the hatch act. we are all subject to that. the act does allow campaign contributions to be made. it outlaws other forms of partisan activity, and i would say within that, it is up to each individual to decide what

is appropriate in their point of view. but the federal reserve is not a partisan political organization. >> the policy projections appear to reflect an increase in the extent of labor market slack. you talked about one possible reason, which is the softness of wage growth. are there other considerations that have led you to increase your estimate of how much slack there is in the labor market? chair yellen: i should point out that i think what you are talking about is the slight decline in the median estimate of the longer run normal unemployment rate, is that -- >> [inaudible]

chair yellen: the path of rate inceases may be -- that reflects for those who brought it down, and estimate of greater slack in the labor market. the fed funds rate projection is not just that, it is also a reflection of shifts in other views, for example, the likely pace of global growth that reflects what we need as a policy path to achieve our objectives. but the slow pace of wage growth, the fact that part-time employment for economic reasons, and voluntary part-time employment, remains high. we have seen an upward move in labor force participation, which is heartening, and suggests there was scope therefore further improvement in the labor market. my guess is that those things influenced individuals who wrote

down a slightly lower number for the long-term unemployment rate. >> we have heard a lot about president obama's pick for the supreme court today, but there are a number of vacancies on the fed board of governors, and there is a new position, the vice chair for supervision, that the president has not even nominated anyone for. would you like the president to nominate someone, and what effects are those vacancies having on the fed? chair yellen: i think congress made for the board to have seven members, and that tends to bring on board people with a wide spectrum of views and experience and perspectives.

i think that is valuable, and i would like to see the senate move forward, and consider these nominees, so that we could operate with the full complement. with respect to the nomination for vice chair of supervision, that is a question that i think you need to post to the white house -- pose to the white house. i would say we are doing a very good job on supervision, and we are very focused on it, and devote a great deal of time to that issue. so really, is a nomination question, it is one for the white house. >> thank you, madam chair. the president, last week, expressed concern about what he termed cynicism on both sides of the aisle concerning progress made since the crisis to reform the banking sector and financial sector, more generally.

do you share that concern about public attitudes, that either not enough has been done, or what has been done has not been affected in changing the regulatory landscape in banking? what are your thoughts? chair yellen: i feel a great deal has been done. we have been working at this for a number of years, and i believe we have made very substantial progress. we have a much more capital, higher-quality capital, liquidity in the banking system, our supervision -- we have made very meaningful changes in our supervision. for example, the stress test methodology that we use routinely to evaluate the

robustness of the capital positions and plans of the largest institutions constitutes a quantum leap in terms of, i think, the quality of the supervision we are providing, especially of the largest firms. so, we have finished writing most of the dodd frank rules. we are working very hard on too big to fail, which is of great concern to the american people. in addition to having a financial system that is more robust, and less likely to experience a failure, we have also worked very hard and continued to work on making sure we had the ability to resolve a firm, if it were to fail in spite of having more capital and liquidity. there, too, i think we have made very substantial progress. a month or so ago, we came out with a rule that would require

the largest firms to hold a substantial buffer of long-term debt, that in the event that they were to fail, could be bailed into protect the taxpayer from having to bear any burden, in terms of injecting capital into the firms. it would provide loss absorption in that event. working jointly, closely with the fdic, firms have made a great deal of progress with their living wills. we are in the process of evaluating the most recent submissions. we are working with the fdic, and there are potential techniques that could be used in the event of a failure of a significant financial institution. we have also made a lot of progress there. i was at the meeting of

financial regulators with the president, when he made those comments. i understood what he was trying to tell the american people, that they should understand who really has been -- there really has been very substantial progress, and that is something they should be aware of. >> but do you think that despite all that progress, why hasn't that message, or why haven't these improvements made its way to the public? and perhaps, do you find that is an obstacle, either among people that you meet, people in the public, or their representatives in congress that maybe have a pervasive view that nothing has changed? is that a problem? chair yellen: i think it is our job as we make these improvements, to explain what we are doing, and to try to educate the public about what happened, and they may not understand how

much has changed. it is certainly part of my own responsibility to try to explain that to the american people. >> in the sep today, the unemployment rate forecast for future years, for 2017-2018 was marked down without changes to inflation. there seems to be growing debate about the relationship between higher -- lower unemployment and higher inflation. what is your view about the strength of this relationship, the phillips curve, and how does that view way into how actual inflation versus anticipated inflation you will need to see? chair yellen: that was a complicated question. let me start with the phillips curve.

