S. HRG. 115–157 NOMINATION OF JEROME H. POWELL HEARING BEFORE THE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS UNITED STATES SENATE ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION ON THE NOMINATION OF: JEROME H. POWELL, OF MARYLAND, TO BE CHAIRMAN, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM NOVEMBER 28, 2017 Printed for the use of the Committee on Banking, Housing, and Urban Affairs ( Available at: http://www.govinfo.gov/ U.S. GOVERNMENT PUBLISHING OFFICE 28–661 PDF WASHINGTON : 2018 VerDate Nov 24 2008 16:22 Aug 23, 2018 Jkt 046629 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\DOCS\28661 SHERYL COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS MIKE CRAPO, Idaho, Chairman RICHARD C. SHELBY, Alabama SHERROD BROWN, Ohio BOB CORKER, Tennessee JACK REED, Rhode Island PATRICK J. TOOMEY, Pennsylvania ROBERT MENENDEZ, New Jersey DEAN HELLER, Nevada JON TESTER, Montana TIM SCOTT, South Carolina MARK R. WARNER, Virginia BEN SASSE, Nebraska ELIZABETH WARREN, Massachusetts TOM COTTON, Arkansas HEIDI HEITKAMP, North Dakota MIKE ROUNDS, South Dakota JOE DONNELLY, Indiana DAVID PERDUE, Georgia BRIAN SCHATZ, Hawaii THOM TILLIS, North Carolina CHRIS VAN HOLLEN, Maryland JOHN KENNEDY, Louisiana CATHERINE CORTEZ MASTO, Nevada GREGG RICHARD, Staff Director MARK POWDEN, Democratic Staff Director ELAD ROISMAN, Chief Counsel JOE CARAPIET, Senior Counsel KRISTINE JOHNSON, Professional Staff Member ELISHA TUKU, Democratic Chief Counsel LAURA SWANSON, Democratic Deputy Staff Director COREY FRAYER, Democratic Professional Staff Member DAWN RATLIFF, Chief Clerk JAMES GUILIANO, Hearing Clerk SHELVIN SIMMONS, IT Director JIM CROWELL, Editor (II) VerDate Nov 24 2008 16:22 Aug 23, 2018 Jkt 046629 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 S:\DOCS\28661 SHERYL CONTENTS TUESDAY, NOVEMBER 28, 2017 Page Opening statement of Chairman Crapo ................................................................. 1 Opening statements, comments, or prepared statements of: Senator Brown .................................................................................................. 2 NOMINEE Statement of Jerome H. Powell, of Maryland, to be Chairman, Board of Governors of the Federal Reserve System ......................................................... 4 Prepared statement .......................................................................................... 43 Biographical sketch of nominee ....................................................................... 45 Responses to written questions of: Senator Brown ........................................................................................... 55 Senator Toomey ......................................................................................... 67 Senator Sasse ............................................................................................ 70 Senator Menendez ..................................................................................... 77 Senator Warner ......................................................................................... 82 Senator Warren ......................................................................................... 87 Senator Perdue .......................................................................................... 90 Senator Heitkamp ..................................................................................... 94 Senator Schatz ........................................................................................... 97 Senator Van Hollen ................................................................................... 101 Senator Cortez Masto ................................................................................ 105 (III) VerDate Nov 24 2008 16:22 Aug 23, 2018 Jkt 046629 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\DOCS\28661 SHERYL VerDate Nov 24 2008 16:22 Aug 23, 2018 Jkt 046629 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\DOCS\28661 SHERYL NOMINATION OF JEROME H. POWELL, OF MARYLAND, TO BE CHAIRMAN, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM TUESDAY, NOVEMBER 28, 2017 U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC. The Committee met at 10:07 a.m., in room SD–216, Dirksen Sen- ate Office Building, Hon. Michael Crapo, Chairman of the Com- mittee, presiding. OPENING STATEMENT OF CHAIRMAN MIKE CRAPO Chairman CRAPO. And the Committee will come to order for the hearing. This morning, we will consider the nomination of the Honorable Jerome, or Jay, Powell to be Chairman of the Board of Governors of the Federal Reserve System. Governor Powell, welcome, and congratulations on your nomina- tion. I see friends and family behind you, and I welcome them here today as well. Governor Powell has had an accomplished public and private sec- tor career in financial services. He