Fed's Powell Reassures on Treasury Payments, Musk Access
Federal Reserve Chair Jerome Powell provided assurances regarding the security of payments routed through the Treasury Department during a Senate Banking Committee hearing.
Treasury System Integrity
In response to concerns raised by Senator Mike Rounds, Powell stated, "I believe [the Treasury system] is safe." He emphasized the Fed's commitment to maintaining the integrity and reliability of this critical system.
Musk's Treasury Access
When questioned if Elon Musk had attempted to access the Fed, Powell replied, "I don't believe so."
Focus on Treasury and CFPB
Many Democratic lawmakers expressed interest in Powell's perspective on Musk's involvement with the Treasury Department and the Consumer Financial Protection Bureau (CFPB).
Fed's Role
Powell clarified that the Fed is responsible for processing payments for the Treasury and providing funding for the CFPB. However, the Fed does not make decisions regarding how or why funds are allocated.
CFPB's Importance
In response to Senator Elizabeth Warren's concerns, Powell acknowledged the CFPB's unique role in regulating consumer finance issues at large banks. He emphasized that without the CFPB, there would be a regulatory gap.
Bank Capital Standards and Debanking
Republican lawmakers inquired about bank capital standards and the practice of "debanking" certain customers by larger lenders. Powell indicated the need to re-examine the debanking issue.
Basel III Proposal
Powell announced that the Fed is awaiting new leadership at the Office of the Comptroller of the Currency and the FDIC to collaborate on a revision of the Basel III capital proposal. He expressed confidence in a timely and competitive proposal.
Trump's Tariff Policies and Fed Independence
Powell declined to speculate on the potential impact of Trump's tariff policies on the economy and interest rates. He reiterated that any attempt by the President to remove a Fed board member would be illegal.