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tv   Key Capitol Hill Hearings  CSPAN  September 8, 2016 2:00am-4:01am EDT

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>> yes, i do. intense focus of every regional reserve bank to understand economic conditions in their district in a way that compliments the national economic statistics ask is more granule granular and thoughtfu than statistics reveal. >> the transcripts show that a significant portion of the discussion about the economy does come from talking about regional aspects of the national economy. >> i've had my own little experience in that my family is involved in construction in michigan. i own a small third generation sand and gravel operation. my family has been involved in construction for decades. when i went to visit the president of chicago reserve bank, first 15 minutes of that was an interview of me, what was happening in if the local economy in west michigan. given those changes in populations and demographics, does the current rotation of who
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votes in each foc meeting fully leverage the benefits of that local perspectives that can bring to monetary policy. again, ms. george, i want to start with you. >> the importance of those regional connections come through access that we have in those district lines, through our branch offices, through our boards of directors on those branch offices, and so i think the country has been covered. in terms of despite demographics changes, that span that each regional reserve bank takes seriously, which is to make sure they understand within the confines of their district how that economy -- >> i think you asked about voting rotation as well. all the participants, whether they vote or not, have a voice and do bring their characterization of regional economic conditions to the discussion, and it's part of the discussion. where voting comes into play is
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just where the center of gravity of the committee? where does the chair find it useful to find a consensus? the current rotation was crafted decades ago, and altering it would alter the balance of forces within the community. >> my time is expired. that would bring more balance out of district level views and the voting process, and we've had such a weighted view towards new york and that permanency. i wanted to make sure all those voices are being heard. with that my time has expired, and i recognize the ranking member for five minutes. >> well, thank you so much, mr. chairman. i do want to thank you all for your testimony. i think i heard correctly from all of you thaw think that the independence of the fed is
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really critical towards your being able to do your jobs. was i -- did i hear correctly from all of you? yeah. so you all agree on that. that being said, i guess i'm concerned about -- i guess i want to hear from each of you what you think of the importance of having a more diverse representation on a federal reserve board. do you think or do you not think it interfered with independence or would that enhance the decision making process? i was on a letter with about 100 lawmakers which asked the federal reserve to look at greater diversity.
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>> the idea of bringing diversity to the table, the value of diverse perspectives and strengthening and decision making process is something that predates the concerns of this decade with a previous decade in diversity of access technology, resources, and opportunities. >> we and others have had minority representation, women representation on their boards going back several decades. it's something that is a regular part of the discussion and regularly reported on. >> thank you. i want to give others a chance to answer it. this question as well. >> i would say that a problem
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with having it owned by banks is regrettably the board of directors look like banks. >> the transcripts you see going up to the crisis, even regional bank presidents who were in regions where the epicenter of the subprime crisis hit hardest had no comments about what was going on in terms of the affect of the subprime crisis on the african-american and latino community or -- >> with that -- my time is
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limited, so let me take you here. there is often a lot of resistance to the bank doing their dual mandate to look at unemployment, and unemployment in the african-american community -- african-americans are not experiencing the recovery as other communities are. >> what do you think about reforms or activity that focus on reducing unemployment. especially among african-americans. is that something that would interfere with the other mandate to control inflation? >> the mandate of the bank actually comes from humphrey hawkins act. >> yes. >> the full mandate is full employment. full employment benefits everyone, skps that means full employment for everyone. actually, african-americans employment the population ratio has been rising faster than for
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anyone else. it's gone up 10%. the problem is that often the fed ignores the importance -- of that trend continuing and often thinks it can stop recoveries before full employment is actually reached. when full employment comes, we know that workers are better allocated. we get the efficiencies of the labor market of full employment, and discrimination falls. currently that's what's taking place. the gap in the unemployment experience of better educated african-americans through less educated whites is closing, and that's because the labor market is beginning to heal. it's not at full employment. wages are not rising with the productivity. we do not see rates to show that workers are being reallocated, and we do not see the level of discrimination dropping. >> do you think a reformation of the board and, you know, moving from class b to c or some sort
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of programming would enable -- would inform the board about the importance of focussing on the full employment part of their mandate if we were to diversify the fed more? >> yes. finally the workers' voice would be at the table, and the workers voice from communities that really are hurt the most would be at the table. in 2010 when the african-american unemployment rate was always about 15%, no one mentioned -- >> thank you for the indulgence. >> the gentleman yields back. with that the vice chair of the committee is recognized for five minutes. >> thank you. i want to try to talk about three different things and see if i can weave them together. if you give me a second to try and do that. i heard eep of the three of you
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who have been -- i weigh that against my personal experience. i can never forget being in a homebuilders conference in california in 2006 or 2007, and the keynote speaker one night at dinner was some high ranking member of the san francisco fed. it was not janet yellin at the time. the subject of his speech that night was that it was the studied opinion of the san francisco fed after having done intensive research that on a national basis the home building business would never go into recession again. that the restrictions on supply of new housing was such at the local level that we would never see a housing recession again in the country. your efforts to try to know your district is weighed with the human weaknesses of being wrong from time to time, and occasionally being wrong on a monumental scale. secondly, i would draw to each of the panelist's attention not
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only a recent article in the economist magazine, but a scholarly piece of work that was referenced in there. i wish i could read the names. i think it's professors she slack morse and jorgenson. one from duke and two from cal berkeley. it goes into an interesting analysis of what market returns have been in the weeks after the private fomc meetings. >> it would be about 12 times. 1, 1,200% versus almost zero if you weighed in on every other week. the article mentions that the -- i'll read from the article very briefly. the scholars speculate there's a causal connection, selective disclosure, which they say is unfair. those who attend the meetings have informal contact with the media. consult answery and financial firms, and eventually the content of those meetings makes its way into the stock market.
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>> i would commend the study to you folks and be curious to know your opinion about it at another time that reminded me, by the way, that there is an investigation going on into the leak involving a company medley global advisors that is still ongoing. we know information is leaked out of the fomc meetings. two meetings want apparently similar, and i'm trying to get there. lastly, you mentioned in your testimony, we talked about in this committee several times, which is -- i'll read from it now. at times there's temptation to provide excessive economic stimulus. evidence from around the world and their own history demonstrates temptation of short-sighted monetary policies as a bipartisan vulnerability as the fed's founders feared. monetary policy decisions need to be insulated from short political pressures driven by electoral considerations. certainly my party is
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experiencing that now. we have a fed chairman who is appointed by someone of another party. it's a different philosophy that we share, and my democratic colleagues made in the future sometimes share that same concern if a republican nominee holds that chair. what do these three things have in common? >> it seems like the current system makes a difficult -- that our record of predicting the future at the fed is fairly poor. it also seems that there's a risk of market distortions just from us doing it. the scholarly piece doesn't suggest there's nepharious activities. you have the risk of political pressure from either side on the fed. there are people, and they're appointed by other people, and there are human tendencies here. my question to all of you is this. doesn't a rules-based approach to monetary policy lessen the possible distortions to each of those weaknesses? doesn't it take away and make it
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less important if we make big mistakes in terms of our predictability? does it lessen the likelihood that information is selectively distributed to the market so that some people can benefit and others do not? doesn't it lessen the likely hood of political pressure? doesn't a rules-based system, whether you are conservative, liberal, republican, democrat, solve a lot of the problems that we face at the fed? >> sure. we consult rules very regularly. i think having a sense of the pattern of past behavior of your own institution that gave rise to a good outcome is an important befrm mark, and i gave a speech about this last friday. i caution on that, and i draw the parallel between the search for the right rule and the san francisco fed study you cited, which was clearly well-meaning, where they believe their results sincerely.
