Senate committee on banking, housing and urban affairs will come to order. Today is a hybrid format. Our witnesses are in this person but members have the option to appear in person or virtually to consider the nominations of dr. Lael brainard to be vice chair of the board of governors of the Federal Reserve system. And acting director Sandra Thompson to be director of the federal Housing Finance agency. Its amazing what a difference a year makes. We have today safe and effective vaccines that are saving lives, that are getting people back to work. 207 million americans have fully vaccinated. In 2021 we added 6. 4 million new jobs, more in any year since 1939. Workers are demanding raises. Theyre finally getting them. Theyre changing jobs at record rates because people finally have some options. The past year has illustrated our economy works best when it works for everyone, not just wall street, not just the top 1 . Everyone. Whether you punch a clock or raise children or care for an aging parent, no matter who you are, where you live, what kind of work you do, Economic Growth wont mean much if it doesnt reach all workers. Families in stubenville, scranton and communities of all sizes. The president has nominated dr. Brainard and acting director thompson to Important Roles to put workers at the center of our government and our economy to deliver results that actually improve their lives. Dr. Brainard is a leading economist who understands a Strong Economy is one where workers have power. Shes committed to a worker centered Monetary Policy that boosts employment and lifts wages, something that every member of the feds Rate Setting Committee has reaffirmed. Shes led the way in modernizing and strengthening the Community Reinvestment act, something that senator warner has been particularly interested in. A landmark civil rights law passed to begin to undo the shameful legacy of red lining and lending discrimination and spur investment in all neighborhoods and communities. Shes working to ensure banks meet the needs of all of our communities. During the pandemic she worked shoulder to shoulder with chair powell to steer our country out of the abyss. Dr. Brainard has a distinguished record. She joined the fed in 2014. From 2009 to 2013 she was in the department of treasury. She worked in the first bush administratio as a staff economist for the council of economic advisors and the clinton administration. As vice chair shell be tasked with supporting efforts to empower workers and refocus our economy on main street and make sure all americans have good jobs with growing paychecks and affordable cost of living. That also means supporting efforts to close the racial wealth and income gaps. The average black or latino household earn about half as much as the average white house hold and own only about 15 to 20 as much net wealth. As one of our colleagues once said, when we all do better, we all do better. With govern brainard as vice chair of the fed, america will have someone who understands that workers, not corporations, not wall street, but workers create Economic Growth. Acting director thompson has taken meaningful steps to put renters, homeowners and families first. Over the past six months acting director thompson has directed the gses to strengthen their plans to support housing. Shes expanded opportunities for middle class and low income homeowners to save money on their mortgages through refinancing and shes increased the focus on fair housing at the gse. I can think of no person who is qualified to strengthen the financial standing of the gse. Advocates have written to this Committee Supporting her. Before being designated as acting director in 2021, she served for eight years as the Deputy Director for the division of mission and goals. To ensure the safety of fannie mae and freddie mack. She spent 18 years at the fdic where she worked for seven different chairpersons from each of the Political Parties and in senior level positions including director of supervision and Consumer Protection and the director of the division of Risk Management and supervision helping to stabilize our nation nations in a nutshell you can see how qualified she is. Shell be in a position to tackle some of the most pressing issues facing homeowners and renters to ensure the stability of our Housing Finance system whether youre looking to rent or buy, housing has become too expensive and too hard to find long before the pandemic began. More than 50 years after the passage of the physical therapy Fair Housing Act people of color are far more likely to be denied a mortgage, own their own home. In just the past week tragic fires in the Ranking Members home state and the bronx have reminded us how far we need to go to ensure everyone has safe affordable places to live. Acting director thompson has distinguished herself as the person we need to lead this critical work. These nominees, each of them understands the challenges our economy faces, they understand the people who make our economy work, like so many of the president s nominees. As we recover from a pandemic that laid bare just how hard women especially work at paid jobs in the labor market and unpaid jobs in their families. I want to thank both nominees for their exceptional and lengthy years of commitment to Public Service. Ranking member toomey. Welcome. You