During a hearing before the Senate Banking Committee today, U.S. Senator Herb Kohl urged Federal Reserve Chairman Ben Bernanke to be more aggressive in his approach to the nation's long-term unemployment problem. Chairman Bernanke testified before the Banking Committee to give the Federal Reserve's semiannual monetary policy report. Kohl is a member of the Senate Banking Committee.
"Given that unemployment has remained over eight percent for 41 months, now is the time to be more aggressive in your approach to unemployment," Kohl told Bernanke during today's hearing. "I think we agree that the consequences are too great for us to wait any longer."
Kohl noted that, during a Banking Committee hearing last July, Bernanke agreed that long-term unemployment was a major problem and recommended that Congress take a look at ways to help the unemployed through training and education.
"Of course the Federal Reserve has its own mandate to keep unemployment low; and we continue to see disappointing jobs numbers," Kohl said. "If the consequences of long-term unemployment are so great, why has the Fed been so slow to tackle unemployment over the past year? Why hasn't the Fed issued a third round of Quantitative Easing?"
Bernanke said that the Federal Reserve has taken extraordinary actions, pointing to a June decision to continue the maturity extension program for Treasury securities. He indicated that the Federal Reserve is looking to see whether there are sustainable improvements in labor markets but remains prepared to act.
Kohl also raised concerns over the Libor manipulation scandal's impact on credit markets for consumers. The London Interbank Offered Rate, or "Libor," is the number widely used as a benchmark for interest rates on consumer loans for homes, automobiles, credit cards and college. Recent press reports indicate that manipulation of Libor could cost the banking industry billions, if not trillions, of dollars.
"There is no appetite here or anywhere else to do another bail out for the banks and given the increasing amount of money that is at stake, I would urge you to work with the Justice Department on this," Kohl said.