mr. chairman. >> thank you. >> thank you, mr. chairman. chairman bernanke, while credit conditions for small businesses have improved over the last past year, the number of small dollar loans, loans of 250,000 or less remains below pre-recession levels. as you know, these are the type of loans that are important to early stage and startups. do you think credit availability for these loans will ever fullary rebound to the high water marks set in 2007? >> i think there are a number of reasons why the number of loans being made is lower. first, given that the economy isn't that strong, demand for loans is not quite what it was. secondly, of course, lending standards have tightened since before the crisis, and some of that is appropriate because, as you know, there was credit standards were too easy before the crisis. so there are some reasons why lending has fallen, which no doubt will improve over time. but i think it's still case that we're a little bit too far -- the pendulum has swung a little bit too far, and we are certainly working with banks, particula

mr. chairman. chairman bernanke, good to have you back again. one of the things that the g-8 central banks have expanded their balance sheets. if you convert the currencies to dollars to about $15 trillion over the last two years. what do you see looking forward? how much more expansion in these balance sheets in these central banks do you see? and what could be some of the consequences of that? >> well, i don't know what expansion may or may not be. the japanese, for example, have, again, begun some asset purchases. the ecb has put out again this morning about a half a trillionutrillion u eur euros. i think some is sterilized. these central banks is dealing in a similar way. it is not unusual. they're trying to find ways to provide more accommodation in a situation where interest rates are close to zero. and so standard cutting the basis of the federal funds rate by 25 basis points doesn't work. all of the central banks in question have similar tools to the ones we have including the ability to pay interest on reserves, ability to sell assets,

mr. chairman, and welcome, chair man bernanke. it's always a pleasure to hear you because you are eminently sane about all these issues. i have heard from our life insurers and granters and providers of annuities that they're very concerned, as you can imagine, about an interest rate squeeze that may occur in the future. it almost feels predictable in certain respects. how do you recommend that they proceed, that they anticipate the challenges that we're facing because of the way in which we have to have an accommodative monetary policy? >> well, we've had numerous discussions with insurance companies and pension funds and others, and there certainly is a problem in the sense that they're -- under current accounting rules, their obligations to put money in the funds can be greater with lower interest rates. i agree that's a problem and once we've discussed with them. again, going back to my conversation with miss cotter on the other side, we're trying to strengt strengthen the economy that will give them higher returns on their po

mr. chairman. >> thank you, mr. chairman. chairman bernanke, this is a question which is a follow-up in your discussion with senator crepele. in your testimony you note there has been some modestly encouraging data recently, including slightly better performance in the labor market, improved consumer sentiment, and some increases in manufacturing. but these signs of economic recovery aren't necessarily reflected glet experiences of our workers and their families in the communities. putting aside a question in the euro zone, what possible set backs concern you the most with respect risks in our economic recovery. for instance, could action to cut critical investments too quickly send the economy back into a slowdown? >> let me just say first that one of the points that i talked about in my remarks was there still is a little bit of a contradiction between the improvement in the labor market and the speed of the overall recovery in terms of growth in particular. i mentioned that income had been flat for consumers in 2011 to revise data from yest

mr. chairman. >> chairman, bernanke, i would like to thank you for your testimony today. there is a vote going on, which requires my attention. i'll turn over the gavel to senator schumer for your few last questions. >> i'd like to recognize senator schumer to ask five minutes of questions. thank you, mr. chairman. first question is about the highway bill on the floor. it's -- it will create, akoording to its sponsors, create or save 2 million jobs, has broad bipartisan support, apta, the public transportation association estimates for every billion dollars the federal government -- federal investments in highways creating 36,000 jobs. what impact would passing a long-term transportation re-authorization legislation have on the pace of economic growth? >> i don't know enough about the details of that bill to give you any kind of estimate. i would like to make one observation, which is the jobs part is important. that's part of helping the recovery. but i think when you think about long-term infrastructure investments, you want to think about whether these are good investm

