Yellen Ducks Capital Question, Further Threatening Finalization
As anticipated, today’s HFSC hearing with Treasury Secretary and FSOC Chair Yellen showcased sharp Republican criticism of the Council’s nonbank designation authority (see FSM Report SIFI36), with Chairman McHenry (R-NC) and Financial Institutions Subcommittee Chairman Barr (R-KY) citing the guidance as yet another example of regulatory politicization, calling FSOC a “rogue” and “roving” regulator. Digital asset regulatory gaps were a top GOP concern, with Chairman McHenry also joined today by Reps. Hill (R-AR), Johnson (R-SD), and Thompson (R-PA) in sending a letter to Ms. Yellen requesting much greater attention to SEC and CFTC collaboration on digital asset oversight. The hearing also continued to raise doubts about the viability of the agencies’ capital proposal (see FSM Report CAPITAL230), with Ms. Yellen repeatedly refusing to endorse it and emphasizing that the rule’s final form is the purview of the banking agencies. Democratic opposition to the proposal was most starkly captured by Rep. Scott (D-GA), who said not only that it would be economically “terrible,” but that the majority of Committee members shared this opinion. Ranking Member Waters (D-CA) strongly countered this view, but Democratic support today was muted. Rep. Waters was also joined last night by Reps. Green (D-TX), Lynch (D-MA), Cleaver (D-MO), and Foster (D-IL) in sending a letter to Chairman McHenry requesting a hearing examining what they argue are racial disparities in mortgage approval rates at Navy Federal Credit Union.