Battle Lines Form Over Capital Rewrite
Although Chairman Powell’s testimony kept exclusively to monetary policy, today’s Senate Banking hearing seemed only to go through the motions set at previous hearings with regard to inflation, growth, and the Fed’s long-term objectives. Real energy was reserved for regulatory-policy questions, most notably future bank capital standards. As anticipated, Republicans were unified in a series of questions all focused on the extent to which Chairman Powell will allow Vice Chairman Barr’s holistic-capital exercise to result in the higher capital standards Mr. Barr says are warranted for the largest banks.