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Groups React To Nomination Of New Fed Chairman

Groups react to Jay or Jerome Powell nomination for the Fed Chair to replace Janet Yellen, first we start off with Janet herself who has a brief statement on the matter

Statement by Federal Reserve Board Chair Janet L. Yellen:

I congratulate my colleague Jay Powell on his nomination to be Chairman of the Federal Reserve Board. Jay’s long and distinguished career has been marked by dedicated public service and seriousness of purpose. I am confident in his deep commitment to carrying out the vital public mission of the Federal Reserve. I am committed to working with him to ensure a smooth transition.

Charlie Ripley, Senior Investment Strategist for Allianz Investment Management, about Federal Reserve Chair nominee Jerome Powell and the market

The official nomination of Jay Powell for Fed Chair by President Trump should be viewed as a welcomed event by markets and investors as this choice provides a more predictable and less uncertain path for future monetary policy. A smooth transition of the Chair position is exactly what this economy needs and Janet Yellen appears to have committed to that in her latest statement. The uneventful reaction in both equity and bond markets confirms this. While Powell has similar views to Janet Yellen, it’s important to note his background is less academic than his predecessor. On balance, we expect the Fed to continue the process of removing policy accommodation, but the decision process going forward may come from other influences as the composition of the Fed starts to change.

Danielle DiMartino Booth of Money Strong, LLC

The sheer breadth of Powell’s experience is refreshing compared to what we’ve had for the past 30 years. Powell has a deep understanding of the law and politics. He worked in the Treasury Department under Nicholas Brady and was confirmed as Undersecretary of the Treasury under George H.W. Bush. His background in politics and the experience he has had at the Fed thus far have prepared him well for his role as liaison to Congress and the White House.

Powell’s experience as an investment banker was critical in his carrying out the investigation and sanctioning of Salomon Brothers. Understanding the entirely different type of politics that exists in big banks will bode well for his capacity to regulate the banks. This attribute especially will dilute the power traditionally exerted by the NY Fed in recent years, a District that has a long history of conflicts of interest vis-à-vis the banks it regulates. A stronger regulator as Fed chair in the years leading up to the financial crisis.

At the Carlyle Group, Powell founded and ran the Industrial Group within the Buyout Fund. A separate missing characteristic among Fed leaders for the past 30 years has been a woeful lack of understanding as to how Fed policy effects corporations and the decisions CEOs and CFOs make driven by Fed policy, the most obvious of which has been debt-financed share buybacks at the expense of capital expenditures.

Some in the media have questioned Powell’s being the wealthiest individual at the Fed. That is an extremely strong attribute. In his work between 2010 and 2012 at a bipartisan think tank, Powell worked for a salary of $1 per year to carry out his mission to raise the debt ceiling. His wealth affords him the luxury of having no preset agenda. His history of working for his country to its best end exemplifies that he is at the Fed because he truly believes he is doing a greater good in servicing his country.

Powell’s work on Too Big to Fail banks also speaks to his ability to be independent and objective in his approach to regulating big banks with deep-pocketed lobbyists who hold huge sway over politicians. If he is willing to go up against the biggest banks, he will hopefully prove to be a leader cast in the mold of William McChesney Martin, the longest serving Fed Chairman famous for testifying to Congress that it was the Fed’s job to take away the punch bowl just as the party gets going.

His being a member of the Republican party is a sign he will be less apt to encourage further mission creep at the Fed in its fulfillment of its second mandate to maximize employment. Dovish leaning Fed chairs have induced financial instability time and again in their efforts to bring marginal workers off the sidelines. The busts that have followed though have done greater damage to the labor market. His experience in the financial markets suggests he will be less apt to keep rates too low for too long as has been the case with his three predecessors.

Powell was not in favor of the third round of QE, but voted for its nevertheless. This is his biggest black eye and why market participants perceive him to be as dovish as they do. One can only hope that the quiet leader will have the strength to not only act more independently, being faithful to his convictions, but also to encourage dissent on the Board of Governors which has been absent since 1996 save two dissents.

