U.S. GOVERNMENT PUBLISHING OFFICE

31–196 PDF WASHINGTON : 2018

S. HRG. 115–306 

NOMINATIONS OF RICHARD CLARIDA AND 

MICHELLE W. BOWMAN 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

ON 

THE NOMINATIONS OF: 

RICHARD CLARIDA, OF CONNECTICUT, TO BE A MEMBER AND VICE CHAIRMAN, 

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

MICHELLE W. BOWMAN, OF KANSAS, TO BE A MEMBER, BOARD OF GOVERNORS

OF THE FEDERAL RESERVE SYSTEM

MAY 15, 2018 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.govinfo.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

MIKE CRAPO, Idaho, Chairman 

RICHARD C. SHELBY, Alabama 

BOB CORKER, Tennessee 

PATRICK J. TOOMEY, Pennsylvania 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

DAVID PERDUE, Georgia 

THOM TILLIS, North Carolina 

JOHN KENNEDY, Louisiana 

JERRY MORAN, Kansas 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana 

BRIAN SCHATZ, Hawaii 

CHRIS VAN HOLLEN, Maryland 

CATHERINE CORTEZ MASTO, Nevada 

DOUG JONES, Alabama 

GREGG RICHARD, Staff Director 

MARK POWDEN, Democratic Staff Director 

ELAD ROISMAN, Chief Counsel 

JOE CARAPIET, Senior Counsel 

TRAVIS HILL, Senior Counsel 

ELISHA TUKU, Democratic Chief Counsel 

LAURA SWANSON, Democratic Deputy Staff Director 

AMANDA FISCHER, Democratic Professional Staff Member 

DAWN RATLIFF, Chief Clerk 

CAMERON RICKER, Deputy Clerk 

JAMES GUILIANO, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

TUESDAY, MAY 15, 2018 

Page 

Opening statement of Chairman Crapo ................................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Brown .................................................................................................. 2 

NOMINEES 

Richard Clarida, of Connecticut, to be a Member and Vice Chairman, Board 

of Governors of the Federal Reserve System ..................................................... 4 

Prepared statement .......................................................................................... 27 

Biographical sketch of nominee ....................................................................... 28 

Responses to written questions of: 

Senator Brown ........................................................................................... 57 

Senator Reed .............................................................................................. 63 

Senator Menendez ..................................................................................... 64 

Senator Warner ......................................................................................... 67 

Senator Warren ......................................................................................... 70 

Senator Cortez Masto ................................................................................ 73 

Michelle W. Bowman, of Kansas, to be a Member, Board of Governors of 

the Federal Reserve System ................................................................................ 5 

Prepared statement .......................................................................................... 50 

Biographical sketch of nominee ....................................................................... 51 

Responses to written questions of: 

Senator Brown ........................................................................................... 83 

Senator Reed .............................................................................................. 91 

Senator Menendez ..................................................................................... 92 

Senator Warner ......................................................................................... 95 

Senator Warren ......................................................................................... 97 

Senator Cortez Masto ................................................................................ 100 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

List of Federal Reserve Enforcement Actions from January 2015–May 2018 

submitted by Richard Clarida and Michelle W. Bowman ................................. 116 

Joint letter submitted in support of the nomination of Richard Clarida ............ 122 

ICBA letter submitted in support of the nomination of Michelle W. Bowman .. 124 

Excerpt from the December 2012 FDIC Study submitted by Senator Brown .... 126 

(III)

(1) 

NOMINATIONS OF RICHARD CLARIDA AND 

MICHELLE W. BOWMAN 

TUESDAY, MAY 15, 2018 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 10:17 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Mike Crapo, Chairman of the Committee, 

presiding. 

OPENING STATEMENT OF CHAIRMAN MIKE CRAPO 

Chairman CRAPO. The hearing will come to order. 

This morning we will consider the nominations of the Honorable 

Richard Clarida to be a Member and Vice Chairman of the Board 

of Governors of the Federal Reserve System, and Commissioner 

Michelle Bowman to be a Member of the Board of Governors of the 

Federal Reserve System. 

Welcome and congratulations to each of you for your nominations 

to these positions. I see friends and family sitting with you, and I 

welcome them here as well. You are certainly welcome to introduce 

them. 

We are fortunate to have two highly qualified nominees appearing today. These positions are critical to ensuring safe, sound, and 

vibrant financial systems and a healthy, growing economy. 

Dr. Clarida currently serves as managing director and global 

strategic advisor at PIMCO, a position he has held since 2006. 

Previously, he served as Assistant Secretary of the Treasury for 

Economic Policy from 2002 to 2003 and as a senior staff economist 

with the Council of Economic Advisers from 1986 to 1987. 

In his academic career, he was an assistant professor at Yale 

University from 1983 to 1988 and has served as a professor of economics at Columbia University in various capacities since 1988. 

If confirmed, Dr. Clarida will serve as the Federal Reserve’s Vice 

Chairman and will play an important role in monetary policy normalization. 

Dr. Clarida has written extensively about monetary policy, and 

I look forward to hearing more about his views. Such expertise will 

be especially important as the Fed continues to wind down its balance sheet and raise interest rates after years at the zero lower 

bound. 

Commissioner Bowman is currently the State Bank Commissioner of Kansas, a position she has held since February 2017. Previously, Commissioner Bowman worked as a Vice President at 

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Farmers & Drovers Bank, a community bank with $175 million in 

assets, from 2010 through 2017. 

She has also served in a number of Government roles, including 

as a staffer in both the Senate and House and in various roles at 

the Department of Homeland Security. 

With past experience as a community banker and as a bank regulator, Commissioner Bowman is well equipped to fill the Federal 

Reserve Board role reserved for someone with community banking 

experience. 

Rightsizing our regulation for community banks has been a critical goal of mine as Chairman. Earlier this year, the Senate passed 

Senate bill 2155, a bipartisan bill focused on providing regulatory 

relief for community banks. 

If confirmed, Commissioner Bowman will play a key role in implementing the bill, if it is signed into law. In addition, the Federal 

Reserve continues to review many of the rules put in place following the crisis. 

If confirmed, I look forward to working with Dr. Clarida and 

Commissioner Bowman on further regulatory and monetary policy 

improvements. Congratulations again on your nominations and 

thank you and your families for your willingness to serve. 

Senator Brown. 

STATEMENT OF SENATOR SHERROD BROWN 

Senator BROWN. Thank you, Mr. Chairman. I want to congratulate the two of you and welcome your families to the Committee. 

Thank you for your willingness to serve our country 

In the last Congress, two of President Obama’s nominees to serve 

as Members of the Federal Reserve Board of Governors were denied even consideration by this Committee. Mr. Allan Landon, a 

Republican, was nominated in January 2015. He waited for 2 years 

for a hearing—a hearing he never got. Ms. Kathryn Dominguez 

waited nearly as long—a year and half. Again, nothing. It sounds 

a lot like what the Republicans did on a Supreme Court nominee. 

As a result, President Trump will be able to nominate six of the 

seven members to the Board of Governors of the Federal Reserve. 

His first picks, Chair Powell and Vice Chair Quarles, have already 

been confirmed; Mr. Goodfriend has had his hearing. 

Today’s nominees, the Honorable Richard Clarida and Commissioner Michelle Bowman, bring relevant experience to the Federal 

Reserve Board. Dr. Clarida, who is nominated to serve as Vice 

Chair of the Board, has spent his career studying monetary policy. 

As we enter our ninth year of the recovery since the Great Recession, even though job growth in the last couple years has not been 

quite what it was, with the Fed funds rate still below 2 percent and 

inflation finally nearing the Fed’s target, expertise in that area is 

critical. 

Ms. Bowman has been nominated to serve in the role reserved 

for an individual with experience working in or supervising community banks. She has done both. 

But experience is only useful if you have learned the right lessons from it. So despite the nominees’ experience, I am concerned. 

We have seen the Treasury’s recommendations urging that 

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we ‘‘tailor’’ and ‘‘recalibrate’’ the financial protections put in place 

after the crisis. It sound a lot like Wall Street’s wish list. 

We have heard the Fed’s Vice Chair of Supervision’s plans for 

bank rules. We have seen actions with the Fed’s recent capital and 

leverage proposals, spoken out in opposition by Sheila Bair and 

Tom Hoenig, two prominent Republican regulators. We see they decrease the amount of capital required by the biggest banks by $121 

billion. So we have banks with some of the most—the highest profitability rates in their history. We have a huge tax cut bestowed 

on the financial services industry. We have legislation that has 

passed the Senate and will likely soon pass the House, rolling back 

even more rules and regulations for banks. It just never seems to 

be enough for them. 

It matters more than ever, because of that, who will be voting 

on proposals to weaken bank rules. The Fed, the OCC, the Office 

of Thrift Supervision, and other watchdogs spent the decade— 

‘‘watchdogs,’’ I use that term loosely—leading up to the crisis weakening bank rules and failing to protect communities. 

In the first half of 2007, my ZIP Code in Cleveland—44105—had 

more foreclosures than any other ZIP Code in the United States. 

Factories closed; neighborhoods and towns emptied out. The population in Slavic Village where I live dropped 27 percent, down to 

20,000 people. At the same time the subprime lending industry 

swept in. 

As early as 2000, the Cuyahoga County Treasurer and other local 

officials went to the Federal Reserve asking them to take action 

against subprime lenders preying on homeowners. As early as 

2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007. 

The Fed did nothing. 

Dr. Clarida, you have said that the financial crisis resulted from 

serious failures by regulators of securities markets and banks to 

adequately understand and supervise markets. I appreciated your 

comments in my office and the vigilance which I hope you show. 

The financial crisis followed a decade of deregulation of the financial industry, and now too many people who informed the policies before the crisis are back. 

Dr. Clarida admitted we got it wrong. 

Ms. Bowman knows firsthand how bank failures impact communities across the country: 462 failures starting in 2008, including 

bank failures in your home State and Senator Moran’s home State 

of Kansas. Employment in Kansas is only 1.5 percent higher than 

at the pre-crisis peak 10 years ago. 

I wish others in the Administration and Congress would remember the devastating impacts of the financial crisis. 

As I consider the nominations for each of you, I am not just looking to what expertise you bring to these positions. You do that. I 

want to know that you remember the people behind the numbers. 

I am looking at how you will approach the numerous issues considered by the Board: monetary policy, small bank regulation with 

which you are so familiar, Ms. Bowman, but also big bank regulation and supervision, enforcement actions, and, most importantly, 

whether you will push back on policies that weaken financial stability. Do not just rely on Vice Chair Quarles, who is Director of 

Supervision. Study it. Push back on him when he is wrong. Push 

4 

back on him when he deregulates beyond what he should, which 

already seems imminent. 

Thank you. 

Chairman CRAPO. Thank you. 

At this point we will administer the oath. Will the nominees 

please rise and raise your right hands? Do you swear or affirm that 

the testimony you are about to give is the truth, the whole truth, 

and nothing but the truth, so help you God? 

Mr. CLARIDA. I do. 

Ms. BOWMAN. I do. 

Chairman CRAPO. And do you agree to appear and testify before 

any duly constituted Committee of the Senate? 

Mr. CLARIDA. I do. 

Ms. BOWMAN. I do. 

Chairman CRAPO. Thank you. You may sit down. 

I will advise the witnesses that your written statements will be 

made a part of the record in its entirety. As you can see, we have 

got a clock there. We ask you to try to keep your presentations to 

5 minutes, if possible, so we will have time for questions from the 

Senators. And, Dr. Clarida, you may proceed first. 

STATEMENT OF RICHARD CLARIDA, OF CONNECTICUT, TO BE 

A MEMBER AND VICE CHAIRMAN, BOARD OF GOVERNORS 

OF THE FEDERAL RESERVE SYSTEM 

Mr. CLARIDA. Thank you very much. Chairman Crapo, Ranking 

Member Brown, and Members of the Committee, thank you for the 

opportunity to appear before you today. I am grateful for the Committee’s consideration for the important positions for which I have 

been nominated. I am also honored to have been nominated by the 

President to be Vice Chair of the Federal Reserve Board of Governors and a Member of the Board of Governors. 

I am grateful for the support of my family who is with me here 

today: my wife of 29 years, Polly Barry, and my sons Matthew and 

Russell. 

The Federal Reserve has been charged by the Congress with a 

dual mandate responsibility of maximum employment and price 

stability. I fully support both pillars of this dual mandate and, if 

I am confirmed, will support a balanced approach to achieving 

these important objectives. 

The Federal Reserve also plays a central role in ensuring the 

safety, soundness, and stability of our financial system. If I am confirmed, I will support policies that are effective, efficient, and appropriately tailored; but I will also want to preserve the important 

gains in resiliency and stability of our financial system that have 

resulted from the significant improvements and reforms put in 

place since the financial crisis. 

I believe I am well qualified for the positions for which I have 

been nominated. In my published work, I have developed, along 

with others, a framework for monetary policy analysis that has 

been widely cited at the Fed and central banks around the world. 

Although I have served most of my career in academia, I have had 

two opportunities to serve in economic policy positions in the Federal Government, in the executive branch: as a senior staff economist with Council of Economic Advisers in 1986 and 1987; and as 

5 

Assistant Secretary of the Treasury for Economic Policy between 

2002 and 2003. These experiences taught me the importance of 

doing economic analysis that is practical, that is relevant, and that 

gives insights into the way that economic policy impacts the lives 

of real Americans. 

I have also had an opportunity to advise investment firms on economics and strategy, and I think these experiences have given me 

some insights into the interplay between macroeconomics and financial markets. 

The Federal Reserve has an enormous responsibility to achieve 

the objectives assigned to it by the Congress, to communicate the 

rationale for these policies, and to explain how the policies will 

achieve the goals assigned. If I am confirmed, I look forward to 

working with Chair Powell and my other colleagues to satisfy the 

assignments given to the Federal Reserve and, importantly, to foster the transparent communication and accountability that is so 

important for the Fed’s independent and nonpartisan status. 

Thank you again for the privilege of appearing before you today, 

and I look forward to answering your questions. 

Chairman Crapo. Thank you, Dr. Clarida. 

Commissioner Bowman. 

STATEMENT OF MICHELLE W. BOWMAN, OF KANSAS, TO BE A 

MEMBER, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 

Ms. BOWMAN. Good morning, Chairman Crapo, Ranking Member 

Brown, and Members of the Committee. Thank you for this opportunity to appear before you today. I am deeply honored that the 

President has nominated me to serve as a Member of the Board of 

Governors of the Federal Reserve System. Because community 

banking is a vital and ongoing part of my family’s legacy, I am also 

humbled that, if I am confirmed, I will be holding the position designated for someone with community banking experience. 