mr. chairman. thank you, chairman bernanke, for your service. i read your statement, and i'm just obviously creating jobs is the singular most important issue in our country for families, for our collective in an economy when such a large part of our gdp is consumer nand. obviously, without income there isn't the opportunity to make that demand. how would you describe -- how are the latest programs of quantitative easing and operation twist helping us get to a more robust growth in creating those opportunities? >> of course, it's very difficult to figure out exactly how on attribute the progress we have made to monetary policy to fiscal policy to other sources of growth. if you look at the record, for example, if you look back at the quantitative easing 2 so-called in november 2010, the concerns at the time were that it would be highly inflationary. it would hurt the dollar. that it would not have much effect on growth, et cetera. since november 2010 where we've had since then the qe-2 and the so-called operation twist we had about 2.5 million j

mr. chairman. thank you, chairman bernanke, for your service.just, you know, obviously, creating jobs is the singular most important issue in our country, for families, for our collective economy when such a large part of our gdp is consumer demand, obviously, without income there isn't the opportunity to make that demand. how would you describe how are the latest programs of quantative easing and operation twists helping us get to a more robust growth? and creating those opportunities. >> well, of course, it's very difficult to -- to figure out exactly how to attribute the progress that we have made to monetary policy to fiscal policy to other sources of growth. but the -- if you look at the record, for example, if you look back at the quantative easing 2 so-called in november of 2010, the concerns at the time were that it would be highly inflationary, it would hurt the dollar. that it would not have much affect on growth, et cetera, but since november 2010, where we've had since the qe2 and the so-called operation twist, we've had about 2.5 mi

mr. secretary. chairman bernanke. >> thank you, chairman issa and ranking member cummings. as you know for about two years, developments in europe have had an important influence on global financial markets and the global economy. high debts, large deficits and poor growth prospectes the led to big increases in borrowing costs, first for greece but subsequently for other countries, as well. and pescy mix about countries fiscal and economic situations has undermined confidence in the strength of european financial institutions. this has had an impact on the u.s. economy. the european union accounts for about one-fifth of u.s. exports of goods and services and we have seen those exports underperform and, of course, europe also affects the rest of the world. financial strains have been evident during times when financial conditions in europe were at their most turbulent. we saw a global retreat from riskier assets. notice united states those risks increases the cost of issuing corporate debt and affected consumer and business confidence. we've also seen our own financial insti

chairman bernanke, i know all of us look forward to your testimony. i now recognize the ranking member, mr. frey. >> thank you, mr. chairman. i will accept your invitation for a civil debate on the subject. let me begin with deficit reduction, which i believe is a great requirement. but i disagree with this focus which you reflect on entitlement reform. before i reduce social security payments to elderly people, particularly, for example, for those who want to reduce the cost of living increase so that 82-year-old women living on a fairly modest income would get less of a compensation for inflation, particularly since health care costs are a major cost for them and go up more than regular inflation, i think we should withdraw from afghanist afghanistan. i support the president's decision to withdraw troops from iraq, and i know that many on the republican side have been critical of that. we do have to reduce spending but we spend far more as a favor to much of the rest of the world on the military than we need to. and before i will impose costs on americans, i should add i regard the enact

mr. chairman. tharme bernanke, this is a question which is a follow-up on your discussion with chairman johnson and senator crapo. in your testimony you note there has been some modestly en -- and some increases in manufacturing. but these signs of economic recovery are not necessarily reflected yet in the-- what poss concern you the most with respect to risks in our economic recovery? send the economy back into a slowdown? >> let me just say first that one of the points that i talked about in my remarks was there is still a little bit of a con tradition between the improvement in the labor market and the speed of the overall recovery in terms of growth. i mentioned in come had been flat for contest -- flat for consumers and 2011. it was a little bit less than 1%. you have consumption spending growing relatively weekly. you have fiscal issues that are hanging over our heads. in order to make this a sustainable strong recovery, we need to have declines in unemployment and strong growth and demand and production. i

