In this report, we assess FRB Chairman Powell’s appearance today before the HFSC. Echoing Democratic senators yesterday (see Client Report FEDERALRESERVE48), Chairwoman Waters (D-CA) urged the FRB to focus on combating the “scourge” of economic inequality. She also pushed Mr. Powell not to lower bank capital and liquidity levels and to review M&A transactions, specifically mentioning BB&T/SunTrust. Mr. Powell argued that recent bank capital and liquidity levels remain strong and defended the FRB’s M&A review process. After questioning the pace of FRB balance-sheet normalization, Ranking Member McHenry (R-NC) attacked state-run Chinese banks as a potential global financial-stability risk. While Republicans objected to a Fed-run faster payments system, Mr. Powell suggested that certain real-time settlement services may only be available through the central bank. Despite continued bipartisan opposition to CECL (see FSM Report ALLL5), Mr. Powell did not promise additional study or a capital offset.
The full report is available to retainer clients. To find out how you can sign up for the service, click here.