the phillips curve posits that there is a relationship between the degree of slack in the labor market and inflation. it is an empirical relationship that, while not absolutely tight, has been a consistent relationship over time. i believe that relationship still holds. but the impact of shifts in the unemployment rate, on inflation should not be overstated. the phillips curve has become, according to most estimates, quite flat in the sense that movements in an appointment -- in unemployment have only a modest impact on inflation, so we shouldn't over blow how large that is. in addition, the phillips curve theory suggests that inflation expectations are also an important driver of actual wage and price setting decisions, and

inflation behavior, and i believe there is also solid empirical evidence for that. it is one of the reasons that i highlighted in my statement, and we continue to highlight in the fomc statement, that we are tracking indicators of the inflation expectations that matter to wage and price setting. unfortunately, we don't have a perfect measure of these things. we have survey measures. we know that household measures, even one household address longer-term inflation, longer-term inflation -- they tend to move in response to salient changes in prices that they see every day. in particular, when gas prices go down, which is very

noticeable to the most -- to most households. you tend to see responses about long-term inflation marked down. so, that is kind of an over response to something that is transitory. it is difficult to get a clear read from those survey measures. compensation is measured in financial markets, also it in bodies a variety of liquidity premiums. we monitor those closely and discuss them in the statement in paragraph 1. again, there is not a straight reader what is happening to the expectations. model continues to influence my own thinking, and certainly is a factor that i and

some of my colleagues are incorporating in these projections. >> eric from bloomberg television, notwithstanding what the dos tell us about rate expectations, has there been any discussion, among members of the committee, about the potential need for further stimulus? even if that hasn't been such a discussion yet, could you share with us what you have learned from the reevaluation of negative interest rates? consider those effective, how effective relative to quantitative easing, and whether the committee would hypothetically use them instead up the or in conjunction with quantitative easing, in the event the economist warned further stimulus? yellen: this is not actively a subject we are considering the more discussing. the committee continues to feel

that we are on a course wgere economy ise improving and inflation is moving back up. as i indicated, if events continue to unfold in that way, raise likely to gradually rates over time. again, that is not fixed in stone. we will watch how the economy behaves. we are prepared to respond to things transpire differently. we are not spending time actively debating and considering things we could do for additional accommodation. certainly not actively considering negative rate. we are looking at the experience in other countries. they have been deemed to have mixed effect. some positive, and some negative things.

if we found ourselves in the unlikely situation where we needed to have accommodations, we have a range of tools. we know from the things that we did in the past that they have a number of options with respect ofthe maturity, for example, our portfolio and with respect to asset purchases. those guided his remain available to us. there are tools we could turn to in the unlikely event that we need to add accommodation. negative rate is not something where actively considering. book tv has 48 hours of nonfiction books and authors every weekend. here are some programs to watch for. saturday night, a book discussion with city university of new york professor douglas rushkoff, author of "throwing rocks at the google bus."

businessesout how can change to benefit employees and employers. afterwards, with law professor -- examine the growth of presidential power during the obama administration. pictorialviewed by former deputy assistant attorney general. seems obvious the government can't regulate the money you would use to participate in a constitutional right. citizens united says essentially right to free speech, particularly in politics during campaign is on the framers really wanted to protect the right of free speech. how can government say but you can't spend money on using your constitutional right? >> former first lady laura bush chronicles the lots of afghan women since the u.s. invasion in the book "we are afghan women."

she wrote the introduction to the book put up by the george w. bush institute. go to book tv.org for the complete we can schedule. >> this weekend, the c-span cities tour hosted by our cable partners takes you to montgomery, alabama to explode the city's history and literary culture. on book tv -- >> we show you a house that was the turning point for scott and zelda. to regroup. what this house was was a landing pad. it was a regrouping, as i've said. it wasn't the sort of place where you will find scott and zelda engaging in domestic activities. it was the sort of place where they would be planning their next move. >> on american history tv -- >> what happens in the campaign,

