Fed Chairman Indicates Consumer Banking Not in the Offing
Last year, during a time when the U.S. Postal Service (USPS) saw its delivery times, and other efficiency metrics collapse, policymakers in Washington kept pushing the idea of having the USPS offer small dollar loans and perhaps even bank accounts to consumers and the under-banked.
Given the challenges of doing its core functions well, its inability to keep its own fiscal house in order, never mind picking up the processes required to assist customers and service such loans, the proposal ended up in the “Dead Letter Office.”
Last week, Senate Banking Chair Sherrod Brown (D-OH) floated another banking concept: having the Federal Reserve enter the consumer banking and financial services market place. There are a number of regulatory issues that make this a seemingly even more unworkable than the USPS proposal: namely, having a regulator competing against those institutions it oversees. Never mind the odd scene of consumers lining up at the Federal Reserve on Constitution Avenue looking for their “in network” ATM.
Today, Senator Steve Daines (R-MT) asked Federal Reserve Chairman, Jerome Powell if the Federal Reserve was equipped to manage retail and commercial accounts and Powell’s answer was unequivocal.
“No. And of course we’re not permitted under current law. Thats never been our role and it’s not been the role of other central banks. … [I]t would be quite (emphasis Chairman Powell’s) a dramatic change and one that would require careful thought.”
View the full clip here.
March 25th, 2021