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what you chose as the apt malrule. for that reason i think to back away from a rule, consulted as a guide to good policy, and not follow it mechanically or slavishly. i do think it's important to give prominent attention to rules that encapsulate good past behavior in our conduct and monitoring policy, and we do that. >> the problem is that many of the problems are more complex and can have counter balancing effects. i don't think in all situations you would want them to adhere to the rule. the rule, in fact, may be not the best policy. for farmers right now, the problem is an over supply of commodities, and this hurts them. the value of the dollar hurts our manufacturing sector.
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there are many things that are moving at the same time, and i think you wouldn't want a rule that would bind the fed in dealing with how those different -- >> i thank you. i thank you, chairman, for the indulgence. it sounds like the two gentlemen may not be that far apart. i appreciate the time. >> the chair will note again i have a light gavel, but four minute and 40 second chair question might not leave a whole lot of time for answers. >> the chair recognizes mr. foster for five minutes. >> thank you, mr. chairman. thank you to our witnesses here. >> or, in fact, the gdp distribution or however you might assign the region.
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this to my mind is a huge problem in legislative power in our country. the senate is closely unrepresentative of the actual population distribution of the states. results in about a half a trillion dollars per year wealth transfer from the high population states which are underrepresented in the senate than the overpop laying states. the huge economic distortion that cost us a lot. be i know it cost my home state of illinois about $40 billion a year, and it's the primary driver of our fiscal difficulties. i was wondering what your reaction would be and with enough decades of time that you would actually have time to plan, and it wouldn't be
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disruptive. if you -- how big a problem do you think the mail distribution of political power inside the fed is to its current operation and do you think it would net out positively to redistrict the fed every century or so? >> i don't think we are handicapped by the current district lines. notwithstanding, the changes in demographics that you describe over the last is00 years, and the reason i say that is because each region, regardless of how the boundary is defined is focused on -- making sure it understands every part of that region. the federal reserve works carefully as we do in kansas city to make sure that all of our regions are represented, but we understand the economic issues there.
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>> i would offer that -- it appears that way, but over time some of the district lines have been redrawn. detroit was once represented by cleveland, and now it's with chicago as the whole state of michigan is. fine-tuning. >> yeah. personally i think there was still something like a factor of six differences in the number of people in different -- that's a big number. >> yes. i think more important would be an assurance that the people of the district actually were represented. the issue now is that the banks are represented. i think an issue is how can we make sure that the people themselves are represented? how do we make sure that an actual farmer in illinois is represented? not some giant agricultural chairman of some huge
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corporation? how do we make sure that the workers on the south side of chicago are represented because these policies affect them, and their voice needs to be integral to it. currently this is at the whim of the banking community, whether those voices really factor in to the decision making because those people aren't on their board -- aren't on the boards of the regional banks. >> i was very struck by the study paper from i think -- one of the federal reserve study groups talking about fiscal hawks and doves and if you look at the course of a cyclical downturn and the choice that the fed faces of maintaining constant inflation or constant employment that if you focus on constant employment, it has real distributional advantages to those at the bottom and converse conversely. if you choose to optimize the other way. i think this is a fundamental reason. you know, fundamental argument for diversity that there are
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real distributional effects because of the trade-offs that the fed has to make. just a final question on rules-based system. if you do go to a rules of had based system, it would have to go to a. >> as a fundamental input to that, so you are not talking about a simple tailor rule. you're talking about i avery involved macro-economic model. i think it exists. really sort of hard to specify in legislation. >> in the models we have that capture economic -- the economic -- economic activity pretty well implementing a tailor rule gets very close to the optimal rule that would be dependent on the broader range of things. in the models we have it looks as if the taylor rule gets you
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fairly close. >> there's an economist whose name i forget which has a more complete and general rule than the taylor rule. it had more perimeters, and it they did a better job. it's not an organize umt that started with the taylor rule. >> i will be a rarity and only a little bit over time. >> thank you, mr. foster. appreciate that. with that the chair recognizes mr. lucas of oklahoma for five minutes. >> thank you, mr. chairman. for my time since i am a resident of the kansas fed, i like to turn to president george. there were observations about the realigning of the districts, and it touches on the subject that you as a historian as well as a ceo know -- goes back not just to the beginning of the fed, but to the very beginning of this country about where the concentration of capital should be and control over the economy and how that capital flows.
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from the very beginning, the great battle was should the money centers -- new york, chicago -- should they be the dominant force? i suspect that's why my predecessors in this congress a century ago demanded the 12 districts and the lines be laid out the way they were, to protect the entire country from a handful. in 2009 when i was the ranking member of another committee with jurisdiction over the derivatives markets in a meeting one night, a senior administration official wrote up the topic of realigning feds as we were preparing to launch into dodd frank. taking the 12 districts. shouldn't the districts reflect the economic strength of a particular region? rather quickly both republicans
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and democrats, house and senate members in that meeting, made it clear to the senior official that that was not a topic that was acceptable at the time to congress. even as recently as 2009 it was a subject of real debate apparently at the highest levels of the administration. that said, from my perspective, i like not only the 12 feds, but i like the sub-feds. i like the groups in our district in denver is and in oklahoma city and in omaha who act as consultants, advisors. could you expand for a moment on the involvement in those -- those communities within the kansas city fed, president george, how they add to the process? >> the branch offices for each of the head offices play very important roles. in the case of the kansas city fed, i rely heavily on the input from those branch boards to the
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state of oklahoma to help me understand what's going on in energy markets. in our omaha board to understand what's happening in ag culture. and the diversity of input that comes on to those boards serves us well in the head office. that sort of regional input is essential in my view to make sure that all parts of that district are well understood. the regional economist who had each of those offices are out in those communities engaging with those. that structure has searched us well. >> so even though you don't clear checks anymore, and the regional banks aren't big currency repositorierepositorie still serve a purpose, correct? >> absolutely. the federal reserve has changed dramatically in its operations, but its compliment to those regions remain constant.
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>> your district is manufacturing. it's agriculture and energy. we seem to be under pressure these days in kansas city district in all three areas. how much concern do you have as an economist and banker with the circumstances right now in your district? >> so we've seen over the last six years a clear shift in the economies of that region based on commodity price falls, so the drop in oil prices, the fall in agricultural product prices and the strong dollar on our manufacturing have affected that region significantly so that today we do see more unemployment. we are seeing flatter growth, although some sectors are still growing. those are important inputs as we look at that region relative to
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the performance of the national economy. >> so it does matter having eyes and ears all over the country. thank you. >> gentlemen yields back. with that the chair recognizes mr. -- from colorado. >> thank you. president george, you'll get some questions if me too. although mr. lucas stole a few of my questions. let's just go back to basics. how many directors are there for each of the regional banks? >> there are nine directors. >> nine. what are the basic requirements of those nine directors? >> the first requirement is integrity and, of course, beyond that, there are three bankers. there are three businesses, and there are three that are selected by the board of governors. six of those nine represent
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labor, represent community, represent generally what is reflective of the region in that district as well as the three bankers on our boards. in the case of the kansas city fed, those three bankers are community banks. they are individuals who connect tightly with many aspects of meeting the credit neetsds of o region, as well as community leaders that we have in our class b category, and on our class c directors. >> okay. this applies to all of the regional banks. >> the general -- >> nine directors for every one of the regional banks? it. >> yes. >> similar kind of criteria. >> it seemed like it was agricultural, industrial, and financial. seemed to be the basic core principles. looking at your website, you have these regional kind of boards within your regional banks.