I am also grateful to my family and my husband’s family for 

their continued support and belief in me. My husband, Wes, our 

children Jack and Audrey, my sister Maggie, who is a school teacher in Kansas City, Missouri, and my parents, Jan and Hank White, 

are with me today. My father, Hank, is a fourth-generation banker. 

He is a farmer and a rancher, a Vietnam veteran, and a retired 

U.S. Air Force officer. My mother, Jan, is a great inspiration. She 

taught me that with hard work, anything is possible. My in-laws, 

John and Sherry Bowman, and Sherry’s 91-year-old mother, Mary 

Hopkins, could not be here with us today, but they are watching 

from Everest, Kansas. 

My family and I have been in community banking for generations. In 1882, my great-great-grandfather, W.H. White, helped to 

charter the Farmers & Drovers Bank. The bank was named for the 

customers it served then and continues to serve today: the farmers 

and ranchers of the Flint Hills of Kansas. Today the fourth and 

fifth generation of my family continue this long tradition of service 

through the bank and through active participation in the community and through volunteer work in our community of 2,300 people. 

I know firsthand that community banks are a vital part of the 

backbone of small, rural, agricultural towns, and they play a 

6 

critical role in providing access to credit and fostering economic activity in communities across our country. Without these institutions, many communities and many of our citizens will see their 

economic opportunities suffer significantly. 

I joined my family’s bank in 2010, and I learned the business 

from the front line to the back office. My most challenging role was 

as compliance officer—working with our small team to implement 

many of the post-crisis regulations. Although the crisis revealed 

weaknesses in the U.S. financial system that needed to be addressed, I have witnessed firsthand how the regulatory environment created in the aftermath of the crisis has disadvantaged community banks. And if confirmed, I will bring this perspective to my 

work at the Board to ensure that rules preserve the resiliency of 

the financial system, but that they are appropriately tailored to the 

size, complexity, and risk of an institution. 

As a community banker, it was my job to support local businesses and consumers. This experience has given me a personal 

and deep understanding of how the Federal Reserve’s goals of fostering maximum employment and stable prices directly affect the 

financial system and the broader economy. The dual mandate is 

critically important to our economy, to our businesses, to our families, and our communities. If I am confirmed, I will be very focused 

on how we can do the best job possible to fulfill that mandate. 

I currently serve as the Kansas State Bank Commissioner, and 

our office oversees hundreds of State-chartered banks, trust companies, money transmitters, and other nondepository financial service 

institutions. Our mission is both proactive oversight and protection 

of the consumers our financial institutions serve. As commissioner, 

I am accountable to the people of Kansas. And as I carry out my 

regulatory mission, my goal is to treat every consumer and every 

institution fairly, respectfully, and with open communication. 

I believe the experiences I have described qualify me for this important role, and if confirmed by the Senate, I will be committed 

to accountability, transparency, and clear communication in all of 

my responsibilities at the Federal Reserve. 

Thank you for the honor of this hearing, and I look forward to 

answering the Committee’s questions. 

Chairman Crapo. Thank you very much, Commissioner Bowman. 

I will proceed with the first questioning. My first question is 

really to both of you, so I would like you each to respond to this. 

There has been a lot of discussion here in the Senate and, frankly, 

here today about the concept of tailoring and whether—some view 

tailoring as rolling back regulations that should be in place. Others 

views tailoring as getting the correct requirements of regulation focused properly on the risk that is presented by individual financial 

institutions. 

I would just like to have your perspective on both of those. I 

think it is very clear that one way to improve economic growth is 

by addressing areas where financial regulations can be improved. 

Financial regulations should promote a vibrant, growing economy, 

but should still ensure a safe and sound financial institution. And 

I personally believe that those two objectives can be achieved. I 

would simply like your perspectives on that. Dr. Clarida, would you 

go first? 

7 

Mr. CLARIDA. Well, thank you, Mr. Chairman. And, yes, I would 

agree very much with that sentiment. I think that tailoring and efficiency are goals, but within the context of preserving the important improvements in the financial stability and soundness in our 

financial system. And certainly were I to be confirmed, that would 

be my focus on any particular matter that I would vote on as a 

member, namely, to seek out efficiencies and tailoring to specifics 

as best as possible, but not putting the system at risk in an unnecessary way. 

Chairman CRAPO. Thank you. 

Commissioner Bowman? 

Ms. BOWMAN. Chairman Crapo, a great deal of work has gone 

into improving the levels of both capital, liquidity, the stress testing that has been put in place, and also the resolvability of institutions has improved greatly since the crisis. I think when we are 

talking about appropriateness of regulation and applying it to different institutions in our financial system, we need to be very 

aware of the complexity, the size, and the risk of those institutions 

as we are looking to ensure the safety and soundness of our financial system. 

I believe it is appropriate to consider those characteristics within 

the context of safety and soundness and looking to apply the most 

appropriate level of regulation to each institution. 

Chairman CRAPO. Well, I appreciate your answers, and to basically just summarize what I heard, we all agree that the primary 

objective of our regulatory system should be to assure the safety 

and soundness of our financial institutions in this country. Within 

that standard there can be a level of regulation, depending on the 

size, complexity, business model, and financial risk that is posed by 

an individual financial institution. 

I probably just have time for one more question, and so I am 

going to ask that of you, Dr. Clarida, and this goes not to regulation but to basically economic policy. The Fed recently began the 

process of shrinking its balance sheet, which currently sits above 

$4 trillion. In a speech last year, Chairman Powell cited long-run 

estimates of the appropriate size of the balance sheet as about $2.4 

to $2.9 trillion by 2022. I would just like your opinion on these factors. What factors do you expect to focus on in determining the 

pace and ultimate scope of the balance sheet reduction? 

Mr. CLARIDA. Thank you, Mr. Chairman. Let me begin by saying 

that certainly I think the Fed does need a smaller balance sheet, 

and so I am very much in support of the efforts commenced last 

year to begin to shrink that balance sheet. The ultimate destination for the balance sheet should be a lot smaller than it is today. 

I am aware of Chairman Powell’s comments on that. 

One factor determining the size of the balance sheet is the 

amount of currency in circulation, and that number is growing. So 

the Fed will have a larger balance sheet, I imagine, at the end of 

this process, whenever it ends, than it did before the crisis. 

I would look forward, if I am confirmed, to working with my colleagues to assess the appropriate metrics for determining when to 

stop to shrink the balance sheet. So I think the numbers that the 

Chair has mentioned, that Chair Powell has mentioned, makes 

8 

sense to me, but I have not studied it deeply and would look forward to talking with my colleagues about that, if confirmed. 

Chairman CRAPO. Thank you very much. 

Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

A question for both of you. I will start with you, Commissioner 

Bowman. Do you believe the Federal Reserve is intended to be 

independent from the President of the United States? 

Ms. BOWMAN. Absolutely. 

Senator BROWN. Dr. Clarida? 

Mr. CLARIDA. Absolutely. It is essential. 

Senator BROWN. Thank you. My understanding is that, Commissioner Bowman, you did not meet with the President and, Dr. 

Clarida, you did before the nomination? 

Mr. CLARIDA. I did meet with the President, yes. 

Senator BROWN. Ms. Bowman, you did not? 

Ms. BOWMAN. Correct. 

Senator BROWN. OK. When you were interviewed by the President, Dr. Clarida, did he say anything that gives the impression 

that he did not view the central bank as independent? 

Mr. CLARIDA. Absolutely not, and let me just state definitively 

that I had a number of meetings over several months with a number of officials, including the President, and in no meeting and at 

no time did I ever have any reason to question the independence 

of the Federal Reserve. Absolutely not. 

Senator BROWN. OK. Thank you. 

Ms. Bowman, I appreciated the story of your family and the 

bank, and I must admit maybe I should have listened more to Senator Moran. I did not know what a drover was until I saw the—— 

[Laughter.] 

Senator BROWN. It is not a word, not a thing that we do in Ohio, 

but the farmers and drovers, so I like that. Your family’s bank is 

profitable. It serves its community. It has maintained a Tier 1 leverage ratio of well over 20 percent, which is five times the required ratio, to my understanding throughout your time working 

there. Do you agree that banks with higher capital levels tend to 

lend more, not less, through the ups and downs of the business 

cycle? 

Ms. BOWMAN. Senator, I agree that capital is a very important 

part of the stability of our financial system, and capital is one of 

the ways that banks have credit available or funds available to 

loan to their communities or to their loan customers. It is a very 

important part of the system. One of many of the four pillars that 

have been strengthened since the crisis is capital, and liquidity as 

well. Both of those are important parts of the—— 

Senator BROWN. And you—sorry to interrupt. You have been able 

to serve your community well, your bank—you were not there during all this time, I understand. With those higher capital levels, 

you were able to serve the community well in good times and bad 

times, correct? 

Ms. BOWMAN. That is my understanding, yes, correct. 

Senator BROWN. OK. The Fed last month proposed weakening 

the required leverage rules for the very largest banks, which already many experts think are too low at 5 percent. My question to 

9 

both of you, and I will start with you, Ms. Bowman: Will you commit to oppose any Federal proposal that weakens leverage rules for 

the largest banks? 

Ms. BOWMAN. Senator, I think it is important to understand the 

details of all of those proposals so that should I be asked, and if 

I am confirmed, to participate in discussions regarding those proposals, that I am fully informed, that I have the opportunity to 

speak with my colleagues, and that I can vote in a way that I feel 

is appropriate. 

Senator BROWN. Thank you for that. I did not expect anything 

less—or anything more indirect. If you come to the conclusion after 

talking to Supervision Chair Quarles, Vice Chair Quarles, whatever, and you analyze this and you believe in your mind that these 

weakened leverage rules—weakening the required leverage rules, 

you would oppose it? 

Ms. BOWMAN. Senator, I would certainly express my opinion and 

ask questions so that I would be—— 

Senator BROWN. But if your conclusion was, yes, these rules 

would weaken required leverage rules, would that mean you would 

oppose it? 

Ms. BOWMAN. I would feel free to vote as I felt appropriate, and 

if that were how I felt, I would certainly do so. 

Senator BROWN. Dr. Clarida, would you like to comment on the 

same question? 

Mr. CLARIDA. Just briefly, just to say that, as I mentioned in my 

opening statement, a priority of mine in any consideration on any 

item I would vote on in this area would be I would need to be assured that are preserved the substantial gains in safety and soundness and resiliency that we have in place. So I would look at it on 

a case-by-case basis, and I agree with the prior comment. 

Senator BROWN. That is a bit of a surprise answer from you, Dr. 

Clarida. In 2010, you wrote, ‘‘Financial history suggests ‘never 

again’ eventually becomes ‘this time it is different.’ ‘This time it is 

different’ eventually sets the stage for the next financial crisis.’’ 

Based on that, you give the same answer? 

Mr. CLARIDA. My answer would simply be, as I mentioned, I 

would want to preserve what we have in place. I would look on it, 

if confirmed, on a case-by-case basis. But I would certainly hope 

that I would never fall victim to the ‘‘this time it is different’’ with 

regards to the financial crisis because it was enormously costly to 

the economy, to individual communities, and certainly that is not 

a lesson that I will forget. 

Senator BROWN. Well, thank you. I am concerned that we have— 

well, I am concerned when we have a very aggressive Vice Chair 

of Supervision now at the Fed who has had a history of supporting 

deregulation, in some cases ignoring signs of—well, suffering perhaps, as many on this Committee do, from collective amnesia about 

what happened a decade ago. We have regulators in this Government who were in the Government before and did not see it coming. In fact, many contributed in their vigor and their aggressiveness—their vigor and interest in deregulating. And I am very concerned with the collective amnesia, with the regulators in place in 

other agencies and at the Fed, who want to deregulate. I am very 

concerned about the strength and aggressiveness of the two of you 

10 

in pushing back. I will leave it at that, and I will remind you of 

your comments later perhaps. 

Chairman CRAPO. Senator Scott. 

Senator SCOTT. Thank you, Chairman. 

To the panel, thank you both for being here and thank you for 

your willingness to serve. Commissioner Bowman, I would like to 

say to your family, especially to your father, thank you for your 

service as an Air Force officer, a banker, a farmer. I guess in the 

tradition of Kansas, he is just a real Renaissance man. I am not 

quite sure what your kids do to have to be punished here by sitting 

through a Banking hearing. 

[Laughter.] 

Senator SCOTT. I apologize on behalf of this topic for your kids, 

but I do want to make a couple of points. 

The unemployment rate is at 3.9 percent. Wages have increased 

over the last year by 2.9 percent, the highest increase since 2009. 

Our economy is growing pretty quickly, 2.9 percent the last quarter 

of 2017, 2.3 percent the first quarter of this year. With tax reform 

I would imagine that we can anticipate 3 percent or higher growth 

in our economy. 

Despite all the positive indicators, the market had several days 

of volatility, typically around the swearing-in of Chairman Powell. 

If I look back at the recent past, the Federal Reserve has cited 

stock market volatility as a reason not to raise interest rates. The 

Fed backed down so many times that this seemed to become 

learned behavior. Stock market volatility meant no interest rate 

hikes. 

I will ask both of you: Is the stock market a pillar of monetary 

policy? And would stock market volatility deter you from plans to 

raise interest rates? 

Mr. CLARIDA. I guess let me begin by saying, Senator Scott, 

thank you for that question. First of all, to me stock market volatility is not a pillar of monetary policy in and of itself. I would not 

think it would be a factor. Sometimes stock market volatility is associated with other developments that you do pay attention to. 

Senator SCOTT. Yes. 

Mr. CLARIDA. But stock market volatility alone, absolutely not, as 

far as I am concerned. 

Senator SCOTT. Thank you. Commissioner? 

Ms. BOWMAN. I would agree with Dr. Clarida that this should 

perhaps be one of the several factors that should be considered, but 

not in and of itself as a guiding factor. 

Senator SCOTT. I am glad to hear your answer is basically. Congress says to seek maximum employment and stable prices, no 

more, no less. I have highlighted in the past what people often 

seem to forget about low interest rates. It has a negative impact 

on savers and particularly seniors on a fixed income. So when interest rates go from 4 percent to 3 percent, if you have a $1 million 

nest egg, that is a $10,000 swing in what you are able to live off 

of. So it is really important to me, but let me move to a different 

topic. 

