Capital Distributions, SIFIs, CBDC and More
Following yesterday’s HFSC session (see Client Report REFORM203), Secretary Yellen and Chairman Powell today faced Senate Banking and, as before, a raft of questions with little to do with the hearing’s ostensible focus on CARES Act programs. Many questions again addressed fiscal policy, inflation, and macroeconomic growth. However, as in the House, senators also used the session to broach regulatory concerns. As Secretary Yellen admitted, she has now reversed her opposition to big-bank capital distributions, deeming the sector healthy enough to absorb them. She also committed to review the systemic risk posed by asset managers, noting her preference for activity/practice designation instead of the firm-specific one sought by Sen. Warren (D-MA) for BlackRock. Chairman Powell for the first time came out squarely against FedAccounts, noting the radical change it would make to the Fed’s mandate.