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you've got a head office, a denver office, an oklahoma city office and an omaha office. dr. lackner used the terms everybody is looking for diversity. to the two of you, i would say, okay, what the heck does that mean to you? start with you, president george, and then to you, dr. lacquer. i mean, says what do you mean by diversity? >> so diversity is built in to an institution like the federal reserve who is serbing a broad public, and it is essential to the public's trust in this institution that the public sees themselves around those that are making decisions and have input to policy. >> do you mean -- this really applies to both of you and mr. jones and mr. sprigs jump in if you wish. does it mean ethnic backgrounds? does it mean level of income? does it mean regional diversity? what does it mean? >> it means all of that.
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we will not be successful without having ethnic diversity on our boards, without having the interest of labor represented on our boards, as well as the multi-facetted contributors to that economy, says whether they are business, ag, energy. we look broadly at all aspects of that. >> dr. lacquer. >> i agree with how president george characterized it. there are multiple dimensions when we're looking at rounding out a board we look at. ethnic diversity is certainly one of them. gender. we're also looking at diversity within our region. you know, ours goes from south carolina and maryland out to west virginia. very diverse economies. we want representations from around the region. we want coverage across different industries. we want representatives of someone in touch with consumers and consumer groups, labor. all of those perspectives are valuable to us. we try and balance that.
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>> if i could say i think that's one of the key roles that commercial bankers play towards diversity because diversity is race, religion. it's also neighborhoods. it's also communities. if you think about the bank on program that was started was really driven through the fed to say how do we better serve the under banked and unbanked. that's really the key role that bankers play because we have a moral obligation to insure that all of our communities are served and as we sit on the fed boards, our primary focus is to make sure those voices are heard. as you prepare for meetings, you talk to folks from the under banked and the un-banked all the way to the gm running toyota, and you bring those voices to the fed and say here's what we see and what's going on in our markets. that's what's so critical for us as a commercial banker, because we're one of the few industries that see everything. that's the value. >> let me ask mr. sprigs, same thing. >> regrettably, there are only three labor members among the 12
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regional banks. considering the importance of workers and workers as consumers, says i don't think the current system gets us the kind of diversity that we need. the entire history of the fed know zero african-american or latino has ever been chosen to be president of a regional bank. i don't think the system is designed. it looks like bankers. it talks like bankers. it doesn't have a built in way to insure it. we do applaud the fed for paying attention to this and paying attention, but they're doing it. >> i thank you for your answer, and i thank the panel for appearing today. >> the chair recognizes mr
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mr. schweiker from arizona. >> there are just so many things to ask, and we'll try to do this with a little caffeine in our soul and go quickly. >> the yo town e tone i was picking up say there was all this monetary liquidity, but you guys in the fiscal side, you need to put more cash into the system. was i misunderstanding that because was it dr. -- the reason for that is even in this year we're going to push up close to $600 billion of deficit spending in a year where just a couple of years ago our projections were, hey, we're only going to be 245, 265 this year. some here were deficit spending like crazy, and that's a type of
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liquidity. borrowing money, putting it out the door. plus, the accommodative. can you really make an argument that there's not enough liquidity put out into society in a world with almost zero interest rates? was i mishearing what you were saying here? >> no, you weren't mishearing, but it's not putting liquidity. it's putting demand into the system. >> k on. >> so at the current rate that we're going, we're not getting the level of investment that we should. that's because we vbt had our state and local governments in a position to take advantage of the current low interest rates. >> let's back up because, okay, demand in the system. does demand in the system come from -- let's go borrow more money and build something, or does demand in the system ultimately come from the regulatory, the environment we've created here? a good example would be when we look at some of our
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environmental rules, i can come to you with a way saying, you know, if we crowd source much of this data, we could do it cleaner and faster. yet, we still have a regulatory molgd that puts paper in file cabinets and say that's good environmental policy. it doesn't have anything to do with cleaning the air. it has to do with office buildings full of people shoving paper in file cabinets. some of our labor policies. if you wanted fiscal policy to increase demand, don't we need to be doing a series of things where we rationalize some of the crazy regs we're in, whether it's labor or environmental, all the way down to some of the creative destruction aspect that actually create new lines of economic growth that we've created barriers of entry. is demand available out there not from a bastardized helicopter money which all of
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those are sort of involved in and actually it's a regulatory arbitrage we need to move through? >> the demand is the drop in investment that we have seen, and it's not picking up in the private residential sector, and it's not picking up in the public sector. >> but how can you -- >> so we know we are down in terms of pupil, teacher, ratios. >> in a line where i have gone a decade now with falls in productivi productivity, how do you equate just even those couple of statements of teacher-pupil ratios with the fact of the matter is capital isn't moving in to acquisition of things that make us more productive? >> well, education does make us more productive.
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it's our foundation. workers are being trained and have to be trained, and so de-investing as we have done because our public sector had to live through not having the lender of last resort. they have downsized their operations to the smaller side. we have to invest in our people. we have to invest in their higher education. >> embrace apprenticeship programs, on-line learning. yet, we have a regulatory barrier right now saying we can't do that because it's not collectiveized, unionized, it's not those things. i hope there's a second round because it's more dough manned,
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more productivity, and you can't say i want to support the very institutional bureaucratic structures that have been there for years that are dysfunctional in a modern data driven, you know -- where this is the driver of the economy. not a mechanism that was designed in the 1930s. with that i'm way over time. thank you, mr. chairman. >> with that, the chair recognizes gentleman from washington for five minutes. >> thank you, mr. chairman. i also want to express my appreciation to the panel for your presence here today. i want to go back to briefly a line of questioning that dr. foster pursued, which was population mal-distribution and preface my remarks by calling up one of my favorite adages. namely, the two most powerful forces, or compound interest, and the status quo.
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we ought not to re-examine -- it wouldn't make a difference. things are fine as-is. i.e., let's not dink with the status quo. i guess i want to pose a question in a slightly different way. it's does anybody on the panel genuinely believe that if you were starting from scratch to design the federal reserve system and you had any x number of federal research districts in mind. let's use an arbitrary number. 12. >> with you honestly say it would look like anything that it currently does? >> i think it's fair to say if you were starting today, it may not look like that. it may be that every state would
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want its own regional reserve back bank, and you would have -- your point i take, which is the world looks different today than it did 100 years ago. >> 103 years ago. with all due respect, the largest federal research district now by population is more than six times larger than the smallest. i dare say that it's gdp is probably ten times greater than that smallest one. it reflected the neighborhoods and the communities. i don't know how you can achieve that without some sem blens of a more balanced population distribution. >> dr. sprigs, i want to ask you about this underlying issue, the elephant in the room. if you will, the hawk dove
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issue. >> the fed has actually been involved in the achievement of its full employment goal exactly 60 months out of 25 years. they've generally had more tangible targets in that regard than on the inflation side, but i think it's fair to say that they've been more effective on the inflation side. i think it's, therefore, fair to say that they've been much more willing to put their foot on the brake on inflation, their foot on the gas pedal to achieve full employment as evidenced by the data. would you agree, sir? >> my third slide emphasizes one
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good product of full employment. a condition for wages to rise with productivity because we have to be at full employment. we get the allocative efficiencies of the labor market so that workers quit low productivity firms and move to higher productivity firms that really can only happen once we have full employment. we have other institutional factors that help them make at . we get the allocative -- we have other institutional factors to help make it happen. you see the third slide, you see that productivity continues to grow and wages don't. when you don't have full employment, you don't have the competitor force that the labor market can bring to bear on making sure that we get as much of a worker but they also make something that reflects it. so, we all benefit. the best policy. the reason congress passed the full employment act in the '40s.