I sold insurance for my professional life. I have said it many 

times that our State-based system of insurance regulation is the 

best in the world. The President’s executive order on financial 

11 

regulation favors a deferential approach by the Fed to working 

with primary financial regulators, and when it comes to insurance, 

that means State-based insurance regulators. 

How will you integrate State-based insurance regulators into 

your work? Both of you, please. 

Ms. BOWMAN. Well, I would be happy to take that. As the Kansas 

State Bank Commissioner, it is very important from where I sit 

now to be able to have a dialogue about those issues that impact 

State-chartered institutions or institutions that are regulated at 

the State level. I believe that it is important to continue that dialogue between the Federal and the State level, and my understanding is that there is a mechanism for that to continue, and 

that would be something that I would believe would be important 

to continue. 

Senator SCOTT. I am running out of time, so I want to ask you 

a different question. Thank you for your answer. 

I favor an activities-based approach to nonbank SIFI designations and more clarity around what gets you designated and what 

gets you de-designated. What are your thoughts? 

Mr. CLARIDA. Well, Senator, obviously SIFI designation is a part 

of the process that is now in place. I believe that is handled at the 

level of the Stability Oversight Council. It is not a subject that I 

myself have studied. If I were confirmed, I would certainly look forward to learning more about it. But, in general, as a proposition 

I think an activities-based approach makes a lot of sense. But beyond that, I have not really studied the issue. 

Senator SCOTT. OK. Thank you. Let me add a little to the question. Oftentimes an insurance company may have a small bank 

presence under their umbrella. 

Mr. CLARIDA. Right. 

Senator SCOTT. If we treat that entire insurance company as if 

it were a bank, we are only increasing the cost to every single policyholder, even though a sliver of the overall picture of that insurance company has anything to do with a bank. So if you punish an 

insurance company by treating it like a bank, you are actually not 

punishing the insurance company. You are punishing the policyholders of the insurance company. So having a delineation between 

nonbank presence as it relates to SIFI designation is an incredibly 

important part that I hope you will take some time and learn more 

about. 

Thank you both for your answers and congratulations and condolences for being chosen. 

Chairman CRAPO. Thank you. 

Senator Reed. 

Senator REED. Well, thank you very much, Mr. Chairman. Let 

me begin, as Senator Scott did, by commending and thanking the 

families for being here. And, Mr. White, thank you very much for 

your service in Vietnam and the Air Force. And, Mr. Clarida, your 

family, a great sacrifice. They could be relaxing in Westerly, Rhode 

Island, right now. 

Mr. CLARIDA. Absolutely. 

Senator REED. I appreciate the sacrifice. 

We all are pleased that the unemployment rate is 3.9 percent, 

but behind that number is a labor participation rate that is falling. 

12 

And there are perhaps many factors, but one is the continuing 

innovation, automation of jobs, et cetera, and, you know, there is 

at least a theoretical possibility that several years from now we 

could have a very low unemployment rate but a huge number of 

people without jobs. 

I will start with you, Dr. Clarida. In terms of your mandate to 

maintain full employment in this new technological era, how do 

you factor in job loss? How do you emphasize training and adaptation? Because my sense is that many of these individuals are midcareer who have worked very hard, have skills—but those skills are 

no longer marketable in many cases? So let me begin with that 

general question, and then Ms. Bowman. 

Mr. CLARIDA. Well, Senator Reed, you are absolutely right. The 

economy is changing. The unemployment rate of 3.9 percent, as you 

say, is welcome, but behind that one number is a very, very complex picture. Technology, as you mentioned, is changing rapidly. It 

creates winners, it creates losers. 

I believe with regards to monetary policy, if I were to be confirmed, I would not focus solely on the unemployment rate but on 

broader measures of the labor market, including labor force participation. My sense is that with regards to technology and education 

in mid-career, the policies that could best address those challenges 

are probably policies for the Congress and the executive branch to 

consider. I think the Fed can do its part by responsibly trying to 

achieve maximum employment for the economy as a whole. 

Senator REED. So there is a fiscal component of this which requires investment in training and job transition and a host of other 

things. 

Mr. CLARIDA. And I believe that is what the research does say. 

Senator REED. Thank you. 

Commissioner, your comments? 

Ms. BOWMAN. Senator, I would frankly rely on my experience in 

my community. When I returned to Kansas in 2010, we recognized 

that there were many people unemployed as a result of the financial crisis. There were many partnerships that were developed with 

training schools, vocational and community colleges that assisted 

in the development of skills that could be used within perhaps a 

new industry or a new technology that they might be able to utilize. 

In my view, while it is very important in the context of monetary 

policy and maximum employment, it is also very important for 

communities to understand the needs of their workers and of their 

businesses so that they can work to address those things at a local 

level. That would be one thing that I think is a very critical part 

of trying to address that. 

I do not believe that the Fed has tools that are in its toolbox to 

be able to address those particular issues, and as Dr. Clarida said, 

it would be something that Congress would likely need to enact 

some sort of law that could address those kinds of things. But I 

have great faith in our communities to recognize the challenges 

that they face and try to address those. 

Senator REED. Thank you. One aspect that just seems to be ubiquitous is the cybersecurity threats to every aspect of our life, and 

we have been trying to encourage the Securities and Exchange 

13 

Commission to take what I think is a very modest step, which is 

to require someone on a public company’s board to have either 

knowledge of cybersecurity or have some other mechanism, just 

simply informational to the shareholders. The bank holding companies are particularly, as you both recognize, targets of this type of 

disruption effect. 

Can you take or should you take action as a supervisor of the 

bank holding companies to make sure that they have at every level, 

and particularly—the biggest ones I assume have it; it is the smaller bank holding companies—have someone or some capacity for cybersecurity on an active basis? My time has expired, so this might 

be just a yes or a no. 

Mr. CLARIDA. I agree that cybersecurity is a very significant 

threat to the economy and obviously the financial system. If I am 

confirmed, I would look forward to understanding what actions the 

Fed currently takes in that area, but I agree it is absolutely critical. 

Senator REED. Thank you, Doctor. Ma’am? 

Ms. BOWMAN. I would absolutely agree with the threat of cybersecurity and the importance of having some expertise within an institution to be able to address those risks. 

Senator REED. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator Tillis. 

Senator TILLIS. Thank you, Mr. Chairman. Thank you both for 

being here, and thank you for the time in the office last week. 

When we talk about deregulation around here, I think that some 

people will kind of position the question as we are going to deregulate and we are going to expose ourselves to the underlying risk 

that that regulation was intended to resolve. It does not seem to 

me that that would be the way that you would go about taking a 

look at rightsizing and deregulating. Let me give you an example 

of a few things I would like for you to expand on. 

One is the regulatory reform bill that we got bipartisan support 

out of this Committee, S. 2155. Could you characterize how you 

think that is—or take a position one way or the other how you 

think that is the right kind of method for going and trying to find 

regulations that fit the activities the size and scale of the institutions to which the regulations would be applied? And we will start 

with you, Commissioner. 

Ms. BOWMAN. Senator Tillis, I appreciate that question. At the 

State level, I oversee banks that range in size from $7 million in 

assets with three employees to $3.2 billion in assets. All of those 

qualify by the Federal standard as community banks. It is important to be able to understand the burden on a staff of three to 

implement the same regulations that apply to much larger institutions. 

Senator TILLIS. So about one-third of that bank is probably in 

regulatory compliance, right? 

Ms. BOWMAN. Probably 100 percent of the time. 

Senator TILLIS. Yes, OK. And then, Dr. Clarida, we talked about 

international standards like Basel III. 

Mr. CLARIDA. Right. 

14 

Senator TILLIS. So you see these standards that are being formulated. I worked in an accounting firm. I am not an accountant, but 

I worked in an accounting firm, and we were very much engaged 

in that. So you create maybe these international standards, and 

then we have those suggestions come into our rulemaking process, 

and then suddenly you have got a lot of community banks that suddenly find out that they have Basel III regulatory requirements. 

Is that a good thing? Or what should we be doing differently as 

we are being instructed by emerging international standards and 

making sure that, on the one hand, we provide regulatory relief 

through the bill like S. 2155, but on the other hand, we come on 

the back end and just layer on another set of regulations that may 

not make sense for the nature of the institution targeted? 

Mr. CLARIDA. Well, Senator, yes, as I understand, the Fed does 

participate in these international discussions, but ultimately any 

rulemaking has to go through a process with comment and affirmative votes of the members. And so certainly the situation you describe would be a situation that I would be concerned about. 

So, again, if I am confirmed for this position, I will look at each 

of those on a case-by-case basis, but would certainly want to respect and really pay attention to the comments and the feedback 

that the Fed would be getting on any such proposed rulemaking. 

Senator TILLIS. Thank you. By the way, I appreciate the answers 

to the questions by the Ranking Member about your independence. 

I saw President Erdogan from Turkey on Bloomberg this morning 

who was talking about he needs to be the ultimate person deciding 

some monetary policy or interest rates in Turkey. And I think if 

you see the Turkish currency right now, maybe the markets do not 

necessarily agree with that. So I appreciate you all continuing to 

be independent on that scale. I think that is a very vital role that 

you play. 

I do want to associate myself with comments by Senator Scott on 

insurance savings and loan holding companies. That is an area 

that we are working on legislation on a bipartisan basis to, again— 

we are not talking about going to no regulation. We are talking 

about really taking a look at the nature of the business activities 

in these institutions and making sure that we have lean regulations that manage the risk but do not actually put certain financial 

institutions out of business. For anyone to look at the banking sector in North Carolina and see that we have half as many community banks today as we had pre-crisis and suggest that the regulatory overreach of Dodd-Frank was not a contributing factor, I 

would love to see how they could present a case otherwise. Do you 

agree with that? 

Ms. BOWMAN. I think there are many things that contribute to 

the reason why we have had either mergers, acquisitions, or failures. I would say that regulatory burden is part of that. 

Senator TILLIS. And some of the mergers and acquisitions are a 

survival decision: I can no longer be a three-person bank with the 

regulatory construct of a large regional bank or a national bank. 

So some of it was a natural part of the ecosystem being consumed; 

as banks get larger, you buy their portfolio, and you build it in. But 

some of it is just purely a survival decision. I cannot imagine that 

half the community banks in North Carolina would be gone purely 

15 

because they were good acquisition targets. And I think we have 

to look at that so that we have a thriving pyramid, an ecosystem, 

financial ecosystem that today I do not think we really have. 

Thank you all and congratulations to the family, and I look forward to supporting your confirmation. 

Mr. CLARIDA. Thank you. 

Ms. BOWMAN. Thank you. 

Chairman CRAPO. Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. Congratulations 

to both of you on your nominations. 

I want to follow up on Senator Brown’s questions and make sure 

we are clear on the question of independence. Mr. Clarida, in your 

meetings with President Trump, did he ask you how you would 

vote on proposed increases to the Federal funds rate? 

Mr. CLARIDA. Absolutely not. 

Senator MENENDEZ. Good. Did the President indicate a preference one way or the other for how you should approach decisions 

on whether to increase the Federal funds rate? 

Mr. CLARIDA. Absolutely not. 

Senator MENENDEZ. Good. Now, for both of you, we are tasked 

with examining your qualifications for 14-year terms, terms that 

will outlast this Administration and the next. So it is critical—Senator Tester says, ‘‘Most of us.’’ 

[Laughter.] 

Senator MENENDEZ. So it is critical that your decisions—I hope 

not for you, Jon. So it is critical that your decisions be guided by 

the Federal Reserve’s dual mandate and remain independent of 

any political pressure or interference from the Administration, this 

one or any other. 

Will each of you commit today that, if confirmed, you will ignore 

any political pressure or interference, whether it is direct or indirect, from the President or any other member of the Administration 

in your decisionmaking? 

Ms. BOWMAN. Senator, I would just say that the Fed makes decisions based on sound economic policies and judgments, and politics 

has no place in that. 

Senator MENENDEZ. So the answer is yes? 

Ms. BOWMAN. Yes. 

Mr. CLARIDA. The answer is absolutely yes. 

Senator MENENDEZ. Thank you. We have made significant 

progress from the darkest days of the recession, but in many ways 

our economic recovery continues to be uneven. Today we are looking at an economy with 3.9 percent unemployment but still very 

sluggish wage growth. As corporations have reaped billions of dollars in benefits from the new tax law, hardworking families are 

still waiting to see their paychecks rise. 

In a tight labor market, workers, I think, should be able to transform corporate profits as part of it into higher pay, but any acceleration in wages seems to be accruing only to high-paid executives 

and managers. 

This question is to both of you. Do you agree that the achievement of full employment should be associated with strong and 

broad-based wage growth for average workers, not just senior executives and managers? 

16 

Mr. CLARIDA. I will begin with that, Senator Menendez. Absolutely, that is something that we would like to see associated with 

full employment. It is the case in recent decades that there has 

been more dispersion between, you know, workers in different categories, and there are a number of factors that impact that. I think 

the Fed’s focus—if I am confirmed, I think the Fed’s focus should 

be on getting that unemployment rate at a level that is on average 

consistent with a healthy labor market, but acknowledge that there 

are factors at work that are impacting different workers in different ways. 

Senator MENENDEZ. I am not quite sure—what about wage 

growth? 

Mr. CLARIDA. Wage growth will be a function of the growth of the 

economy. It will be a function of productivity, of technology. There 

are a number of factors. I think what the Fed can do, Senator, on 

wage growth is to keep the economy as close as it can to that full 

employment mandate that Congress has given it. 

Senator MENENDEZ. Commissioner? 

Ms. BOWMAN. Senator, wage growth is a very important issue, 

and I think that as the economy improves, it is important that all 

benefit from the economic conditions. It is a factor that should be 

considered and looked at within the context of full employment or 

maximum employment, which is one of the mandates that Congress has given the Fed. It is something that I think is very important, and I would be happy to speak with you further about that 

if that is an issue that, should I be confirmed—— 

Senator MENENDEZ. Well, I appreciate your answers. I think a 

tight labor market, forcing employers to offer higher and more competitive wages normally, that is not what we are seeing. As a matter of fact, wages are up about 2.6 percent annually, which is only 

slightly higher than the rate at which they have been rising for the 

better part of 3 years. So that says to me something about the recovery, and the recovery for average Americans not being realized. 

Last, the Administration is planning to offer a proposal to make 

changes to the Community Reinvestment Act with 97 percent of 

banks receiving satisfactory or outstanding ratings, yet African 

American and Latino families continue to be disproportionately denied mortgage loans, even when controlling for income, loan 

amount, location. It seems to me that in that respect we have a 

problem. But I have real concerns that the new proposals will lead 

to weakened enforcement by regulators and a discounted importance of physical bank branches. 

