Secretary and undersecretary of the treasury under president george h. W. Bush. Where he was responsible for policy on Financial Institutions and the treasury debt market among other areas. He also has firsthand experience in Investment Banking and was a partner at the Carlyle Group before being appointed to serve on the board of governors in 2000 twelve. During his years of service in government and in the private sector governor powell has proven hes qualified to lead the fed. If confirmed hell play an Important Role in striking the proper balance between a safe and sound Financial System and the need to promote a vibrant, growing economy. Over the past year ive been encouraged to see the federal regulators carefully evaluating current laws and regulations. Governor powell has shared specific areas in the past. Where the fed believes some laws and regulations can be changed to alleviate burden, including the culver rule, stress tests and resolution plans among others. Several weeks ago 13 members of this committee including myself introduced legislation to improve our nations Regulatory Framework and promote Economic Growth. Introduced by ten democrats and ten republicans, the bill demonstrates very strong bipartisan support for tailoring and simplifying regulations. Part of the bill tailors regulations for smaller finance institutions and Community Banks while at the same time improving access to mortgage credit and housing and insuring strong Consumer Protections. The legislation also addresses the 50 billion threshold for which governor powell, chair yellen, and many others have expressed support. On the Monetary Policy front, i was encouraged by the feds june announcement detailing the approach it will use to reduce its assett holdings in a gradual and predictable manner. As the fed continues its path to normalizing Monetary Policy, which i hope it does continue, Clear Communications should be a central priority. I look forward to working with the Federal Reserve on some of these issues and welcome any additional thoughts or ideas that governor powell has on areas where the fed and congress can act to further reduce unnecessary burden and promote Economic Growth. Congratulations again on your nomination, mr. Powell. And thank you and your family for your willingness to serve. Senator brown. Thank you, mr. Chairman. Welcome governor powell. Nice to see you. I want to start off by thanking janet yellen, the chair of the Federal Reserve. She has done an excellent job leading the fed during her tenure as chair and vice chair of the u. S. , experienced one of the longest economic expansions in its history, an expansion we still enjoy. As i i said at the time of her nomination, chair yellen was one of the most qualified people to ever be nominated for chair of the Federal Reserve. You dont have to have a dockerate in economics to lead the fed, but we were lucky that both she and chairman bernanke were students of the feds mistakes in the 1930s. Her strong and steady stewardship of an independent Financial Bank following the worst financial crisis since the Great Depression insured we did not repeat those mistakes. Chair yellen was the first woman ever to serve as chair of the board of governors of the Federal Reserve. Im disappointed that President Trump has broken with the tradition of reappointing the last president s Federal Reserve chair. This administration has also broken with the tradition of trying to make the federal government more diverse. That said,thosis decisions, governor powepowell, were not y. We have had a good working relationship since you were first nominated to be a member of the fed by president obama in 2012. I hope that will continue. You supported tough rules for the nations largest banks as the fed implemented wall street reform. For that were appreciative. As chairman of the reserve bank Affairs Committee you worked to put more diverse individuals in the top spots of the banks on their boards and throughout the feds workforce, much more needs to be done. There has been some progress. And you understand the importance of an independent central bank. You strongly opposed misguided congressional efforts to micromanage the fed and manage make other changes that undermine the ability of the fed to conduct its Monetary Policy. I hope youll stick to those positions on these important matters and on others. But there are good reasons to be concerned. The Current Administration does not appear to value independence. In the judiciary, the fbi or in the Federal Reserve. Its an unprecedented way the president has made comments about the current fed chair as well as Interest Rates. The search for the fed chair too often seemed like an episode of the apprentice. Im concerned about the direction of Financial Regulation under the Current Administration. Once again paying executives big bonuses, the administration makes unfounded claims in order to justify the rollback, the reforms put in place after the crisis. The new vice chair for supervision at the fed does not seem to be inclined to support the current Regulatory Framework put in place by the fed since the crisis. He has troubling views on stress tests and more generally the role of watchdogs in the Financial System. Industry has an outsized influence. Industry, especially wall street, has an outside influence on this administration. The individuals have put in charge that the individuals theyve put in charge as financial watchdogs are far too often former bankers or bankers lawyers. Some federal Bank Regulators seem willing to abet rather than combat regulatory arbitrage. The june report put out by secretary mnuchin was a big bank wish list. In formulating the report, treasury met with 17 industry representatives for every Consumer Group representing ordinary americans. 