both have very extensive experience in your fields. Governor brainard has been nominated to serve as fed vice chair. The fed has been granted significant independence to isolate it from political influence. However, congress has given the fed narrowly defined monitory and regulatory missions. The fed had been tasked to promote stable prices and maximum employment. But the feds recent actions have failed to maintain price stability. Last year governor brainard repeatedly insisted that inflation was transitory. Weve now had nine consecutive months where inflation has been more than two times the feds target. Cpi release of 7 , the highest in 40 years, confirms that further. Inflation is a tax thats eroding americans paychecks every day. Even though wages are growing, inflation is growing faster. Thats causing workers to fall further and further behind. The fed needs to learn from its mistakes. I think that begins with the feds new Monetary Policy framework of which governor brainard was an author and outspoken advocate. The framework supported the price stability mandate to try and maximize employment by allowing inflation to run high. The fed looked beyond employment as a whole to consider whether employment was, quote, broad based and inclusive, end quote. As the fed would sacrifice stable prices to see if it could achieve higher and use Monetary Policy to narrow [indiscernible] the fed decides which subgroups of people should have faster job growth than others. One of the problems is Monetary Policy can never equalize employment rates among different groups. The fed would run the risk of failing on both ends of its mandate because you need stable prices to achieve a Strong Economy and maximum employment. Given this fact, the fed should reevaluate this new framework. The fed has the mission of monitoring safety and soundness of certain major Financial Institutions. Under chairman powell the fed enacted modest, sensible reforms that reduced Regulatory Burdens and helped spur Economic Growth. Governor brainard was the sole dissenter over 20 times on regulatory matters. She argued that the feds reforms of capital liquidity and stress tests for Smaller Banks would weaken the safeguard at the core of the system. Yet the economy nearly collapsed at the start of the pandemic, the Banking System emerged exceptionally well and served as a source of strength for the economy, demonstrating the sensibility of these reforms. In addition to opposing those reforms, governor brainard has urged the fed to take an activist role on Global Warming which is beyond the feds expertise and mission. According to the New York Times shes endorsed the use of supervisory guidance the feds recommendation to banks to ask Financial Institutions to curb their exposures. Im concerned shes advocated for the fed to shape environmental policy through socalled climate Scenario Analysis. Not only does the fed lack expertise in environmental matters, theres no reason to believe that Global Warming poses a risk to the system. We havent found a single bank thats failed in the modern era due to a Severe Weather event. There is a transition risk associated with Global Warming but thats political and regulatory in nature. Its the risk that unelected bureaucrats will attempt to impair the value of assets by cutting off credit to the energy sector. This isnt about whether Climate Change is a threat to society. These are inherently political decisions, which is why they belong firmly in the domain of officials who are elected and directly accountable to voters. Turning to ms. Thompson, shes been nominated to serve as the director of the fhfa. Shes had a busy six months as acting director. Shes proposed Capital Requirements for fannie mae and freddie mack, suspended the gses acquisition of high risk loans. And increased gses Affordable Housing goals. She has not prioritized ending the gses conservatorships. Im concerned shes seeking to use fhfa and gse to take on more risk for taxpayers. That makes her nomination a referendum on the administrations radical housing policy. This policy contemplates more mortgages for higher risk borrowers, repurposing the gses as instrumentality of social policy. This administration is using the power of the gses conservatorship to command and control a huge swath of the economy. Were now asked to take ownership of the bailouts and foreclosures that im afraid are likely to follow, especially given where we might be in the housing cycle we should be reluctant to do so. Mr. Chairman, i look forward to hearing from todays nominees. Would the witnesses please rise and raise your right hands . Do you swear or affirm that the testimony youre about to give is the truth, the whole truth and nothing but the truth, so help you god . Do you agree to appear appear before a committee of the United States senate . Please be seated. Thank you. Governor brainard and acting director thompson, welcome to the committee. If you would like to introduce family members or friends in your testimony, i invite you to do that at the beginning or wherever you want to. Governor brainard, please begin. Is this working . Yes. Chairman brown, Ranking Member toomey, other members of the committee, thank you for this opportunity to appear before you. Im greatly honored to be nominated by President Biden to serve as vice chair of the board of governors of the Federal Reserve. Im delighted to be here alongside acting director thompson. If confirmed, i look forward to continuing to work with members of this committee. Were seeing the strongest rebound in growth and decline of unemployment of any recovery in the last five decades. Over the past year, unemployment has fallen by 2. 