Yates said that she had two in-person meetings with White House counsel Don McGahn to discuss concerns about Flynn.
Referring to the DOJ, she said, "We believed Gen. Flynn was compromised in regards to the Russians."
Yates said that not only was his conduct "problematic in it of itself" but also Vice President Mike Pence and the American people had been misled.
"To state the obvious, you don't want your national security adviser compromised with the Russians," she said.
Concerns about Flynn
The FBI and Department of Justice knew about Flynn's conduct, and more important, "the Russians also knew about what Gen. Flynn had done" and that he had misled Pence, Yates said. That created a "compromise situation," in which Flynn "essentially could be blackmailed by the Russians."
During that time, her office was probing the relationship between Russian officials and Flynn.
When McGahn asked her during their first meeting whether Flynn should be fired, she said that "it was not our call," she testified.
"We were there to tell the White House about something we were very concerned about and emphasize to them repeatedly so that they could take action," she said.
In telling the White House, Yates said that she was balancing sharing the "critical" information with the needs of the FBI but that once Flynn was interviewed, there was no longer a concern about an impact on an investigation.
Sen. Diane Feinstein, D-Calif., asked Yates whether Flynn's conduct was serious enough that it compromised the security of the nation and the government.
"Our point was that logic would tell you that you don't want your national security adviser in a position where the Russians have leverage over him," Yates responded.
"We felt like the vice president was entitled to know that the information he was given and was relaying to the American public wasn't true," she said, adding that it appeared Flynn had lied to Pence.
During this portion of the hearing, Clapper confirmed previous media reports that it was British intelligence that first notified the U.S. government about suspicious interactions between Trump associates and Russian operatives and that European intelligence later provided further intelligence about such contacts. Asked whether those reports are accurate, Clapper said, "Yes it is, but it's also quite sensitive."
How we got here
Nunes' impartiality in the investigation was debated by his colleagues on both sides of the aisle after the delay and his trip to the White House to view classified information pertaining to Trump's allegations that he was wiretapped during the presidential campaign. Nunes later announced he would step away from the Russia investigation.
Aside from discussing the meetings about Flynn, there were many questions Yates declined to answer because the Russia investigation is ongoing and much of her story includes the top-secret surveillance activities of the U.S. intelligence community.
Yates and the Trump administration
The relationship between Yates and the White House is complicated by the circumstances surrounding her firing. In January she instructed the Justice Department not to defend Trump's controversial order limiting travel and immigration from seven majority-Muslim countries in the Middle East and Africa.
She took a moment to defend her actions at today's hearing, saying, "I did my job."
"I understand that, you know, people of goodwill and who are good folks can make different decisions about this. I understand that. But all I can say is that I did my job the best way I knew how. I looked at this executive order. I looked at the law. I talked with the folks at the Department of Justice, gathered them all to get their views and their input, and I did my job."
She wrote at the time of her decision that she was not convinced that defense of the executive order was "right" or "lawful."
During today's hearing, Yates insisted that this situation was rare in that it dealt with not only executive authority but also religious freedom.
She expressed frustration that neither she nor other top DOJ officials were told anything in advance about the executive order — learning about it from media reports after meeting with the White House about Flynn.
Yates was fired on Jan. 30 just hours after instructing the department not to defend the order.
She was replaced as acting attorney general by Dana Boente, who vowed to defend the travel ban. Sessions was confirmed — amid questions about his own relationship with Kislyak — on Feb. 8 and sworn in the next day. Sessions said in March that he will recuse himself from any DOJ investigations concerning the 2016 presidential campaign.
Asked whether the U.S. government is doing enough to deter attacks by Russia, Yates said, "I think they are coming back and we need to do more to ensure that folks out there know when they are looking at news feeds that it may not be real news that they are reading."
She added, "I think that we have to do more to deter the Russians and it wouldn't hurt to prosecute a few folks, but I don't think we should kid ourselves that we'll be able to prosecute our way out" of the problem.
Clapper said the most important thing that needs to be done is to "educate the electorate" about Russia's objectives and the tactics it employed in the 2016 election and will to continue to use.
He also said he believes more needs to be done in the way of sanctions against Russia or any other country that attempts to interfere in the U.S. election process.