Kevin Cramer Slams Efforts To Regulate Federal Reserve: ‘The Independence Of The Fed Is Essential’

3 months ago

Earlier this month, Sen. Kevin Cramer (R-ND) questioned Federal Reserves Board Chairman Jerome Powell on regulation and oversight during a Senate Banking Committee hearing.

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Transcript

00:00Senator Kramer of North Dakota is recognized. Hi, Mr. Chairman. Thank you, Mr. Chairman.

00:06As always, all of my prep goes out the window with the last question. So on the legal immigration

00:11workforce front, and I know this isn't your bailiwick, but the issue of workforce is important to the economy. I would submit to my colleagues

00:20beyond even the the people who come here seeking asylum suddenly being available for the workforce,

00:26we have a million-plus people who we welcome in legally every year,

00:31the vast majority of whom don't come in with a job or even a skill set.

00:36And we have so much work to do, colleagues, on the legal immigration front to create a

00:44connection between

00:46economic demands for workers and the skill set and education that our immigrants

00:51bring to us. So

00:53most every other country requires some sort of skill set useful in the economy.

00:59We don't do much of that. So that's just my speech for the moment. I know, Mr. Chairman,

01:04you've gotten already lots of very specific questions, and I've heard a couple of them on Basel III, so I'm just going to make

01:10an illustration, and you can comment on it if you'd like,

01:14but there's a large generation and

01:18transmission utility in North Dakota,

01:20rural electric cooperative, Basin Electric, very large G&T,

01:24members all over the upper Midwest. And they recently

01:28testified in front of the CFTC on Basel III, and they expressed a concern about

01:34how operations would be impacted if lending was curtailed or limited in any way.

01:39And they gave a real-world example, and I want to just give you that example. Now remember,

01:44this is an electricity supply that we're talking about. It's critical it remains reliable,

01:49it's critical that it remains affordable, and part of an electric cooperatives risk

01:54management program, of course, is how it buys the fuel that generates the electricity, in this case, natural gas.

02:00They may buy natural gas in advance at a fixed price, realizing natural gas is one of those commodities

02:06that goes up and down in pretty big swings at times,

02:09but they can hedge by buying it at a fixed price for a power plant, and it protects the cooperative financially since

02:17electricity prices, again, follow those spot prices generally. So if spot prices spike, so do electricity

02:24prices. However, with a natural gas hedge, the cooperative can generate electricity at a lower fixed fuel cost, protecting itself and its

02:32consumers from high prices. It's an upfront cost on the balance sheet between the cooperative and its bank,

02:38but it protects the reliability and affordable supply of electricity. I give you that very specific example,

02:45not even to mention that the cooperative model itself has some unique

02:50qualities, but if you would like to comment on it, you've already stated that there's going to have to be changes.

02:56I just throw that into your, you know, your box of things to think about, and you're welcome to comment if you'd like.

03:02I'll just say we're well aware of that issue, and I appreciate you bringing it up. Thank you,

03:07Mr. Chairman. With that then, I just, I'm just going to

03:13speak to this independence issue. I think that the senators that have questioned you on it are correct.

03:19I share that concern, as you know, that the independence of the Fed is essential. I have

03:25resisted moves within my own party to change it,

03:29but those moves are very narrow and not very, I don't think, very realistic,

03:34and I appreciate you pointing out that from what you can tell, at least on Capitol Hill,

03:38we're all pretty much united on that front.

03:40Perception does matter. It matters a great deal, and you and I have had discussions over the years on, you were very,

03:47you admonished us strongly as Congress to spend what we needed to spend to get through the pandemic and to maintain the economy. I

03:55think you were right to do that.

03:57You were just as aggressive in not responding to calls to rein it in a little bit when

04:03Democrats brought the

04:06Inflation Reduction Act and the American Rescue Plan

04:09to the forefront, and I think

04:12really basically hijacked the economy and put fuel on inflation.

04:17But perception matters, and so I would just submit to you, and you haven't said you're going to do this.

04:21I don't have any reason to believe you'll do this, but any move

04:25to lower interest rates or

04:28move interest rates either direction before November 5th could certainly be a bad perception, even if there's a strong

04:36push to do that. I know you understand that, but I just want you to know that as long as you remain independent,

04:42I'll be on your side.

04:44I think neutral is a good place to be, and by the way, you have one of those jobs

04:48where being boring is one of the most noble things you can be, so great job.

Kevin Cramer Slams Efforts To Regulate Federal Reserve: ‘The Independence Of The Fed Is Essential’

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