Hearing of the House Financial Services Committee - Opening Statement of Rep. Waters, "Humphrey-Hawkins Hearing on Monetary Policy and the State of the Economy With Federal Reserve Chairman Jerome Powell"

Hearing

Today, this Committee convenes for a hearing on monetary policy and the state of the economy.

Chairman Powell, welcome back.

Today I'd like to start by addressing the current elephant in the room when it comes to monetary policy and the Fed. This President has made it very clear that he has no understanding or respect for the independence of the Federal Reserve. He has said the Fed "doesn't have a clue," and called it the "most difficult problem" for the U.S. According to media reports, he has discussed firing Chairman Powell, just as he has fired others he does not agree with.

Let's be clear: it is essential that the Federal Reserve maintains its independence from the executive branch. I urge Chairman Powell and the other Federal Reserve Board governors not to submit to the high-pressure tactics of this President, who continues to push reckless and harmful economic and social policies.

Another issue I hope Chairman Powell will address today is Facebook's recently announced plan, along with 27 other companies, to develop a cryptocurrency and digital wallet.

I and other Democrats on the Committee have raised concerns that Facebook's planned products may ultimately be intended to establish a parallel banking and monetary policy system to rival the dollar. In a letter last week, we asked Facebook to agree to a moratorium on any movement forward on its plans to create a cryptocurrency or digital wallet.

I believe that what Facebook is planning raises serious privacy, trading, national security, and monetary policy concerns for consumers, investors, the U.S. economy and the global economy. But Facebook's foray into this field should signal to all of us that our current system of regulation lacks adequate coordination, safeguards and attention to cryptocurrency. Chairman Powell, the Fed should be a leader on this issue and should not take a wait and see approach when it comes to examining a financial system involving 2.4 billion people. I look forward to hearing your views on Facebook's plans to create a cryptocurrency today.

Another issue that I would like to discuss is bank deregulation. I remain concerned about the Federal Reserve's actions to weaken safeguards that Congress and Chairman Powell's predecessors put in place following the financial crisis. Specifically, it appears that the Fed may be following the Trump Administration's deregulatory plan to weaken the capital and liquidity buffers of some of the largest banks.

As I have said before, I believe this to be ill-advised, particularly when many economists, including economists at the Federal Reserve, believe that current bank capital levels are on the low end of what would be necessary to withstand another financial crisis.

I look forward to your testimony, and to discussing these matters with you today.

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