House Democrat calls Powell’s testimony on bank deregulation ‘disingenuous at best’


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Rep. Katie Porter, Democrat of California, was a law professor before she was elected to the House of Representatives.

A freshman House Democrat said she’s unhappy with answers she received from Federal Reserve Chairman Jerome Powell late last month about his efforts to “tailor” existing rules on the banking industry.

During his appearance before the House Financial Services Committee, Powell said the Fed’s proposed changes on bank capital rules would not reduce loss-absorbing capital requirements for big banks. He also said the Fed’s recent changes to its stress-test program would not lower the standards of this supervisory tool.

In a letter to Powell, Rep. Katie Porter, a new Democrat from California, called some of the Fed chairman’s answers “disingenuous at best.”

A spokesman for the Fed said the central bank had received the letter and would respond.

At its heart, the dispute is over some changes already made, and others that have been proposed, to the bank regulations put in place in the wake of the financial crisis.

Powell and his chief lieutenant on bank regulation, Fed Vice Chairman for Supervision Randal Quarles, have undertaken a series of actions they say were meant to “tailor“ the rules but don’t amount to meaningful deregulation.

Supporters of strict bank rules, like Porter, have not been convinced. They see the proposed changes as rolling back important safeguards and opening the door for larger, undesirable, deregulation.

Over the last 52 weeks, the Invesco KBW Bank ETF

KBWB, +0.66%

 , with constituents like Bank of America

BAC, +0.52%

  and Citigroup

C, +0.58%

 , has dropped 15% as the yield curve has flattened. The broader Financial Select Sector SPDR ETF

XLF, +0.40%

 has dropped 9%.

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