mr. chairman and chairman bernanke, i want to work on the volcker rule.frankly candid comment that the regulators will not be ready to issue a rule by the deadline of july, which i think is becoming more and more self-evident. i assume the reason for that is because you have 17,000 comments, you have issues that were just raised by senator reid with regard to the reaction of other markets in the world to what we may do with that rule and we need to conduct a cost benefit analysis. just not going to happen by the time we hit the statutory deadline in july, is that correct? >> yes, and in addition, it's a multiagency rule and requires coordination. we'll be working as quickly as we can to get it done. >> i appreciate that. the question i have is as i read the statute, there's a deadline in july for the agencies to act, but if they don't act to rule whatever it is goes into affect and the market participants are understandably concerned about what they should do on july 1st if not coordinated. the question i have to you is wouldn't it be helpful if congress

mr. chairman. >> mr. bernanke, can you tell me whether you do your own shopping at the grocery store? >> ron paul, a true american original. he took some time to get back to his day job, scolding federal reserve chair ben bernanke at a hearing on capitol hill, wherein dr. paul pulled out a silver dollar, making the case for gold and precious metals and not paper currency. let's actually hear that, if we can play that for our panel and our audience. >> why can't -- couldn't people save -- put this in a mattress and get four or five times as much of the value in the same year, so the record of what you've done in the last six years is destroy the value of real money. >> now, the fiscal prudence of putting silver dollars in your mattress, notwithstanding, willie, the thing about ron paul is he's incredibly consistent. and we're talking about the future of the gop during the break. i think there is some part of ron paul's message that when it's all said and done and the gop is giving itself a long, hard look in the mirror after this 2012 race, will eventually come and adopt some of ron pa

mr. chairman. thank you, chairman bernanke.hite paper on housing was very analytical and not -- not descriptive, which is a. . also, thinking back, such an analytical paper could have been useful in 2005, 2006, or 2007 to alert policy makers that the housing market could be catastrophic. the problem is the federal reserve must display. one of the issues that was raised at is that there are short-term programs that might in the long term produce more returns, enhanced value to the government and taxpayers. if they are not pursued, ironically, we could have even further deterioration in profitability assets. can you elaborate on that? >> certainly. senator shelby asked about the speech given by governor duke and president dudley. they do not represent official fed position. members often give their own individual views. sorry, senator reid. one point that we make is that in a typical negotiation between a bar were or a lender, a modification or other arrangement, like a short sale or other activities like reo to rental are typica

mr. chairman. and welcome, chairman bernanke. it is always a pleasure to hear you, because you are eminently sane about all of these issues. i have heard from our life insurers and providers of annuities that they are very concerned, as you can imagine, about an interest-rate squeeze that may occur in the future. it almost feels predictable in certain respects. how do you recommend that they proceed, that they anticipate the challenges that we are facing because of the way in which we have to have accommodative monetary policy? >> we have had numerous discussions with insurance companies and pension funds and others. there certainly is a problem in the sense that under current accounting -- accounting rules, their obligations to put funds are with lower interest rates. i believe that is a problem and when we have discussed with them. going back to my discussion with mr. carter on the other side, we are trying to strengthen an economy that will give them higher returns on their portfolios. it cuts both ways. i have talked to insur

mr. chairman, i would like to yield my time to mr. mchenry. >> the gentleman is recognized. >> i thank my colleague for yielding. chairman bernanke, is there a current fiscal trajectory sustainable? >> in the united states? >> the united states. >> no, it's not. >> what is a sustainable debt load for a country such as ours? >> well, there's no exact number. i think that the current levels would be sustainable if they were kept more or less constant relative to the gdp. i think that's an important criteria. if we could, over a period of years, get the debt to gdp ratio to some level like 75% and then, overtime, begin to improve that, that would be a much better situation. as it stands, the cbo projections show that under current law the debt to gdp ratio begins to explode in the next couple of decades. >> so, explain what happens. you mentioned this before. and just to clarify, what happens at the end of this year in terms of our fiscal situation? >> well, for a number of reasons if current law, no further action is taken, there will be what i've termed a fiscal cliff january 31st, 2015, including the bush tax cuts, payroll tax, u

