Lawmakers question Fed Chair Powell on proposed banking rule changes

Ahead of Federal Reserve Chair Jereme Powell's hearings, U.S. Senator Elizabeth Warren and Congresswoman Maxine Waters have expressed concerns over proposed changes to banking rules. The two lawmakers questioned Powell about plans to alter the stress testing framework that ensures banks are prepared for financial shocks.

Warren and Waters stated, "The changes sought by big banks...will come back to haunt families, small businesses, and the economy, increasing the likelihood of another Wall Street-driven economic collapse."

Stress testing has been a crucial regulatory tool since the 2008 economic crisis. It is mandated annually by the Dodd-Frank Act for major banks and systemically important institutions.

In December 2024, several bank lobbying groups filed a lawsuit against the Federal Reserve Board regarding its stress testing practices. Following this, the Fed announced it would seek public input on potential changes aimed at enhancing transparency and reducing capital buffer volatility.

Warren and Waters voiced their concern: “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.”

They emphasized that this approach contradicts previous commitments made by Powell to uphold rigorous banking standards. The lawmakers requested Powell's response to their inquiries by February 24, 2025.