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the best act for americans to work. beginning of 1921 -- >> doctor william sprigs, you have 13 seconds. >> i still want to get another point in here. >> which is i think and i have said so in this committee that it is time to re-examine how we measure full employment of the great adequate of the great recessions that takes into account. more discouraged workers is stubbornly just under 10%.
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if we are measuring achievement of our goals as we traditional have then we are missing a boat and not achieving what it is we should. i appreciate it very much, thank you sir. >> no problem. with that, the chair recognizes the gentleman from mexico. mr. pearce. >> thank you, for being here today for this fascinated discussion. i was going for follow up a little bit from what the gentleman from washington was talking about. you just got back to jackson and you are looking at the full employment mandate, what is the sense of the members presatisfied of the 5% employment concerned? you got an opinion about how or what the outlook was of the full
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employment mandate? >> i only speak to the region we serve in indiana. >> anybody on the panel go to jackson home? >> yes. >> did you read any online comments or anything? >> the focus of jackson homes was looking at monetary policy and framework for the future and global and central banks. the issue that you raised is one that's discussed at the meetings to understand how will the labor market perform ing in the econoy today. judgment about how close we are to full employment. so, what's the judgment? >> fairly close? 5% okay? >> i believe we are at or near full employment. >> when you reverse it, we see a participation rate of 62.8%.
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we are saying and your words, 62.8% which is you have to go back to the '70s to get a full participation rate at that level. you have the federal reserve says this is as good as it gets. that's alarming. i see the difficulty of spreading across the government between working participants and it is alarming that this is as good as it is going get. you put it up against the 1.1% rate of growth and then you get into the monitory policietary pn i go to my town hall, my seniors tell me, we live our lives correctly and we paid for our house and now you are making our
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savings worth nothing because we get nothing and the value of our house is down to 50% of what it was before 2008. your policies are kill us and so this function of creating laing elastic of currency that you are talking about, do you sit behind closed doors and ask yourself what the hell you are doing it for? >> that has not happened. it is true to our founding and it is true now. we are all aware of it. when i look at the dprgraph thas doctor sprigs put up of the unemployment break, going back, several of those recessions we
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could not prevent and some of those we did cause. >> i am asking of the effect of the elastic currency. when the price of food goes up because of this elastic currency, it hurts our constituents. i didn't want the history, i am trying to get, do you talk about the effects on the poors and the seniors of these policies. that's my question if you want to try again. i am running out of time so i want to ask one more question. >>. >> the answer is yes, we do. i met with the federal reserve branch in el paso just last week, the week before, they have
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the correct information. the thing that troubles most employers in our district is they cannot find workers showing up for work. when i ask janet yellen about this, she had no knowledge. if the information is not transmitted from those branches out there tracking of the specific problems of the economy, what difference does all this make anyway? >> we do bring forward that information. the antidote that you just described as one and it gets to understanding of what is it monetary policy can effect and we'll choir other source of policies to effect. when you zrieb, i would argue it is one that have to have other remedies brought to it as suppooppose to low interest rates. with that, the chair rec nices
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the ranking number, miss waters from california for five minutes. >> thank you very much, i would like to address the question to doctor sprigs. you discussed out african-americans suffer from over employment discrimination. as concrete evidence of this fact, you point to the unemployment experience of better educated african-americans is worse than the unemployment rates for educated white. >> first, thank you for joining us. when we look before the great moderati
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moderation, the unemployment experience with blacks with more education looks like unemployment of whites with more education. there was a significant closing of the gap that occurred between the passage of the civil rights act. as we came to the late 1970s, so much so that if you looked at young men that were college educators that's no difference between black or white. that gap was shrinking for others african-americans with less education. once we went into our high employment of the 1980s when the block unemployment rate never fell below for the entire decade, that gap grew or all levels of education and has remained and so that gap can close. we saw in the late 1990s as we
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pushed for full entreprenemploy. a lot of people thinking they needed to be worried about inflation. by letting the labor market ta t tighten. we saw the reduce of disparity. >> the humphrey's act clearly anticipated it. it is one of the findings in the act itself. so you knew congressman hawkins as well as i did, he met full employment. his language and the preamble talks about full employment and full opportunity for useful paid employment of fair way conversations. it is way down at the bottom that there is a sentence about reasonable priceablety. the preamble of that act says
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full employment and these other things should be considered and full employment gets this lower rate of discrimination. >> well, that's very interesting and thank you. we in this community who are concerned of full employment should pay attention and engaged in the bank. you are thoroughly right, you know? he was very serious about it and as a matter of fact, when i was elected to office here of the seat that he held, that has changed some what. having a appreciation of how you have to understand, what we need to encouraged to also -- let me thank the feds for something
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that may not mean a lot of folks. the recent meetings at jackson home where fedex was invited to participate and i have a great appreciation of that. >> with that, the chair recognizes the gentle lady from utah, mrs. love for five minutes. >> thank you. you know i believe that the united states, house of representatives is a branch of government that's closest to people. and, here the concerns on both sides of the isles, on the structure of the federal reserve system is a concern of mine also. and, we couple that with the fomc structure and the interests and the priorities of americans
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and western states like utah. with the answers that's been given, i am still not convinced that the western states are represented as well as the eastern states. with that thought and knowing that concern, i don't think it is enough to just say well, we believe it is working well because you do have members on both sides of the isle that are expressing concerns. and, i happen to agree with those concerns that they are expressing. so, i guess -- i guess i would like to know what you think maybe done to rebalance the federal reserve system to ensure that all americans are equally representatives monetary policy discussions. do i call you president george, or is that okay? >> yes, i guess. >> so your question is the important one of federal
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reserve. as i listened to this discussion, i remained convinced. in the case of western state, i have a few of those in my region. wyoming and colorado and the northern part of new mexico. where he intentional in picking up information, fact, today you will see coming up out of the beige book which is released by the federal reserve which directly in clouds those kinds of -- i am guess the question that i am asking is that i know that you are convinced that it is working. the house of representatives are closer to people is that every single one we are talking to are bankers and share that concern, also. again, i know you feel as if it is representatives but i am trying to look for different ideas where that thought made
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feel they are being more represented. >> although the federal reserve described as deeply engaged and understanding the entire country. we have one monetary policy for the whole country. the set of interest rates we set, applied in financial markets and they set conditions for the whole country. while president george or williams from san francisco or myself can go and explain what conditions are like in our district. it is still as in this body, we have to make the case that it is good for the country as a whole, one policy changer of another. so there is a matter of understanding and then there is a matter of what tools do we have? here in this body, tools can address things of one particular thing to another. we do not have that, a way to
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target monetary regions. >> if it is all equalled then what difference does it make? not to say if i agree or disagree with this. >> that should not change things either then? if that's the argument that -- >> in my view, the question was asked earlier. you know what our predictions would be is how the district will be drawn and whether it is drawn today. i think it is a fair prediction that they would be different. would we be worse or better off in terms of how the feds engages. i think we would be about the same. this goes to the way mr. george, the structure does not impede us. we probably would be as good as we are now. perhaps, better but it would not make a difference in my mind to the degree where we are connected. >> of course, i end up with about 30 seconds.
