New Federal Reserve Chairman: Jerome Powell

11-28-17, John Cassidy, New Yorker [Excerpted*] – President Trump’s nominee to replace Janet Yellen as chair of the Federal Reserve details learned from his Senate banking committee appearance follow:
1. He went to Princeton and Georgetown and was a lawyer
2. Was an investment banker and placed in the Fed by Obama in 2012
3. Multimillionaire, married with three children, 64 yrs old and lives in Maryland
4. Asked what role Steven Mnuchin, Trump’s Treasury Secretary, would play in his decision-making? Powell replied, “He would have no role.”
5.  Apparently he will follow Ms Yellen’s lead; the Fed’s current policy of slowly raising interest rates will continue.
6. The biggest difference between Yellen and Powell’s approaches? Their financial regulation. Powell defended the over-all approach that was adopted after the great financial crisis of 2008–09, which involved forcing banks to hold more capital and liquidity, to take regular stress tests that would supposedly enable them to be wound down in the next crisis, rather than bailed out. He said the Fed should take a “fresh look” at some of the rules; some may be too costly or burdensome.
7. He may approve weakening the Volcker Rule. It was designed to prevent the trading departments of big banks from speculating on their own accounts—an activity known as proprietary trading. He said he was in favor of “tailoring the application” of the rule. This was the sort of language that Wall Street wanted to hear. Ever since Paul Volcker, a former Fed chairman, issued his proposal, at the start of 2010, the big banks have vigorously opposed it. Although Powell also said that he wanted to stick to the spirit of the rule, the bankers will be delighted to have someone at the Fed who is sensitive to their concerns.
8. When asked by Kennedy [Rep-LA] if “we still have banks that are too big to fail in America,” Powell said, “I would say no to that.”
9. Regarding income inequality: Powell said that inequality and wage stagnation are pressing problems and the “most compelling” factor in explaining them was a shortfall in educational attainment leaving American workers without the skills needed to compete in a high-tech world. The Fed doesn’t have many tools for dealing with the issue of income distribution. 

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* Excerpted and adapted more here from New Yorker