Federal Reserve Chairman Jerome Powell said he has yet to hear a compelling argument for why the largest banks should receive substantial regulatory relief, noting that by all indicators they are very profitable and competitive in the global marketplace.

“Our expectations of the largest most complex systemically important firms are the highest — they’re very high, and they’re going to remain very high,” Powell said. “As you look around the world, U.S. banks are competing very, very successfully. They’re very profitable. They’re earning good returns on capital. Their stock prices are doing well.”

Speaking before the Economic Club of Chicago Friday afternoon, Powell said he has found nothing to support the argument that regulations are hurting the largest banks, either domestically or overseas. If such proof is presented in the future, he said, he would be willing to consider it.

Federal Reserve Board Gov. Jerome Powell
"Our expectations of the largest most complex systemically important firms are the highest — they’re very high, and they’re going to remain very high," said Federal Reserve chairman Jerome Powell. Bloomberg News

“I’m looking for the case for, some kind of evidence that — and I’m open to this — some kind of evidence that regulation is holding them back,” Powell said. “I’m just not really seeing that case as made at this point. But again, we’re open to what evidence comes in.”

Powell was sworn in as chairman of the Fed in February after being nominated to succeed Janet Yellen. Some Democrats in the Senate — most notably Sen. Elizabeth Warren of Massachusetts — criticized his nomination because they feared he would loosen post-crisis regulations on the largest banks.

But Powell has pushed back against that premise recently. Last month, in his first press conference as chairman, he said the Fed was “fully prepared” to apply macroprudential requirements on banks with assets of less than $250 billion if a Senate bill raising the threshold for systemically risky banks is enacted.

Powell also said during the event that he has delegated many of the responsibilities for regulatory policy and payments to other governors but that the role of the head of the central bank is different.

“I chaired most of the committees during my time" as governor, "but it’s a very different job,” he said. “I chaired the committee that oversees the reserve banks and the board’s operations, the committee that oversees supervision of the banks, and the one that oversees the payments system — all that stuff, I’ve handed all of that off. And so my focus is on the economy, monetary policy and the institution. So it’s a much … it’s a different thing.”

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