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.
As Prepared for Delivery
I'd like to welcome back Chairman Powell
As I discussed at our last hearing with you, I remain very concerned by the President’s efforts to interfere with the Fed’s independent monetary policy. A recent news story noted that Trump has tweeted over 100 times about the Fed since your nomination. Many of those tweets appear to be attempting to exert pressure on the Fed.
Chairman Powell, you and the Fed Board of Governors must not be swayed by these aggressive tactics. In upholding the Fed’s independence, you should also be mindful of public perception.
Of course, Trump continues to try to claim credit for economic growth that was put in motion by the policies of President Obama, Congressional Democrats and the Federal Reserve. His irresponsible trade war and the GOP tax scam have blown up the national debt, slowed our economic growth, and harmed hardworking American families. Trump continues to squander this inherited economy.
Let me note that I am disappointed in the Fed’s efforts to deregulate megabanks, most recently by proposing to further roll back the Volcker Rule. The Dodd-Frank Act made our financial system safer, but it depends on agencies like the Fed to prudently use the tools available to monitor and mitigate threats to our economy.
The Committee is carefully monitoring the developments in the repo market and the Fed’s response. The Fed should not arbitrarily reduce liquidity requirements, in response to the repo market disruption, as some on Wall Street have asked for. Instead, the Fed should make appropriate adjustments to promote a well-functioning repo market while ensuring we have strong capital rules that can’t be gamed through “window dressing,” a practice where banks alter their balance sheet to appear less risky and reduce their capital levels. In addition, the riskiness of various financial assets is increasing as climate change poses a more serious risk to our economy. The Fed and other regulators should utilize financial stability tools under Dodd-Frank, such as incorporating climate-related losses into supervisory stress tests of big banks, to address this growing risk.
I would also like to discuss recent developments involving the Community Reinvestment Act (CRA). We’ve had a series of hearings on this issue, and I am very concerned about OCC Comptroller Otting’s harmful proposal to turn CRA into the Community Disinvestment Act and allow banks to escape their obligation to make responsible investments in the communities where they are chartered.
I urge the Fed to take a careful, deliberate approach to any changes to the implementation of the CRA, and to not join Comptroller Otting’s misguided efforts. Governor Brainard’s statement that “…it’s more important to get the reforms done right than to do them quickly,” is absolutely correct. The OCC and FDIC should heed that advice as well and extend the public comment period as community banks, state regulators, community and civil rights groups as well as Committee Democrats have called for so that all stakeholders have the opportunity to voice their concerns.
I also encourage the Fed to keep a watchful eye on Facebook’s efforts to launch a cryptocurrency and digital wallet, which, as we discussed at our last hearing could have profound implications for monetary policy and compete with our own U.S. dollar. In light of the many risks Facebook’s plans could create, I and other Democrats have called on Facebook to halt their plans until Congress can examine the issues associated with a big tech company developing these digital products, and take action.
I look forward to your testimony today Chairman Powell, and to discussing these matters.