Frank Lucas Grills Fed Chair Jerome Powell On How He Plans To Curb Inflation

4 months ago

During a House Financial Services Committee hearing prior to the Congressional recess, Rep. Frank Lucas (R-OK) spoke about inflation.

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Transcript

00:00We'll go to the gentleman from Oklahoma, Mr. Lucas, who's recognized for five minutes.

00:04Thank you, Mr. Chairman, and thank you, Chairman Powell, for testifying today.

00:09I realize that my questioning point in the hearing today, probably a lot of material

00:15has been covered, but there's never anything ever wrong with asking important questions

00:19a second or third time.

00:22You've reiterated how members of the Board would like to see a revised Boswell proposal

00:28put out for public comment, and you're working through the process with FDIC and OCC.

00:35From my perspective, the FDIC is in a period of uncertainty, the current chairman announcing

00:40he'll resign to restore confidence in his agency, and the replacement is awaiting Senate

00:45confirmation hearings.

00:47And at the OCC, we have an acting comptroller who has not been yet confirmed by the Senate.

00:53At the very least, given the expected broad revisions, I hope the other agencies agree

01:00that a complete re-proposal would be appropriate.

01:02So, Chairman, could you give me some indication of what the potential timeline around such

01:09a decision to re-propose might look like?

01:13It's pretty uncertain, but I'll give it a shot, and I'll say again that these discussions

01:18we've been having with the other two agencies have been very constructive, and we very much

01:24want that to continue.

01:25We've got pretty good agreement on the substance, and now it's about to process, so a baseline

01:33might be that we agree on a re-proposal of some kind that gives the public a chance to

01:41see these changes and react to them and write comment letters, and so that could happen.

01:49You know, it would take us a while to write it up, and then we'd put it out for 60 days.

01:54I think that couldn't happen probably until part of the way through the fall.

02:00Then there would be, let's say, 60 days of comment, and we get the comments, we'd have

02:04to then evaluate the comments and think carefully about them.

02:08Having done that, we'd have to write up the final version, and that would take some time.

02:13So that probably puts you, my guess is it puts you well into next year.

02:17As I mentioned, these rules are going to be, these are rules that the banks are going to

02:22have to live with for a long time, and we need to get them right.

02:26It's not something we should be hurrying on.

02:29We need to take our time and get it right and make sure that we hear the comments.

02:33This is a very big piece of regulation.

02:36A lot of things will need to be changed.

02:38There are a lot of good things in there.

02:40We want to come out with a good proposal, and that's what it'll take.

02:43To shift gears on you, Chairman, the 2024 stress test focused on commercial real estate

02:48risk, which is an area we've all been paying close attention to here on this committee.

02:55Do you agree that the results showed the financial system to be strong?

02:59Yes, I do.

03:02The folks back home are always very concerned about inflation and the period we've gone

03:10through lately, not just the basic necessities that continue to explode, but the cost of

03:15doing business and all those other issues.

03:19The fact is the inflation's still running above the Fed's 2% target, and we've seen

03:24significant price increases in food and energy over recent years.

03:27As you and I discussed before, I started out as a young farmer in 1977 in that inflationary

03:33period during the Carter years, then when we went through Chairman Volcker's rather,

03:38shall we say, dramatic tightening of monetary policy.

03:43I still remember paying 17% to borrow cow feed money when I was a student in college.

03:50I was well collateralized, but that was a bargain in the fact that the cow was accessible.

03:55So I'm particularly sensitive, being a part of that generation, that if inflation isn't

04:00effectively dealt with, it can spiral out of control.

04:03Could you expand for a little bit more about your approach in dealing with inflation in

04:08a way that doesn't repeat the mistakes of the past?

04:10I just want to avoid the mistakes of the past.

04:13So I think really one of the big lessons coming out of the high inflation of the 70s, which

04:21we both lived through, is that it really is on the central bank to be on the case and

04:27do the job and make sure that it is fully well and truly done, and that really that

04:34is up to the central bank.

04:35And believe it or not, that wasn't fully accepted or that wasn't necessarily the thinking.

04:40And also, the independence of central banks was much less respected back then.

04:45So all the more credit to Paul Volcker for having the courage to do it.

04:50So that is an internalized lesson for people in central banking these days.

04:56We do understand that.

04:58We are committed to bringing inflation sustainably down to 2%.

05:02One last question in my remaining seconds.

05:05You and the leadership of the Feds will be there the day before the election this fall,

05:09and you'll be there the day after the election.

05:11Still be the same people, carefully watching the Fed's responsibilities, correct?

05:17This is my fourth presidential election at the Fed, and I can tell you,

05:20we come to work the next day and we do our jobs.

Frank Lucas Grills Fed Chair Jerome Powell On How He Plans To Curb Inflation

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