This is for both of you. Do you agree with Federal Reserve Governor Brainard that it is important to retain a focus on place as 

the Fed contemplates CRA changes? In essence, do you agree that 

in some low-income and hard-to-reach communities, physical 

branches are sometimes the only way to meet local credit needs? 

Ms. BOWMAN. Senator, if you do not mind, I would be very happy 

to start with that. I think in any case discrimination is absolutely 

unacceptable, whether that is based on race, religion, any of those 

characteristics. It is important, as we are looking at reviewing the 

Community Reinvestment Act, that we keep in mind how the country has evolved since the time that that Act was enacted in 1979. 

There are many changes to the industry, to how our communities 

17 

are shaped and how they look now, but it is very important that 

we continue to understand the needs of the community from all 

parts of the community and that they are addressed appropriately. 

Senator MENENDEZ. Mr. Clarida? 

Mr. CLARIDA. Senator Menendez, I would just simply say the 

Community Reinvestment Act has been on the books for 40 years. 

It would be a very high priority of mine, if confirmed, to make sure 

that it is enforced. And, obviously, if there are discussions for improving or bringing it up to date, I would be open-minded to that. 

But the essential mission of the Act I think needs to be respected. 

Senator MENENDEZ. Well, let me close by just simply saying, 40 

years later, African American families and Latino families are still 

disproportionately discriminated against, and so something is 

wrong. And I look forward to seeing how you would respond to that 

discrimination. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Senator Toomey. 

Senator TOOMEY. Thank you, Mr. Chairman. And congratulations 

to our two nominees. Let me start with Dr. Clarida. 

Dr. Clarida, it is my view that the Fed contributed to the financial crisis by virtue of monetary policy in the years preceding it, 

specifically very low interest rates for an extended period of time, 

including negative real interest rates, that coincided, not coincidentally but coincided chronologically, with a housing boom that really 

turned into a bubble, the bursting of which, of course, was one of 

the essential features of the crisis. 

Do you agree with the view that the Fed probably contributed to 

the financial crisis in this fashion? 

Mr. CLARIDA. Senator, I enjoyed our conversation in your office 

on this and other topics very much. I fully agree that monetary policy was one part. I think it is tough—I think other factors were 

also at play, so it is difficult to parse particular quantities of contribution. But, yes, monetary policy did play a part. 

Senator TOOMEY. Commissioner Bowman, what is your view on 

that same question? 

Ms. BOWMAN. I would agree with Dr. Clarida that monetary policy did play a part. 

Senator TOOMEY. Well, I think that is a really, really important 

thing to keep in mind. I think we need to learn the lessons of the 

mistakes that have been made. I agree it is difficult to quantify exactly what portion of the crisis originated in this fashion, but it 

was part of it. 

I think from our discussion, Dr. Clarida, my understanding is 

you support the idea of continuing the normalization of interest 

rates. 

Mr. CLARIDA. Absolutely. 

Senator TOOMEY. And that that you believe is important, and I 

agree. I guess the question I would like to explore a little bit is: 

Given the unprecedented behavior of the Fed in recent years, what 

is normal? You know, what is the new normal, if there is a new 

normal? And one of the things specifically I would like your 

thoughts on is the extraordinary quantitative easing exercises. The 

Fed went for almost 100 years without engaging in anything of the 

sort, and then we had these repeated rounds of massive buying of 

18 

fixed-income instruments, including in 2013 when our economy was 

growing at over 2 percent, unemployment was coming down, the inflation rate was just below 2 percent. So there was no crisis. There 

was no recession even. And yet we launched another $85 billiona-month bond-buying program, which included mortgage-backed securities. 

So is it your view that during a period like we had in 2013 it 

would be normal for the Fed to engage in a massive-scale bondbuying program? 

Mr. CLARIDA. Perhaps I can begin on that, Senator. My general 

feeling and what I have written and said about QE is that there 

are benefits and costs, and initially I would have argued and did 

at the time think that it made sense in the depths of the period 

in 2008 for the Fed to pursue that option, acknowledging that it 

had not been tried before. But at least in my memory, the U.S. had 

not been essential at zero rates before. But I do believe that the 

benefits of QE diminished as more and more rounds were added 

and that the cost of QE went up. I do not know how, frankly, sir, 

I would have voted if I had been on the Fed at that time, but I 

am very sympathetic to your view that any discussion and thinking 

about QE would have to take a serious look at the cost as well as 

the benefit. 

Senator TOOMEY. And would you consider non-Treasury instruments like mortgage-backed securities in a separate category? In 

other words, do you acknowledge that when the Fed gets into selecting which category of non-Treasury securities, it is really allocating credit? 

Mr. CLARIDA. Yes, absolutely, my preference certainly right now 

going into this would be for the Fed to end up with a Treasuryonly portfolio. I do agree that the Fed began to buy the mortgages 

under duress at a challenging time for the economy. But as a general proposition, my preference would be to have the Fed’s balance 

sheet as much as possible in Treasury securities. 

Senator TOOMEY. And, Ms. Bowman, would you like to share 

your views on the kinds of securities that the Fed should be buying? 

Ms. BOWMAN. Senator, I agree with Dr. Clarida’s comments 

about the discussion that you were having previously. Having not 

been a part of the decisionmaking process, I view the Fed from a 

prospective perspective at this point. I agree that normalizing the 

balance sheet is a good idea and that that is the appropriate path 

forward. And my understanding is as that happens, the balance of 

Treasurys versus other types of assets will be more normalized, 

and that would be something that I think would be a good idea. 

Senator TOOMEY. I see I have run out of time. Thank you, Mr. 

Chairman. 

Chairman CRAPO. Thank you, Senator Toomey. 

Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. I also want to congratulate both of you on your nominations. I appreciate your being 

here and appreciate your willingness to serve. You have been very 

succinct with your answers, and I hope you can do that with me, 

too, because this one you can take all my time and I do not want 

you to. 

19 

I will start with you, Commissioner Bowman. I come from a rural 

State. You have been a community banker in a past life in a rural 

State. How would you advocate for rural America? And where do 

you believe the biggest disconnect is? 

Ms. BOWMAN. Senator Tester, I appreciate your perspective being 

from a rural community, and I certainly also appreciate the partnership that I know that you share with your State commissioner 

and learning more about their efforts at the State level with your 

banking industry. 

I think it is important to understand that since the crisis there 

have been 1,500 mergers that have occurred within that community banking space across the country. 

Senator TESTER. Yes. 

Ms. BOWMAN. And last year alone, there were just over 250. Kansas experienced 16 of those in our State, and when you have just 

over 200 to supervise and oversee, that is a pretty significant decline. 

I think it is important that we understand the pain points for 

those community banks, understand the importance of safety and 

soundness within those institutions, but also recognize that in 

some cases the regulatory framework could be more tailored to appropriately supervise the risk. Their activity basis, their complexity, and also their asset size is critically important in my view 

with respect to that. 

Senator TESTER. Mr. Clarida, Connecticut is a more urban State. 

Do you have anything to add to her comments? Do you agree with 

what she said? 

Mr. CLARIDA. I completely agree. I will only say, Senator, that I 

grew up in downstate Illinois in a coal mining town with 8,000 people, proud graduate of the University of Illinois. So I understand 

how those communities can be impacted. 

Senator TESTER. OK. Recently, the Federal Reserve imposed 

growth restrictions on Wells Fargo in response to some abhorrent 

treatment of their customers and lack of internal controls. Would 

you assure me that you will not support releasing them from these 

growth restrictions until they significantly change the way they do 

business? 

Mr. CLARIDA. Perhaps I can begin. First, let me say that just 

based upon the news accounts, which, of course, is all I have to go 

on, the activities of Wells Fargo in this domain are egregious and 

unacceptable, and I was as shocked as anyone to read about it in 

the newspaper. If I am confirmed and this matter came before me, 

as it looks like it would, I would certainly individually want to be 

absolutely convinced that appropriate steps had been taken and 

could be verified. 

Senator TESTER. OK. Commissioner? 

Ms. BOWMAN. I would concur with Dr. Clarida’s comments. The 

actions of Wells Fargo were absolutely inappropriate, and I would 

certainly want to make sure that any concerns are addressed by 

the bank prior to any discussion. 

Senator TESTER. OK. Thank you both. 

I want to talk a little bit about housing finance right now. Basically, do you guys believe there should be a Government guarantee 

for a 30-year fixed-rate note? 

20 

Ms. BOWMAN. Senator, in my view as a community banker, it is 

important that our community members have access to 30-year 

fixed-rate notes. 

Senator TESTER. OK. 

Ms. BOWMAN. Those are very important loan vehicles or mortgage vehicles. Without some kind of guarantee, banks cannot withstand that 30-year interest rate risk. 

Senator TESTER. That is correct. 

Ms. BOWMAN. So, in my view, it would be very important to 

maintain that access to credit. 

Senator TESTER. Dr. Clarida? 

Mr. CLARIDA. I would simply say the 30-year fixed-rate mortgage 

has served this country well for many, many decades, and I would 

imagine that going forward it is going to be a crucial part of the 

system. 

Senator TESTER. Do you support it? 

Mr. CLARIDA. That is the status quo. I certainly support it. 

Senator TESTER. OK, good. The GSEs are in conservatorship. Do 

you believe that is having any negative impact on the economy? 

Mr. CLARIDA. Senator, the GSEs have been in conservatorship 

since 2008. I am not an expert on housing finance, but obviously 

for the housing agencies to be in this State is probably not desirable. I am not an expert on housing finance, but—— 

Senator TESTER. That is all right. That is good. 

Commissioner? 

Ms. BOWMAN. I would agree with Dr. Clarida. 

Senator TESTER. OK. Thank you all. I have got some other questions for the record that we will present to you, but I appreciate 

your answers not only to me but to previous questioners, too. 

Senator Tester. Thank you for being here. 

Mr. CLARIDA. Thank you. 

Ms. BOWMAN. Thank you. 

Chairman CRAPO. Thank you. 

Senator Moran. 

Senator MORAN. Chairman, thank you very much. Ranking Member, nice to know that we have educated you on the word ‘‘drovers.’’ 

And I look forward to you listening to me more often than you 

sometimes do. 

[Laughter.] 

Senator MORAN. Let me welcome both of our nominees here 

today. Doctor and Commissioner, thank you for joining us. Congratulations on your nomination. 

For as long as I have been a Member of the U.S. Senate and a 

Member of the Banking Committee, I have had conversations with 

individuals who have sat in the seats that you now sit in after they 

have been confirmed, mostly about the overregulation or community or what I call ‘‘relationship banks.’’ Our financial institutions 

in rural America are very special and important. For as long as I 

have been in Congress, I have been explaining to my colleagues 

that, where I come from, economic development is often whether or 

not there is a grocery store in town. That is something that many 

in Congress do not understand, and certainly many within an Administration would find, of course, there is a grocery store. 

21 

I think these two things are related. What I have concluded over 

a period of time is that if we are going to have a grocery store in 

town, it is dependent upon a financial institution that understands 

the needs of their community and is not overly regulated in a way 

in which they cannot make a loan to a business that may not on 

paper be as financially capable as a regulation may require. 

This recently hit home with me again. In our State of Kansas, 

we had fires across a significant portion of grasslands, particularly 

in southwest and western Kansas and the ranching community of 

Ashland. The county is Comanche; the county seat is a town of 900 

people. That is the biggest town in the county. And 80 percent of 

the ground was burned, and most of the cattle died in that as a 

result. 

What hit home with me is that those bankers responded to a crisis for those ranchers. The ranchers, with the death of their cattle, 

had no collateral. But the bankers continued to make loans, working capital, a line of credit was kept open to keep the ranchers in 

business. 

We are in the process, in the House in particular but soon in the 

Senate, to debate a farm bill. We often talk about the farm bill as 

being a safety net for agricultural producers. It is. But so is our 

community or relationship bankers. In the absence of the ability to 

access credit in difficult times, either as a result of a fire or low 

commodity prices, both of which we are having in Kansas today, it 

is our bankers who keep our farmers in business. It is our bankers 

who keep our ranchers raising cattle and earning a living. 

And so this is an important day for me, particularly with the 

Commissioner. You, Doctor, and I are going to have a conversation 

later today, and I will pursue this in further detail. But I know 

that Ms. Bowman understands the circumstances that it is not just 

a Kansas issue but it is across the country in rural America, and 

why this is so different or what I expect to be so different from, 

I hope, both of you is that every time I have had a conversation 

about the overregulation of a community bank—a bank, incidentally, that if it was insolvent, would cause no problems for the 

country, although significant challenges for the stockholders and 

the community—I get what I would describe as mostly lip service. 

The Federal Reserve or the FDIC or the Comptroller of the Currency will tell me, ‘‘Well, we have an advisory committee, we take 

seriously our community banks,’’ and yet it seems to me that there 

is an attitude among many of our regulators that it would be simpler to regulate a lot fewer financial institutions than the number 

we have today. And, unfortunately, we are on that path, but that 

is not the solution to the future of the places that I represent. 

So I would give you the opportunity, Commissioner and Doctor, 

to tell me again how you see the role of regulators, FDIC in your 

regulatory capacity, in regard to financial institutions that, in my 

view, if we are not careful, become products—their lending practices become a product of a computer program that spews out 

whether the answer is yes or no as compared to the relationship 

they have with the lenders, sometimes for generations. What you 

see in Ashland is a community bank owned by generations of a 

bank family lending to a set of people who are long-time 

generational ranchers. And the issue here for me is what can you 

22 

do to convince me that, once you are a member of the Federal Reserve, you will advocate in a way different than just the idea that 

we are going to appoint an advisory committee to make certain we 

do not have overreach? 

Let me make a final conclusion before my 14 seconds concludes. 

I am at a stage in life, Ms. Bowman, in which I know the previous 

generation. I now know people’s parents better than I know, in this 

case, you and I pay tribute to your Mom and Dad who are here and 

to the effect, the consequence that their lives have had in the community of Council Grove and Morris County and the surrounding 

area in the Flint Hills. The joy of being a community banker today 

is a lot less than it used to be. The idea of the satisfaction that 

comes with a job is diminished, but your parents and your family 

have made a tremendous difference in a community in Kansas. 

And as a result of their profession, Council Grove and the surrounding communities of Dwight and all the places that you and 

I know have a brighter future as a result of the work of your Mom 

and Dad. And I am very grateful to them, and from what I know 

about you, I would tell them thank you for raising a great daughter 

as well. 

Chairman CRAPO. Thank you, Senator Moran. 