bernanke effect. here are more details about the fed's chairman's comment today. mr. bernanke accommodating a monitory poll pcy will be needed. bernanke speaking at the economic policy conference th morning in arlington, virginia. >> it may be at least in part the layoffs that occurred in early 2008 and 009. to the extent of this reversal complete, further improvements in the unemployment rate will likely require a more rapid expansion and demand from consumers and businesses, a process that can be supported by continued accommodative policyes. >> with that, the u.s. dollar fell sharply against the euro, following comments. traders interpreted those comments to mean the fed will keep interest rates near zero until 2014 as has been promised. lower rates tend to weigh on currency by reducing returns investors get from holding it. the euro trading higher versus the dollar. >>> another red flag, national association of realtors, unexpectedly declined half percent in february from the month before. the south posted the worst sales decline while the midwest clocked biggest i

mr. kelly. >> thank you, chairman. and secretary bernanke, thank you very much for being here today. i know you're in a difficult position. i've been in that same position myself many times. my question deals more with prime rate and where prime rate goes. if you go back to '47 around 9.5 to 9.8. right now we're 3.28. i remember, with not really pleasant memories, in the early '80s where it went to 21.5% for prime rate. some people tell me, are you out of your mind? that couldn't possibly happen. the reason i remember is because we paid 1% over prime for our floor plan. so, borrowing money to buy cars at 22% made it a little crazy. that meant we were paying 2% for month that sat on the lot. not to have too many cars on the lot was the idea then. what i worry about is our dollar starts to drop in value. as we start to pump more money into the equation. we just negotiated a new loan to build a new building. it was certainty that the banks came to us, and we came up with what we thought was a real attractive package. but, again, the driver for all of us that own a small business is the

mr. chairman. >> it would make you uncomfortable. interesting transition. miss holmes norton is recognized for five minutes. >> thank you, mr. chairman. and thank you, sect geithner and chairman bernanke for being here. every country and every culture, of course, is very different and it's very risky to go looking at cultures whether it's greece or some cultural country that you perhaps admire. i want to -- i do want to ask you about germany. we are -- there are some in the congress who believe that the way out of our present recession and dilemma is to impose draconian cuts repeatedly. even forsaking the budget deal, that was very difficult to reach was reached at a huge sacrifice, the loss of our aaa rating. the -- i look to europe. this was a worldwide recession. and look at the difference among the various countries. the british seem to have adopted something of that approach. approach to emphasize retrenchment over growth. i'm intrigued by germany. everybody's favorite example of the strongest economy in europe, perhaps the strongest in the world today. and do not understand and believe we need to come to grips with the theory that they have embraced during this recession. they a

mr. chairman. chairman bernanke, this is a question which is a fallout on it -- a followup with your question from senator crapo. in your testimony you note there has been some modestly encouraging data recently, including slightly better performance of the labour market, improved concern -- consumer sentiment, and some increases in manufacturing. but the signs of economic recovery are not necessarily reflected yet in the experiences of our workers and their families in the communities. putting aside the question of the eurozone, what possible set box -- what possible you the most with respect to risks in our economic recovery? could thissend the economy back into a slowdown? >> let me just say first that one of the points that i talked about in my remarks was there is still a little bit of a con tradition between the improvement in the labor market and the speed of the overall recovery in terms of growth. i mentioned in come had been flat for consumers in 2011. it was a little bit less than 1%. you have consumption spending growing relatively weekly. you have fiscal issues that are hanging over o

mr. chairman. chairman bernanke, i want to thank you for coming before our committee and giving us your thoughts. i would like to thank you and your staff at the federal reserve for offering your insights on the dry and in the housing market and the economy in the recent white paper. that paper explains that foreclosures are considered dead weight losses to the economy. meaning, they cost everyone, the banks, the government, families, and society. i think there is no better word for the glut of vacant properties in my district in deep the south texas. i think they are being dragged by this deadweight of foreclosed homes and the head winds of negative equity. project rebuild would put americans to work, refurbishing and repurchasing currently foreclosed properties to help ease the shortage of affordable housing options. my question is, if programs such as the real estate owned to read program, and the project rebuild would be enacted and fund it, what do you predict would be the effect of not all of the housing market, but the rental market? >> first, i agree that foreclosures impose a lot of cost

chairman of the of subcommittee, mr. mchenry for five minutes. >> you thank you both, secretary geithner, chairman bernanke, for your service to our government. you certainly both served in some challenging times. not just in the last three years

