Catherine Cortez-Masto Asks Federal Reserve Chair Jerome Powell About Challenges For Community Banks

During Wednesday’s Senate Banking Committee hearing, Sen. Catherine Cortez-Masto (D-NV) questioned Fed Chair Jerome Powell about community banks.

Transcript

00:00Thank you, Mr. Chairman. Chairman Powell, it's good to see you. Thank you for being here.

00:04I want to follow up on a question from Senator Warner about data deterioration. I'm concerned

00:10about that as well, that the Trump administration, I'm watching as they've ended dozens of research

00:16studies that business and government leaders rely on. So my question to you, are there specific

00:21research projects that the Bureau of Labor Statistics provided that they no longer do

00:27provide that the Federal Reserve researchers cannot replicate on their own or through other

00:35sources? I'm not aware of any. Okay. That doesn't mean they don't exist, but mainly it's the regular

00:41data they supply. And as you know, they've cut back on the size of that survey. Right. So I would

00:47hope as we move forward, and not just in today's hearing, but if there is some other data or you're

00:53relying on data that you're not getting, or there's now another source for that data, I would

00:59please share that with the committee. Thank you. Yes. During the Biden administration, the Federal

01:06Housing Finance Agency and the Federal Reserve worked together to improve access to the discount

01:11window for banks. What is the status of that collaboration with the FHFA? I can't speak to the

01:20FHFA. I can speak to the fact that we're really looking carefully at, you know, modernizing the

01:26discount window and making investments. But we're not there yet? No, it's going to be, this is a project

01:31that will take some time. You know, it's the discount window needs to be updated and refreshed from a

01:36technological standpoint so that people can access it readily and that kind of thing. It's still a little

01:42bit behind the age in that respect. Do you have a time frame that you're looking at to? I'll get back

01:50to you. You know, it's something we've been working on. Or is there a funding impediment that is also

01:54addressing this? No. No. Okay. If you could. We're moving ahead with it. I'll come back. Okay. Thank you.

02:01In March, the Federal Reserve, together with the FDIC and OCC, announced that you all intend to

02:06repeal the 2023 Community Reinvestment Act proposed rule. I prefer the proposed rule as it would better

02:17address the needs of states like Nevada that don't have headquarters of large banks. How will you ensure

02:24that the new CRA guidance improves access to financial services, to loans, to investments,

02:30and underserved rural and tribal communities? So I think in March, we announced that we're going to be

02:37we're putting out for comment, really, a proposal to withdraw the proposed guidance, which has been the

02:44subject of litigation. And in the meantime, we're going back to the old CRA rules. And I think that's where we will

02:52be. And I don't have anything more in terms of what we might change with respect to those old rules. But that's

02:59where the default is the are the old rules. Yes. That's those may be CRA as it existed before this

03:04proposal, which actually never took effect. Right. Right. Okay. That's helpful. Community banks

03:09benefited from high deposits during the pandemic. Since then, the net interest margin for community

03:15banks has fallen. What what specific challenges do you see for community banks, if any?

03:23Community banks, you know, are very important. We want a banking system that

03:29has all different sizes and shapes of banks. And community banks are absolutely critical. They

03:33know what's going on in communities and in a way that the, you know, that the big banks can't

03:38possibly. So they're a critical part of our infrastructure. And I think they've been under

03:42pressure because, frankly, regulatory costs have gone fixed costs of regulation have gone up. We try not

03:48to contribute to that. The number of banks has been going down pretty steadily. And that's that's not

03:53something we're trying to foster. But it's a sort of long run trend of really the last 30 years. So we try

03:59not to add to to what is a secular trend. Because we think they're important. Thank you. Thank you for

04:06being here. Appreciate it.