‘That Is Completely Untrue’: Fed. Chair Powell Responds To Warren's Claims Of ‘Big Bank’ Priorities

3 months ago

Earlier this month, Sen. Katie Britt (R-AL) questioned Federal Reserve Chair Jerome Powell on the comments of Sen. Elizabeth Warren (D-MA) during a Senate Banking Committee hearing.

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Transcript

00:00Thank you, Senator Van Hollen. Senator Brett from Alabama is recognized.

00:04Thank you, Mr. Chairman. Chair Powell, thank you for being with us today. My colleague

00:09from Maryland actually just touched on something, but as I was listening to the exchange from

00:13my colleague from Massachusetts and her closing remarks, particularly about Dodd-Frank and

00:18956, there was also a comment at the end where she mentioned you working for giant banks

00:25versus the American people. Now, I have a long list of questions I want to talk to you

00:29about, but I did want to get you to respond to that.

00:32Yeah, that's completely untrue. The things that we're doing are consistent with our international

00:38obligations and they're meant to be the best thing for the American economy, and that's

00:43really our only consideration. We have policy differences across various things, but we're

00:49all trying to achieve the best results we can for the people that we serve.

00:53Absolutely. Thank you. Chair Powell, I have repeatedly talked about my concern with long-term

00:58debt proposal and just think that it has not been well thought through. First, I have concerns

01:03that it blatantly undermines the tailoring requirement, and on that note, do you believe

01:10that 2155 will be applicable to the long-term debt requirement?

01:16I think it applies to everything, and on the long-term debt requirement, we have voluminous

01:21comments that we're looking at carefully and thinking through the process of what to do

01:27about them. No, I appreciate that because I do believe

01:30that currently it lacks a real cost-benefit analysis, and I think it really does need

01:35serious reconsideration. Additionally, when you take a look at it and its overlapping

01:40nature with Basel III, it seems inappropriate that we would move forward with a new long-term

01:46debt proposal, finalizing that rule when we don't even really understand what Basel III

01:54is going to mean for capital requirements for banks and obviously financial institutions.

02:00My question for you is just that. Would it be inappropriate to move forward with the

02:04long-term debt proposal finalizing that rule prior to Basel III being finalized as well?

02:11I don't know that I would give you – I can't give you a clear answer on that. It will depend.

02:18Basel III won't be finally finalized for some time, but that's not to say we wouldn't

02:24reach a place where people understand and accept and support what it is that we're

02:30doing. I think at that point, we could certainly move forward with other rules.

02:33I heard you mention to one of my other colleagues that probably by the time this all took place,

02:37it would be the beginning of next year. I would just say my concern, the Fed has said

02:42that the long-term debt rule will directly be impacted by the final Basel product. Why

02:49would it be inappropriate or appropriate to move forward with that before banks can fully

02:53understand what they're facing from Basel? I would just ask that you all are thoughtful

02:57about that. These are a lot of things that people are dealing with and trying to really

03:01understand the implications of. I think we have seen consistently that people are not

03:07taking a look at the cumulative impact of these things and not really taking a look

03:11at the trickle-down effect. On that, on Basel, when you testified in March, you said the

03:16Fed was aware and fully considering the potential impacts of a proposal on our commodities markets.

03:23I do want to talk about that. The commodities market, our agriculture industry, is one in

03:28five jobs in the state of Alabama. It's 20 percent of our economy. I am a big believer

03:32food security is national security. The proposal would increase hedging costs by 80 percent,

03:39meaning banks would be far less likely or inclined to offer clearing services. This

03:45could have a detrimental effect to our agriculture community and increase other costs providing

03:50food and fiber for our nation. When you look at inputs such as feed, seed, fertilizer prices,

03:56those have skyrocketed. Prices have ended up just getting passed down to the consumer.

04:01Grocery prices are up 21 percent since January. Do you believe that the revised Basel proposal

04:08will alleviate these concerns that our farmers and our ag community have had about Basel

04:12III? Has the Fed done anything specifically to take a look at this? If not, will you commit

04:17to doing so?

04:19I don't want to get into the specific changes that we're going to make. I'll just say that

04:22we're very well aware of and very focused on that particular set of changes and paying

04:28close attention to the issues you've raised.

04:31I appreciate that. I also hope that the Fed, when you craft these types of regulation,

04:36you really consider the relationship between the economic impact and the ability of community

04:40banks to serve their communities as well. I have heard you mention that to another one

04:43of my colleagues, so I know that you're committed to doing that, but that is incredibly important

04:47to Alabamians and our main streets all across the state.

04:51In my last few seconds, I want to touch on one more topic. Finding solutions to expanding

04:57affordable child care is a top priority of mine. It is something that I know a number

05:01of my colleagues on the other side of the aisle share an interest in and believe is

05:06an important issue as well. Chair Powell, do you believe that increasing access to affordable

05:12child care would positively impact labor participation in our country?

05:18I do believe that.

‘That Is Completely Untrue’: Fed. Chair Powell Responds To Warren's Claims Of ‘Big Bank’ Priorities

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