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Powell and Yellen Hearing Recaps 

July 16, 2024

Last week, Federal Reserve Chairman Jerome Powell testified before the House Financial Services Committee (HFSC) and the Senate Banking Committee (SBC) to deliver the Semiannual Monetary Policy Report. Treasury Secretary Janet Yellen separately testified before the HFSC.

Why it matters: Monetary policy and the Basel Capital proposal (covered above) were key topics in the Powell hearings while Yellen’s discussion focused on a variety of policy issues, including beneficial ownership reporting.

CRE Mentions: Commercial real estate was not a key focus of the hearings, but the issue came up several times.

Sen. Tina Smith (D-MN) and Rep. Brittney Pettersen (D-CO) touched on the risks posed by commercial real estate with Powell, focusing specifically on the effect it could have on smaller banks. Powell emphasized the issue does not appear to be systemic and that examiners and banks are working through the issues:

“We know from the stress tests and from our own work that the large banks, they're going to be okay, here. Some of the regional banks and smaller banks have what you would expect, which is high concentrations in their local community in real estate. We are aware of those [and] the banks are aware of it.” -Fed Chair Powell

Chinese Land Investments. Both Republicans and Democrats including Reps. Lucas (R-OK), Zach Nunn (R-IA), and Ralph Norman (R-SC) expressed concern that China continues to buy up land in the vicinity of U.S. military bases.

• However, Rep. David Scott (D-GA) and other Members praised the Biden administration for adding 50 new facilities (see story below) to the list where surrounding property transactions may be reviewed by the Committee on Foreign Investment in the U.S. (CFIUS).
• Secretary Yellen stated that Treasury is working very closely with the U.S. Department of Defense to add those 50 new facilities and the DoD just issued rulemaking after undertaking a comprehensive assessment of military installations across the country.

Beneficial Ownership. Members on both sides of the aisle, including Chairman Patrick McHenry, Rep. Norman (R-SC), Rep. Nydia Velazquez (D-NY), Rep. Joyce Beatty (D-OH), and Rep. Nunn (R-IA) expressed their concern that small businesses across the United States are unaware of the new beneficial ownership requirement.

• Republicans took it a step further to request that FinCEN extend the deadline for small businesses to come into compliance with the beneficial ownership rule.
• Yellen said the Biden administration is conducting extensive outreach and education to ensure small businesses are aware they need to come into compliance with the new rule. Secretary Yellen added that Treasury has been able to reach 2.7 of 3.1 million small businesses.

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