Jerome Powell, Trump’s Fed nominee, says he favors loosening some bank regulations

[Zippyjuan]

http://www.latimes.com/business/la-f...128-story.html

Jerome H. Powell, President Trump's pick to be chairman of the Federal Reserve, told senators at his confirmation hearing Tuesday that he believes some bank regulations can be rolled back — something the Trump administration and Wall Street favor. But he emphasized that he will protect the central bank's political independence, calling it vital for the Fed's role.

Powell also strongly hinted in his appearance before the Senate Banking Committee that the Fed would raise interest rates again in December.

Powell said he believed that the Dodd-Frank Act — passed in the wake of the 2008 financial crisis — had succeeded in making the financial system stronger, including ensuring that no major institution now is too big to fail.

But in some areas, such as regulation of smaller banks, the law imposed unnecessary burdens that should be eased, he said.

Powell's comments pleased many GOP senators, who have complained for years that Dodd-Frank was hurting the economic recovery by making it harder to get bank loans. Democratic senators, however, pressed Powell to say whether he would cut key consumer protections in the 2010 law. On the campaign trail, Trump often attacked those protections, calling them a disaster.

Powell stressed that he was “strongly committed” to the political independence of the Federal Reserve. He said he has not had any conversation with anyone in the administration that concerned him.

During two hours of testimony, Powell sought to convey a sense of stability and praised his predecessors Janet L. Yellen and Ben S. Bernanke. He said the Fed would continue on a gradual path of raising interest rates and shrinking its massive $4.5-trillion balance sheet, which grew five-fold in the wake of the Great Recession as the Fed bought government bonds to push down long-term interest rates.

Powell said he expected the balance sheet to shrink to about $2.5 trillion to $3 trillion over the next three to four years under a program set in motion by Yellen.

On interest rates, Powell said: “I think the case for raising interest rates at our next meeting is coming together.”

When pressed for specifics on a December rate hike, Powell deferred, citing Fed policy not to talk about possible outcomes before officials gathered and heard all views.

[Zippyjuan]

https://www.bloomberg.com/news/artic...ills-vacancies

There are currently three vacancies on the Board. Yellen says she will retire when her term as Chair is up (she can remain on the board if she wants). The seat Goodfriend will fill has been open since 2014. Powell- who will replace Yellen as Chair- is already on the Federal Reserve Board.

Marvin Goodfriend Is Nominated to Be a Fed Governor

Marvin Goodfriend, a widely respected monetary economist and sometime critic of the Federal Reserve under Chair Janet Yellen, was nominated by President Donald Trump to be a governor at the U.S. central bank, the White House announced on Wednesday.

A professor at Carnegie Mellon University and a former director of research at the Richmond Fed, Goodfriend has served on an independent panel of economists known as the Shadow Open Market Committee aimed at providing alternative views on monetary policy.

Goodfriend will be Trump’s third nomination to the Fed’s Board of Governors, as the president moves to fill several vacancies on the seven-seat panel. Earlier this month, he picked Governor Jerome Powell to replace Yellen as chair. Randal Quarles was sworn into office in October as the Fed’s vice chairman of supervision.

Given that Powell doesn’t have a Ph.D. in economics, Goodfriend’s credentials will add some academic heft to a group of policy makers that will lose Yellen’s expertise when her term expires Feb. 3.

[RJB]

As an ardent apologist for the Fed, are you for all this, Zippy?

[Swordsmyth]

As an ardent apologist for the Fed, are you for all this, Zippy?

....

[timosman]

https://in.reuters.com/article/usa-c...-idINKBN1FC2VO

JANUARY 23, 2018

WASHINGTON (Reuters) - The U.S. Senate on Tuesday confirmed Federal Reserve Governor Jerome Powell as the next head of the central bank, succeeding Janet Yellen, a move likely to provide continuity in U.S. monetary policy with the economy growing now for nine years straight.


^{Jerome Powell testifies before the Senate Banking, Housing and Urban Affairs Committee on his nomination to become chairman of the U.S. Federal Reserve in Washington, U.S., November 28, 2017. REUTERS}

The Republican-controlled Senate voted 84-13 to approve the 64-year-old lawyer to a four-year term as Fed chair beginning early next month.

It was the most lopsided of recent Fed chair votes, signalling both Powell’s bipartisan appeal and the ebbing of some of the tensions raised by the central bank’s aggressive response to the 2007-2009 financial crisis and recession.

Controversy over those Fed policies led to a narrower 56-26 vote margin when Yellen became chair in 2013, and a 70-30 vote when former chair Ben Bernanke was named to a second term.

Powell will be “central to ensuring a safe and sound financial system while supporting a vibrant, growing economy,” banking committee chairman and Idaho Republican Mike Crapo said on the Senate floor. “He will play a key role in rightsizing federal regulations and alleviating unnecessary burdens.”

Powell takes over as chair with U.S. monetary policy on a steady course towards gradually higher interest rates and a smaller balance sheet.

However, a debate is brewing within the central bank about whether it needs to rethink its approach to inflation and whether the recent massive tax overhaul legislation will affect the U.S. economy.

Powell must also decide how far to accommodate a push by the Trump administration to roll back some post-crisis financial regulations.

The potential for financial deregulation advocated by the Trump administration prompted the most pointed opposition to Powell, a former executive at the Carlyle Group private equity firm whose credentials as Fed chair are rooted in his understanding of markets. Powell is not an economist by training.

“We need a Fed chair who can stand up to Wall Street,” said Senator Elizabeth Warren, a Democrat. “That person is not Governor Powell.”

The 12 votes against Powell included both Democrats and some conservative Republicans.

Powell, 64, was nominated by Trump in November as a largely uncontroversial pick whose monetary policy views are closely aligned with Yellen‘s.

He has served on the Fed’s board since 2012 and over time became supportive of the consensus forged by Yellen for gradual interest rate increases and a slow decrease in the asset holdings the Fed accumulated while fighting the crisis, without abandoning a willingness to take extraordinary steps again if a crisis recurs.

During a Senate hearing on his nomination in November, Powell said he would “respond decisively,” if necessary, to future problems.

Powell has never dissented on a monetary policy decision during his nearly six years at the Fed, though recently released transcripts of central bank deliberations during 2012 showed his discomfort at the time with the Fed’s massive bond-buying programme.

He later came to see Yellen’s go slow approach as important to helping the jobs market recover and to share her concerns that low inflation justified a cautious approach to raising interest rates.

While interest rates have been rising, they remain low in the context of a 4.1 percent unemployment rate, and on an inflation-adjusted basis still hover around zero.

The Fed raised interest rates three times last year and policymakers indicated last month they would likely raise them three times more this year as part of their gradual campaign to put policy on a more normal footing.

Initially tapped for the Fed board by then-President Barack Obama as a moderate Republican, Powell emerged over the fall as Trump’s choice to lead the Fed from a slate of possible nominees that included both Yellen and some who might have pursued a sharp policy shift.

The Senate confirmation vote was originally 85-12, but Democratic Senator Dianne Feinstein changed her vote to a “no.” Aides to Feinstein were not immediately available to comment on the senator’s decision.