Fed Chair Assures Integrity of Treasury Payments System and Denies Musk's Access
Key Points:
* Fed Chair Jerome Powell affirms the safety of the Treasury Department's payments system.
* Powell confirms that Elon Musk has not attempted to access the Federal Reserve.
* Despite concerns raised by Democratic lawmakers, Powell emphasizes that the Fed has no decision-making role in the Treasury or Consumer Financial Protection Bureau (CFPB).
* Powell acknowledges the critical role of the CFPB in consumer finance regulation.
* The Fed Chair expresses readiness to address debanking concerns and work with new leadership at the OCC and FDIC on bank capital reform.
Analysis:
In his appearance before the Senate Banking Committee, Federal Reserve Chair Jerome Powell addressed concerns raised by Democrats about Elon Musk's involvement with the Treasury Department and the CFPB. Powell affirmed the integrity of the Treasury payments system and denied any attempts by Musk to access the Fed.
However, Powell emphasized that the Fed's role in both the Treasury and CFPB is limited to processing payments and providing funding, respectively. He acknowledged the importance of the CFPB's regulatory role in consumer finance but noted that the Fed has no authority over how or why money is spent by these agencies.
Regarding bank capital standards, Powell expressed his support for reviewing the debanking issue and working with new leadership at the OCC and FDIC on revamping the Basel III proposal. He emphasized the need for a proposal that would be competitive with European banks while maintaining appropriate capital levels.
Powell declined to comment on the potential impact of Trump's tariff policies on the economy and interest rates, but acknowledged that higher inflation could be a potential outcome. He reiterated his stance that the president cannot remove members of the Fed board without just cause.