Senator MORAN. Apparently, you do not have to respond. 

[Laughter.] 

Chairman CRAPO. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. And welcome to our 

nominees and to your families. 

Dr. Clarida, your views on monetary policy are well known, but 

another critical part of your job at the Fed will be helping regulate 

the big banks. So I want to get to your views on bank regulation. 

Do you agree that inadequate regulation of banks helped lead to 

the 2008 financial crisis? 

Mr. CLARIDA. I do. 

Senator WARREN. Yeah. So after the crisis, under former Fed 

Chair Janet Yellen, the Fed imposed new rules on big banks relating to capital, stress tests, liquidity, among other things. Do you 

believe that those rules helped make the financial system safer? 

Mr. CLARIDA. I do. 

Senator WARREN. Good. So as you know, Randal Quarles is now 

the new Fed Vice Chair for Supervision, the person who will be responsible for the Fed’s regulatory approach toward the biggest 

banks. He recently put out a new proposal on capital standards, 

and by his own admission, when he testified here a few weeks ago, 

his proposal would reduce capital requirements for every big bank 

in the country, and that is why both the FDIC and Fed Governor 

Brainard opposed this plan. 

So given your agreement that the new rules have made the financial system safer, are you concerned that the Fed is looking to 

reverse course and lower capital standards for the biggest banks? 

Mr. CLARIDA. Well, Senator, let me say that, as I mentioned in 

my opening statement, I do think there are opportunities to tailor 

regulations appropriately. But an equal priority is preserving the 

substantial gains and resiliency and stability of our financial system. And on any matter that would come before me as a member 

23 

to vote on, I would want to be assured that we are not trading off 

that improved resiliency and stability in that particular matter. 

I cannot comment on this matter because I have not studied it. 

I believe it is out for comment right now. 

Senator WARREN. I am sorry. You are being—this is a hearing 

about your becoming Federal Reserve Board Chair, and you have 

not read this proposal that would take a significant step that, by 

Mr. Quarles’ own admission, would reduce capital standards for the 

largest banks? You have not read it, and you are telling me you 

do not have an opinion about it? 

Mr. CLARIDA. Senator, I am aware of it in broad ways. I have not 

studied it in detail, and it is my understanding that before any 

final decision on that, there would need to be another vote on the 

matter once the comments are back. 

Senator WARREN. Well, I actually am having a hard time understanding how you can sit here, how we evaluate you as a Fed Reserve Member if you cannot tell us how you feel about reducing 

capital standards for the largest financial institutions. 

I tell you what. Let me try this another way. Most experts agree 

that too-big-to-fail is still a problem, and meanwhile the biggest 

banks are making huge profits and are among the biggest beneficiaries of the Republican tax bill. These banks are now spending 

billions of dollars each quarter in stock buybacks. So why on Earth 

would this be the time to reduce capital standards for these toobig-to-fail banks? 

Mr. CLARIDA. Again, Senator, I take the thrust of your observation, and I think that if I am confirmed for this position, I would 

certainly come to the issue with an open mind. But as I mentioned, 

my priority would not be to sacrifice any of the gains that we have 

achieved with the existing policy—— 

Senator WARREN. Can you just give me any reason why you 

think it would be appropriate to reduce capital standards for giant 

financial institutions that are spending billions of dollars right now 

in stock buybacks? 

Mr. CLARIDA. Senator, as I understand it, part of the rationale 

for the proposal is some of the incentives in the way that it is existing, that is implemented. But, again, beyond that I would look forward to studying it, and I agree that it would be important not to 

give up any of the gains in resiliency and stability we have 

achieved. 

Senator WARREN. I will take that as, no, you cannot come up 

with a reason, but you are not telling me you will commit to keeping capital standards high. 

Let me ask one more question. Can you identify a single Fed rule 

on capital, on liquidity, on stress tests, or Board Member obligations, risk management, anything else, that you think should be 

made stronger than it is right now? 

Mr. CLARIDA. Well, Senator Warren, I think in the area of stress 

testing, I think it is vital. I think it is a crucial part of our system 

right now, and it is my understanding that the stress test exercises 

do take into account the loss of a particular institution in stress 

scenarios. And if those stress scenarios were to be more damaging, 

then the capital standards would be raised as a function of the 

stress. 

24 

Senator WARREN. I am sorry. So are you saying that you think 

the rule on stress tests should be made tougher? 

Mr. CLARIDA. No. I am saying that the stress scenarios that 

are—— 

Senator WARREN. OK, but—I am sorry. Let me just be clear what 

my question was. 

Mr. CLARIDA. Yes. 

Senator WARREN. There is a whole range of regulatory issues: 

capital standards, stress tests, obligations of Board Members. I am 

asking if you think there is a single regulation that the Fed now 

has in place that ought to be made tougher. 

Mr. CLARIDA. And I do not have one for you today. 

Senator WARREN. You do not have one. Look, Dr. Clarida, for a 

long time leaders at the Fed seemed to think that the only thing 

they needed to worry about was monetary policy. But as we 

learned in the 2008 crash, an equally important part of the Fed’s 

job is regulating the giant banks. The defining economic event of 

the last 50 years was the 2008 financial crisis, and as Alan Greenspan later admitted, it was brought about in part because the Fed 

did not do its job on regulation. 

I am concerned about your lack of background on regulatory 

issues, and I am concerned about your unwillingness today to support strong capital standards for big banks. So I will be following 

up with written questions. 

Senator Warren. Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator Cortez Masto. 

Senator CORTEZ MASTO. Thank you. Welcome to your family 

members. Thank you both. It was a pleasure to meet both of you. 

Thank you for taking the time. 

I have only got 5 minutes, so let me get through this with your 

indulgence, and let me associate myself with my colleague from 

Massachusetts and her line of questioning and Dr. Clarida. So let 

me ask you this: I come from Nevada. The foreclosure crisis, we 

were ground zero for the foreclosure crisis. What have you learned 

from that foreclosure crisis? And how will you ensure we avoid another crisis? 

Mr. CLARIDA. Well, certainly I think we have all learned that we 

do not want to go back to the world of 2006 and 2007. And as I 

have mentioned—— 

Senator CORTEZ MASTO. Can you give me specifics? I think we 

would all agree with that, but specifically—you are going to be in 

a key position, so specifically can you talk about what you have 

learned and how you will apply what you have learned to your new 

position that you are being nominated to? 

Mr. CLARIDA. Well, some specifics would obviously be higher capital, stress testing at the banks, liquidity, but more broadly in our 

financial system better understanding and better accounting for 

the different parts of the system, including, I think, moving certain 

transactions on to exchanges and clearing. Those are all important 

steps forward, I think. 

Senator CORTEZ MASTO. OK. Thank you. 

Ms. Bowman, I am going to associate myself with Senator 

Menendez’s questioning. When you are the last one to ask 

25 

questions, the questions usually have been answered. But this is 

another one that is just as important, I think, for many of us, the 

Community Reinvestment Act exams. I understand—and Senator 

Menendez stated this—that 98 percent of the banks pass the CRA 

exams with a satisfactory rating. Ninety-eight percent. So what 

would it have taken for your bank to earn an outstanding score or 

any bank to earn an outstanding score based on your understanding? 

Ms. BOWMAN. Senator, that is an excellent question. I think 

those are discussions that I have on a community banking level frequently. I think part of the review that I mentioned with Senator 

Menendez was that the goalposts seem a bit unclear. I think many 

of the banks, if not most of the banks that I am aware of and familiar with, with respect to their Community Reinvestment Act activities or activities that benefit that process, there is not clarity for 

them in and an understanding of the types of investments that 

they make, whether they are extending credit, whether they are 

making other investments in their communities if those types of activities can qualify for the CRA. I think that would be something 

I would be very interested to speak with you about further regarding looking at those types of—how the rule is now and perhaps how 

communities exist now and how the investments of banks can be 

improved with respect to that. 

Senator CORTEZ MASTO. Thank you, and I appreciate your candor, because the goalposts are unclear, and I guess that goes back 

to the concerns of what factors do you think would be helpful in 

determining whether small businesses, communities of color, and 

low-income areas are truly receiving the support that the law intended. I guess that is our challenge, and that is what we are looking to you to help us identify that so we can make sure that they 

are getting the help and the support they need. 

Ms. BOWMAN. Senator, on that topic in particular, at our bank, 

when I was the community banker, we worked very closely with 

our small business customers to help them understand how a business plan should be formed, how they can qualify for different 

types of credits, and how they can present to a banker in a way 

that would assist with their approval process with respect to their 

business plan. That is something that I think community banks in 

particular are quite good at to help educate their communities 

about the best ways to make investments. 

Senator CORTEZ MASTO. Thank you. And then I have only got a 

few seconds left. Can you talk about the Consumer Financial Protection Bureau and the importance of it and your interaction with 

it in this new position? And I will start with you, Dr. Clarida. 

Mr. CLARIDA. The Consumer Financial Protection Bureau, of 

course, is part of the landscape now. As I understand it, a number 

of the responsibilities were transferred over to the CFPB in the 

Dodd-Frank legislation, and that is obviously an important part of 

the way that the country oversees consumer protection, which is an 

important goal. 

Senator CORTEZ MASTO. Ms. Bowman? 

Ms. BOWMAN. I believe that the CFPB, Consumer Financial Protection Bureau, is currently the agency that is responsible for 

assisting in the protection of consumers, and it promulgates 

26 

regulations that impact their ability to do that and the rest of the 

prudential regulators and their ability to protect consumers in different ways. It is important that there is open communication and 

working together to ensure consistency in the application of those 

regulations and enforcement of those. 

Senator CORTEZ MASTO. Thank you. I appreciate it. 

Chairman CRAPO. Senator Brown had a request. 

Senator BROWN. Thank you. Mr. Chairman, in light of comments 

from Senator Tillis and others, I have two charts I am going to— 

one brief study and one chart about community banks and the 

number of them. This chart—and I know you cannot really see it, 

but this just shows the number of U.S. community banks as it has 

declined since 1981, and this sport right here in when Dodd-Frank 

was enacted. So the decline, there is no way to ascribe Dodd-Frank 

as accelerating the decline of community banks, decline meaning 

either sell, merge, or go out of business, or sell to another bank. 

So it is pretty clear that Dodd-Frank did not cause the demise 

of community banks. That is a greatest hit in this Committee from 

a lot of my colleagues saying, well, it is all because of Dodd-Frank 

that community banks have gone out of business. 

So, Mr. Chairman, I would just ask unanimous consent to put 

this brief study and the charts into the record. 

Chairman CRAPO. Without objection, so ordered. 

Senator BROWN. Thank you. 

Chairman Crapo. And with that, that concludes the questioning 

and the hearing. I again thank both of you for participating at our 

hearing today, and thank you for your willingness to serve the 

country. 

For Senators, all follow-on questions need to be submitted by 

Tuesday, May 22nd. And for our witnesses, responses to those 

questions are due by the following Tuesday morning, May 29th. So 

please respond quickly to the questions you receive. 

With that, the hearing is adjourned. 

[Whereupon, at 11:40 a.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 

27 

PREPARED STATEMENT OF RICHARD CLARIDA 

TO BE A MEMBER AND VICE CHAIRMAN, BOARD OF GOVERNORS OF THE FEDERAL

RESERVE SYSTEM

MAY 15, 2018 

Chairman Crapo, Ranking Member Brown, and Members of the Committee, thank 

you for this opportunity to appear before you today. I am honored that the President 

has nominated me to serve as a Member of the Board of Governors of the Federal 

Reserve System and as the Board’s Vice Chairman, and I am grateful to have the 

privilege of the Committee’s consideration for these positions. I am also very grateful to have the support of my family who is with me here today—my wife of 29 

years, Polly Barry, and my two sons, Matthew and Russell. 

The Federal Reserve has been charged by the Congress with a mandate to attain 

maximum employment and stable prices. I fully support both pillars of this dual 

mandate and pledge to the Committee that if I am confirmed by the Senate, I will 

support monetary policies that take a balanced approach to achieving these important objectives. The Federal Reserve also plays a central role in our Government’s 

efforts to ensure the safety and soundness and stability of the U.S. financial system 

as it provides credit between households and businesses. If I am confirmed, my priority will be to support policies that are effective, efficient, and appropriately tailored and that preserve the far greater resiliency and stability of the financial system that has been achieved as a result of the significant reforms that have been 

put in place since the financial crisis. 

I believe I am well qualified to fulfill the responsibilities of the positions for which 

I have been nominated. In my published research, I have studied the formulation 

and communication of monetary policies and developed, along with others, a framework for monetary policy analysis that has been widely cited and used by monetary 

policymakers and their staffs around the world. Although I have spent most of my 

career in academia, I have had two opportunities to serve in economic policy positions in the executive branch of the U.S. Government—first, as a senior staff economist with Council of Economic Advisers from 1986 to 1987 and second, as assistant 

Treasury secretary for economic policy from 2002 to 2003. These experiences were 

invaluable in providing me a perspective that places a premium on doing economic 

analysis that is practical, robust, and relevant to better understanding how economic policy affects individual Americans and their communities. Over the years, 

I have also advised asset management firms on economics and strategy, with a particular focus on global monetary policy, and this experience has given me a deeper 

understanding of the interactions between macroeconomic developments and financial markets. 

The Federal Reserve has an enormous responsibility to achieve the mandates 

given to it by the Congress, to communicate the rationale for its decisions, and to 

explain how its policies will enable it to meet these objectives. If I am confirmed, 

I pledge to work closely with Chairman Powell and my future colleagues to put in 

place policies that best fulfill its obligation to meet the mandates that the Congress 

has assigned to the Federal Reserve and to foster the transparent communication 

and accountability that is so vital to preserving the Federal Reserve’s independent 

and nonpartisan status. 

Thank you again for the privilege to appear before you today and I look forward 

to your questions. 

28 


51518001.eps

STATEMENT FOR COMPLETION BY PRESIDENTIAL NOMINEES 

Name: Cbrida 

n.-J 

Rkbard 

(fill) 

Ranis 

(OCicr) 

Position to wbkb nominated: Vice Chairman, Fedml Reserve Board 

Date of oomiutioo: 24-04-2018 

Date of birth: JUS-1957 Place of birth: Herrin Ullaols 

(ilo1)(Moa6)(YCII) 

Marital Status: Mlnied 

Name aod •en of children: 

FuU name of spouJt: Polly Morg~~~ Barry 

Matthew QuiM Clarida age 25 

Russell William Clarida age 22 

Edueatioa: 

Honors 

and aw1rdJ: 

Mta~bmbips: 

Da:es Degrees Dates of 

Institution aneoded received degrfts 

UniYetsity of Illinois 1975-1979 B.S. Economics May 1979 

Harvard University 1979-1983 M.A. Economics June 1983 

Ph.D Economics 

List below all scbolmps, fellowships, hono1'81)' degJte$, military medals, ho001'81)' 

society membmhips and any olher spetiaJ recognition.s for outstanding service or 

achievement. 

