Today’s abbreviated HFSC hearing with FRB Chairman Powell was relatively cordial, likely reflecting the absence of junior progressive Democrats and populist Republicans.  During the hearing, Chairman Waters (D-CA) joined Senate Banking Ranking Member Brown (D-OH, see Client Report FEDERALRESERVE56) in calling on the FRB to take action to address racial economic disparities.  Rep. Cleaver (D-MO) urged the FRB to consider using consent decrees to force financial institutions with patterns of discrimination to enact change.  Mr. Powell  did not  commit to that, but he did indicate that the FRB plans to advance a CRA rulemaking modelled on Gov. Brainard’s alternative to the OCC’s approach (see Client Report CRA28).  However, Mr. Powell also pushed back Democratic legislation to create retail FedAccounts (see Client Report CBDC2), saying that retail FedAccounts would adversely impact bank intermediation.  However, Mr. Powell said that the Fed’s plans on CBDC need not involve private-sector consultation.

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