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president lack, just to switch gear, when one of your speeches of economic growth and strategies, i want you to give a description on why the district bank, president, would be interested and why is it good? >> when i look at my district, ca carolinas are deeply affected by manufacturing and what's going on the last couple of years. it is hard to think of economic development. when you think of how labor market works and what kind of transformation carolinas gone through. it is hard not to think about skills and you are thinking about, well, how do people acquire skills or the changing demands for skills affect people's choices and what can
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with e we do? >> i am out of time. thank you. >> spethe chair recognizes the gentleman from north carolina for five minutes. mr. pittenger for five minutes. >> thank you. i would like to ask you of the -- i happen to be from charlotte where we are certainly in your district. can you walk me through how the feds is fully public institution of the american public and the economy? >> how we affect the american public and the economy? >> so it is paramount to keep inflation low and stable. i understand that maximum employment is part of our mandate. keeping inflation slow and stable is our best way.
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the recession of the 1970s and the earlier 1980s, we are engineered by the feds. we are concerned about that. we are thinking of are we at full employment. is there a chance we are going beyond it or approaching beyond it. the risk of over stimulating the economy is the is -- if that were to happen, it would be hard for us to calibrate a response and causing a recession. in recessions, minority groups tend to do very badly. >> with that in mind, i will ask you with the fed's extra policy stra stance. has it produce an economic growth since we have seen post world war ii.
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that's been the norm of the country, give me an explanation for why you believe it is true a. >> there is a discussion of labor force participation earlier. the population and the fracking looking for worker employees have fallen. we no longer benefiting from the second half of the 20th century of engaging in women of the labor force. productivity is falling as well. >> this is including capitol formation and neither of those are under the direct control of the federal reserve pointed out. while we could achieve pri priceablety. >> the feds accommodated policies that have been important to the progress and the recovery, i think to see
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where the economy is at this stage of many years, suggest that there are other economic policies should be considered and come to bear for the progress of the economy needs. >> could you elaborate on that, specifically. >> for example, i agree with doctor sprigs. it would be important for the united states that any individual that's willing and wants to work is able to find a job and healthy labor market will be important. we must address issues that were raised earlier about businesses that are not able to find of the kind of workers they need whether it comes from training or education or other things. we should seriously look at all policies and our disposal to make sure that work can contribute to the economy. >> miss jones. >> we are just elaborating of the single biggest issues are here for our clients and the
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ability to atratract workers. our work force development is critical. full employment, to do that, we have to have more work force development. >> i would like to ask as well, do you agree the federal reserve and district -- of the fonc deliberatio deliberations? >> i actually do. sitting six years in st. louis and western kentucky and listen to the voices of agriculture to community leaders and as i said the head of toyota, i can tell you doctor bolter and his team and his people took those inputs very critical. we represent diversities. we represent a diverse economy. i have toyota as a compliant and
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tho and -- as a client. those voices are critical to the process. >> do you agree with that? >> yes, i do. >> apologize, mr. chair, but, i do node to need. i appreciate you extending the invitation and i thank the members as well. i apologize. >> not a problem and i appreciate you doctor sprigs sharing some time with us here today. we are hoping to do a quick second round but first we still have a first round questionnaire here. the gentleman from indiana who's recognized for five mens. thank you, mr. chairman and i apologize for being a little late. i came from a budget committee. it is good to see you mr. jones and fellow hoosier. i would like to ask mr. jones a
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question. first, i would like to address president george. in this article, the article quotes of congressman glass "of natural divisions in abundance to foreign countries, there is no argument of a banking theory or that dictates the central bank institutions. no matter how carefulfully managed or control. me question is this.
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which we can conduct the most economic policies, monetary policies. can you address? >> thank from tese issues were r a long time and coming a conclusion that a decentralized structure is best served the country. it remains true today and its values come from drawing many parts of the country, not just washington and new york and bringing those views to bare something that's important to the lives of many americans and not a decision about money. >> you know, again, i think that mr. jones can attest to this of what's going on. i see this frequently and i believe that our economy is pinned up right now and it is ready go but it needs certainly and know the rules. if we don't get our monetary policy right. can our economy grow?
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>> monetary policies have played an important role but it is not the only factor of what can stipulate the economy. as i listen to voices in my region, there are questions about other kind of economic policies that come to bare on their decisions. i would not want to over burden monetary policies to be the answer to all issues that could be affecting our economy's performance today. >> i agree with that. we are focusing specifically here on decentralization or centralization and sound monetary policy is a foundation. it is great to see you and i know that you ar work in indian is being recognized and not only in indiana but across the country. can you talk a little bit about the benefit of others, indiana,
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we have seen -- can you talk about the differencing between some of the state's regulations that's encouraging growth and of this conflict of washington policy where they are budding heads against each other. the country as a whole can be better. would you be able to touch on that? thank you for your service and indiana as well. >> the other issue we hear is regulation. and, it is both current and pending regulation that is challenging businesses to know the road map to success. you think about coal which is critical to our state. you think about agriculture and some of the changes in agriculture early. you know that as well as anyone. businesses need a clear path to success and part of that is understanding regulatory
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environment to operate in. access to capitol are ailment to all of our customers and clients. you think of banking regulations and making observations and you have seen flat tony. i spoke to our compliance and getting ready for our first exam which is going to be very, very important important. we submitted seven and a half feet stack of papers. i am sure there is a lot of good information in there. it requires a lot of people to do that that cannot give access to the capitols. regulations is a real challenge for our clients. >> mr. chair, i saw flat tony and he was about my height when i first visited him but now he's much taller. it is unbelievable to see the amount of regulations that institutions have to deal with. not only flat but he's tall now.
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>> all right, that's the je gen time has expired. we would like to move into brief round two if that is all right are our witnesses. i will start by yielding myself five micnutes. this struck me as we are talking about your business and what you do. obviously, we had conversations and not just here and other places of the federal reserve system is lacking diversity and not doing enough to serve their communities, i used to be a licensed realtor when i got out of school and as i said my family has been in construction and those kinds of things. one of the fundamental corner stone of my license ensures as a reali realtor to recognize that people are not black or white or yellow
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or brown or any color other than green. meaning they can either afford it or cannot afford it. that's how you have to treat customers. that's how you had to deal with people. it was an equitable way of looking at it. what i am concerned about and our friends and our fed up friends just left, unfortunately, i would love for him to hear this. my goal is to make sure that we have an equality of opportunity for everybody no matter where they live or what their income is. and, we have seen time and time again that sometimes for maybe a good goal but certainly the way that it is gone about has not gotten it there. i notice that in your testimony, your organization is remarkably diverse and heavily involved in
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various communities and i know you have business to run as well as part of that. my question is, you do feel a conflict between reaching out tens of thousands of people and i know you did. i think it was 900 plus, sort of seminars on better managed financial affairs on one hand and making money and having an ongoing business with employs and for your investors on the other hand. do you feel any conflicts in that? >> it is good business. if you think about what we do as community bankers are our moral obligations is dealing with our community. filling all the way up to the large corporations and doing so we start in the market that we serve and there is no real conflict there. that's what a community banker does. there is 8,000 of us throughout the country wake up and worry about what we can do to make this a better place for
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everyone. and, those are the voices that we bring to the fed as we think about what we do as members of the federal reserve board is to talk about all those voices. there is no conflicts. it is just good business. >> what i am concerned about and i too like one of my colleagues, i cannot remember who it was as they sit down and talk to employers, a couple of things they express is we have a hard time finding somebody that'll show up everyday and being able to pass a drug test. those are two basic thresholds that they need to meet and they say, you know what? we'll take care of so much of the rest of it. we need to have people that'll show up and show up clean and willing to work and that is a struggle that whether we had in michigan and i saw earlier today that michigan is doing different or better than other states in the region of chicago,