mr. bernanke. both as governor and as chairman of the board of governors, in fact he is a hero of the piece i'm presenting in a couple weeks time for the gic. >> well get to that, peter, you are of course, an exofficial before you joined deutsche bank, 26 years in the fed and an economist in the open market for that time. could you give the case for the fed? nobody has yet mentioned what some would describe is the ultimate cause a opposed to the global financial imbalance, is that a factor? >> let's go back maybe a bit further and look at a slightly larger picture and go back maybe to the early 1980s where the fed was fighting a major inflation, the last time we had a near great recession, with unemployment getting up well to the double digits and the volcker decision, that kicked off a bull market for bonds and stocks. inflation came down over time, the fed was successful with volcker and then green span taking the helm after him in bringing down the inflation and engineering the great moderation, lasted for 25 years. a period during which inflation not only came down but risk general came down as well.

mr. chairman. welcome, chairman burning xie. it is always a pleasure to -- welcome, chairman bernanke.easure for you to be here. i have heard that there are concerned about an interest-rate sqquuze -- squeeze. how do you recommend that they proceed? that they anticipate the challenges that we are facing because of the way in which we have to have an accommodative monetary policy? >> we have had numerous discussions of insurance companies and pension funds and others and it is a problem in the sense that their obligations to put money into fund can be greater with low interest rates. i agree that is a problem and what we have discussed. again, going back to my conversation on the other side, we are trying to strengthen an economy that will give them higher returns in their portfolios. it cuts both ways. i have talked to insurance companies. they recognize a low-interest rate is not a permanent condition. the economy has to get back to the situation where interest is can be more normal. we are trying to help the economy. we recognize there are some side effects of lower interest rates an

mr. mcenry. >> chairman bernanke, is there a current fiscal -- is our current fiscal trajectory sustainable in the united states? >> no, it is not. >> what is a sustainable debt load for a country such as ours? >> there is no exact number. i think the current levels would be sustainable if there were kept more relative to gdp. that is an important criteria. if we could, over time, get the gdp to debt ratio down to 75% and then come over time, begin to improve that, that would be much better situation. but as it stands, the cbo projection shows that come under current law, the debt-to- gdp ratio will explode in the next couple of decades. >> explain what happens -- you have mentioned this before, just to clarify -- what happens at the end of this year? in terms of our fiscal situation. >> for a number of reasons, under current law, if no further action is taken, what i turned the fiscal cliff, general first, -- january 1, 2013, as a number of taxes and other things expire, the bush tax cuts, the payroll tax, and the spending side and the sequestration arising from the failure of the super co

mr. chairman. >> it would make you uncomfortable. interesting transition. miss holmes-norton is recognized for five minutes. >> thank you, mr. chairman. and thank you, secretary geithner, and chairman bernankeculture of course is very different and it's very risky to go looking at cultures, whether it's greece or some cultural country that you perhaps admire. i do want to ask you about germany. we are -- there are some in the congress who believe that the way out of our present recession and dilemma is to impose draconian cuts repeatedly, even foresake the budget deal which was very difficult to reach, was reached at a huge sacrifice, the loss of our aaa rating. i look to europe. this was a worldwide recession. and look at the difference among the various countries. the british seem to have adopted something of that approach, the approach to emphasize retrenchment over growth. i'm intrigued by germany. everybody's favorite example of the strongest economy in europe, perhaps the strongest in the world today. and do not understand and believe we need to come to grips with the theory that they have embraced during this recession. they are one of the few countries in europe not to cut the budge

mr. chairman, on how you intend to continue to improve the fed's performance on all three objectives. thank you. >> thank you, senator shelby. welcome, chairman bernanke. dr. ben bernanke is currently serving his second term as chairman of the board of governors of the federal reserve system. his first term began under president bush in 2006. dr. bernanke was chairman of the council of economic advisers during the bush administration from june 2005 to january 2006. prior, he served as a member of the board of governors of the federal reserve system from 2002 to 2005. chairman bernanke, please begin your testimony. >> thank you. chairman johnson, ranking member shelby and other members of the committee, i'm pleased to present the monetary policy report to the congress. i'll begin with a discussion of current economic conditions and the outlook and then turn to monetary policy. the recovery of the u.s. economy continues but the pace of the expansion has been uneven and modest by historical standards. after minimal gains last year, real gdp increased at a 2.25% annual rate in the second half. the limited information available for 2012 is consistent with

