Fed nominee Powell backs ‘tailoring’ regulations to ease up on small banks

Andrew Harrer | Bloomberg | Getty Images

Jerome Powell, chairman of the U.S. Federal Reserve nominee for U.S. President Donald Trump, waits to begin a Senate Banking Committee confirmation hearing in Washington, D.C., U.S., on Tuesday, Nov. 28, 2017.

During his time as a Fed governor, Powell has consistently voted with the majority. The U.S. central bank is in the process of gradually removing the accommodative monetary policy it put in place during the financial crisis.

The hearing featured some discussion of monetary policy but also focused heavily on regulations, an area where Powell has said he believes there is room for change. Democrats grilled Powell on the safety of Wall Street banks that helped cause the financial crisis and what his plans are for keeping them from posing too-big-to-fail threats again.

“Of all the rules that the Fed has issued during your time there … you don’t think a single one should be made tougher?” Sen. Elizabeth Warren [D-Massachusetts] said.

“Honestly, Senator, I think they’ve been tough enough,” Powell said.

On other issues, Powell said the Fed will continue reducing its $4.5 trillion balance sheet in a process that will take three or four years and leave the portfolio of mostly Treasurys and mortgage-backed securities at $2.5 trillion to $3 trillion.

The balance sheet expansion came as the Fed sought to stem the damage from the financial crisis, the worst of its kind since the Great Depression. While the Fed in 2016 ended the bond-buying program that ballooned the balance sheet, Powell pledged aggressive action should the economy face a significant downturn during his term.

Also on monetary policy, Powell said the case is building for a December rate hike — already fully priced in by the market — but would not fully commit.

He also said he would strive to keep the Fed free of political pressure.

Sen. Sherrod Brown [D-Ohio] compared Trump’s protracted process for selecting the nominee to “an episode of ‘The Apprentice,'” a reference to the reality show the president once hosted on CNBC parent NBC.

“I think it’s good for all supervisory regulatory agencies to operate doing the best that they can with their mandates and not to look at the politics of things,” Powell said.

Brown repeatedly tried to push Powell into commenting on the tax reform bill that Republicans are pushing through Congress, but the nominee refused each time, saying it is not the Fed’s job to gauge the measure’s specific economic impact.