Cspan is your unfiltered view of government funded by these Television Companies and more including comcast. You think this is just a Community Center . It is more than that. Comcast is creating wifi enabled left for students for low inme families to get what they need to be ready for anything. Comcast support cspan is a Public Service along with these other Television Providers giving you a front row seat to democracy. Financial regulators testify on oversight of the Banking System including crypto currency market. This hearing occurred after the recent collapse of the Crypto Currency Exchange ftx. The topics discussed include the impact of the economy on Banking Systems, lending in native, Rural Communities and banking reform. Senate committee will come to order. Welcome to the witnesses and committee members, most americans want the same thing, a safe, affordable place to call home, a strong, stable government they can trust, Democratic Institutions are only as strong as the people who empower them come our economy works best when we have a free and fair democracy in which everyone flies with dignity. For too long, each working family struggled to pay for groceries, to keep a roof over their heads, the cost of living and raising kids continues to rise, democrats are listening and delivered for the American People, for lower Prescription Drug costs. And during the height of the pandemic, made investments in the nations infrastructure. For the first time in generations we focused on communities governments turned their back on especially state government. Now we are tackling inflation by taking on Corporate Power and consolidation and reducing dependence on foreign oil while creating good paying manufacturing jobs at home. These jobs making semiconductors, electric vehicles, solar panels and jobs in the future, these jobs go to americans because we passed the chips act, the inflation reduction act, bipartisan infrastructure law with provisions we worked on. We see results. Our economy recovered, economic recovery has been strong. The past two years Many Americans built up more in savings, we ve seen robust job growth. The first time in decades weve seen wage gains. Last week we began to see signs of inflation starting to cool, banks and Credit Unions doing well thanks to protections we put in place in doddfrank. And regulators provided during the pandemic. Too many big corporations have taken advantage of market, jacking up consumer prices, higher profits, senator reid pointed out the biggest banks that benefit from higher Interest Rates are not passing them on to their customers penalizing americans trying to build up savings. Workers in Small Businesses struggling under the weight of inflation, exorbitant bank fees and crypto, shouldnt worry their savings will disappear overnight because mismanaged bank or credit union failed, none of us want a scenario where risky bets on wall street crash the economy again. Thats why we have financial watchdogs like the four of you empowered to look out for mainstreet, helping more americans go on to the time they need it most. Banking and credit union regulators are agencies that protect consumers, make sure banks and Credit Unions are safe and strong, independence matters, it makes for more stable Financial System, essential for the entire economy. Our Witnesses Today all have decades of banking and credit union regulatory experience, they spent career is serving the public and protecting consumers making sure banking and Credit Union System works for mainstreet, not just wall street. That is what they do today which modernizing and strengthening civil rights laws that will spur new investment in neighborhoods and communities that were left on their own, thank you for that, theyve taken a closer look at overdraft funds and other gotcha fees in banks and Credit Unions to make sure customers are treated fairly so these programs dont raise safety concerns, taking a fresh look at the bank merger approval process so we dont continue this rubberstamp consolidation which has consequences for local communities, big banks merge, leaving rural towns in urban communities without a bank. Revisiting the Financial Systems safeguards that protect us from risks in foreign banks making sure Bank Failures dont leave them holding the bag, its important to remember super Regional Banks today, hundreds of millions of dollars larger than the largest banks that failed during the financial crisis. Financial regulators know that we need Strong Capital requirement so banks and Credit Unions continue to lend and invest, they are overseeing formation of new institutions and serve communities, they charted a new faithbased credit union, if the ic recently approved the First Mutual Bank in 50 years which will pave the way for more across the country and Credit Unions and support the work of mdis and cdf is. At the same time regulators are looking out for risks on the horizon, the effects of Climate Change, the rise in Crypto Assets and risk from shadow banks, constant threat from cyber attacks, banking and Credit Union Industry to prepare for climaterelated risks and bolster Cyber Security protections as criminals become more sophisticated, geopolitical threats, for depositors and consumers were crypto firms mislead them into thinking there money was safe. We must stay vigilant and empower regulators with tools to come back, data breaches, Credit Unions happen too off and threatening Customer Data and exposing the Financial Systems vulnerability. Thats why we need to pass, the cybersecurity Credit Unions act led by senator ossoff, we need to make sure third parties in a way to stay competitive without putting consumer money at risk, cant let risky shadow banks played by different rules, they will strengthen Banking Credit union system for a core mission serving mainstreet, when they have more power in the economy, they have better paying jobs and stronger labor market. It helps Credit Unions which added 5 million members over the past year, drive down the number of households without a bank account which dropped record lows in 2021. When government is on the side of working families more americans save money and build wealth and start Small Businesses and participate in the economy. Financial regulators answered that call. Thank you for that. I will continue to work with them to help ensure the banking and Credit Union System works. Before i conclude my remarks i want to thank the winces for being here especially congratulate Martin Gruenberg for being nominated to be chair of the fdics. To protect consumers and preserve confidence in the Banking System and played an instrumental role and implement many doddfrank reforms, experienced leadership, i have no doubt fcic will address risks in the Financial System and reduce access to Affordable Financial Services and make sure banks honor their commitment to communities for the cra. This comedy looks for the nomination hearing in the next few weeks for other fdics members. Welcome to our witnesses. Throughout this congress i warned about the politicization of financial regulation. Them Bank Regulators are straying outside their mandates for a politically contentious issues, take Global Warming for instance. In september the fed announced a, quote, Pilot ClimateScenario Analysis exercise. With 6 us