WASHINGTON – U.S. Senator Katie Britt, R-Ala., called for more accountability at the Federal Reserve and questioned Fed Chair Jerome Powell about the Consumer Financial Protection Bureau’s funding during a Senate Banking Committee hearing Tuesday.
Powell testified in front of the committee for the semiannual report to Congress. Powell said in his opening remarks that there is no need to “hurry to adjust our policy stance” as he said the economy is strong. The Fed cut its interest rates three times last year, and kept it the same last month, according to The Associated Press.
Alabama has received the benefits of the higher interest rates. The state’s General Fund has grown due to the interest on state deposits. In fiscal 2024, interests on state deposits accounted for about $152 million of the General Fund’s $226 million growth. However, that growth is expected to slow because of the interest rate cuts last year.
Britt used her questioning time to express her concern over the Fed’s response to the bank failures that happened in 2023, while also calling out the regulation that occurred in response.
“I think there’s some real merit to having accountability that we have not seen there,” Britt said. “In the aftermath of those failures, the Fed was certainly not slow to act when it came to new regulations.”
Britt also brought up the CFPB and its funding model. The CFPB has been in the news recently as the Trump administration ordered it to stop its work over the weekend. The agency was created in response to the 2008 financial crisis to protect consumers. The CFPB is funded through quarterly transfers from the Fed requested by the agency. The transfers are not subject to Congressional approval.
Britt questioned Powell about the logistics of this process. Office of Management and Budget Director Russell Vought announced on X that the CFPB will not take the next payment.
“I’d like to applaud the current administration and Acting Director Vought for inserting some accountability back into the agency by pausing these quarterly, just blank checks,” Britt said.
Britt asked how the Fed can fund the CFPB if it currently doesn’t have any earnings.
“We’ve looked at that question very carefully and it’s very clear on the law and the legislative history that were still required to make those payments,” Powell said.
A Supreme Court ruling in May determined that the CFPB’s funding is constitutional, according to the Associated Press.
While Britt and other Senate Republicans expressed their concerns with the CFPB, Democrats like Sen. Elizabeth Warren, D-MA, who helped create the agency, focused on the importance of the consumer protection piece.
“If the CFPB is not there examining these giant banks to make sure they are following the laws on not cheating consumers, who is doing that job?” Warren said.
Powell said “no other federal regulator” is doing it.
Powell will also testify in front of the House Financial Services Committee on Wednesday.