wallace does try to reach this racial moderate and really tries to campaign for hte p -- the poor and working-class alabamians. he get the support of the naacp. unfortunately, he loses by pretty significant margin to john patterson. he completely is devastated by this loss. all he wants to be as governor. he is really upset by this loss. he considers it a failing. so, when people ask him what the take away from the 1958 campaign i tried to talk about progressive improvement. i tried to talk about good roads, and schools and no one would listen. when they started talking about segregation, everybody started listening to me. >> was the c-span cities tour saturday at noon eastern, on c-span2's book tv, and sunday

afternoon on american history tv on c-span3. the cities tour, working with our cable affiliates and visiting cities across the country. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2016] theoday the head of consumer protection bureau discussed his agency's mission and regulatory activities in the hearing of the house financial services committee. mr. hensarling: the committee will come to order. without objection, the chair is authorized to declare recess of the ea committee at any time. i now recognize myself for three

minutes to give an opening statement. not that we need a reminder but if there's one thing the presidential campaigns have shown us, the american people are indeed angry and they have a right to be angry after seven years of obamanonics, they are still suffering through a failed economic recovery, the slowest and worst in our lifetime, this is indisputable. americans are even angrier at having their lives increasingly ruled by out of touch washington elites. every day they see their liberties slipping away as washington grows larger, more intrusive and more arrogant. as thomas jefferson said once, government agencies are sending people to harass our people and eat out their substance. today the poster child of jefferson's lament is the cfpb. its director, our witness, is neither elected by or accountable to the american people yet he's vested with the awesome power of the entire united states congress. this is amazing, this is frighten, and this is tragic.

soon mr. cordray will decide for all americans whether he'll allow them to take out small dollar loans to keep their utilities from being cut off or to keep their car on the road. soon he will decide whether he will permit whether he will permit americans to decide contract disputes from arbitration or hand over the keys to the cfpb's luxury office building to the wealthy, powerful, trial lawyers lobby. already mr. cordray has decided who in america will be able to receive a mortgage under his qualified mortgage rule which

when fully implemented will disqualify almost one fourth of all americans who qualify for a home mortgage just a few years ago. already mr. cordray has decided that countless americans should pay more for auto loans based upon junk science and a dubious legal theory of statistical unintentional discrimination, all the while his agent sir reels from countless accusations of actual discrimination. now apologists for the bureau along with mr. cordray cite the tens of millions of dollars of fines they have imposed as proof that they are indeed protecting consumers. but the bureau operates as legislature, cop on the beat, prosecutor, judge and jury all rolled into one. fines imposed in such an abusive structure tell us nothing about justice, tell us nothing about consumer welfare, nothing. in short, congress has made mr. cordray a dictator. when it comes to the well being and liberty of american consumers, he is not a particularly benevolent one. congress must address this critical problem because congress helped create the problem. it is -- it has outsourced much of its legislative authority to the executive branch in general

and cfpb in particular. in doing so, it's compromised our foundational principles of co-equal branches of government, checks and balances, due process and justice for all. congress must reclaim its article 1 authority and reclaim it now. there's no better place to start than the cfpb, an agency that's abused its power that it never should have had in the first place. it is time to uphold our oath to the constitution, it is time to strip the cfpb of its rule making authority and return it to the elected representatives of we the people. i now recognize the ranking member for five minutes. ms. waters: thank you, mr. chairman, and thank you mr. cordray for joining us to discuss the cfpb's semiannual report to congress. the bureau has helped more americans participate in a financial system that's fair and strong. the work you do is so important because it means that consumers can access the financial products and services they need to live prosperous lives without the risk of deceptive or abusive practices.

it also means that consumers can have recourse when they have been wronged and recoup any finances they may have lost. those accomplishments are reflected in the $11.2 billion you have returned to 25.5 million americans. they are reflected in the 830,000 consumer complaints you have handled on issues from debt collection to credit reporting. they're reflected in the increased share of mortgages made to minority borrowers in recent years, and the expansion of access to credit cards, despite republican claims to the contrary. director cordray, you are helping consumers succeed to the benefit of the entire financial system. i'd like to highlight a few of these particularly important efforts. i'm encouraged by the bureau's work so far on payday lend, including soliciting input from small businesses on the

forthcoming regulations. we need rules that will protect low income and minority communities from unreasonable loan terms and unaffordable rates. despite modest efforts by some states to curb predatory practices, most payday loans are simply used to help pay off another payday loan. we must stop this debt trap and we must fight any efforts to weaken, rollback, or stop the cfpb's upcoming rules. the bureau has led the charge against the discrimination that still exists in the auto lending industry. we should be doing all we can to prevent minority borrowers from being charged higher interest rates and from overpaying on their auto loans. unfortunately, too many members of congress have been misled by republican arguments against the data and methodology used by the cfpb in this important work.

