January 24, 2018

Senator Warren Delivers Floor Speech Against Jerome Powell Nomination for Federal Reserve Chair

Warren: "Powell will roll back critical rules that help guard against another financial crisis - and that is simply a risk we cannot afford."

Video available here (YouTube)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today delivered a speech on the Senate floor on the nomination of Jerome Powell to serve as Chairman of the Federal Reserve.  In her speech, Senator Warren expressed concern that Mr. Powell would weaken financial regulations rather than strengthen them, and urged her colleagues to reject his nomination.  

The full text of her remarks is available below.

Remarks by Senator Elizabeth Warren
January 23, 2018

Mister President,

I am concerned that as Chair of the Fed, Governor Powell will roll back critical rules that help guard against another financial crisis - and that is simply a risk we cannot afford.

While big banks have bounced back from the 2008 financial crisis and are posting record profits, many American families are still trying to rebuild their lives ten years later.  Yet Governor Powell seems to think that the number one problem with our current financial system is that we're too hard on the banks. In his confirmation hearing he said he would, quote, "continue to consider appropriate ways to ease regulatory burdens."  When I asked him if there was a single financial rule he thought should be stronger - just a single provision in one of the Fed's dozens of rules where there might be an unintended loophole or where an innovative product has introduced a new risk into the system - he couldn't name a single one-not one.  

In my questions for record, I also asked Governor Powell about a "report" that the Treasury Department put out last June.  Now, this report was really just a cut-and-paste job of the banking lobbyists' wish lists for rule rollbacks. Governor Powell could not identify any recommendations in that report that he disagreed with. Again, not a single one.

That's not all. At Governor Powell's confirmation hearing, when my Republican colleague Senator Kennedy asked him about whether there are any institutions today that are Too Big to Fail, Governor Powell said, quote, "I would say no to that."   Governor Powell expanded on that statement in his answers to my written questions, saying, quote, "we have made enough progress that the failure of one of our most systemically important financial institutions, while undoubtedly posing a severe shock to the economy, could more likely than not be resolved without critically undermining the financial stability of the United States."

First of all, that is an incredibly narrow definition of what Too Big to Fail means.  Second of all - and more importantly - Governor Powell's view is out of step with the mainstream of serious experts. Giant institutions still have the ability to blow up our economy - and that is the biggest problem facing the Fed and other regulators.

I am deeply concerned that as soon as Governor Powell unpacks his boxes in the Chairman's office, he will begin weakening the new rules Congress and the Fed put in place after the 2008 financial crisis.  And he will have help: right down the hall will be his "close friend," Randal Quarles, the Fed's new Vice Chair for Supervision. Governor Powell told me when we met that he intended to rely a lot on Vice Chair Quarles on regulatory issues.

That is a really dangerous prospect.  Before coming to the Fed, Vice Chair Quarles spent more than a decade in private equity, where he made his mark arguing for weaker rules on big banks.  And he's gotten a running start now that he's at the Fed. In a speech a few weeks ago at his old private equity firm, Quarles announced that he was working on reducing capital standards for Wall Street banks, weakening the Volcker rule, and making stress tests easier for big banks to pass - in other words, he's already set up his to-do list to gut measures put in place after the financial crisis that are there to try to keep our economy safer.  
So Governor Powell says he will take his cues from a guy who wants to get rid of as many rules he can and take the teeth out of the rules that he can't. No thank you. That will make American families less safe. It will make the American economy less safe.

To make matters worse, Powell's gifts to the giant banks will come at a time when banks of all sizes made gigantic profits last year and got giant tax giveaways in the bill that was passed in December. Good grief - when will enough be enough for these guys?  But even with banks rolling in money, the army of lobbyists and executives have come back, storming Capitol Hill and the halls of the Fed, spinning this story that financial rules are throttling them and need to be cut back.

We need a Fed Chair who can stand up to Wall Street and think about the needs of working families in this country.  We need someone who believes in the toughest rules for banks - not in weaker rules for banks.  That person is not Governor Powell.
Thank you, Mister President.