mr. mcenry. >> chairman bernanke, is there a current fiscal -- is our current fiscal trajectory sustainable in the united states? >> no, it is not. >> what is a sustainable debt load for a country such as ours? >> there is no exact number. i think the current levels would be sustainable if there were kept more relative to gdp. that is an important criteria. if we could, over time, get the gdp to debt ratio down to 75% and then come over time, begin to improve that, that would be much better situation. but as it stands, the cbo projection shows that come under current law, the debt-to-gdp ratio will explode in the next couple of decades. >> explain what happens -- you have mentioned this before, just to clarify -- what happens at the end of this year? in terms of our fiscal situation. >> for a number of reasons, under current law, if no further action is taken, what i turned the fiscal cliff, general first, 2013, as a number of taxes and other things expire, the bush tax cuts, the payroll tax, and the spending side and the sequestration arising from the failure of the super committee to agre

mr. clay, is now recognized for five minutes. >> thank you, chairman, and thank you, chairman bernanke, for your return to the committee. unemployment is declining and is now at 8.3%, the lowest in three years, and we can get pretty technical in these hearings. but my constituents in st. louis would like to know what we in congress and you at the federal reserve can do to put americans back to work in ways that perhaps we can all understand. what do you suggest? >> well, from the federal reserve's point of view, as you know, we have been keeping interest rates low and trying to create financial conditions that will foster investment in entrepreneurship and demand on the part of consumers, and that should help bring the economy back towards a more normal level of functioning. but as i said earlier, again, the fed cannot affect the long run health, prosperity and productivity of the economy. that's really up to congress, and there's a whole range of policies there, starting with fiscal, i would say. having a fiscal program that on the one hand achieves fiscal sustainability in the long run, and on the other hand, is prote

mr. chairman. thank you for coming, and i look forward to the rest of the class. >>> so federal reserve chairman ben bernanke teaching the last of four classes washington university. we'll have some of that for you on our website, c-span.org. here's what's coming up. more live programming to tell you about. a series of panel discussions looking at the role of women at the 2012 elections hosted by a group called the femme nichlt majority and we have it live for you at 2:30, about a half hour from now here on c-span. take a look at the u.s. capitol now. today we've got news from both the house and senate. the house voting earlier by a vote of 266-158 to extend current transportation spending for an additional 90 days. that measure now goes to the senate for their consideration. and speaking of the senate, lawmakers there earlier today blocked the bill that sought to the repeal tax breaks for are gas and oil companies. we heard from congressional leaders earlier. that's comments from house speaker john boehner from his weekly briefing and following that his democratic counterpart nancy pelosi. together their re

i hope your advice to bernanke will be all iranian banks and not just those sanctioned by the eu. >> thank you madam secretary. mr. burton, the chairman on your asia and europe is recognized. >> nice to see you again. i understand we might once again open a dialogue with north korea. i just checked, we gave north korea during the clinton administration over $1 billion in fuel and food aid as well as money we spent building their light water reactor. and of course they violated the agreement that they made. the only reason i bring that up, i hope that if we start a dialogue with them we realize their history is one of -- that you certainly can't trust. even though kim jong-il is gone and we have a new leader there, i think it's extremely important that the state department get everything written in blood, so to speak, to make sure we're not shafted again. recently tom do not lynn and chairman of the joi -- donnellin went to visit israel. the tone was, they were urging israel not to take any unilateral action as far as attack on iran is concerned. i know just recently they said they certainly weren't in any way going to involve the unit

mr. bernanke, both as governor and as chairman of the board of governors.ic. >> we'll get back to that. peter, you're an ex-ofishow before you joined deutsche bank. and could you give the case for the fed? nobody has mentioned what some of is described as the ultimate cause as opposed to the proximate cause, the imbalance and overconsumption. is that a factor? >> let's go back maybe a little further and look at a slightly larger picture. go back maybe to the early 1980s where the fed was fighting a major inflation. the last time we had a near great recession, with unemployment getting up well into the double digits, the recession to bring down inflation. that started off a two and a half decade bull market for bonds and stocks. inflation came down over time. the fed was successful with volcker and then greenspan taking the helm and bringing inflation down and engineering the agreed mott racing, -- the grate moderation, lasted for 25 years, a period in which inflation came down but risk general live came down as well, and at this time, we also had a bull run

