Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, gave the following opening statement at the semiannual Humphrey-Hawkins hearing on monetary policy and the state of the economy with Federal Reserve Chairman Jerome Powell.
Chairman Powell, welcome back to the Committee.
I am concerned about some of the actions of President Trump and his Administration, and perhaps, you may be asked some questions today about whether or not it is affecting the Fed’s decisions.
President Trump has manufactured the longest government shutdown in our nation’s history, which beyond the needless harm inflicted on affected government employees, contractors and other businesses, also hurt our economic outlook.
Moreover, this President declared a trade war on allies and enemies alike, leveling tariffs on steel and aluminum, and threatening to rip up other deals. His trade war is bringing down consumer and business sentiment.
His tax scam, which was a giveaway to the wealthy and corporate America, is slated to reduce government revenue by 1.8 trillion over the next ten years.
Each of these actions by the Trump Administration were noted in the minutes of the Fed’s January policy meeting and appear to have weighed on the Fed’s decision to pause further interest rate increases.
In the midst of what some fear is slowing growth, the Administration’s economic policies are fueling the fire of a possible downturn. It is critical that the Federal Reserve remain vigilant in protecting this economy.
The last matter I want to raise pertains to the Federal Reserve’s apparent efforts to modify Dodd-Frank safeguards Congress and your predecessors at the Fed put in place following the financial crisis. In particular, I’m concerned that the Fed is following the Trump Treasury Department’s deregulatory roadmap to weaken the capital and liquidity buffers on some of the largest banks. This is particularly troubling given that many economists, including many at the Federal Reserve, believe that bank capital levels are at the lower end of where they should be to weather another downturn. Banks earned a record $236.7 billion in annual profits in 2018. The largest six banks alone raked in over $120 billion. Given these record profits, I do not believe there is a need for the Fed to further reduce capital and liquidity requirements. If anything, given your concerns about the economy, now is not the time to take the guardrails off of this industry.
The Fed should also be concerned with the growing economic inequality in this country. In 2016, the Fed’s Survey of Consumer Finances stated that the top one percent of U.S. families own 38.6 percent of the wealth. The Minneapolis Federal Reserve Bank reported that over the last 70 years, virtually no progress had been made in reducing income and wealth inequalities between black and white households. So, I would urge you and the Federal Reserve to work to tackle the scourge of economic inequality.
So, I know we just had a moment to talk about some of these issues and you have some information you shared with us recently about some of the concerns that I have raised, and you may want to talk about those a little bit today.
So, I look forward to your testimony, and to discussing these matters with you.