Federal Reserve Chair
While the national unemployment rate has fallen to 6.1% in June from 6.7% in March, Fed Chair Yellen testified: "Too many Americans remain unemployed; inflation remains below our longer-run objective; and not all of the necessary financial reform initiatives have been completed."
"You pointed out that one of the mandates of the Fed is full employment. We've seen some progress, but there have been variations regionally," Reed said. "My state still suffers from a significant unemployment crisis. And also underlying the statistic is the persistently high long-term unemployment number. Can you comment about what the Fed is doing to try and address these two specific issues and further comment upon whether the, as I feel,
Yellen noted that nationally, long-term unemployment is at "almost unprecedented levels historically, and the average duration of unemployment spells is extremely, extremely long," but she added monetary policy cannot affect the situation at the level of individual states, and the Fed has no specific tools to target long-term unemployment on its own. She does however expect to see improvements "on all fronts" as the national unemployment rate comes down and the pace of job creation stays on pace or rises.
"You point out the Federal Reserve's monetary policies have limitations, but fiscal policies of the
Yellen replied by noting: "We have a situation where long-term unemployment is far more common in the population and imposing serious, serious tolls," she continued. "Fiscal policy has been, I think CBO would confirm, a significant drag on the recovery." The CBO, or
Reed also asked Yellen about the Fed's Independent Foreclosure Review (IFR) and subsequent Payment Agreement between the board and 15 mortgage servicers. Between
"That was scrapped shortly afterwards and essentially went to a direct payment of about
Yellen replied that "no decision at all has been made at this point on what to do with residual funds, and so there may be a number of options we've yet -- we've yet to debate that."
Reed encouraged the Fed to get help to consumers in a timely manner, noting "There are states, you know, and regions that need this help, and if you could get the money to the people who can get it out, that would be I think positive."
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