McHenry to Chair Powell: Stick to the Task at Hand and Follow the Data—the Stakes are Too High to Put Politics Over Sound Policy
Washington,
March 6, 2024 -
Today, the House Financial Services Committee is holding its semi-annual hearing with Federal Reserve Chairman Jerome Powell. Lawmakers will question Chair Powell on banking regulators’ Basel III Endgame proposal, the ongoing fight to tackle inflation, and the Fed’s commitment to its independence.
Ahead of today’s hearing, all Republicans on the House Financial Services Committee—led by Chairman Patrick McHenry (NC-10) and Subcommittee Chairman Andy Barr (KY-06)—sent a letter to Biden’s banking regulators urging them to withdraw their fatally-flawed Basel III Endgame proposal.
Watch Chairman McHenry’s opening remarks here.
Read Chairman McHenry’s opening remarks as prepared for delivery:
“Welcome back, Chairman Powell.
“Since you last appeared before the Committee in June of 2023, the conversation in Washington surrounding inflation has shifted significantly.
“To be clear, it’s not because the inflationary fire has been extinguished.
“From the most recent data available, food costs are up by 21 percent since President Biden took office; energy costs are up nearly 32 percent; shelter costs are up by more than 19 percent; and you’ll pay 37 percent more for a dozen eggs.
“As you stated in January, ‘people are still paying more for the basics of life’ and, ‘the prices they’re paying are still high.’
“Families aren’t happy about it. But according to the Biden Administration, and many of my Democratic colleagues, they should be thrilled.
“In an attempt to score political points, many in Washington have decided the best strategy is to tell people that what they’re feeling actually isn’t accurate.
“They claim ‘Bidenomics’ has brought down costs and their partisan, so-called American Rescue Plan put our economy back on the right track.
“Of course, we know the opposite is true since inflation skyrocketed soon after its enactment, which was predicted by several former Obama Administration economic officials.
“Instead of working to solve the underlying issues causing higher prices, the Administration has played the blame game citing corporate greed and so-called shrinkflation.
“Some Democrats have even trained their fire on you, Chairman Powell, blaming interest rate hikes—which were necessitated by their spending—for higher costs and brazenly calling on you to make cuts prematurely.
“It is highly inappropriate for lawmakers to attempt to influence monetary policy. Chairman Powell, I have faith that you will not allow politics to cloud your judgement in the fight to tackle inflation.
“As I have always said, you are a steady hand and I believe you are committed to the Federal Reserve’s independence.
“Just as you have rejected the outside pressures of politically motivated agendas, I hope you will be just as attuned to the threats of politicization when the call is coming from inside the house.
“Vice Chairman Michael Barr’s so-called holistic review of capital requirements and the fatally flawed Basel III Endgame proposal represent a concerning trend of partisan proposals taking priority over supervision.
“This has real world impacts as we saw one year ago this month when the supervision and regulation arm of the Fed was late catching on to the effects of the acceleration of interest rates on banks.
“Americans were understandably shaken by last year’s banking turbulence. As we continue to monitor potential instability, including bank exposure to commercial real estate, it’s critical the Fed keeps its eye on the ball—this does not include enacting new, far-reaching, and ultimately harmful regulatory policy.
“As you know, Members on both sides of the aisle have made clear that the Basel III Endgame proposal would be catastrophic for families, communities, and small businesses. Regulators should withdraw it and start over.
“Additionally, given that other significant proposals would have to fit holistically together, regulators cannot simply proceed with them as separate modules.
“Most importantly, as the Basel III Endgame proposal is discarded or altered, I strongly urge you and other regulators not to finalize your long-term debt proposal.
“Instead, Chairman Powell, I would encourage you to stick to the task at hand and follow the data—the stakes are too high to put politics over sound policy.”
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