while republicans are attempting to protect lenders, the bureau has fined banks and captive lenders such as toyota, honda, and fifth third bank for discriminatory practices. additionally in the months since its last report, the bureau has successfully won a case against an unscrupulous college that deceived students into taking out expensive private loans and engaging in illegal debt collection practices. as you know, i've worked on this issue my entire career. just recently, the department of education announced a proposal to ban mandatory arbitration in student lending. i hope the bureau will follow in their footsteps by offering this protection not only to students but also to americans that have found these unfair clauses in their credit cards, prepaid

cards, bank accounts, and mobile phone contracts. despite a successful track record of helping consumers whether looking to buy a car, own a home or attend college, republicans have turned the cfpb into a political punching bag, attempting to undermine its work at every turn. this tactic is at odds with the public's support for the cfpb and the bureau's efforts to remain accountable and transparent. i'd leek to remind my colleagues that the cfpb has now testified 59 times before congress since it was created. issued more than 40 reports on its activities in the last year alone, and provided tens of thousands of documents in response to a never ending list of republican phishing expeditions. director cordray, i'm thankful for the work you're doing. i look forward to hearing your testimony on how the bureau

continues to help consumers and improve our economy. thank you so much and i yield back the balance of my time. mr. hensarling: the gentlelady yields back. the chair recognizes the gentleman from texas, mr. neugebauer, for two minutes. mr. neugebauer: thank you, mr. chairman. i want to use this opening statement to address an issue that director cordray raised himself in speaking before the consumer bankers association conference a couple of weeks ago. in speaking before the group of bankers he highlighted the virtues of bringing market changing enforcement actions instead of going through a transparent and formalized rule making process. some call this practice regulation by enforcement. further he critiqued his critics saying their concerns were misguided. after hearing these comments i feel it necessary to respond. businesses of all sizes deserve certainty. from the largest financial institution to the three-office title lender, regulatory risk drives up cost and stunts economic growth.

federal agencies that are authorized to even force federal law take appropriate action when they hold unlawful actors accountable. however when they routinely bring enforcement actions instead of bringing rule making with the sole purpose of changing market behavior it begins to look like a deliberate evasion of public notice and comment. public notice and comment is a crucial check on the abuse of regulatory power. not only does it allow the public to provide unique insight into the marketplace but balances the decision making. at the cfpb, this point is all the more important given the agency's current structure, a single individual who can unilaterally authorize action. this celebrated bureau practice is most obvious and concerning in the indirect auto industry market. in the midst of pushback, the bureau's -- on the bureau's policy position, he chose to strong arm lenders to change certain practices.

it chose to do this instead of allowing a transparent and pro-- transparent process driven by public comment. some say purposefully evaded the public dialogue. unfortunately this example highlights the very problem with regulation by enforcement. it allows regulators to insert regulatory authority outside of transparent structure process. it provides an opportunity for regulatory overreach and abuse. further it inserts significant regulatory risk into the business of our main street job creators. in closing, the director told the consumer bankers' association when you push back, we welcome your input. director should expect continued and aggressive pushback to continue his regulation by enforcement. mr. hensarling: we welcome the testimony of director cordray, he's testified before the committee and i believe needs no further introduction. without objection, your written statement will be made part of the record and you are now

recognized to give an oral presentation of your testimony, thank you. mr. cordray: thank you, mr. chairman, ranking member waters -- members of the committee, thank you for the opportunity to testify about the semiannual report to congress. i appreciate your continued dialogue as we work together to strengthen our financial system and ensure that it serves consumers, responsible businesses and the long-term foundations of the american economy. as we continue to build this new agency, we made considerable progress on our core responsibilities to exert supervisor oversight over the nation's largest banks and nonbank financial companies and to enforce the consumer financial laws enacted by the congress. our analytical approach to risk-based supervision is leading to more systematic changes at these institutions and we're making progress on leveling the playing field for all participants. it resulted in institutions providing more than $95 million in