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interestingly enough, illinois. it is the lowest performing. i would say it is not just about regulation and taxation. it is about the environment that's been created and we and michigan know that we have very much attempted to create a commondative growth atmosphere. >> illinois is what it says to move across the border. >> we did because indiana tried that on us for a number of years for those welcome home billboards. >> it worked for a while, too. >> it did work for a while. we got it turned around. you know i want to milwaukake s that as we are moving forward,
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we are not losing sight of main street. wall street is doing just fine. it reaches down and goes to all levels. we are seeing wages coming up in michigan and some of those things stored but not fast enough. ultimatelily, it is about demand and ifill buster myself, my time is up. ask a quick question of a banker, i appreciate your time. with that, i recognize the member for five minutes. thank you very much mr. chairman. and thank you all for agreeing to stick around a little bit longer. i, too, are sorry of some of the other folks observing left. having said that, i do want to engage the panel on some things
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that i heard doctor sprigs say and he got a lot of push backs today. we have put a lot of pressure on the fed to grow our economy. there is a lot of criticisms or praise on both sides of the isle regarding your, you know, your fixes and what you have done. but, that being said, i think it was mr. jones that said, you cannot have a blank instrument with monetary policy. i think it was doctor lacquer respo lacquer -- lacker responding from the gentleman in utah. >> with that being said, you are limited in terms of what you can do. with that being said, i guess i am wondering what you think
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about the slow growth, the lack of recovery and certain parts of the country among folks like african-america african-americans. number one, what congress is doing? well, we focus a lot on prosperity and we believe that hurts growth. there is a gap of $1. trillion of structure. that could put 20 millions to work. >> i am guessing and i am wondering. doctor brigs said that there is a lack of demands. as we talk about regulations being too great and the debt being too great. he made the point that, you
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know, our 70% of our economy depends on people having money so they can spend it. i know in the african-american community, they spend every dime they get. if shops are closing down in african-american communities because they don't have any money. i am wondering what y'all think of what we do with regards to hurting growth in this country. what is your opinion on sequester and austerity and cutting pell grant and so son. i will yield to make doctor lacker. >> you asked me to stray outside the fed rate policy. baltimore is part of my district and thinking about the events
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that have transpired there thinking why african-american communiti communities lacked so far behind despite the fast innovations we head and the vast policy initiatives that brought to bear. >> doctor brigs is right. policies can influence the broad sweep of demand in our country. there is nothing that we can do to guarantee where it is going to show you. is it going to show up in silicon valley or the carolinas or inner city baltimore. >> is this the time to be doing austerity with slow growth. >> okay, just a transportation bill or infrastructure bill that was adequate. do you think that would help
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your efforts to -- >> i think you how old evaluate a transportation bill based on what your transportation infrastructure needs. we have 80,000 bridges that could collapse just like in minnesota. >> it is not like we don't need and don't have to go out and do a survey to see if we need to fix the roads and bridges. >> that sounds like a legitimate reason. i have no reason to disagree with it. >> would that or would it not spur our economy. mr. jones, you are jumping a little bit. >> clearly creating jobs and demands is helping our economy. the economy is a multitude of policies and procedures and inputs. one of the biggest ones that we see is confidence. you know if we can get a consistent message that says it is okay and i think you will see more and more people responding of the economy but it is difficult with the negativity
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that surrounds our economy create challenges. thank you, i yield back. >> thank you. >> i would like to recognize the chairman from minnesota. >> thank you. we partially agree here. it is the con infrastructure. as the discussion we had earlier with mr. stutzman, when you have seven fetal of regulatory paper work, how does that improve productivity in our society? paper work goes into file cabinets. that's what they said earlier. that was the testimony just 20 minutes ago. we are fixated of monetary policies and policies going as far as it can.
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our responsibility here to get creative instead of just trying to do more of. we are going to throw a bunch of cash at something. we'll see how well that crashes and burns. the year where we said all the models that it is going to happen but it did not. >> miss george, i want to sort of ask -- walk me through first, the services your federal reserve branch provides. just sort of, you know, from one that's on the old check committees, 21 committees. walk me through the services that i am providing. the renalal banks involving in the system. >> we are still clearing checks believe it or not.
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we distribute cash and financial institutions and we are involved in an effort to look how to mode modernize the payment sector. so you know where i am going. i see fascinating discussions coming out of silicon value using a distributor ledger model to basically, it is functioning credit of a mechanic movement and dramatically cutting down the cost. >> lets use papal -- they are landed in our utah and industrial banks to move money. clearing on this side and all of a sudden, i move the money from factions of penny. that's outside your mechanics. is from your discussion because you have a lot of really smart people around you.
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are you ready for what you and i would call the creative destruction that would help us bring efficiencies in the movement of money and the distribution of those resources and are you looking at these alternatives transmission networks and how to lower the cost? so our responsibilities in the area to make sure that the payment system is efficient and assessable and safe. the nature of this technology holds an interesting promises and as part of our work with the private sector to think about how this will affect the payment system going pforward. we are engaged in learning from them and trying to say where this intersects with -- >> you already know and we have a handful of our money center institutions that are already engaged in the trans and the
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movement of money using a distribu distribute ledge. why is this so important for a lot of us caring for econom economic -- you are the uber driver and you are deciding to put 50 cents in our account and every time you drive someone, the payment hits, the 50 cent goes over. in some of the networks it costs 18 cents to move that. you cannot do the micro management of small dollars. i need a network, i need a less expensive, safe. this is soon going to be our banking institutions. my great fears is we had the conversation of efficiency in
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society and productivity, i desperately hope that the federal reserve does not become the barrier of adoption of our society that we desperately need for productivity. my fear isil c silicon valley i about to run around you. with that, i am out of time. >> thank you, mr. chairman. >> for the last question of the day, we'll go back to the gentleman in indiana. >> thank you to all of you for your testimonies and your thoughts and advices today. it really helped. it is been a fascinating d discussi discussion. that's where holding
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on his smart phones. >> they are very easy which is nice, but the security of them. can we trust the technology that's coming along and i know it is been talked about it at owl today. some of you can address that and what's your role and mr. jones, if you can lead off mr. jones of what you are all doing as a banking institutions and online banking and how much of it is being done on smart phones. websites are being adapted to fit smart phones because that's where most of the banking being done. if you can talk about that. >> sure, a great question and clearly as you think of our industry and dramatic changes and mobile banking and sin tech
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are going to be the forefront of the next several years if not already. your question surrounds around cyber security. this is an area of coop reratio of the federal reserve and the occ and the cfbb are coming together and we are working together to make sure that those systems are safe and secure. richmond where doctor lacker were head of chairs. we were able to experience the great control that's in place. 8,000 commercial banks cannot work separately on things like cyber security and as i said, for the fed to convene commercial banks, it has made a significance difference for us >> so the rapid changes that's going on in our payment system
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as you note and the initiative that we currently have under way is to carry on a tradition that we had for most of our history is to work for our private sector as they come up with different ways to conduct payments at the end of the day, making sure it is safety and efficiency is apart of that. the effort that we are under now is looking at new technologies to see how that's best managed on behalf of the public. securing our system to make sure they are safe and effectiveness, for the banking system as a whole. either we cooperate and sharing what we know and can share, you know it is certainly led us to
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focus on the extent to which cyber risk of being managin managing -- as well as supervising focus of teams that's overseeing these large organizations. it is an evolving landscape so it is one way where we are going to have to continually keeping up in essence. >> how do you do that? do you hire teams of experts that know their industry that are on your side and working together but also making sure that their safe guards are in place. how much do you have to -- do you have to invest more down the road or making an initial investment and focusing on banking? >> our investment have increased substantially over the last ten years and information security. yes, talent is something we look at and particular skills set that you need are highly
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valuable in the marketplace and we look to find the skills that we need. >> i don't know of any further comments. 20 seconds left if anybody wants to say anything. >> if not, i yield back. >> i would like to thank our witnesses for taking the time coming. i deeply appreciate it by all of us. i had a number of colleagues going and giving me thumbs up and we thought this is an informative and helpful hearing as we are looking at what the future of this monetary system is and the effects of it. without objection, all members will have five legislative days to submit additional questions to the chair and reported to the witness for respond. respond promethaziptly as you a able. >> to the chair for inclusion for in the record. with that, our hearing is adjourned.