17 industry representatives for every Consumer Group representing ordinary americans. Mr. Powell, even your schedule indicates you were meeting far more frequently with industry than with Consumer Groups. You have met with wells fargo ceo more times than all the Consumer Groups on your schedule combined. This administration has already forgotten the americans who lost their jobs and homes and Retirement Savings less than a decade ago. I take this personally. In many ways. As members of this committee have heard me say my wife and i live in cleveland, ohio. That zip code in the first half of 2007 experienced more foreclosures than any zip code in the United States of america. I still see the blight 200 yards from my house that happened in large part because of wall street overreach. The loss to so Many Americans of jobs, of homes, of Retirement Savings was particularly harmful to africanamericans and latino communities which have not recovered from the financial crisis as quickly as white americans. Financial industry is doing better than ever. There seems to be a collective amnesia in this room, in this committee, in this congress, a collective amnesia about what happened ten years ago, but Americans Still struggle because of low wages, because of underemployment or unemployment and lack of opportunities. Loosening the rules for some of the countrys largest banks is not the way to solve these problems. Your record has been strong on a number of these issues. We urge you to continue that record. I look forward to hearing your views on the direction you will Monetary Policy and Bank Regulation and central bank decisions. I hope you will make your decisions based on facts independent from the political pressure from the president of the United States and from the treasury secretary. Thank you. Thank you, senator brown. At this point we will administer the oath. Governor powell, will you please rise and raise your right hand . Do you swear or affirm that the testimony you are about to give is the truth, the whole truth and nothing but the truth so help you god . And do you agree to appear and testify before any duly constituted committee of the senate . Thank you, you may be seated. Your written statement will be made part of the record in its entirety. And i invite you to introduce your family in advance of making your statement. Governor powell, you may proceed. Thank you senator crapo and Ranking Member brown. And i will begin as you suggest by introducing my wife, alyssa, without whose loving support and wise counsel someone else would have been sitting here. Ill also introduce two of my five siblings here today, my sister libby and my sister monica. The other three siblings are here in spirit and all will later claim to have watched this hearing live. Which im sure will be true. Well deem it true. Some stories are too good to fact check. So thank you again, chairman and Ranking Member brown and other members of the committee for expeditiously scheduling this hearing and providing me the opportunity to appear before you today. Id also like to express my gratitude to President Trump for the confidence hes shown by nominating me to serve as the chairman of governors in the Federal Reserve system. Federal reserve has had a productive relationship with this committee over the years and if you and your colleagues see fit to confirm me, i look forward to working closely with you in the years ahead. As you know, i have served as a member of the board of governors and the fomc for more than five years, contributing to our work in a variety of capacities, including most recently as chairman of the Boards Committee on supervision and regulation. My views on a wide range of Monetary Policy and regulatory issues are on the Public Record in speeches and testimonies during my service at the fed. Congress established the Federal Reserve more than a century ago to provide a safer and more flexible monetary and Financial System. In almost exactly 40 years ago you assigned us the dual Monetary Policy goals of maximum employment. Meaning that people who want work either have a job or likely to find one fairly quickly. And price stability, meaning inflation is low and stable enough it need not figure into household and businesses economic decisions. Ive had the great privilege to serving under chairman bernanke and chair yellen. Like them, i will do everything in my power to achieve those goals while preserving the Federal Reserves independent and nonpartisan status that is so vital to their pursuit. In our democracy, transparency and accountability