Jerome Powell Quotes
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The too-big-to-fail reform project is massive in scope. In my view, it holds real promise. But the project will take years to complete. Success is not assured.
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The financial crisis and the Great Recession left firms with excess capacity, reducing incentives to invest. If businesses expect slower growth to continue, that will also hold down investment.
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Over time, low rates can put pressure on the business models of financial institutions.
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Increased fragmentation of production across international borders - a natural outgrowth of the gains from specialization - meant more trade for any given value of final production, thus adding to the major expansion in gross trade flows in the 1990s and 2000s.
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Regional interest rate differentials persisted until around the time of World War I and helped shape the attitudes of Americans living in western areas toward the nation's financial system.
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The main long-run contribution monetary policy can make is to provide a stable macroeconomic and financial environment.
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The question of how to structure our nation's financial system arose in the early years of the republic.
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Below-target inflation increases the real value of debts owed by households and businesses and reduces the ability of central banks to respond to downturns.
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The FOMC has considerable control over short-term interest rates. We have much less influence over long-term rates, which are set in the marketplace.
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Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials.
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The financial crisis revealed important weaknesses in many areas of our financial system.
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By the beginning of the 20th century, the debate about monetary policy and the nation's financial system had been going on for over a century. Increasingly, the shortcomings of the existing system were causing too much harm to ignore.
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The Federal Reserve is not charged with designing or evaluating proposals for housing finance reform. But we are responsible for regulating and supervising banking institutions to ensure their safety and soundness, and more broadly for the stability of the financial system.
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One factor that favors easier adjustment in EMEs is that U.S. monetary policy normalization has been and should continue to be gradual, as long as the U.S. economy evolves roughly as expected.
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In normal times, at the beginning of each month, the federal government makes a cash advance to the Social Security Trust Fund called the 'normalized tax transfer,' in an amount equal to the estimated payroll taxes for the coming month.
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AIG's failure revealed systemic problems in the OTC derivatives market that went well beyond the failure of a single market participant.
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The overwhelming majority of new mortgages are issued with government backing in a highly concentrated securitization market. That leaves us with both potential taxpayer liability and systemic risk.
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With customers' permission, fintech firms have increasingly turned to data aggregators to 'screen scrape' information from financial accounts. In such cases, data aggregators collect and store online banking logins and passwords provided by the bank's customers and use them to log directly into the customer's banking account.
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Alignment of business strategy and risk appetite should minimize the firm's exposure to large and unexpected losses. In addition, the firm's risk management capabilities need to be commensurate with the risks it expects to take.
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In a world of global trade and integrated capital markets, it is natural for economic and financial shocks and policy actions to be transmitted across borders.
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There is no risk-free path for monetary policy.
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Real short- and long-term rates were relatively high in the late-1990s, so financial excess can also arise without a low-rate environment.
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It is worth noting that 'too big to fail' is not simply about size. A big institution is 'too big' when there is an expectation that government will do whatever it takes to rescue that institution from failure, thus bestowing an effective risk premium subsidy. Reforms to end 'too big to fail' must address the causes of this expectation.
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The sale of Treasury bonds, notes, and bills finances the U.S. government, and those securities are, in turn, a primary vehicle for savings for a wide range of U.S. households. Treasury securities are also an important source of collateral within the financial system.