United Slates Trwwy Medal fOf Distinguished Service 2003 

Lowell Haniss Endowtd Olli-in Economics, Colwnbit University 2003 

Hllional Scieru r-da!ioa ReseW~ c...., 1985-1917 

World Bank IRIS PYopm on lnsniUiional Refonn, Resea!dl Ftllow, 1992 

Fon! Foundatioo ()ran~ lncema~ional Economics Program at SIJ>A, 1992 • 1996 

List below all memberships and offices held in p10fessional, fratemal, business. 

scholarly, 
29 


51518002.eps

civic, charitable and other organizations. 

Organization Off~ee held (if any) Dates 

Natiooal Burtau ofEoonomic Researtb Reseaoh fdloldAS$0Ciate 19&3· Present 

CollllCil on ForeiBJl Relations Member 2001 ·Present 

E<ooomk Club of New Yort Member 20 I l • Prtsenl 

Emplo)'llleDI record: 

name 

List below all positions held since college, including lhe title or description of job, 

of employment, location of work, and inclusive dates of employment. (Please see 

oJrached cv for further detail) 

Teaching Fellow, Hll\lard Uni....sity, Cambrid&eMA 1981·1983 

Assistaol Professor, Yale Uni....sily, New Havco CT 198>-1988 (member of Cowles Foondation) 

Senior Staff Ecooomist, CCOlneil of Economic Advisa>, Wll5hingtoo DC, 1986·1987 (oo leave from Yale) 

Colombia Universny, Professor of Economics, New Volt NY, 1988 - Prtsenl (AsdsWII Proft$SOr, 19Be-9l; 

Associ&le Professor witb tenUit, 1993·96; Professor, 1996·Presenl; Co-dir<e10r Ctllter for Economic ar.d 

Political Aatlysis, 2001).2001; Lo .. u Harriss Proft5.10l, 2003-Prtsem; 

Economics Dq>ar~mtnt Chairman, 1997·2001~ member, College Committee oa Admission lnd Finii!Cial Aid 

(CAF A11999·200 I; member F11<11lly of Arts lnd Sciences Budget Comntittet, 2001).200 I; Co-Chair Provost 

Coounittee oo Columbia H..tdt Cart Benefits, 2010·11; Member, Education Policy Plar.ning Commiltet 

2013-2016 

ConsuiW!' Federll Reserve Bank of New Vorl: 1991·1992, 199l·l997 

Coosuliant, Croup o(J4, Project on £xcltance Rate Regimes. 1m 

Coosuhan~ JP M01p11 Cbase, 1994 

Consu 11n~ Crtdit Suisse, Fortisn EJocbance Research 111d Strategy, 1998-2000 

United States Treasury, Coosulbn' 9-200110 2·2002 (prior to ooofumation as AS3il1anl Secr<llt)') 

Unntd Slales Treasury, Assistant Secrttary for Economic Policy, 2002-2003 (On leave from Co!lllllbia) 

Tbt Clinton Group. Economic Stn!ltgjsl, 2003 7 200l 

Director, NBER Project on G7 C\IITtllt Account Imbalances, 200J.200l. 

P1ci0c lll'/tSUIItlll Mwgem~ Gloltal Stral<sie Advisor, 2006 - Present 

Noftes Bank W&tcher's Committee, MEMBER. 2009-2010 
30 


51518003.eps

Governmtnt 

exptrieoee: 

Publislled 

Wrifillgs: 

List any experieo(e in or dine~ assocWion with Fedml, State, or local governments, 

including any advisocy, consultativr, honorary or other part time savic:e or positions. 

S.nior Slllf ftooomllt, <:®neil or Economic AcMJ<tS, WuhingtOil DC, 1916-t917 

fcdml R"""" Sri or Now Van, Ac:ocSaole Advisocy Group, t995-t997 

Ucoiwd s-r.....,., c--. J.20Gt10 2-2002 (jlrior" oco[...OO. 111 Assislaot S«naay) 

U.k!d SllleS Trwury, Assl$lant Sca<llry for Eeo-ic Policy, 2002-200} 

List the titles, publishm and dates of books, articles. rqlOitS or other published materials 

you have written. 

Plwt stt wched ljl!leDdix listing published articles, books, working papers and written conunenwies. I 

havr done my btst to identify titles, publishm, and dates of books, 111icles, Rp01U, and other published 

materials, including a thorough ~ew of personal files and searthts of publically available electtonic 

databases. Despite my searches, the~ may be other materials I have been unable to identify, find, or ~ember. 

Polilical 

Aff'diltioos 

and activitits: List memberships and offices held in and services rendmd to all political parties or 

election conunittees during the last I 0 years. 

I havt bdd no office nor offeml any savic:es to any political pcties or election committees in last I 0 years. I 

signed a letter entitled "Economists for McCain" in 2008 and a leuer entitled "Economists for Romney" in 2012 

but did not hold office or perform any services to those campaigns. 

Political 

Cootnllutioas: ltanizt all political contribctions ofSSOO or~ to any individual, campaign 

organization, political party, political ec:tion committee or simiw entity during the last 

eight years and identify specific arnouots, dates, and names of recipients. 

"Kudlow for US Senate" exploratory committee on Jan\111)' 20, 2016 for S2700.00 
31 


51518004.eps

Qualifications: State fully your qualifications to serve in the position to which you have been named. 

In my 35-year professional career, I have achieved recognition among a<:ademics, policy makers, and financial 

market participants as an expert on the economics of monetary policy. My academic worlc on monetary policy 

as a professor of economics and international affairs since 1988 at Columbia University (and before that at Yale 

· University) has been frequently cited and the framewolk for a more effective monetary policy developed in 

these papers has been widely consulted by economists at the Fed and as well as at other major central banks 

around the world. In this regard, since 20071 have served as a member of the Deutsche Bundesbank Academic 

Research Council and have been chairman of this group since 2012.1n 2009 • 2010 I served as an external 

member of the Norges Bank monetary policy review committee, and since 2012 have served on the Academic 

Advisory Board of the Hong Kong Monetary Authority's Institute for Monetary Research. Earlier in my career, 

from 1991 to 1992 and again between 1995 and 19971 was a consultant at the economic research department of 

the Federal Reserve Bank of New York as part of a group of academic experts that included Ben Bemanke and 

future Nobel laureate Christopher Sims. And in 19991 served as a consultant to Paul Volcker and the Group of 

30 and contributed to their Project on Exchange Rate Regimes. I have been an active member of the National 

Bureau of Economic Research (NBER) since 1983, and since 2004 have served as a co-organizer of the 

NBER's annual International Seminar on Macro Economics, which is typically hosted by a central bank in 

Europe. I am also a regular participant in the annual Hoover Institution Conference on Monetary Policy, and 

last summer, delivered a keynote address at the BIS Annual Research Conferenoe. 

Although I have spent most of my career in academia, I have had two opportunities to serve in economic policy 

positions in the executive branch of the U.S. government- firs~ as a Senior Staff Economist with Council of 

Economic Advisers from 1986to 1987 and second, as Assistant Treasury Secretary for Economic Policy from 

2002 to 2003. These experienoes were invaluable in providing me a perspective that places a premium on doing 

economic analysis that is practical, robust, and relevant to better understanding how economic policy impacts 

individual American and their communities. 

Since 2006,1 have had the opportunity to advise Pacific Investment Management (PIMCO) on global 

economics and strategy, with a particular focus on global monetary policy. While I myself do not manage 

portfolios, I have worked with the firm's investment committee to help them interpret and assess global 

economic and monetary policy trends. I believe this experience has given me an appreciation for the interaction 

between macroeconomic developments and financial markets that! would not otherwise have obtained. 

Future employment 

relatioosbips: !.Indicate whether you will sever all connections with your present employer, business 

firm, association or organization if you are confumed by the Senate. 

Yes, except that upon final appointment, if oonfirmed, I will take an unpaid leave of absence from my position 

as a professor at Columbia University. I will apply for annual extensions of the leave of absence until 

completion of my term of service at the Federal Reserve. 

2. As far as can be foreseen, state whether you have any plans after completing 

government service to resume employment, affiliation or pra<:tice with your previous 

employer, business firm, association or organization. 

None, other than terminating my leave of absence and returning to my position on the faculty of Columbia 

University. 
32 


51518005.eps

No. 

Yes. 

Poteatltl cumru 

or interest: 

3. Has anybody made you a commitment to a job after you l~\'e government? 

4. Do you exped to serve the full tenn for which you have been appointed? 

I. Describe any fiDanciaJ anangemalts or deferred compensation ~ or other 

c:ontinuing dealings with business associates, cliena or customers who will be alftded 

by policies whicb you will influence in the position to which you have been 

nominated. 

In connection with the nomination process, I have consulted with the Office of Government Ethics and the 

Federal Reserve Board's Designated Agency Ethics Official (DAEO) to identify potential conflicts of interest I 

willrtSOive any conflicts by following tbe advice of the Board's DAEO and complying with the tenns of the 

ethics apmentlhat I bave entered into wilh the DAEO and lhat has been provided to this Committee. 

2. List any investments, obligations, liabilities, or other relationships ~ilich might 

involve potential conflictS of interest with the position to which you have been 

nominated. 

In wnnection with the nomination process, I have wnsulicd with the Office of Government EthicS and the 

Federal Reserve Board's Designated Agency Ethics Official (DAEO) to identify potenti11 conflicts of interest. I 

willrtSOive any conflicts by foUo~ing the advice of the Board's DAEO and complying with the tmns of the 

ethic$ aareanent that I have entered into with the DAEO and lhat bas been provided to this Committte. 

3. Descn"be auy Mioess reiJtionship, dealing or fmancial tranSaCtion (other thaD tax 

paying). which you have had during the last 10 yean with the Federal Oovernmen~ 

whether for yourself, on behalf of a clie~ or acting as an agen~ that might in any 

way constit\ite or result in a possible conflict of interest with the position to which 

you have been nominated. 

In connection with the nominztion process, I bave coosulttd with the Oflice of Government Ethics and the 

Federal Resme Board's Designated Agency Ethics OffJcial (DAEO) to identify pottz~ti11 conflicts of interest. I 

~ill resolve any conflicts by following the advice of the Board's DAEO and c:omplying with the tenns of the 

ethics agreement that I have entered into with the DAEO and that bas been provided to this Committee. 

4. List any lobbying activity during the past ten years in which you have engaged in 

for the purpose of directly or indirectly influencing the passage, defeat or 

modification of any legislation at the national level of government or affecting the 

administration and execution of national law or public policy. 
33 


51518006.eps

None. 

5. Explain bow you will rtSONe any conflia of interest thai may be disclosed by your 

respooscs to the items above. 

In connection with the nomination process, I have consulted with the Office of Government Ethics and the 

Federal Reserve Board's Designated Agency Ethics Official (DAEO) to identify potential conflicts of interest. I 

will rtSOive any conflicts by following the advice of the Board's DAEO and complying with the terms of the 

ethics agreement that I have ente!ed into with the DAEO and that has been provided to this Committee. 

Civi~ crimiaal ud 

unutigatory 

ldioiU: 

None. 

None. 

I. Oive the full details of any civil or criminal proceeding in IWich you wm a defendant 

or any inquiry or investigation by a Fedml, Slate, or local agtncy in which you wert 

the subject of the inquiry or investigation. 

l Oive the full details of any proceeding. inquiry or investigation by any professional 

association including any bar wociation in which you wert the subjea of the 

proceeding, inquiry or investigation. 
34 


51518007.eps

CUWCUWM JIITAE 

~HAROHAmuSC~DA 

January 2018 

Address: 

Oepar1ment of Economics, Columbia University 

Room 1111 International Affairs Building 

NewY0!1<, NewY0!1< 10027 

(212) 854-3676 (phone) 

rllc2@coll.ll1bia.edu (e-mai) 

Date of Birth: May 18, 1957 

Education: 

B.S. Economics, University of Illinois at Urbana, 1979 Bronze Tablet Honors 

MA and Ph.D. Economics, Harvard University, 1983 Wrth Distinction 

Awards: 

National Science Foundation Research Grant, 1985-1987 

Wort! Bank IRIS ProgJam on Institutional Reform. Research Felow, 1992 

Ford Foundation Grant, International Economics Program at SIP A. 1992 - 1996 

Affiliation: 

Member, The Cowles Foundation for Researeh in Economics, 1983-1988 

Research Fellow, National Bureau of Economic Research, 1983 ·1990 

Research Associate, National Bureau of Economic Research, 1990 • Present 

CcHKector, Columbia Center lot Economic and Poitical Analysis, 2000-01 

Member, Counci on Foreign Relations, 2001 - Present 

Member, Economics CMl of New YOilc, 2013-Present 

Academic Appoinbnents: . 

Assistant Professor of Economics, Yale University, 1983 ·1988, 

Assistant Professor of Economics, Columbia University, 1988 ·1993 

Associate Professor of Economics and International Affairs (with tenure), 

Coklmbia University, 1993 ·1996 

Professor of Economics and International Affairs, Coll.mbia University, 

1~resent 

C. lowel Harriss Professor of Economics, Cokmbia University 

July 2003 - Present 
35 


51518008.eps

Economic Polley Positions: 

Senior Staff Economist, Counca of Economic Advisers, 1986 -1987 

Assistant Secretary of the Unaed States Treasury for Economic Policy, 

February 2002- May 2003 (awarded :rreasury Medal for Distinguished Servioe) 

University Service: 

Chainnan, Department of Economics, 1997 -2001 

College Committee on Admission and Financial Aid (CAFA), 1999-2001 

Faculty of Arts and Soienoes Budget Committee, 2000-2001 

CcrCha.ir Provost Committee on Columbia Heallh Care Benefils, 2010-11 

Member, Education Policy Planning Committee, 2013-2016 

Professional Service:• 

Consuttant, Federal Reserve Bank of New York 1991-1992, 1995-1997 

Consultant, Paul Volcker and Group of 30, Project on Exchange Rate 

Regimes, 1999 

Director, NBER Project on G7 Current ~nt lmbalanoes, 2003-2005. 

