Earlier this month, Sen. Sherrod Brown (D-OH) questioned Federal Reserves Chair Jerome Powell on corporation power and regulation during a Senate Banking Committee hearing.
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NewsTranscript
00:00Welcome, Chair Powell, nice to have you back.
00:02Good to have you first this time of year.
00:05Ohioans know, Americans know
00:07that our economy fundamentally is not a fair playing field.
00:12Instead, we have a David and Goliath economy
00:14where the largest corporations use their power
00:17to funnel all the gains in the economy to the top, aided
00:21and abetted by too many people in this room.
00:24Corporations squeeze every last penny
00:26from Americans' pocketbooks and workers' paychecks.
00:30They don't even try to hide it anymore.
00:32The biggest corporations are charging more for less.
00:36Americans are frustrated.
00:37No, actually, Americans are pissed off.
00:40They have fewer and fewer choices.
00:41Those choices cost more and more.
00:44Keeping prices down is part of the Fed's mandate,
00:48but as many of us have made clear, the Fed's main tool
00:51to combat inflation, raising interest rates,
00:53does nothing to address the biggest causes
00:57of rising prices right now, corporate greed.
01:01Keeping rates too high for too long threatens workers'
01:04paychecks, while keeping other costs high,
01:07particularly housing costs.
01:08Housing prices and rents continue to go up.
01:11It's no surprise that since the Fed began raising rates,
01:15the amount of income families need to qualify
01:17for a mortgage has nearly doubled.
01:20Home ownership has long been a bedrock of our middle class,
01:23but today, fewer and fewer middle class families can
01:26afford to buy a home.
01:28Higher interest rates are making our country's housing supply
01:31shortage worse, not better.
01:33We need more housing construction of all types.
01:37Higher rates lead to the opposite,
01:39and particularly make it harder
01:40for multifamily construction to work financially.
01:44Higher interest rates make borrowing more expensive
01:46for working families, whether it's for a mortgage
01:49or a car or anything else.
01:51Most people don't have the luxury of paying
01:53for everything in cash.
01:55And for the millions of Americans feeling their budgets
01:58stretch by higher prices, taking on credit card debt
02:01to pay for groceries and other essentials
02:04has become an option of last resort.
02:08But as more people struggle to pay down their debts,
02:10credit card interest rates are reaching all-time highs.
02:13Last month, Director Chopra testified
02:16in front of this committee and explicitly stated
02:19that credit card issuers are charging higher rates
02:22far beyond what they need to cover their costs.
02:25Corporate greed rearing its head again.
02:28Banks are making record profits
02:29at the expense of cash-strapped Americans.
02:32Every month that the Fed keeps rates high, Mr. Chair,
02:35it costs Americans money by making it more expensive
02:38to buy a house and to borrow money.
02:40Higher borrowing costs stifle future economic growth,
02:44leading to fewer homes being built,
02:45leading to businesses making fewer investments
02:49in the economy, and eventually, if the Fed doesn't stop,
02:51leading to workers losing their jobs.
02:54As they said, economic policy,
02:56I urge the Fed to weigh these trade-offs
02:58and remember whose jobs and futures are at stake.
03:02It's why I've worked with my colleagues
03:04to hold corporations accountable
03:06and will continue to do that.
03:07For instance, we fought to cap insulin prices
03:10for senior citizens.
03:11We'll continue to fight to extend this price cap,
03:15this price cap on life-saving drugs for all Americans.
03:19And why my colleagues and I on this committee are working,
03:22it's why we're working to lower housing costs
03:25for more Americans.
03:27The Fed also continues its work
03:29to keep the banking system stable
03:30and ensure consumers' money is safe.
03:33Last year, the Fed and other bank regulators
03:35issued a proposal to update bank capital requirements,
03:39strong capital standards,
03:40and you've heard in this committee
03:42overwhelming support for strong capital standards.
03:45They're critical for the economy.
03:47It's our way of making sure that if Wall Street bets go poorly,
03:53which they often do,
03:55investors, executives, and shareholders should pay for it,
03:58not taxpayers.
03:59The biggest banks have spent obscene amounts of money
04:03attacking this Fed proposal.
04:06But you, the Fed, don't work for big banks.
04:09You work for the American people.
04:10Your concern should be developing capital rules
04:13that protect Americans' money,
04:15not protect bank CEOs' stock portfolios.
04:19The Fed needs to look past these shameless lobbying efforts
04:22and finalize a rule in the best interest of taxpayers.
04:26Another dangerous piece of the Wall Street business model
04:29that makes our banking system less safe
04:32is incentive-based compensation.
04:35This compensation model rewards risky behavior
04:39that enriches Wall Street executives in the short term,
04:43but makes banks more likely to fail.
04:46We saw the results of that model in 2008.
04:49We saw it again last year
04:50with the failure of Silicon Valley Bank and Signature.
04:53Other regulators have moved forward
04:55with a proposal to rein in these reckless incentives,
04:58but the rule, Mr. Chair, can't move forward without your
05:02and the Fed's moving on it.
05:04This rule is long overdue.
05:06The Fed must join this statutorily required effort
05:10as soon as possible.
05:11Fed also has the important job of reviewing mergers
05:14and acquisitions between and among banks.
05:17Over the last several decades,
05:18we've seen the largest banks grow into massive,
05:21literally trillion-dollar companies,
05:23while thousands of small banks in rural communities
05:26in Northwest and Southeast Ohio,
05:28in small towns in those communities, in those areas,
05:31and all across America have disappeared.
05:33Consumers have lost trusted local banks,
05:36small businesses have lost long-time,
05:39reliable banking partners.
05:41Regulators like the Fed have the crucial job
05:43of guarding against mergers that reduce
05:45or eliminate competition
05:47and lead to bank closures or layoffs.
05:50I recently sent comment letters to the OCC and the FDIC.
05:53On their current efforts, I expect the Fed
05:56to take the proper steps to ensure
05:57that its merger review process is robust
06:00and that it protects consumers and communities.
06:03Finally, Mr. Chair, you must ensure the Fed
06:06has high ethical standards.
06:07Fed officials should never again be able to profit
06:10from their positions by using confidential plans
06:13about Fed monetary policy and emergency programs
06:16to pad their investment portfolios.
06:19The board's latest update to its trading rules
06:22is simply not good enough.
06:24It still fails to establish the clear penalties needed
06:27for Federal Reserve officials who make investments
06:30in violation of the public trust.
06:33A rule with no consequences
06:35is really not much of a rule at all.
06:37The American people need to be able to trust
06:40that the Federal Reserve works for them
06:42in a time of deep cynicism that people have
06:45about the federal government overall.
06:47The American people need to know
06:48that officials aren't abusing their positions
06:51for personal gain.
06:52As chair, you have an important role to play
06:55to make sure our economy works for everyone,
06:57not just for Wall Street.
06:58The Fed's regional banks must do their part
07:01to hear from people and other stakeholders
07:03in their 12 districts to understand their needs.
07:06I look forward to hearing today
07:07how the Fed will balance its dual mandate,
07:10how it will protect Americans' money,
07:11how it will foster an economy
07:13that upholds the dignity of work.