I lean towards the Bloomberg Intelligence Fed Spectrometer which rates Powell as neutral rather than a hawk or a dove. Or as the man I used to call boss, Richard Fisher, would say, Powell is a (wise) owl. The notion that an intelligent man who has studied economics assiduously since joining the Fed is unfit to lead because he is not a PhD in economics is naïve and utterly preposterous. His not being an academic is possibly his best attribute given he will be battling the next recession and the financial markets disruption that is sure to accompany it.
Industry Leaders Announce Formation of SBIA BDC Council

WASHINGTON, D.C. (November 2, 2017) – Today, a broad coalition of Business Development Companies (BDCs) and investment industry leaders announce the formation of the Small Business Investor Alliance (SBIA) BDC Council. The Council and SBIA work to advocate for modernization of the BDC industry. Council members represent the most prominent group of investment industry leaders supporting small business investment in almost every industry and sector.

The BDC industry is growing rapidly, and modernizations made to how BDCs are regulated will help unleash more available capital to small businesses that normally cannot access it through bank financing alone. Currently, BDCs have over $80 billion in outstanding debt investments in middle market businesses. This financing helps businesses expand and create jobs, providing much needed growth to the U.S. economy. Growing companies across the country rely on BDCs to purchase equipment, build factories, and create jobs. The more capital made available means more small businesses have the opportunity for growth.

Middle market firms are responsible for more than half of U.S. job growth since 2011, and BDCs provide vital growth capital to these growing businesses.

“The overall growth of the U.S. depends on the health of the Main Street economy. Modernizing the way BDCs are able to access capital will increase capital formation while maintaining the responsible investor protections now in place, and this will be the focus of the Council’s work.” said Ian Simmonds, Chair of the SBIA BDC Council and Chief Financial Officer of TPG Specialty Lending, a publicly traded BDC.

“The investments made by BDCs are helping to grow local economies across America’s main street. The capital and partnership a BDC provides helps small business owners achieve next level growth and build more American success stories,” said Dean D’Angelo, a founding partner of Stellus Capital Management and a leader within the BDC investment industry.

The BDC Council is committed to working with Congress and other stakeholders to advance consensus-driven changes to current regulations that will make it easier to deploy capital to domestic small businesses.

Keating Statement on Powell Nomination

Washington, D.C.Frank Keating, Bipartisan Policy Center board chairman and former chief executive of the American Bankers Association, issued the following statement on Jay Powell’s nomination to be the next Federal Reserve chairman:

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Jerome Powell
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“Jay Powell is the right leader for the Federal Reserve as it pursues its critical goals of keeping unemployment low and inflation in check. I have known Jay for many years, and along with his vast financial expertise, he will bring a thoughtful and insightful leadership style to the central bank. At the Bipartisan Policy Center he encouraged conflicting viewpoints in an effort to find realistic common ground—a necessary skill that will serve our country at the helm of the Federal Reserve. He will be a wonderful leader and thoughtful advocate for what's best for the financial health of Americans.”

ICBA Statement on Nomination of Jerome Powell for Fed Chairman

Washington, D.C (Nov. 2, 2017)—Scott Heitkamp, chairman of the Independent Community Bankers of America® (ICBA) and president and CEO of ValueBank Texas in Corpus Christi, and Camden R. Fine, ICBA president and CEO, issued the following statement on today’s nomination of Federal Reserve Governor Jerome Powell for Federal Reserve Board chairman.

“ICBA congratulates Federal Reserve Governor Jerome Powell on his nomination for Federal Reserve Board chairman. Governor Powell is a strong choice for Fed chairman, bringing a wealth of experience from a long career in banking, finance and regulation.

“ICBA urges the Senate to promptly confirm Governor Powell and looks forward to working with him on the challenges and opportunities facing the community banking industry.”


About ICBA

The Independent Community Bankers of America®, the nation’s voice for more than 5,700 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit ICBA’s website at www.icba.org.

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