Norges Bank Watche(s Committee, 2009-2010 

Bundesbank Research Advisory Board, 2007-Present (Chainnan sinoe 2012) 

Co-Organizer, NBER tntemational Seminar in Macroeconomics, 2004- Present. 

Hong Kong Monetary Authority Institute for Monetary Research, Academic Advisory 

Board, 2012-Present 

Outside Professional Activities .. 

Consuttant, JP Morgan Chase, 1994 

Consuttant, Cred~ Suisse, Foreign Exchange Research and Strategy, 1998-2000 

Consuftant, Grossman Asset Managemenl2001 

Economic Strategisl Clinton Group, July 2003- January 2006 

Global Strategic Advisor, Pacific Investment Managemenl Company, 2006 -Present 

Editorial: 

Editor, GZ Current Aocount tmbatanoes: Sustainab ~y and AdjuslrnenL Chicago: 

University of Chicago Press, May 2007. 

Co.-Editor, NBER lntemational Macroeconomics Annual, Cambridge: MIT Press 

2004 - present. 

Citations: Google Scholar Citations 20,132 

• For smnl of these assignmenu I was paid an boocnrium of less dian I 0,000 dollan. 

" Tht Coillml>ia Uniwnily facully ol Ansllld Sci<~K<S ""ires ia lt<oily membm 10 diS<Ioso any JliOicssional 

octirilies Ill~ miplpr<Smlt"" or""""' C<ICiftin ol inlemt. Hert islhe liu or 1\1)' oullid< professionol anh·ilics 

eadl ol llllid! '"' poid moftlllDA IO.COO dolbl>. 
36 


51518009.eps

Pub6cations: 

'Na!OOal Monetary Policies Often Correlate, Sometine Coordinate, but Rarely 

Cooperate' in 'Rules for lntemstional Monetary Stability: Past, Present and Future,' 

ed~ed by Michael D. Bordo and John B. Taylor, Stanford University Press, 2017. 

"The _Fed is Ready to Raise Rates: WiB Past be Prologue?' International Finance, 

Winter 2Q15 

"Optinal Monetary Policy in Open EconOtnies: Praclical Perspectives for Pragmatic 

Central bankers,' Journal of economic Dynamics and Control, December2014 

'Exchange Rates, Risk Premia, and lnf.ation Indexed Bond Y"lekis,' (with Showen 

luo), in ~!chi Pojaliev and Richald M. l.evich , The Role of Currencv in 

lns!Monal Poffolios: Risk Books - Incisive Media , 2014 

'What have we learned about Monetary Polley In a low Inflation Envronrnent? A 

Review of the 2000s' Boston Fed Conference on Monetary Poley in a low lnffation 

Environrnen~ October 15-16, 201 0; publshed in Journal of Money. Cmdit, and 

Banking,. February 2012. 

'Get Real: Interpreting NOtninal Exchange Rate Fluctuations,' International Joumsl 

of Central Banking, January 2012. 

'Currency Carry Trades: Beyond the Fama Regression' (with Josh Davis and Niels 

Pedersen), Journal olln!smational Money and Finance, December 2009. 

'Perspectives on Monetary Policy in the Open Economy' NBER lntemational 

Maaoeconomic /wwa/2008 

,s Bad News about Inflation Good News for the Exchange Rate?' (with Daniel 

Waklman), in Asset Prices and Monetary PQriC'I. John CampbeD, editor, Chicago: 

University of Chicago Press, ·2008 

'G7 Current Account Imbalances: Sustalnabrtity and Adjustmen~· Chapter 1 in gz 

Current Aocount Imbalances: SustalnabRitv and AdJustment, Richard Clarida, ed~or, 

Chicago: University of Chicago Press, May 2007. 

'Are There Thresholds. of Current Aocount Adjustment in the G7?" Chapter 5 in gz 

Current Aocount Imbalances: SuS)alnabi&ft and Adlus!menl Richard Clarida, ed~or, 

Chicago: University of Chicago Press, May 2007. 

'The Role of Asyimlelries and Regine Shifts in the T enn Structure of Interest 

Rates (with Lucio Sarno, Mark Taylor and Giorgio Valente),' Journal of 

~ss (19), May 2006. 

'Non-linear Permanent-Temporary Decompositions in Macroeconomics and 

Finance (with Mark Taylor),' The EoonOtnic Joomal, March 2003. 
37 


51518010.eps

"The Out of Sample Success of Term Structure Models as Exchange Rate 

Predictors: A Step Beyond (with Lucio Sarno, Mark Taylor, and Giorgio 

Valente),' The Journal of International Eoonomics, February 2003. 

'A Simple Frameworf< for International Monetary Policy Analysis (with 

Jordi Gali and Marl< Gertler),' The Journal of Monelary Economics, 

September 2002. 

• The Empirics of Monetary Policy Rules In Open Economies,' Invited 

Keynote Address at The Bank of England Conference on the Future of 

Macroeconomics, Apri 2000; The lntemational Joumal 

of Filance and Economics, December 2001. 

' Optimal Monetary Policies In Closed vs Open Eoonomies: An Integrated 

Appioach (with Jordi GaS and Marf< GerUer),' American Economic Review 

Papers and Proceedings, May 2001. 

'G3 Exchange Rate Relationships: A Recap of the Re(Ord and a Review of 

Proposals for Change,' Princeton Essays in lntematlonal Economics, September 

2m · · 

'Mooetary Policy Rules and Macroeconomic StabNity: Evidence and Some 

Theory' (with Jordi Ga6 and Marl< Gertler), The Qulltetly Journal of 

Economics, January 2000. 

'The Science of Monetary Policy· A New Keynesian Perspective' (with . 

Jordi Gai and Marf< Gertler), The Jolxnal of Economic L.ilefa/ure, 

December 1999. 

'G3 Exchange Rate Relationships' Group of Thltty Occasional Paper no. 

59, September, 1999. 

'Monetary PoUcy Rules in Practice: Some International Evidence' (with 

Jordi Gali and Mark Gertler), European Economics Review, June 1998, 

1033-1068. 

"The Real Exchange Rate and US Manufaduring Profits: A Theoretical 

Framework with some Empirical Support,'lnlemalional Journal of 

Finance and Economics, 2,June, 1997. 

"How the Bundesbank Conduds Monetary Policy' (with Matk GerUer), 

Chapter 10 In C. Romer and D. Romer, eds., Re<Ncjog to!!a!ion: 

M9tjyation and Strategy, Chicago: University of Chicago Press, 1997. 

"The Term Structure of FoJWard Exchange Rates and the Forecastabii"Jty of 

Spot Exchange Rates: Correcting the Errors' (with Mark P. Taylor), 
38 


51518011.eps

Review of Economics and Statistics, LXXIX, August. 1997. 

'Dumping; In Theocy, In Policy, and in Practice,' in J. Bhagwati and R. 

Hudec, Eds •• fair Trade and Harmonization: Prerequisites for Free Trade?, 

Cambrid~ MIT Press, 1996. 

'Consumption, Import Prices, and the Demand for Imported Consumer 

Durable$; A Structural Econometric Investigation," Review of Economics 

and Statistics, LXVIII, August, 1996. 

'Real Interest Differentials and Macroeconomic Fundamentals: Empirical 

Estinates' (with Robert Blake), International Journal of Finance and 

Economics, 1, April. 1996, 103-116. 

'Sources of Real Exchange Rate Fluctuations.; How Important are Norrinal 

Shocks?' (with Jordi GaiQ. The Carnegie-Rochester Conference Series on 

Public Policy, December. 1994, 1-55. 

'Cointegration, ~reg ate Consumption, and the Demand for Imports: A 

Structural Econometric Investigation,' The American Economic Review, 

84, March, 1994, 298-308. 

·us Manufacturilg and the Demustriaization Debate: Macroeconomic 

Perspectives and Sectoral Assessments,' ('rill Susan Hickok), The WOOd 

Economy. 16, March, 1993, 173-192. 

• A Model of liquidity Overhang,' European Economic Review, 37, Mareh, 

1993, 61-73. 

'Enlly, Dumping, and Shakeout,' The American Economic Review, 63, 

Mareh, 1993, 180-203. 

'Mer Maastricht Public nveslmen~ International capital Mobility, and 

Economic Integration,' (with Ronald Fllldlay), Economica. 61, July, 1994. 

'Govemment, Trade, and Comparative Advantage,' (with Ronald Findlay), 

Ametican Economic Review Papers and Proceedings, 82, May, 1992. 

'Aggregate Stochastic lmpfations of the Life.Cycle Hypothesis," The 

Quarterly Journal of Economics, CVl, August, 1991, 851-869. 

"International Borrowing and Lending in a Stochastic Stationary 

EquilibfUn,' /nlernationa/ acnomic Review, 31, Augus~ 1990, 543-558. 

'That Trade Deficit, Protectionism, and Policy Coordination,' The World 

Economy, 12, December, 1989,415-437. 

"Household Saving and Permanent Income In Canada and the United 

Kingdom,' (with John Y. Campbell) in Economic Effects of the 
39 


51518012.eps

Goyemment Budget E. Hetpman, A. Razin, and E. Sadka, edaOIS, MIT 

Press, 1988, 122-141. 

'The Dollar and Real Interest Rates; (with John Y. Campbel), carnegieRochester Conference Series on Public Policy, 27, Autumn, 1987, 103-139. 

'Growth, Competitiveness and the Trade Deficit,' (wHh Michael L. Mussa 

and J. David Gennany), Chapter 3, The Economic Reoort of the President, 

1987, 132-171. 

'Consumption, liquiday Constraints, and Asset Accumulation in the 

Presence of Random income 111ctuations,' lntemational Economic 

Review, 28, June, 1987, 339-351. 

'The T enn Structure of Euromarket Interest Rates: An Empirical 

lnvesl9ation,' (with John Y. Campbel), Journal of Monetary Economics, 

19, January, 1987, 25-44. 

'The Behavior of U.S. Short Tenn Interest Rates Since October, 1979' (with 

Benjamin M. Friedman), Journal of Finance. 39, June, 1984, 671-682. 

Why Have Short Tenn Interest Rates Been So High?' (with Benjamin M. 

Friedman), Brooking Papers on Economics ActMty, 2, 1983. 
40 


51518013.eps

Academic Papers 

"lqcW Monttaty Pdlcies 011!11 Comtate. Somellmt ~dinm, but R¥111' Coop«att" in "RIJits Jot ltltttlllllilwiMMt!Orf 

SCQblcy: fo$1. l'rrstnl.ond Mutt: edltd by M~ O. SO<do and .10M I. Tl'j4or, SUnlcrd l.mtrsily Pres~ 2017. 

"Tht Ftd b Ready to Ralst Rites: Will Past be Prolocuer llltnnotilwl Fltlonct, Wftlttr 2015 

"'pti!NI Monttaty Poficy In Open E<onomies: PraaiQI PeBptetivtslot Pracmati< Ctntral banters: Joumo/ of tcCI1M1Ic fl1nomlcs 

or>d Cont!O/, Otambtr 2014 

'bthance Rites, Rill< Prl!mla, and lnflatiotl lndel<td Bond l1elds. • (Will> Showtn Luo),ln Momtdli PoJadig:ond Ricbtrd M Lcy!dl, 

!l!t Rp!t of Cwensy in lnstitUIIona! PorfgJios: Risk Books •lndsiYt M~ ,2014 

"WWIat 11M M lwntd about MoneUry Policy in a Low lnflatiotl EtwirOMitt\l? A RtYiew of tht 20001" Boston Ftd CDnferentt on 

MontUty Poley In a Low !nftatloo ErMorvnen1. O«aber IS-16, 2010; pubishtd inJoumolo/ Monty. Cttdil, ond ~ febNary 

lOU. 

"CU<rtncy CMry Trades: Btyond the Fama Repesslon' {wid~ Josh Oaw and Niels Ptderstni,A:Iurnolo/lnlttnotilwl Mooty ond 

Finonct, OKtrnbtr 2009. 

"Pmpectliltl on MOM!aty Poley in the Open Economy" NSER lllttfno!iMM MIKIOfCOnomic AMuo/2008 

"Is Bad News about In Ration Good News lot the Exchanse Rater (will> Daniel Waldman), in A!set Prtcesand Monetary Policy, John 

Campbe ~ tditot, Chlcaco: l.klivtrsily of Chl<aso Press, 2008 

"G7 Curttnt ACcount Imbalances: Slrstainobiliy and Adjustmtnl.' Chap1tr I in GZ CUrti!!\! All!O!Jnt lmbalancn: Su!!alnabjity and 

~ Ridlatd Clatlda. tditot, Olicaco: univtntty d Olicaco Press. Mry 2001. 

"Ate TMrr Tlvesholds ol Current AaiOunl Ad'pstmtnt In tht Gzr Chap!er Sin G7 Qmnt Attwnt lmbai!!!CO!: Sagljnabllty and 

~ Ridlatd Clatlda. tcb, Qiaco: l.kllwnlty ol Olicaco l'feu, Mly la!7. 

"The ~of A$yiMitlries and fttcime Slifts in the Ttm SWclllrt ollnl¥est Rites (vritlllucio samo, M¥t Tl'j4or and GioiJio 

ValtnttL" ~of Bldilm 179L Moot 2006. 

'Noft.Uiw Permanent· Temporary OKompolitions In Mxroeconomics and f'Nnct (with Mart T~ • lilt Ea>IIOIIIic ~. 

M•rdllOOl. 

"'lit Out ol Simple S..CCessoiTerm Stru«ure Modtk as Excllonce Rite Prtdictots: A Step Btyond (with Lucio s.tno, Mark Taylor, 

and Gloftio Valtnte); lilt Joumolo/lntmot/onof Etot~omk:s, Ftbruory 2003. 

'A Simple Framew«k for lnternotional Monttory Polley Analysis (with Jotdl Galland Mark Gertler!: lilt Joumolo/ Mont tory 

Economics, Stpttmber la!2. 

"'he Emplria of Monttary Policy Rules in Open E<onomitl, "lrMttd Ktynolt Addrtss at The Bank of~ Conference on the 

Future ol-mia, AprlliXJO; lilt lllttmO!i>nolltMJmiJI 0/Fbwt or>d Economics, Oeamber 2001. 

·~ -.y Poldts ID Closed vs Open E~ An lnlfllattd Aj>ploadl (with Jotdi Gil and M¥t Gtt!tet).' Amttton 

(C1JMtltic ....... foptnondl'roctftfngs, Moyla!l. 

