Zach Nunn Presses Federal Reserve Chair Jerome Powell On Concerns Over Bank Consolidation Across US

4 months ago

During a House Financial Services Committee hearing prior to the Congressional recess, Rep. Zach Nunn (R-IA) spoke about bank consolidation.

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00:00Gentleman from Iowa. Mr. Nunn is recognized for five minutes. Thank You

00:04Mr. Chair and thank you Chairman Powell for being with us today. Your office has

00:08done a very diligent job in working with this body on both sides of the aisle. I

00:13chalk some of that up to the fact that you've got some very good folks from

00:16Iowa on your staff there helping keep the trains running on time so that's

00:19excellent. I will note that you know in Iowa the average family has experienced

00:24the you know annual inflation of about nine hundred and twenty five dollars per

00:27month just in the last three years. I've got six kids we're the number one egg

00:32producing state in the country but yet eggs for each one of my kids goes up

00:36forty percent this past year and take that times six. I'm no economist but that

00:40adds up real quick and I think I'm reflective a lot of families across the

00:44country right now. So Mr. Chair one of the things I'd like to talk about is you

00:50know what we are focused on and what your department's working on at the Fed.

00:54The US Federal Reserve in my opinion should be more focused on folks like my

00:58hometown of Bondurant, Iowa versus what's coming out of elected bureaucrats in

01:02Brussels, Belgium for example. Which is one of the reasons I'm so grateful that

01:06you have talked about reopening Basel III for a conversation on what's in the

01:11best interest of the American people. I applaud you and your team for this. While

01:15I would like to see Basel III candidly scrapped altogether I think that there

01:18are three things in this proposal that we've got to look at immediately. One the

01:21impact of credit availability especially to ensure that it won't be tighter

01:26credit conditions on small businesses back home in places like Iowa. The

01:31ability for farmers across the country to be able to hedge their grain, corn,

01:35soybean, livestock in a new Basel III conversation and ultimately eliminate

01:41the downstream effects on American banks being held to higher standards and very

01:45clear in Basel III than what's being held in Europe. So with that I want to

01:50readdress your team's attention to the letter I sent in a bipartisan way with

01:54Senator Jerry Moran. Specifically emphasizing the negative impact of

01:57increased bank capital requirements on the economy, our constituents and

02:02ultimately our ag producers across the country. So what I'll first say is can

02:07you confirm that the next Basel III proposal as outlined will address

02:11concerns from our ag growers including our farmers? Let me just say that we're

02:16well aware of the concerns you're raising about hedging and I'm not going

02:21to be too specific about things but we're quite aware of those concerns.

02:25I certainly hope your team gets the opportunity to hear that because it's

02:28one of the most painful things I'm hearing back in my home district. Would

02:31you agree that the end-users concerns could have been mitigated maybe at the

02:37front end of this if you know Congress or say a farmer in my district had been

02:43included in those opening conversations? You know in hindsight perhaps that's

02:51right but in any case this is what the comment period is for. Well I'll note

02:55that 84% of the comments coming from this proposal concern entities outside

03:01of banks. As you know a lot of those were from the ag industry who felt that they

03:05had no voice in this and were a recipient of things that really harm

03:09their businesses. With that I want to read quickly former Treasurer Secretary

03:13Larry Summers was asked about Basel and he said quote we're going to need to

03:17prepare for consolidation in banking in the future quite possibly some even

03:22further evolution of lending away from banks. Now I'm going to note here that

03:25Iowa has over 250 community banks with assets under seven billion dollars. His

03:30commitment or his comments are of great concern on this consolidation. Do you

03:34share concerns about a consolidation amongst banks across America? So I you

03:40know we all I speak for myself you know I realize that community banks are

03:44tremendously important in their communities and and it's not a better

03:48world when when community banks go out of business or at the same time if there

03:54needs to be consolidation I don't think we should be standing in the way of that

03:57but we shouldn't we don't want to be part of the reason why community banks

04:01are going out of business or being forced to merge because of for example

04:05high fixed costs because of regulation or other things. I would agree with you

04:09Mr. Chairman we don't want to be the instigator for a small bank to have to

04:13go out and stop serving a local community. You know as we look at Basel

04:163 if it's finalized in early 2025 does that mean we will push implementation

04:22back to 2026? I don't know exactly what it would be but that's something like

04:26that is right you know we'd have it we'd have a typical phase-in process at the

04:31end of the you know quite a lot of work to do to get to a final rule and then

04:34there'll be a phase-in process and I don't know exactly what the date would

04:37be. Thank you Mr. Chairman. I just want to know kind of a timeline for my folks I mean

04:41there's obviously 2026 or take my advice scrap it all together and we can start

04:45over if we even need to do that. Let me ask very quickly with Chevron overturn

04:49is there anything you're the Fed is doing to identify areas where maybe we

04:53have over regulated at the federal side and you're self policing right now? Under

04:57the Chevron decision? I mean again our view is we're very focused on on obeying

05:03the law and reading reading the actual words of the law and interpreting it

05:06according to the words that are in the law. This is the way we approach things

05:09and I I'm not sure how much will change you know basically a court will be doing

05:14that with a little bit less deference to to the agency but you know we think we're

05:19already interpreting the law pretty carefully so and again this these are

05:23brand new decisions there are several of them and I it's way early we're just

05:27studying them now. Thank You Chairman Powell thank you chair and I hope you

05:30continue to self police much appreciated to you and your team.

05:33We will now recognize the gentleman from North Carolina.

Zach Nunn Presses Federal Reserve Chair Jerome Powell On Concerns Over Bank Consolidation Across US

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