served as an Assistant Secretary and Under Secretary of the Treasury under President George H.W. Bush, where he was responsible for policy on financial institutions and the Treasury debt market, among other areas. He also has firsthand experience in investment banking and was a partner at The Carlyle Group before being appointed to serve on the Board of Governors in 2012. During his years of service in Government and in the private sec- tor, Governor Powell has proven he is qualified to lead the Fed. If confirmed, he will play an important role in striking the proper balance between the need for a safe and sound financial system and the need to promote a vibrant, growing economy. Over the past year, I have been encouraged to see Federal regu- lators carefully and thoroughly evaluating current laws and regula- tions. Governor Powell has shared specific areas in the past where the Fed believes some laws and regulations can be changed to alleviate burden, including the Volcker Rule, stress tests, and resolution plans, among others. (1) VerDate Nov 24 2008 16:22 Aug 23, 2018 Jkt 046629 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\DOCS\28661 SHERYL 2 Several weeks ago, 13 Members of this Committee, including my- self, introduced legislation to improve our Nation’s financial regu- latory framework and to promote economic growth. Introduced by 10 Democrats and 10 Republicans, the bill dem- onstrates very strong bipartisan support for tailoring and simpli- fying regulations. Part of the bill tailors regulations for smaller fi- nancial institutions and community banks, while at the same time improving access to mortgage credit and housing and ensuring strong consumer protections. The legislation also addresses the $50 billion SIFI threshold, for which Governor Powell, Chair Yellen, and many others have ex- pressed support. On the monetary policy front, I was encouraged by the Fed’s June announcement detailing the approach it will use to reduce its asset holdings in a gradual and predictable manner. As the Fed continues its path to normalizing monetary policy, which I hope it does continue, clear communications should be a central priority. I look forward to working with the Federal Reserve on some of these issues and welcome any additional thoughts or ideas that Governor Powell has on areas where the Fed and Congress can act to further reduce unnecessary burden and promote economic growth. Congratulations again on your nomination, Mr. Powell, and thank you and your family for your willingness to serve. Senator Brown. STATEMENT OF SENATOR SHERROD BROWN Senator BROWN. Thank you, Mr. Chairman. Welcome, Governor Powell. Nice to see you. I want to start off by thanking Janet Yellen, the Chair of the Federal Reserve. She has done an excellent job leading the Fed. During her tenure as Chair and as Vice Chair, the United States experienced one of the longest economic expansions in its history, an expansion we still enjoy. As I said at the time of her nomination, Chair Yellen was among the most qualified people to ever be nominated to be Chair of the Federal Reserve. You do not have to have a doctorate in economics to lead the Fed, but we were lucky that both she and Chairman Bernanke were students of the Fed’s mistakes in the 1930s. Her strong and steady stewardship of an independent central bank following the worst financial crisis since the Great Depression ensured that we did not repeat those mistakes. Chair Yellen was, as we know, the first woman ever to serve as Chair of the Board of Governors of the Federal Reserve. I am dis- appointed that President Trump has broken with the tradition of re-appointing the last President’s Federal Reserve Chair. This Ad- ministration has also broken with the tradition of trying to make the Federal Government more diverse. That said, those decisions, Governor Powell, were not yours. I congratulate you on your nomination to be Chair of the Federal Re- serve Board of Governors. VerDate Nov 24 2008 16:22 Aug 23, 2018 Jkt 046629 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 S:\DOCS\28661 SHERYL 3 We have had a good working relationship since you were first nominated to be a member of the Fed by President Obama in 2012. I hope that will continue. You have supported tough rules for the Nation’s largest banks as the Fed implemented Wall Street reform. For that, we are appre- ciative. As Chair of the Reserve Bank Affairs Committee, you worked to put more diverse individuals in the top spots at the regional Fed- eral Reserve banks, on their boards, and throughout the Fed’s workforce. Much more needs to be done. There has been progress. And you understand the importance of an independent central bank. You strongly opposed misguided congressional efforts to micromanage the Fed and make other changes that undermine the ability