Jerome H. Powell Fed Nomination Opening Statement — page 1

Statement of Jerome H. Powell

Nominee to be a Member of the Board of Governors of the Federal Reserve System

Before the Committee on Banking, Housing and Urban Affairs

United States Senate

March 20, 2012

Chairman Johnson, Senator Shelby and members of the Committee, I am honored and grateful to

President Obama for the privilege of appearing before this Committee today as a nominee to the

Federal Reserve Board. If I am confirmed, I will work to the best of my abilities to carry out the

responsibilities of this office.

Most of my career has been in the private sector, including close to 30 years working in the financial

markets as an attorney, an investment banker and finally as an investor. I believe that my practical

experience of the private sector and the financial markets would provide a valuable perspective in the

Federal Reserve Board’s deliberations.

I also served as Assistant Secretary and then Under Secretary of the Treasury for Finance from 1990

through 1993. Throughout that period, I worked closely with this Committee, and appeared in this room

a number of times as a witness in hearings and markups. Since I left public service in 1993, it has been

my highest aspiration to serve again. It means a great deal to me to have the possibility to do so.

My earlier service also occurred during a period of great economic turmoil. I arrived at Treasury in June

1990 at the beginning of the saving & loan cleanup. A year later we faced the insolvency of the Bank

Insurance Fund. We also faced multiple failures of large financial institutions as well as a severe “credit

crunch”, with businesses and consumers unable to get credit on affordable terms.

I was deeply involved in addressing these serial crises and in the major legislation that followed,

including the FDIC Improvements Act of 1992, or “FDICIA”. I also led the Administration’s response to a

major bidding scandal in the Treasury markets in 1991 – 92, which eventually resulted in the

Government Securities Act of 1992, as well as revisions to the Treasury’s auction rules.

Since leaving Treasury in 1993, I have remained a careful student of economic policy and events, always

with the thought that I might have the opportunity to return to public service. Like many others, over

the years I have grown increasingly concerned about our ever more unsustainable fiscal position, the

performance of our economy, and most of all our collective failure to come together around a plan of

action.

In 2010, I left the private sector with the intention of spending the rest of my career working on those

issues. Since then, I have worked full time as a Visiting Scholar at the Bipartisan Policy Center, focusing

on federal and state fiscal issues. Last summer I authored a widely distributed study of operation of the

federal debt ceiling. After that, I put together a public simulation of the failure of a large, global

financial institution under the new rules of Dodd-Frank. In 2010, I also led another simulation of the

financial collapse of a large, fictitious American state, among other projects.

Jerome H. Powell Fed Nomination Opening Statement — page 2

Economic policy makers, including those at the Fed, will be working in the shadow of the financial crisis

for some time. There are enormous challenges on every front. This is a time to apply the lessons we

have learned from the crisis, and set the stage for another long period of prosperity.

In monetary policy, the task will be providing support for the still weak economy but exiting the current

highly accommodative policies in time to avoid higher inflation. Along with other governments and

central banks around the world, the Fed is also in the middle of a once in a generation refashioning of

the global financial regulatory architecture. There is much work to be done in implementing the

decisions Congress has made, and in finalizing and implementing international accords such as Basel III.

At the heart of these broad reforms is the project of ending our practice of protecting creditors and

sometimes equity holders of large global financial institutions in extremis – too big to fail. What we

have long needed is a mechanism to handle an orderly resolution of a large, failing institution. Realizing

this objective will be the work of many years. And I would like to play a part in that.

Thank you again for the honor of this hearing. I will be happy to respond to your questions.

Jerome H. Powell Fed Nomination Opening Statement

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