banks. We are told this is an exercise in ensuring banks understand their risks but the data including the feds own Research Shows there is no physical risk to banks from severe Longworth House Office building Severe Weather events. Theres only transition risks. We know that banks are fully capable of pricing risks into their Business Decisions including risks from changing customer preferences over time. The real risk is political. My worry is an attempt to quantify this political risk, with regulations designed to regulate capital away from intensive companies. The regulators are committed to doing that. For example the fed, the fcic, have joined the network for greening of the Financial System. This is an International Group of financial regulators with the stated aim to, quote, mobilize mainstream finance to support the transition toward a sustainable economy. In other words their goal is to allocate capital away from carbon emitting agencies to those deemed to be sufficiently green. Let me emphasize the fed, the fdics and the occ have joined this group. The ncua, may need to consider adjustments to their fields of membership and the types of loan products they offer and that is because of Global Warming. Here is the reality. Some unelected financial regulators want to accelerate the transition to a low Carbon Economy by misusing their powers to locate capital away from energy companies. Addressing Global Warming requires really difficult political decisions that involve tradeoffss and in a Democratic Society these tradeoffs have to be made by elected and accountable representatives, representatives of the American People who are held accountable for the political process. I supported vice chairman barrs nomination despite policy differences based on his commitment to stick to the feds narrow mandate, and the fed should not be in the business of telling Financial Institutions to lend to a particular sector or not to lend to a particular sector. I thank him for that clarity and urge him to keep to that commitment, one way we can do that is by pooling the fed out of a politically contentious issue of Global Warming. Federal banking regulators have been preoccupied in some cases with establishing new rules the need for which have been dubious. Last month the fed and fdic proposed potential new requirements conserving resolve ability of banks, this proposal seems predicated on the assumption the only realistic option to resolve a Large Regional Bank would be to sell it to a larger bank but it is not clear that is warranted or requirements are appropriate for Regional Banks. The fed and fcic have been approving Regional Bank resolution plans for a decade. Nowhere do those contemplate wholesale acquisition by larger banks and Large Regional Banks more than doubled their loss absorbing capital since the financial crisis and this improves their resiliency and decreases likelihood they would need to be resolved. Maybe some regulators think benefits of new regulations outweigh the costs. We know regulation is not without costs. Regulation increases, financial activities will continue to migrate out of the Banking System as they have been doing in recent years. Some of our banking regulators have been distracted, they failed to address real challenges facing the Financial System. Last year the fed, the fdic occ, with banks and crypto activities such as providing Custody Services or stable coins. Over a year later, still provided no public clarity. During that period we see several highprofile collapses of crypto Companies Including just last week. It is very possible customers harmed by these collapses would be better off if Crypto Assets had been safeguarded by regulated banks providing Custody Services for other assets for hundreds of years. Safeguarded by regulated banks that have been providing Custody Services for other kinds of assets for literally hundreds of years. But many banks have been pressured by you not to provide crypto related services until your agencies provide this clarity, which just hasnt been forthcoming. I will note however, that chairman harper seems not to have pursued this Pressure Campaign with Credit Unions. In fact, hes issued guidance for Credit Unions on partnering with Crypto Companies or u in fact, these issued guidance for Credit Unions are partnering with Crypto Companies or using distributed letter technologies however, the ambivalence of the remaining agencies has helped to push crypto activities into foreign jurisdictions with weaker or no regulatory regimes. As a a general matter it seems o make failure of congress to pass legislation in the space and the failure of regulators to provide clear guidance has created ambiguity that has driven developers and entrepreneurs overseas where regulations are often lacks at best. One other item i i want to highlight before we start the rest of the discussion and its the degenerate liquidity and u. S. Treasury market. In march 2021 the 21 the fed committede to modify the supplementary leverage ratio or slr, in part to facilitate bank dealers of italy to intermediate in this market. Over 18 months later the fed still has not acted. I understood vice chairman barr has only been in this willful for months and he has reasonably suggested that potential amendments to the slr should be in the context of reviewing all Capital Requirements. I understandhe that but we realy should recognize that a a significant decline in treasury market liquidity is already occurring and absent an improvement im afraid that the fed might one day decide it has to intervene by restarting a bond purchases which would be quite contrary to its Current Mission of getting inflation under w control. I hope ill hear from her baking regulars today is that they will prioritize these and other real challenges and not stray beyond their mandates into politically contentious issues or establish unnecessary new regulatory burdens. Thank you, mr. Chairman. Thank, you, senator toomey. Ill introduce the witness it. Michael barr vice chair or supervision of thehe board of governors of the Federal Reserve system july 22 for a fouryear term. He serves as a member of the boardls of governors. Todd harper was when he deserve full term as Financial Credit UnionAdministration Board chair in july 2022. Marty gruenberg has been acting chair of the fdic board of directors since february 2022. Hes been confirmed to serve as chair and vice chairman of the fdic and is served at the fdic since 2005. Michael hsu became acting comptroller of the currency in may 2021. Mr. Barr issue would begin your testimony. Thank you. Thank you very much, chairman brown, chairman brown, Ranking Member toomey and other members of the committee. Thank you for the opportunity to testify today on the Federal Reserve supervisory and regulatory activities. As vice chair for supervision my priority is to make the Banking System safer and fair. The Banking System is constantly evolving spiritual regulation and supervision must adjust to respond to new and emerging risks. Reforms following the Global Financial crisis have helped the United States maintain a resilient Financial System for consumers, businesses and communities. Capital and liquidity positions remain above regulatory requirements. But we must ensure we are keeping pacee pick many issues t the forefront of