Powell testimony live: Senate panel to quiz Fed chair on monetary policy

Two senior members of congressional banking committees have claimed the US Federal Reserve is kowtowing to financial lobbyists over plans that the lawmakers say will weaken stress test rules.

With Jay Powell set for a two-day grilling on the Hill, Senator Elizabeth Warren and Representative Maxine Waters have written to the Fed chair ahead of the hearings about the central bank’s review of stress tests that target the US’s biggest lenders.

“We are concerned that, instead of fighting against the banks in courts and elsewhere, the Fed is now — in the wake of President Trump’s election — seeking new avenues for premature surrender,” Warren and Waters wrote in a letter addressed to the Fed chair .

The Fed said on December 23 that it would seek public comment on efforts to improve the transparency of its stress tests.

The tests review the resilience of the US’s largest banks to a sizeable economic or financial shock.

“Rolling back stress test rules that ensure that banks are stable during a fiscal or economic crisis is unwise and unnecessary, and would not be consistent with the Fed’s mandate of promoting the safety and soundness of the banking system and broader financial stability,” the letter said.

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