During Wednesday’s Senate Banking Committee, Sen. Tim Scott (R-SC) questioned Federal Reserve Chair Jerome Powell about Federal Reserve building renovations.
00:02Chair, banks are facing a record number of regulations.
00:06Small community banks are especially burdened by compliance costs.
00:10Bank capital requirements should also be appropriately calibrated so banks are not forced to park capital on the sidelines, limiting access to capital for Americans and small businesses.
00:22I was pleased to see that the Fed is looking to reform the supplementary leverage ratio.
00:26The SLR is supposed to act as a backstop to risk-based capital requirements, but too often the SLR acts as a binding requirement for U.S. banks.
00:36Would you agree that adjusting the SLR would free up capital for banks to invest more in treasury markets and other low-risk assets that would be beneficial to families and businesses across the country?
00:49I would agree, yes.
00:49Do you agree with Vice Chair Supervision Bowman, recently acknowledged that regulators tend to review individual elements of the capital framework in isolation without considering whether proposed changes are sensible in the aggregate and contribute to a capital framework in which all components work together effectively?
01:11Do you agree with her assessment and how are you looking at the capital framework holistically to ensure that the Fed is not stifling economic growth?
01:19Well, we're looking at basically the two big pieces now are Basel III and the leverage ratio.
01:28And I do, I'm pretty confident we'll move on both of those in the relatively near future.
01:33And they fit together, as we discussed.
01:36The leverage ratio was always supposed to be a backstop rather than the binding.
01:41We want risk-based capital to be the binding capital requirement.
01:44And so, that's how those two pieces work together.
01:47And as you look at the, I hope, a reintroduction of Basel III, if you're thinking about the bones of Basel III, obviously, over the last several years, we talked about this on Monday, we've heard the comment that the capital requirement was about right, although that capital requirement has been going up every year.
02:10And so, as you look at Basel III coming back and hopefully being reintroduced and not just recalibrated, what do you forecast?
02:18Well, we very much look forward to working with our colleagues at the OCC and the FDIC on Basel III endgame.
02:25And I would agree we're going to take a fresh start at that.
02:31You know, the former, the last proposal was actually well above Basel minimums.
02:37That's the thing.
02:37It was the ways in which it was gold-plated, as we say, rather than the Basel requirements, which were very significantly exceeded.
02:45Just giving us an opportunity to go back to the spending at the Fed for the construction.
02:55And you said that the items that were listed are not happening.
02:59I will say that the National Capital Planning Commission website, ncpc.gov, anyone can take a look at it for themselves.
03:06I'm not just looking or listening to the New York Post, not just the Wall Street Journal, but page 129 of the final plans reflected rooftop garden terraces.
03:19The page 127 and 129 were where we found the ornate water features and final plans.
03:26The new elevators that dropped board members off at the VIP dining suite was page 37 of the final plans.
03:32The white marble was pages 40, 41, 65 of the final plans.
03:38I would welcome your staff coming in to walk my staff through what is happening there, as opposed to what we not have only read in the New York Post, not only in the Wall Street Journal, but also at the National Capital Planning Commission's website.
03:54So we would welcome that opportunity to have a.
03:56Can I just quickly say some of those are just flatly misleading.
04:00The idea of elevators, you know, it's the same elevator.
04:02It's been there since the building was built.
04:04So that's a mischaracterization.
04:06And some of those are no longer in the plans.
04:08You know, that's that's earlier.
04:10We've the plans have continued to evolve.
04:12One of the questions I asked my staff before having the conversation with you in preparation and assuming that your response would be to refute some of the things that were happening was to ask the question.
04:21Well, since the articles came out in April, have the plans changed since April as a result of the media attention to it?
04:28Or was that just never in the plan?
04:31I would just say that having an understanding, a clear understanding of what's going to be and when it changed would be helpful for us.
04:39I will note that having confidence in what we hear is incredibly important.
04:46And I would give you the opportunity to bring your team in and or send your team over so that we can have that conversation.
04:53That would be helpful.
04:54Look forward to doing that.
04:55And if you'll allow me to say one more sentence, none of those things are really were the cost drivers.
05:00You know, the real thing is the is what were the cost drivers that caused the spending to increase?
05:04And we have those two.
05:05But those are not the things that did that.
05:07Well, I don't want to look forward to the conversation.
05:09I don't want to eat into Bernie Moreno's time because he's kind of cranky when I do.
05:12I would just suggest that the when I hear that things are completely and wholly inaccurate and then I hear that they weren't quite the way they were.
05:24Those are two very different framings of the conversation.
05:27And I only read page 129, 127 through 129, page 37, page 40, 41, page 65, page 129.
05:34Because I could be wrong without any question, but I don't want to be misled.