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c-span washington journal live everyday with news and p l policies that impact you. >> we'll hear from the minority members and top issues of education each is focused on. we'll hear first from ranking member, democratic member, bobby scott and joe courtney as a member of the subcommittee and the chair of the subcommittee, virginia fox of north carolina. watch our c-span journal live beginning at 7:00 eastern. in the morning, a subcommittee looks in the $400 million cash into iran.
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>> live from capitol hill at 10:00 a.m. eastern. in the afternoon, fbi director james comey and john brennan addressed members of the national community. we'll be their live for their remarks at 1:00 p.m. eastern. u.s. diplomats updates of members of congress of the violence and humanitarian situati situation. they look to address the crisis including a potential arm embargo. this hearing of the house foreign affairs on africa is about two hours. good afternoon everyone and thank you for being here.
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>> on april 27th of this year, we held al hearing of prospect for peace. it appears to be finally ending the civil war that broke out december of 2013. it was signed by both governments of south sudan and the movement of our position in august of 2015. we were cautioned by ambassador booth at the time. remember your testimonies on april 27th. mr. ambassador, you said it is the most important -- you also kau cautioned it and said it is the first step of lasting piece of the most difficult still lies ahead. those words were certainly very, very true especially given what happened in july. peace is never fully established in south sudan.
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we know finding areas that's not previously seen armed conflicts. 50,000 south sunnis had been killed since september of 2013. four million people are facing hunger. >> a veesouth sunnis women have case of sexually assaults by arm forces in the country sometimes incite in site from one of those bases. >> apartment compound which houses eight workers and the organization of staff. for several hours, they beat residents and assaulted women and looted the facility. one did not respond to the
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desperate call from help. even though their own personnel lived in the terrain compound. >> various components did not respond to orders to mobilize within the organization. un peace keepers were minutes away. they had a robust legal mandate to do so. >> the investigation of the south sunnis government is scheduled to be completed in days. our ambassador has asked to be an independent panel to look into what happened there. and there must be consequences for those who are found guilty. the deteriorating security. that may want to take to the emergency weeks ago.
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i have known sal since he first became vice president in the republican of sudan in 2005. i met him and only weeks he got the office. my hope is my visit might convey to him of the outrage of the murder, rape, sexually assault and attack on eight workers and the procarious situation that they faced. >> deploying 4,000 abused keepers. the monetary fund is strongly recommended in mechanism for financial transparencies and that meets next month. >> meanwhile, the house and senate both have measures that have embedded as well.
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? j in juva we met with his defense team. t considered by many to be a major power behind the scenes. i have emphasize at that of the widespread rapes and sexually assaults and exploitation must stop now. it must be prosecuted and defense minister adpreegreed to produce zero tolerance against rape and sexually assaults. >> such decree informing perpetrators and they'll be punished but a place such as the government to enforce a decree. >> south sudan governmen
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government -- accountable and few and in cad adequate. that must change. >> president kerr gave us a copy. the results of that is due any day now. there are however 4 military officer in one civilian. no one has been arrested for sexuals or be sexual assaults or beating. >> hard details of the two soldiers. she gave us the name of the soldier w soldi soldier who "rescued her." >> i convey that to our defense minister. mr. ambassador, there were about 20,000 workers in south sudan and 2,000 are from the united
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states foreign countries. there is not greater securities and personal supplies. it is needed most of assistance and child soldiers must stop as well. 16,000 child soldiers have been recruited since the civil war began of more over, this year, the u.s. state department trafficking persons report gave south sudan a failing grade in part because of child soldiers. there is time for south sudan to make its pivot by implementing a comprehensive peace accord including and especially establishment of a hybrid court signed one year ago. time is running out. it is a very, very fluid and
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unfortunately volatile situation. the governments are guarantors of south sudan peace. all have expressed their disgust with the government and its armed opposition for not adhering to the peace agreement and providing for security in the well being of people. expressions of disdain are not enough. this area is not only intended to examine culpability but to try to find solutions to safe guard the future. as a guarantor of peace the united states can and should do no less. i would like to yield to my friend and colleague. >> thank you for your trip that you and mr. simpkins made. i know it was on very short notice but a very important delegation. i'm glad that you did that and also that we are having this hearing so quickly. i also want to thank ambassador booth and ambassador limen. i'm glad we will be hearing your
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testimony today. i was in south sudan in november and i went there with a small delegation to look at the u.n. peace keeping mission at the time and that was before machar returned. the question was will he return and will the nation hold to the agreement? it was shortly after president kier had divided up the nation and expanded the provinces. we were very concerned about how you could possibly since that was done after the peace agreement, how can you hold to the power sharing that had been agreed to in the peace agreement if you have reconfigured the entire geography of the nation. at the time we were concerned about what is happening then. now what is going on and how it is victimized south sudanese
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citizens and especially the ones least able to protect themselves, women, girls and youths. in response to the crisis i joined several of my colleagues in a letter to president obama outlining the severity of the deteriorating situation in south sudan and calling on the u.s. to lead the way and calling for an arms embargo on south sudan to stop the needless killing, endless brutality. the unsc august 12 decision to renew the proposed revision and inclusion of additional 4,000 strong regional protection force must be applauded, but there must also be clarification regarding specific rules of engagement governing the troops. i understand that the government agreed to the additional regional protection force as recently as sunday. i look to ambassador booth to outline the next steps which must be taken to bring an end to the nightmare of violence not
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only by the long-term suffering citizens of south sudan but also by the foreign nationals who with total disregard for personal welfare seek to assist these citizens. several of the questions that i have we'll get into in the dialogue, but i want to propose those in the beginning. obviously, the central question is what more can we do? an arms embargo, will it be effective? it seems as though there needs to be a whole international effort that is beyond this, and i want to know what your thoughts are in terms of the au and the au's capacity. and also in terms of uness what will their role be? will they be able to intervene and be aggressive or are they just going to be in a position where they will watch something happening. i just think that this situation has reached -- and we all know this, has reached dire proportions.