mrs. powell mentioned, who will be with us shortly, said we need to educate our way to a better economy. but also the chairman of the federal reserve ben bernanke said in the long term the best way by far to improve economic opportunity and to reduce inequality is to increase the educational attainment and skills of america's workers. so our report begins with this data because we know from the 100 summits in all 50 states that america's promise led that it was the economic case for action that helped spur policymakers and business leaders and other stakeholders to accelerate their efforts. so what's at stake? the education to jobs equation is completely flipped. a generation ago, 72% of america's jobs required high school or less. by the end of the decade, 75% of all jobs will require high school and some college. ironically, in a time of high unemployment in the country, 53% of business leaders at large companies and 67% at small companies who are creating most of the new jobs in the country say it's difficult to find qualified u.s. workers. our tax dollars are also at stake. we know that if we were to cut the class of dropouts in half for th

bernanke on the cover calling him a hero. mr. voelker was asked what the fed was doing. he said it's his policy not to comment on what other fed chairman did. so let me ask you, how -- how is the fed doing? >> look, i think ben bernanke has done a good job. he came into an impossible and complex situation and took unprecedented actions which combined with abyss so i think he's done a good job. so where we are today, what do you do going forward? and i think if the economy slows down -- look, even those who have a buoyant view of the economy, greg, are projecting growth something like 3% of gdp for this year which is still a slow recovery and projecting unemployment 8% or something like that that is very, very high unemployment. the consensus forecast is 2.5%. that is even slower recovery. so clearly we have a long way to go. i was at dinner last night with a group of -- i'm not a economist. but it was at a group with distinguished economists. aun one of them guessed that qe 2 had 20 basis point effect. even qe-2 is it had very little infect on interest rates. i think given the rates were already so low it had very little effect on inte

mr. bernanke speaking today. what's front and center on your radar for the bond market this week? >> i would say right now it's the fed speakers. you have quite a few fed speakers besides chairman bernanke and plosser this morning. i think you've got another ten opportunities to hear them speak. and many of them are voting members of the fomc. also, if you recall, when they changed over the voting members at the new year, a lot of them moved into the neutral to dovish camp from last year's neutral to hawkish camp. so with all those voting members speaking and they do allow them to vote this year that they could be saying things that are a little bit more positive for the treasury market. so in that respect we could get a little bit of a boost to the treasuries even though we're not seeing it today. >> you know, how do you interpret mr. bernanke's comments? we're talking to people in the stock market who are interpreting it as more qe is on the way. is that your read as well or not? >> you know, i don't know that they want to do that just yet because some of the data has been coming out a little bit better. certainly the employment numbers, jobless claims have been doing better.

mr. bernanke, both as a governor and chairman of the board of governors.is a hero of the piece i'm presenting in a couple of week'' time. >> we will get back to that. you were an ex that official, 26 years at the fed, i believe. could you give the case for the fed? nobody has mentioned what some would describe as the a proximate cause here -- is american over consumption a factor here? >> let's go back further and look at a slightly larger picture and to go backed to where the fed was fighting major inflation. with unemployment getting into the double digits -- that started off a two-decade bull market for bonds as well as for stocks. inflation came down over time and the fed was successful and bringing inflation down and engineering to great moderation lasted for 25 years, during which inflation not only came down but risks came down as well. we also had a bull run in the housing market and had policies in place to encourage home ownership and a belief house prices would never drop. this was a factor that fed into the financial engineering and some compla

