The importance of the Federal Reserve having relationships with the “other independent regulatory agencies” the Congress and the administration – and the need for transparency and accountability – were outlined by the chairman of the central bank’s board Thursday during an interview before an audience at a Washington group.
Federal Reserve Board Chairman Jerome H. (“Jay”) Powell stressed the importance of transparency during the on-stage interview at the Washington Economic Club. He particularly noted the significance of having a relationship with Congress.
“I can’t stress enough how important it is in our system of government, our accountability to the American people runs through Congress,” Powell said. He said that goes, specifically, through the two congressional oversight committees – the Senate Banking and the House Financial Services Committees – and also through congressional leadership.
“So we – including all of my board colleagues – spend lots of time explaining what we are doing and why we are doing it,” he said. “We seek transparency, we seek accountability – it’s a big part of what we do.”
Powell also said, regarding speaking in plain terms and not in “Fed speak,” that he attempts to explain what the Fed is doing in such a comprehensible way that is of interest to the public. “Economic jargon has a real place; it’s the way economists say exactly what they mean and exactly what they don’t mean,” he said. “It’s not appropriate for use with the public because it’s just annoying.” He said he “tries hard not to” use jargon to avoid irritating the public “or to lapse into Latin.”
In other comments, Powell said:
- One of the pleasures of his job as Fed chairman is meeting with members of the public. “You don’t find any deals in the office,” he said.
- Looking back at the Fed’s role in the financial crisis a decade ago, he praised actions by the central bank. “If you look fairly back at the record and don’t expect perfection,” he said, the Fed did “a very good job,” particularly at the height of the crisis. He said the Fed’s actions, and the administration at the time, were successful in ending what had “all the makings of a collapse of the global financial system.”
- Financial institutions affected by the departure of the United Kingdom from the European Union (“Brexit”) should be well prepared for whatever changes come. “They’ve been subject to supervision by U.S. authorities, U.K. authorities, and E.U. authorities – so, they’re prepared for the full range of possible outcomes. That’s the main thing that we’ve been working on.” He did note that there will be some effect on both the U.K. and E.U. economies but said it doesn’t need to be very significant “unless there are real financial disruptions, and we don’t expect that.”