Sherrod Brown Pushes Fed Chair Jerome Powell: ‘You Must Act Immediately To Protect Americans Jobs’

3 months ago

Earlier this month, Sen. Sherrod Brown (D-OH) questioned Federal Reserve Chair Jerome Powell on unemployment and job security during a Senate Banking Committee hearing.

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Transcript

00:00Chair Powell, unemployment has risen by a half percentage point

00:05over the past year.

00:06The number of job openings has dropped almost 50 percent.

00:10The hiring and quit rates are now below pre-pandemic levels.

00:14I'm concerned that if the Fed waits too long to lower rates,

00:17the Fed could undo the progress we've made

00:20on creating good-paying jobs.

00:22Full employment is part of the mandate,

00:24as you say, over and over.

00:26How are you assessing the risks of higher interest rates

00:28in the labor market?

00:30So I completely agree with your characterization.

00:32The latest data do show that we've had considerable cooling

00:37in the labor market, and we do.

00:39We're very much aware that we have two-sided risks now,

00:42as I mentioned earlier, and we're determined

00:46to balance those as best we can.

00:48We want to see more good inflation data,

00:50and we also want to continue to see a strong labor market.

00:54And those two things are equal under the law.

00:56We have this challenging thing to balance them,

00:58but we're very much conscious that that is our job,

01:01and we're trying to do that.

01:02Well, and you know that if unemployment trends upward,

01:05you must act immediately to protect Americans' jobs.

01:08Workers have too much to lose

01:09if the Fed overshoots inflation targeting,

01:12causes a completely unnecessary recession.

01:15We will say that over and over and over again.

01:17I think you understand that.

01:19Housing. Higher interest rates are making housing more

01:23unaffordable.

01:24Higher rates are supposed to lower costs,

01:26yet housing prices continue to soar.

01:29By keeping rates high, the Fed ignores the economic reality

01:32of the millions of Americans struggling

01:35to make ends meet and get ahead.

01:36Let me ask you three quick yes or no questions,

01:39if you would answer that way.

01:41Since late 2022, when the Fed began raising rates,

01:45has the volume of housing sales decreased?

01:49I believe it has, yes.

01:50Since late 2022, has the median home price increased?

01:54I believe it has.

01:56Since late 2022, have monthly mortgage payments become more

01:59affordable or less affordable for homebuyers?

02:02Less affordable.

02:03Okay. Thank you.

02:04In short, despite housing sales declining, the median price

02:08for a single home, a single family home,

02:11has increased by nearly $20,000.

02:13People are spending a greater share of their income

02:16in mortgage payments.

02:17So in sum, higher rates, it's clear from your answers

02:21and data, it's clear higher rates are not bringing

02:23down housing costs.

02:25The cost of home ownership is only going up.

02:29Let me shift to the Synops bankruptcy.

02:31Since mid-May, tens of thousands of people,

02:33including many Ohioans, have lost access to their money due

02:37to the bankruptcy of this fintech middleman.

02:40Reports indicate that as much

02:42as $95 million may have gone missing.

02:44The Fed oversees one of Synops' former partner banks,

02:48Evolve Bank and Trust.

02:49As a regulator, it's your job to make sure

02:52that banks protect the people whom they serve.

02:54What's the Fed doing to help customers who felt the impact

03:00by the Synops collapse?

03:02What are you doing to regain access to their money?

03:04So we do supervise the bank.

03:06We don't supervise Synops, let alone the fintechs

03:09that feed into Synops.

03:10And we're strongly encouraging Evolve to do whatever it can

03:16to help make money available to those depositors.

03:19We also, as you may know, did an enforcement action

03:23against, before this all happened, we did an inspection,

03:26or looked at Evolve, and we hit them with an enforcement action

03:32around these very risk management issues, again,

03:35before the current situation developed.

03:38Okay, it's critical that consumers are made whole

03:40as soon as possible.

03:42We will continue to talk to you about that.

03:44We will watch.

03:44We will let you know we're watching.

03:46The Fed needs to use its supervisory authority

03:49to ensure that Evolve is committing the resources

03:52necessary to return those funds to the account holders.

03:56Last comment, I want to note one last thing.

03:59Last year's Fed report on the failure

04:02of Silicon Valley Bank noted how incentive-based compensation

04:06encouraged excessive risk-taking that led to the bank's failure.

04:10You either watched or had reports

04:12of when those bank CEOs testified in front

04:15of this committee.

04:16The report, the incentive-based compensation

04:21that led to the bank's failure, I mentioned it said

04:23that SVB managers, quote, had a financial incentive to focus

04:27on short-term profit over sound risk management.

04:31That's what a number of us, Senator Smith, Senator Butler,

04:34Senator Warner and I have said over and over,

04:37that short-term profit

04:39over sound risk management causes significant problems

04:42to our financial system.

04:44Compensation practices still pose a threat

04:49to our banking system.

04:50I urge you to move quickly to join your colleagues

04:53in the long-overdue rulemaking on executive compensation.

04:57I mean, you know, you read the reports, yet the outrage

05:02of the public about executive compensation continue to go up

05:06and up and up and up, you have a role, a significant role,

05:10a legal role to deal with that.

Sherrod Brown Pushes Fed Chair Jerome Powell: ‘You Must Act Immediately To Protect Americans Jobs’

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