must accompany that trance pairense. Were transparent andab accountable in many ways. Among them we affirm our objective annually and affirm our projections quarterly. Since 2011 the chairman has conducted regular News Conference to explain the fomcs thinking. Additionally were accountable to the peoples representatives through twice a year reports and testimony as well as through oversight and audited financial statements. I am strongly committed to that framework of transparency and accountable to continue to look for ways to enhance it. In addition in our federated system, members of the washington base board of governors participate in foc meetings with the president s of the 12 Federal Reserve banks, which are deeply rooted in their local communities. I am a strong supporter of this institutional structure, which helps ensure perspectives on Monetary Policy and also helps sustain public support for the Federal Reserve as an institution. If confirmed, i would strive along with my colleagues to support the economys continued progress toward full recovery. Our aim is to sustain a strong jobs market with inflation moving gradually up toward our target. We expect Interest Rates to rise somewhat further and the size of our Balance Sheet to shrink. However, while we endeavor to make the path of policy as predictable as possible, the future cannot be known with certainty. So we must retain the flexibility to adjust our policies in response to economic developments. Above all even as we draw on the lessons of the past, we must be prepared to respond decisively and with appropriate force to new and unexpected threats to our nations Financial Stability and economic prosperity. The original motivation for the founding of the Federal Reserve. As a regulator and supervisor of Banking Institutions in collaboration with other federal and state agencies we must help ensure that our Financial System remains both stable and efficient. Our system is without doubt far stronger and resilient than it was a decade ago with higher levels of capital and liquid assets, with greater awareness of the risks banks run, and greater ability on the part of the banks to manage those risks. Even as we have worked to implement improvements we have sought to tailor regulation and superhave vision to the size and risk profile of banks, particularly community institutions. We will continue to consider appropriate ways to ease regulatory burdens while preserving the core reforms of strong levels of capital and liquidity, stress testing and resolution planning so banks can provide the credit to families and businesses necessary to sustain a prosperous economy. In doing so, we must be clear and transparent about the principles that are driving our decisions and about the expectations we have for the institutions that we regulate. To conclude, inside the Federal Reserve, we understand our decisions in all these areas matter for our families and communities. I am committed to making decisions objectively and based on the best available evidence. In doing so i would be guided solely by our mandate from congress and by the long running interests of the american public. Thank you and ill be happy to respond to your questions. Thank you, governor powell. The fed recently began the process of shrinking its Balance Sheet which currently sits above 4 trillion. In a speech earlier this year, you cited long run estimates of the appropriate size of the Balance Sheet at 2. 4 trillion to 2. 9 trillion by 2022. Would you clarify what you do believe is an appropriate stable size for the feds Balance Sheet and what factors you expect to focus on in determining the pace and ultimate scope of the Balance Sheet reduction . I will, senator. So the feds Balance Sheet is about 4. 5 trillion now, and we know it will be much smaller than that when it reaches its new sort of equilibrium size. It will be larger, however, than it was before the crisis. And weve also said that it will consist primarily mostly of treasury skurs at that time, and it will be no larger than it needs to be for us to conduct Monetary Policy. We will be shrinking the Balance Sheet to allow securities to roll off passively, and that process should take three or four years before we reach our new sort of stable level of the Balance Sheet. And the factors that will determine that will really be in the end the publics demand for our liabilities, particularly cash and reserves. Those will be principle factors that will decide what the final size of the Balance Sheet will be. We dont actually know what that demand will be, but my own thinking, it moves us to a Balance Sheet in the range as i mentioned, 2. 5 trillion to 3 trillion. Again, theres no certainty in that. All right, thank you very much. And the last time you appeared before the committee you stated, it is very important that the intensity of regulation be tailored appropriately for the risks that the institutions present. Theres bipartisan support to tailor existing regulations and laws to insure that they are proportional and appropriate. Are there any specific areas that you think could benefit most from tailoring . Yes. First let me say that tailoring of regulati