In this report, we assess FRB Chairman Powell’s appearance today before the Senate Banking Committee. With the Senate finreg legislation (see Client Report SIFI25) heading to the floor next week, supporters pushed the Chairman to rebut claims that the legislation benefits large foreign banks and eliminates key standards for banks between $100 billion and $250 billion. Despite Treasury Secretary Mnuchin suggesting that FBOs with U.S. operations under $250 billion will benefit from the legislation (see Client Report SIFI26), Mr. Powell said that the FRB will consider these banks’ global total consolidated assets when applying prudential requirements and that the bill does not mandate changes to IHC rules. Ranking Member Brown (D-OH) was skeptical, asking Mr. Powell to commit to ensuring that FBOs will not benefit from the bill and to outline a defense if FBOs sue for national treatment. He then raised the prospect of amending the bill to ensure FBOs are clearly excluded. Mr. Powell said he will respond in writing and announced that the FRB would release for comment a framework for evaluating banks between $100 billion and $250 billion. Sen. Warren (D-MA) pushed for halting Wells Fargo’s growth until it has fully implemented its plans to improve its board’s oversight and risk management.
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