WASHINGTON — Federal Reserve Chair Janet Yellen is scheduled to testify before the House Financial Services Committee next week on the central bank’s regulatory activities.
Yellen will testify Nov. 4 on regulatory matters after she agreed during her July Humphrey-Hawkins testimony on monetary policy to answer bank policy questions at a separate hearing. Committee Chairman Jeb Hensarling, R-Texas, noted in a statement announcing the hearing that Dodd-Frank created a vice chairman position at the Fed that would be dedicated specifically to regulatory issues, but since no one has yet been nominated to fill that position, Yellen will be testifying instead.
“President Obama’s inability or unwillingness to fulfill this requirement of Dodd-Frank and appoint a vice chair for supervision deprives Congress of an important opportunity to conduct effective oversight and hold the Fed accountable. That’s simply unacceptable,” Hensarling said. “Until the president appoints someone, we will have Chair Yellen testify and answer our questions.”
The 1978 Humphrey-Hawkins Full Employment Act requires the Federal Reserve chairman to testify semiannually in both the House and Senate banking oversight committees. In May, Hensarling and Senate Banking Committee Chairman Richard Shelby, R-Ala., asked Yellen to testify semiannually in both committees again to answer questions related to the Fed’s regulatory agenda. When Yellen testified before the House committee in July, she appeared to agree to testify again on regulatory issues, though it is unclear whether she intends to make a similar appearance in the Senate Banking Committee or whether she will make regular appearances in the committees going forward.
The testimony will take place only days after the Fed is slated to propose its rule laying out total loss absorbing capacity requirements for the largest U.S. banks. So-called global systemically important banks, or G-SIBs, will have to hold a combination of capital and long-term unsecured debt that will act as seed capital for a successor bank if one of the G-SIBs should fail. The Fed also finalized a contentious rule in July that would set a capital surcharge on GSIB banks that required banks to hold more capital if they relied too heavily on short-term wholesale funding. The Fed also completed rules in that meeting that would lay out capital requirements for nonbank GE Capital, which had been designated as systemically significant by the Financial Stability Oversight Council.