Jefferson Reporter

U.S. Senator Katie Britt (R-Ala.) questioned Federal Reserve Chair Jerome Powell during a Banking, Housing, and Urban Affairs Committee hearing this week. Her concerns focused on the long-term debt proposed rule and its implementation prior to the full enactment of the Basel III Endgame proposal.

"Chair Powell, I have repeatedly talked about my concern with [the] long-term debt proposal and just think that it has not been well thought through," said Senator Britt. "First, I have concerns that it blatantly undermines the tailoring requirement. And on that note, do you believe that (S.) 2155 will be applicable to the long-term debt requirement?"

Powell affirmed, stating, "I think it applies to everything. And on the long-term debt requirement, you know, we have voluminous comments that we’re looking at carefully and thinking through the process of what to do about them."

Senator Britt emphasized that in addition to undermining the tailoring requirement for financial institutions enacted by Congress in S. 2155—the Economic Growth, Regulatory Relief and Consumer Protection Act—the proposed rule also lacks a proper cost-benefit analysis.

Britt further questioned if it would be "inappropriate to move forward with the long-term debt proposal, finalizing that rule, prior to Basel III [Endgame] being finalized as well?"

Powell responded, "I can’t give you a clear answer on that. It will depend. Basel III won’t be finally finalized for some time…"

Senator Britt highlighted her previous concerns regarding federal regulators' harmful Basel III Endgame proposed rule and its negative impact on commodity markets.

"[O]ur agriculture industry is one in five jobs in the state of Alabama; it's 20% of our economy," Senator Britt remarked today. "I am a big believer [that] food security is national security, and the proposal would increase hedging costs by 80%, meaning banks would be far less likely or inclined to offer clearing services. This could have a detrimental effect on our agriculture community and increase other costs providing food and fiber for our nation."

She added that rising input costs such as feed, seed, and fertilizer prices have led to increased consumer prices: "Grocery prices are up 21% since January [2021]."

While Chair Powell did not specify changes under consideration by the Federal Reserve regarding Basel III Endgame proposals, he acknowledged being “very well aware of and very focused” on issues raised across various industries.

Senator Britt concluded by reminding Chair Powell about prioritizing solutions for expanding affordable child care: “It is something that I know a number of my colleagues on the other side of the aisle share an interest in and believe is an important issue as well.”