February 11, 2016

Sen. Brown's Opening Statement at Banking Committee's Hearing on Semiannual Monetary Policy Report

WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – released the following opening statement, as prepared for delivery, at today’s hearing titled, “The Semiannual Monetary Policy Report to the Congress.” 

Brown’s remarks, as prepared for delivery, follow.

Senator Sherrod Brown - Opening Statement:
Hearing on “The Semiannual Monetary Policy Report to the Congress”

Feb. 11, 2016

Thank you, Chairman Shelby.  It’s good to see everyone back in the hearing room.

Welcome Chair Yellen.

I can’t help but to think back to February 2009, when then-Chairman Ben Bernanke told this Committee that our economy was suffering a “severe contraction.”  President Obama had just taken the reins in the middle of a financial crisis that would become the worst since the Great Depression.  And American taxpayers had just rescued the banking and auto industries. 

By the time we hit bottom, 9 million jobs had disappeared, the unemployment rate soared to 10 percent, 5 million families lost their homes to foreclosure, and $13 trillion in household wealth was wiped out.

It was one of the darkest periods in our nation’s history.

Seven years later, it’s clear that we have come a long way since the financial crisis.  Our economy has added over 13 million jobs since 2010. The unemployment rate has dropped to 4.9 percent, the lowest level since 2008. Average hourly earnings are up 0.5% since December, the second-strongest monthly gain since the crisis, up 2.5% in the last year.

And the Federal Reserve increased interest rates for the first time in a decade in December. 

That said, we still face several challenges. Too many workers are still looking for jobs, those that have one are not making as much as they should be, and some are benefiting from the recovery more than others.  

International economies are slowing. American exporters are challenged by the strong dollar.  Oil prices are at all-time lows, though they haven’t provided the economic boost many analysts expected. And inflation remains very low.

The slow and steady progress of the economy has given rise to what I fear is a collective amnesia for many on Wall Street and in Congress. They seem to have forgotten just how devastating the crisis was for an entire generation of working and middle class Americans.

Instead of working to strengthen our economy and bolster the financial system’s safeguards, some Republicans want to unleash the forces that almost destroyed the economy in the first place. They want to go back to “business as usual” with Wall Street.

Instead of conducting oversight hearings to push for implementation of the Wall Street Reform Act, this Committee has held hearings on weakening the law for banks and nonbanks, and how to make it impossible for regulators to finalize their rules. 

The Banking Committee hasn’t held a single hearing in the last year on strengthening consumer protections.  We haven’t talked about improving credit reporting and debt collection. And we haven’t examined how to curtail payday lending, or make rental housing more accessible, affordable, and safe. 

There is still a lot of work to do to ensure we do not repeat the mistakes that led to the Great Recession.  I sent a letter to Chair Yellen last week urging the Federal Reserve to do more to reduce the risks posed by big banks’ involvement in the commodities business.

The Fed and the FDIC need to make public determinations if individual firms haven’t provided credible living wills that demonstrate that they could go out of business without wrecking the financial system.  This is one of the ways we determine if “too-big-to-fail” still exists.

The regulators should finish rules related to compensation incentives on Wall Street. If we learned anything from the crisis it was that Wall Street encouraged behavior that caused the crisis at a steep price to American homeowners. 

The Fed still has work remaining on its regulatory framework for the nonbanks that it supervises, as well as insurance companies that own savings and loan holding companies, and I hope that you will pay close attention to the distinct business models.

And while regulators have taken important steps to rein in risks in money market mutual funds and the tri-party repo market, policymakers should continue to examine these and other potential threats in the nonbank sector.

To those that say that the reforms that have taken place in the U.S. will put us at a competitive disadvantage, this week has shown us that they benefit our financial system. It is clear to me that, as a result of many of the new regulations, U.S. financial institutions are more resilient than their counterparts in other parts of the world.

Chair Yellen, I look forward to your assessment of both the economy and where we are with efforts to strengthen our financial system. 

All of us must do the necessary work to promote financial stability, protect consumers, and help prevent the next crisis. There is too much at stake for American families.