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i was in nigeria a couple of weeks ago. a staff member from the state department had just been evacuated and sent to nigeria. i really want to be as specific as possible. it's important to understand the situation, but i really want to get down to the brass tax of now what? what can we do? what can we do as a nation and what should the world do? because, otherwise, i just don't see the situation getting particularly better. with that, i yield. >> thank you. chair recognizes mr. donem. >> mr. chairman, thank you very much. i will yield my time so we give the witness more time to testify. >> i want to thank all of our witnesses and ambassador booth for being here today. i look forward to hearing from you on the deteriorating
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situation in south sudan and as congressman bass said, what we can do to be effective in responding. i was optimistic when south sudan emerged as independent country however the civil war that has ravaged since 2013 has escalated alarmingly since the subcommittee's last hearing in april. the impact is devastating and potential for even deeper crisis is greatly disturbing. not only does south sudan face a post recon sill yar process, massive and chronic humanitarian needs, high level corruption but increasing human rights abuses including recruiting child soldiers. which is extremely distressing. officials averted targeted attacks may constitute war crimes and reports civilians have been directly targeted often along ethnic lines. forces have committed widespread
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violence. there have been more than 260 attacks in 2016 alone including an attack on residents for aid workers which resulted in assaults of several americans. and the killing of a local journalist. the dangers faced by foreign aid workers could have a devastating effect on relief efforts. this is a critical time. if the current crisis cannot be brought under control and the violence halted, the situation would likely deteriorate and could spin into complete chaos. i hope the decision to allow the protection force to deploy will enable the beginning of real improvement in this dire situation. i look forward to hearing from our witnesses on what else we can do to support stability in that part of the world. i thank our witnesses for being here. i yield back. >> thank you. we are joined by ed royce of california. >> mr. chairman, thank you very much. i would just start by commending you, chairman, for your sustained focus on the crisis in
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south sudan. as all of you know, chairman smith just travelled to engage with our embassy there and to engage with our other partners. this is the fifth, i think, south sudan specific hearing that the committee has held since this crisis began. what is unfortunately and frankly maddening is the underlying problems haven't changed in the past three years. it is still a man-made crisis. it is still a crisis political in nature. and what does change, what changes every day is the number of innocent south sudanese killed, the number displaced. tens of thousands have been killed, millions have now been displaced. and i very much appreciate the recent senior level engagement of the administration including secretary kerry's trip to the
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region and ambassador samantha powers leading of a security council delegation to south sudan. i was on the phone a few hours ago with secretary susan rice on this issue. it is -- it is really unclear whether this high level diplomacy can have an impact on the ground. one of the oddities here is that the anti-american sentiment is growing in juba as of late. there is reporting today of an incident in which the presidential guard deliberately opened fire on a u.s. diplomatic convoy traveling through the city. i understand command and control of armed forces in south sudan is practically nonexistent in this situation, but there should never be an instance in which american diplomats are targeted
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ever. after lengthy security council negotiations, the security council approved of deployment of regional force. i met with the secretary general recently of the u.n. on this issue. and i shared that we welcome the establishment of force, but i know how difficult it is going to be moving this from concept to reality. it's going to be far from easy. especially envoy booth in your prepared testimony you explained that if the secretary general reports that the government of south sudan is impeding the new forces deployment, the administration would be prepared to support an arms embargo.
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we have made similar threats and other resolutions. i'm not sure anyone takes that threat of an embargo seriously anymore. i hope that we will be serious in terms of implementation of it. interestingly, in your prepared testimony you made no mention of the existing executive order that would allow the sanction of individuals who threaten peace in south sudan. i think that is worth contemplating. i look forward to hearing from you why no one has been added to the u.s. sanctions list in over a year. there were surely people who deserved to be on that list. if we fail to hold south sudan's political leaders on both sides accountable for the atrocities committed, we cannot expect anything to change. i thank you, and i yield back. >> thank you very much. mr. rooney. >> thank you, mr. chairman. thank you for letting me sit in
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on your hearing. mr. ambassador, since the signing of the peace agreement in august 2015 and violence in july the u.n. security council and the u.s. have failed to implement an arms embargo in south sudan. the u.n. and the u.s. have failed to sanction additional individuals that we have proof have been involved in the attacks against civilians and continue to procure weapons and military equipment. secretary kerry in february in state foreign ops committee, which i sit on, as well as yourself, both told me that the u.s. is committed to holding senior officials accountable for continued cease fire violations and human rights violations that undermine the terms of the peace agreement. you both said that the administration would be willing to implement sanctions on such individuals. secretary kerry stopped short of
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endorsing an arms embargo. in august during a trip to africa, secretary kerry threatened to with hold humanitarian assistance if leaders continue to violate the peace agreement. so i'm curious to hear your testimony why the u.s. is threatening to withhold assistance to the people of south sudan rather than hold leaders who perpetuated the violence accountable through sanctions. i would like to know who in the administration is preventing additional individuals from being sanctioned and who do not want to implement an arms embargo. thank you, i yield back. >> i would like to welcome ambassador booth. donald booth was appointed special envoy on august 28, 2013. he previously served as ambassador to ethiopia and zambia and liberia. prior to that he was director of office of technical and
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specialized agencies. he has served as director of the office of west african affairs. deputy director of office of southern african affairs, economic counselor, division chief of bilateral affairs add the -- at the state department. your full resume will be made part of the record. the floor is yours. >> thank you very much, chairman smith, ranking member and members of the committee. thank you for the opportunity to speak before you today. i want to discuss some of the tragic events that occurred over the past two months without ignoring the bitter reality on the ground i want to focus remarks today on the possibilities for the way forward. chairman smith, as you know from your visit, south sudan is in a dire state. the most recent outbreak of violence in early july created perilous security situation in many parts of the country.
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the humanitarian situation, as many of you have noted, is one of the most extreme in the world with 4.8 million people, over 40% of the population facing life threatening hunger, 2.5 million displaced and the economy in free fall. serious crime is part of daily life and aid workers and their supplies are targets as well. the violence in early july came about because neither president nor first vice president was willing to work with the other to implement the peace agreement or to set up the security arrangements that were designed to prevent or return to fight ing in juba we saw the moment of greatest optimism since the signing of the august 2015 peace agreement. the establishment in late april of the transitional government, we saw it shattered by the irresponsibility and
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ruthlessness of south sudan's leaders. both leaders lost control of their forces during a moment of tremendous political fragility and government soldiers engaged in sexual violence including attacks on foreigners. i would be remised not to pause here and praise the work of ambassador and her team at embassy juba. they have faced enormous hardships and real danger in doing their jobs and their work has been extraordinary. they have, against long odds, reserved the engagement needed to help the people of south sudan. they have done so despite two events that i know are on your minds. first on the night of july 7 just a few hours after a deadly encounter between government and opposition security forces, two vehicles carrying several of our diplomats were fired upon by government soldiers. fortunately, because they were both armored vehicles, the occupants were not injured.
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ambassador fee confronted the president the following day and received an apology as well as assurances that there would be a thorough investigation. that day, however, was also the same day that major fighting broke out between the government and opposition. the second event was much more tragic. the attack by scores of uniformed government security forces against the camp where 12 americans and other third country and other nationals were located. the attack involved hours of looting, beatings, rapes and murder of a journalist. i would like to express at this point my personal condolences to john's family and to all survivors of the attack. that attack occurred towards the end of two days of heavy fighting in juba, which saw government forces drive out the security contingent.
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even as shooting raged, as soon as the embassy was alerted to the attack, ambassador fee contacted security officials whom she believed still had command of their forces and convinced them to intervene. to rescue those under assault at the camp. i want to stress that she did everything in her power and resources in those circumstances to assist those who were under assault at the camp. in the aftermath of the attack our priority was the care and evacuation of the victims and then to protect their privacy and to demand justice for them. my written testimony contains a thorough account of what we know of the awful events as well as what we are doing to ensure safety of our personnel. i would like to focus the rest of my statement on what i see as the way forward or at least a way forward. first, in the wake of the
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fighting in juba in july political accommodation to avoid further fighting and suffering remains as important as ever. given that neither president kier nor former vice president could prevent their security entourages from fighting, we do not it would be wise for him to return to his previous position. this cannot serve as justification to monopolize power. what is most urgently needed is creation of a secure space for inclusive political process to forestall further violence. that is why we strongly support intergovernmental authority for deployment of protection force to juba to provide for free and safe movement throughout the capital. the rpf should contribute to stability and allow for demilitarization of juba. we must be clear that the government will need to allow the rpf to do its job once it is in juba.

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