. >> let's start off with bernanke, we heard from the fed chairman for much of the 8:00 to 9:00 hour eastern time. >> and boom, 8:00, boom, future go right up. why? mr. bernanke is worried about unemployment. he's not going to take his foot off the pedal, folks, that's the take away that everybody had. mr. bernanke is worried about slowing unemployment, he didn't say anything about qe-3. you want to understand ben bernanke, read essays on the great depression, read his book on the causes of the great aggressi depression. it wasn't the market crash, it was the failure of the the fed to act. he's not going raise rates prematurely. and everybody says it will be too late down the road. inflation will be out of control. that's the naysayers. mr. bernanke is convinced that he's got to keep his foot on the pedestal. >> he lays out exactly what he's going to do and the market kind of got what it was looking for. >> we didn't hear anything about qe-3. >> we're up 1 hunter poi00 poin ground already. let's play the economy improving game, let's forget about the qe-3 game. have you seen the hope for second quarter for the stock market? is the s&p is up 11%. it

he advise federal reserve chairman ben bernanke throughout the 2008-2009 financial crisis and also served as a key adviser to former fed chairman alan greenspan. mr. cohen is a 40 or better -- veteran before taking office as a member of the board of governors he was an adviser to the board for monetary policy, secretary of the federal open market committee, director of the division of monetary affairs and deputy staff director for monetary and financial policy and a few more junior position. he as also written extensively and his implication by the federal reserve. >> thank you, kevin. my thanks, both cabins. thank you, congressman bernie. certainly for the opportunity to read your proposed legislation and for the opportunity to comment on. this is a very welcome effort. in my opinion, this constructive way to respond to concerns about past and potentially future performance of the federal reserve, open up, open up the debate, open up the debate on objectives. the optimal central banking is often thought of as the elected representatives, giving the central bank the objectives, and the central bank having considerable independence to move their i

mr. mcenry for 5 minutes. >> thank you both for your service to our government. you certainly have both served in some challenging times, not just in the last three years, but a long run as well. chairman bernankei want to ask about your legal authority, the fed's little 40. -- legal authority. so the fed establishes sovereign debt for the united states. does the fed have legal authority to purchase other country's sovereign debt? >> it does for the purposes of reserve holdings. they currently hold a small amount of debt of very high quality. i think it is france, germany, and japan. but we are not in beijing and purchasing debt of troubled countries. >> but that could be considered? >> we are not considering it appeared >> -- we are not considering it. congress made clear in earlier discussions, some decades ago when this issue came up, that the purpose of this authority was to maintain foreign exchange reserves. i don't think that it was the intent of congress that we get involved in sovereign debt issues. it is not our intent to do so. >> beyond that, does the fed accept as collateral foreign debt, sovereign debt from foreign countries? >> some of the debt we simply own as part of our foreig

bernanke calling him a hero for everything he did. mr. volcker which is asked what he thought. he said it was his policy not to comment on what other chairman did. however, you are not a fed chairman. so let me ask you, how has -- how is the fed during? >> i think ben bernanke has done a good show. he came into an impossible complex and difficult situation, and took someone unprecedented action. which combined with t.a.r.p. and other activities prevented us from going over the abyss. so i think he has done a very good job. i think that's a little different though than the question that we now face, which is from where we are today, what do you do going forward? and i at least think it is the economy slows down, even those who have a boy in view of the con are projecting growth of something like 3% of gdp which is still a slow recovery and there's projecting unemployment a% or something like that. the consensus forecast 2.5%, that's a slow recovery. so clearly we have a long way to go. having said that, i think a lot of discussion, a qe3, i think a qe3 would probably accomplish very little or virtually nothing. i was at a dinner last night w

mr. chairman. mr. chairman bernanke, thank you for coming. i just want to know your views on what more do you think could be done to try to help the housing market get back on track? let me just observe that about 60% of all the mortgages are either owned or backed by, you know, the gses and perhaps, you know, some people have proposed that we write those down, the ones we can write down, and yet they haven't been. and there's some resistance to that. is that a feasible solution? and if not, you know, what other ideas do you have regarding the housing market? because it seems like that is the one persistent thing that seems to be dragging the economy down. and it's not just construction jobs. i mean, it's just, you know, it's a loss of equity. it's a general prevailing sort of diminishment of demand, as i see it. let me hand it over to you. that's actually going to be my only question. >> as you may know, congressman, the federal reserve put out a white paper recently that had an analytical discussion of many options without makes recommendat