8 and growth is estimated to be around 5. 5 according to a variety of private forecasts. But inflation is too high and working people around the country are concerned about how far their paychecks will go. Our Monetary Policy is focused on getting inflation back down to 2 while sustaining a recovery that includes everyone. This is our most important task. When the pandemic struck in 2020, i worked closely alongside chair powell, secretary mnuchin and many others with the support of congress to calm Financial Market turmoil and save american jobs and businesses. When markets stabilized, i worked to responsibly wind down the emergency facilities that were established. Today the economy is making welcome progress. But the pandemic continues to pose challenges. Our priority is to protect the gains weve made and support the recovery. Since 2014, ive supported Monetary Policy that was responsive to Economic Conditions as they evolve. Our approach helped sustain the longest recovery on record with low inflation and millions of jobs. Ive worked to grow and safeguard our economy under administrations of five president s. Ive worked every major financial crisis over three decades. In country im committed to pursuing the goals of price stability and maximum employment and to maintaining the strength and resilience of our Financial Markets. Im committed to the independent and nonpartisan status of the Federal Reserve. If confirmed, i look forward to supporting chair powell in carrying out the responsibilities assigned to the Federal Reserve and in fostering Transparent Communication and accountability to you and to the American People more broadly. I will bring a considered and independent voice to our deliberations drawing on insight from working people, businesses, Financial Institutions and communities large and small around the country. Before closing, i want to thank my husband curt my daughters kaylin, kira and chloe for their steadfast support of my work and i would like to commend the outstanding efforts of the many individuals across the Federal Reserve system who work so hard every day to serve the american public. Senators, i thank you for your consideration and i look forward to answering your questions. Thank you. Thank you, dr. Brainard, acting director thompson. Chairman brown, Ranking Member toomey and members of the committee, i first want to thank President Biden for nominating me to serve as the director of the federal Housing Finance agency. It is the greatest honor of my career to appear before you today. Thank you to the senators and the Staff Members with whom ive met in advance of this hearing. If im fortunate enough to be confirmed, i look forward to working with all of you on the important issues at fhsa. I would like to introduce my sons jared and aaron, who are here with me today. Id like to recognize and thank my parents, herman and helen. Due to covid, they are not able to be here in person. The fact that my parents are still alive to witness todays hearing is very meaningful to me. I was born and raised on the south side of chicago to my extraordinary parents who came to chicago from mississippi as part of the great migration. My parents and family along with the Chicago PublicSchool System and my beloved Howard University right here in washington taught me hard work, dedication, determination and perseverance. I would specifically like to recognize the schools in chicago that helped me my nomination for director of the this great privilege, i realize its rare for a career Public Servant to have the opportunity to lead a federal agency and as the first African American woman nominated for this position i appreciate the opportunity to demonstrate by expertise good judgment and leadership in this position i am proud of the work weve done at fhfa to our supervision of fannie mae, freddie mac and the Federal Home Loan Bank system. Throughout my career mike spirits in mortgage markets, and multiple agencies, ive seen what it takes to lead a federal agency and be effective in that role. In my work at fdic and fhfa ive demonstrated leadership, management and an understanding of the markets and industry. A fair balanced perspective, and the importance of the safety and soundness of americas Financial Institutions. During my time in regulation, ive witnessed and worked in several financial crises. These crises expose the truth in finance. As i head throughout the 2008 financial crisis, i witnessed firsthand the consequences of irresponsible lending. With hundreds of banks across the country when they were closed, a Record Number of homes went into foreclosure. I saw how the borrowers who received unsustainable and predatory loan products were devastated and the downturn and underserved and disadvantaged communities were hit especially hard. In fact, today the black white Home Ownership gap is wider than it was in the 1960s when lending discrimination was based or that was based on race was still legal. As a financial regulator, ive long be