Fed chair nominee Powell defends push to review financial regulations

Marco Green
November 29, 2017

Improvements in USA bank regulation and supervision since the 2007-2009 financial crisis have eliminated the problem of "too-big-to-fail" banks, Federal Reserve chair nominee Jerome Powell told the Senate Banking Committee on Tuesday.

"I think that the case for raising interest rates at our next meeting is coming together", Powell said in a Senate confirmation hearing.

"Honestly, senator, I think they are tough enough", Powell said when Sen.

In general the 64-year-old lawyer stuck close to script, reciting the current Fed consensus that interest rates are due to continue rising gradually, that the course of inflation remains a mystery, and that weak wages and low labour force participation indicate the jobs market still has room to improve.

Mr Powell will replace Janet Yellen as Fed Chair when her term expires in February 2018.

The sharpest and most detailed exchanges involved financial regulation, an area Powell has focused on during his years as a Fed governor and where he said it was time to take a pause and evaluate where things stand eight years after the end of a deep 2007 to 2009 recession.

"We will we continue to consider appropriate ways to ease regulatory burdens while preserving the core reforms", Powell said.

Both Republicans and Democrats hammered Powell at his confirmation hearing over his plans for regulating Wall Street.

Those core reforms include measures such as requiring banks to undergo regular stress tests and to have more capital as a cushion against losses.

Later in the session, Powell said that he would "not characterize what we're doing as deregulation".

"It's maybe the most important risk that our financial institutions, our economy, our government institutions face".

"I am not an expert on what analysis is out there", Powell said.

Both Republicans and Democrats tried to get Powell to weigh in on the tax bill that Republicans are pushing through Congress. Powell was asked whether he agrees with the Congressional Budget Office that the measure would add about $1.5 trillion to the national debt over 10 years. When pressed throughout the session, Powell said he believed in focusing on the "sustainability of our fiscal path in the long run". "It's not our role".

Jerome Powell drinks coffee before testifying before the Senate Banking, Housing and Urban Affairs Committee on his nomination to become chairman of the U.S. Federal Reserve in Washington, U.S., November 28, 2017.

Other reports by Click Lancashire

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