'G3 ~Rote ~tionohips: A Reap ol the Recotd and a RtYiew ol fropPials fot CNnct. • Ptitctton &says;, llltnnodotlol 

Economics, Stpternbtt 2000. 

'Monttory Polley Rules and Maaoeconotnic Stabiity: Evidtna and Some Thtory" (w!lh Jotdi Gali and Mart Gertler~ lilt Quotttrly 

Joumo/o/ Economks, J•nuaty 2000. · 
41 


51518014.eps

"Tht Sdtn<t of Monewy Poley· A New KtyntSiin Pfl1jl«tlvt" (with lotdi Gal and Mark GertlerL 'lilt ioiJmol of EClll!llml< 

Ultrarun, Dtctmbef 1999. 

"Monttaty Poky ltvlts in PrMtict: Some International~· ('old~ .Iordi Gal ond Mart Gertilr~ EiJraptOO fconomoCs Rtl'itw, 

June 1998,1013-1061. 

"Tht Rtal Exd\1-.e ~te and US Manufattuflnc Profiu: A Thtotetltal Framework with some Emplrbl Suppor~; lnttrnotional 

Joumal of Flnonct ond (Q)nomla, 1,June,1997. 

'\low the Bllldllbank Conducts Monetary PolitY' (with Mart Gerti«L Chapter 10 in C. 11Dmtr and 0. IIDmtr, eds. ~ 

~ Moti'!J!!on and S!(JI!I'f. ChicaJO: Uniwrsily of ChicaJO PI' tiS, 1997. 

"Tht Tem>Siruclllrtof f«w><d ~ ~mand the~oiSpol ~ Rates:C«r~ the Elron' (wi1ll MartP. 

T l)lorl. Rtl'itw of fconomoCs Ot>d S!at5!ics, lXIIDI. AICUSI. 1997. 

"'umpilc: In llltory,ln Poley, and in Prattice; In l.llhapad ond R. Hu~ Eck., Foil Tridt end Haanoni!Jtion· P!Cf!S!!!isl!ts !01 

E!a..Ir.isll?, Clmbrldct: MIT Prts~, 19%. 

•eonsump!lori,lmp«t Prices, and !he Demand !or Imported Consumer OUrablts: A Structural EconomtUic lnvtsdptlon." Rtvltw of 

Economics ond Statlllla, LXVIII, Augus1,1996. 

"Rtlllntertsl Ditferendals and~ F~tals: Emjllrlcal Esfinatg" (with RDbtrt llabL/rlrtrnotilnolloutntllo/ 

Fillrltn Ot>d ft#tomlcs, I, Aj)rl.1996, 103-116. 

"Sourt::s al Rtll ~Rate Auc:wations: How lmporUnt 11t NoniNI Sllcdsl'" ('old~ .Iordi Gal). 'lilt COmtgHoc:lltsttr 

CorJfctrra Strits on MJ/ic Poley, Oectrnbtr,1994, I-SS. 

•eo;,tl811tion, Aartsatt CoN~m~Ptioo, and the Otmllld !Of Imports: A Structwal EconO<nt111t lrwtSdptlon; 'lilt Amtricon 

Ecanomlc Rtvftw, 84, Mard1,1994,29B·308. 

"US Manu!atturlnallld the Oeindll!lrialiution Otbatt: Maaaeconamic Perspearm and S«twal Asstssmt~~ts." (with Susan 

Hidu)tL 'lilt World Economy,16, March. 199~, 17l-192. 

•After Musulcht: Public lnwslmentlnti!'INtional tapit.t MOblllty, and Economic lnteamiOn." (with Ronald FindllyL Economir:o, 

61,My,1994. 

•Govemmtftt Trade. and ~aralivt Advan111e: (with Ronald FindlayL Amtricon Economic Rtvltw Papers and Proutdjngs, 84 

May,1992. 

"lnttrnatiorllllorr...,.. and l.erdrlln a Stodlastic Stationary Eq\.tbrio."'\"lrllttnOtiot>al fa>IIOilW Rtvirw, ~I. AICIISI, 1990, 54~ 

ssa. 

'Thlt Trade OtftCk. Proteclionlsm. and PoicyCoordlnation."'lllt World f"""""l',11. Otctrnbtr 1989,41S-4~7. 

"lfousthold Sl'lln1 and Permanent Income in canada and the United KlrcdO<n." (with John Y. tarnpbell)ln Eoon!!l!!ic Effetts o!thc 

(j<rmnmtn! 8s!d1tt E. Helpmao, A. ~lin, and E. Sadka, editon, MIT Pl'ess,1988,122·141. 

"Tht Oollar and Rtllln!ertsl ~ttl. • (with Jolin Y. ClmpbdL ~ 

RDdtt$1NColl/ttenaStritsOIIM«Polcy, 27,Ailtllm11.1917, 1QH39. 
42 


51518015.eps

"Growth, Comptt<INtness and the Trade DefiCll; t~<lh Michael L. Mussa and J. David Germany). Chaplet 3, The Esonoml< Report of 

~ 1987,132·171. 

"Q:Insumption,liqu«My Constrain!S, and Asstt Accurnulatio• in the PreseJKe of Random oncome Fluctuations,* lottmotioMI 

faloomic lltY>t .. ,21, Juroe, 1987, 339-351. 

"The Term Strudwe olfwornatl:t( Interest Rates: All fmpaal ~t.on." ,.,tll John Y. campbei].JoumoJofl.lonttOI'f 

(""""""'· 19, Ja~.I!I87,2S44. 

"The Behavior of U S. ShortT erm Interest Rates SIJKe OClobtr, 1979" jwith Benjamin M. Friedman). Joumol of F•w~nct, 39, June, 

1984,671-682. 

OpEd's 

W§; 

The Fed is starinc tl t nutv rttc di!effima in ?017 

~ 

Sycolvr!!l dtmf!1d m f!i)bl!l""' pow;h 

121!; 

Marcil Joble!l Rite 6 7!1· Enough lor Recovml 

2010: 

Urgrtainty s;t.tnctnc rrmtmmt ~sc:aoc 

122!; 

The OOIIa(} Got a.-mu to Sfde 

2005: 

Our Po>Hillbb!t World 

2003; 

Where Art Ritts Htjdcdl 

Stable and ConOdont 

The International Economy ... ' RicNtd H. O""'a TheOaridaVIew 

Richard H. O~oda LenertoEditor 

R.chardH.~da Will tile !den U.S. dollar Itt the 

s~etu a llobal f<OfiOI'P'OC boom a 

ytat or two from nowl 

In an~ lntenteW, TIE sat downwn!lthe 2003 

Bush Treasury'> clllef maaoe<onomoc straltCJS~ 

Or. Ricl>.1rd Clarida 

Respon1e1o Gale and Omag 2003 

SympoWm 2003 

I 
43 


51518016.eps

Richard H. Clarida lnftatlon Targelilg Symposium: Should the Fede<al Reserve in its 2004 

conduct of monetary porq follow the European 

Centtal Bank and adopt some form of inflation 

laf!el range I TIE aued thlneen d"otlnguished 

expens. 

Ricflard H. Oarida The Bush Economy TIE sat down with Richard Oarida, the Bush 2007 

Treasury's fotmer point man lot economic policy, 

for some frank talk on deficits, rate spreads, •nd 

inflation risk>. Here's how he answered tiur 

questions. 

Richard H. Oarida Reftections on Currency Regknei The uncertainty of the dolla(s future role. 1008 

Richard H. Clarida Eyes on the Prize The role of expectations in monet>ry 2012 

policymaklrcRichard H. Oarida Guidance Counselors The Taylor Rule and the Fed's forward &uidance. 2014 

Wlth saumil Parikh. 

Richard H. Oanda Good News for the Fed Wagt lnf11tion k beginnins to tum up, but Yellen 2016 

will stil run the eoonorny "hot.' 

PIMCO.com 

"The Fed: More confident on Oudoot and Inflation Target.' PIMCO Slog, ht!pl·llbloe.plmoo.oomlonl201819!1the-fed-moreconfident:pn:9ut!ook·•nd·inl\ation-tarret January 2018. 

'Chair Yellen's Last Act,' P/MCO Slog, httDtllbiog Dimco.com/en/2017/12/chair-Yl!lle<ls-last·xt December 2017. 

"The Powell Fed: Continuity in Monetary Poficy; PIMCO 8/oq, httos:llbiOI.o!mco.oomkn/2Q17flllli!Howt11-feck;ontinuily.Jn. 

mone:tfrv=colicv Hovember 2011. 

'Fed on Track lot a oecembe< Rate Hike. • P/MCO 8/oq, https·f!b!og.pimco.comleni:?OI7/IIIfeck>n-tmk·for .. -decembe!~ate hite, 

NO\'ember 2017. 

"The Global Factor in Neutral Po!icy Rates." Global Centro/ Bonk Focus, hltps·l!www.pimco.com/en-<Js0nsi!htsleC9!lO!!!!Nnd· 

martet-commentarylilobakent!i!-bank-forulf!he·iloba facto -in·neutra!·poliomtes. October 2017. 

'fed on Tracl< for a oecember Hite But Stili 'Concemed' About Low tnllati<wl.' PIMCO Slog, httos:l/b!og,pimoo.oom/en/2017/10/ftd· 

on-tracl!-!or-d!(tmbo! -h!\e-but -Sil-cpncemecj.aboyt ·low-inflation October 2017. 

'fed Balance Sheet Notmalization: Si&J>ed, sealed, oe!evered. • PIMCO Bfog, h!torf!bto&Pimco.com/enf20!71091f!d·balance-sheet· 

nonnalizadon·£•ned:lfaled-deleoreced, September 2017. 

"Yelrn at Jackson Hole: long on History, Short on Hints About Future Fed Polley; PIMCO 8/oq,. 

hnos:!Jb!og pimco.com/en/2017/081'1011e!>it -jacklon-ho!e-lons-on-l!lstON·!h0!!111l·hlnts-aboU) -!uturc-fe<!·oo!lcy Au&Vst 2017. 

'fed Balance Sheet Tapering; We Gona Have Fa~h,' PIMCO 8/oq, hnps:f!bt0..01mco.com/en/L1)1Wl8/fed-balanctsbeet-taperjng. 

we·ooUa.f!avr;faHh Allgust 2017. 

' Fed Statement: 'Re!atiwly Soon' ~gna~ September Balance Sheet AMouncemen~ PIMCO 8/oq, 

hnps·l/b!O!.pjmco.comlro/2017/97 !!ed·ijateme!lt·rtlatively=soon·signalsm>tember-balanHert -annouoc:ement,luli 2017. 

"The Fed Balance Sheet and the Taper Tanttum That Ain't jYet); Globof Qnttof Bonk foM, hUps:!fwww.p!mco.com/e<> 

lllfinsigh!lhoonomk -and martet-commentarx/slobal=q!!tra~ank·focus/thtfe<!·balanre4!eet ·and·the·taw ·tanJrunHhat .. int· 

~.July2017. 
44 


51518017.eps

'Fed Minutes: Mb-on Accomplshed on RattS, But Questions Remain on Salwe Shetl Plan,' PtMCC Biog, 

https/Jbloc.g!mco (Omftn/2017/W/fed·miOU)C!·mb~OO·a«Omolsbtd·OM!t!l•bUt'Oye!llons-<emaifl:9n·b!lanet=Jb«t·plan, July 

2017. 

'ley T!Wways from PIMCO's S«xllat OUtloot: FNe l'lwll Points 1D Wltdl" !lo1dl Mdm<Bals one! Daniell Mltyll~ PtMCD &log. 

!mps:J/b!oc.a!mf:• gxn/tn/2017/06f6rt!i*•!WM·fro!lto!mcm-secu!M:OY~oc!i-ftvt:p!Yo!.QO!nt!=!o=Wl!cl" Junt 2017. 

'Piwt Points" lwlth AN.frew Balls and Daniel J. lvaJtyn), Srculor CMJppk, hUP!:I/www olmm cgmftn-us!ln!laht!lugnO!J!k·and· 

mlrlc!!<ommcnt.WKI!Iu-ou!loo!!l.iiwtgts June 2017. 

"Miy Fed Mefti'c; ~ Tlmr Untl tile Minutll,' nMCC Bilg, h!Jpf/AI!oc plmruam/m/2017/05 ~artnti~otii=JI!tmlnuta. May 2017. 

'PtMCC 2017 Stall¥ forum Prtview,' EPOnOmlc OUtlook, b!IQ!:Uwww.olmcp cpmllfi;V!Ijnsi«hts/econgmlc-and;rnar%rt· 

cpmmentardcs!onomJ<.ovdpok/dmce>-lQ171C<UI¥·f9!yrn.prtyiCW ~ril2017. 

'Tho ffll's e.lwt 5llftt s.-fnli&llts In Mllcll Mftltes. aut O'Jeslions Rrmllri,'IW!O Bilg, 

b!l!!!;/lbloc pitocp.g!m/cn/2017A:I4~1Pmt1nlilt~Mv!:Ql!O!!m ... rmm. Apt~ 2011. 

·~ AccOfllmodadon, • GJobcl Ctntro/ ~Focus, hnps;fbwww.pimc!Kpm/Cf)11!1jnsllf!ts/ugncmic:Jnd:marlcct· 

CQ!Omentarv!c!obt!seoutl=!!ink·focus/remoVInc·•Cl!Qmmgditloo. March 2017. 

'Fed on lnfladon: 'S!lbllllt' _ 'SU!Iained' _ 'Symmetric',' PIMCO SIP9, hnm;/lb!ot.m comlen/20!7/l)31frd-oo4n!!ipQ9: 

!!!b!i!M!IS!tlocdromegic. Mild12017. 

~Minutes: 'FalrttSoon',' 1tMCO &log. hnp<ilb!gc.a!mf:Wm/on1101ltll2llrd;;"*'Vtrffii1YjcM. frl>niMy 2017. 

"TTie Calm Btf9!t _tht Mlnutll,• PIMCO B/oo, b!!os:l!b!ot Dfm<o Cl!t!l!tn/l()ll/02/thr:@n:liff-!htmlnu!CS. frbnlary 2017. 

"Fed MinuttS: n~ln& MQ!e Hawk1s11,' PIMCC Slog, b!lps:llb!oujmco.sgmhni20!7/0illcd·mjnutes·tltlno-mpre·hawtlsb January 

2017. 

'Tho Fed b ~II I Nllly Ratelliemnll in 2017,' \1twpoi!IS, l!!!ps://l!ww.o!mcp.cpm/M;<I!{I!!!lgh!lMmp!nl$hhHr61s; 

!R!'rcitY;M!r;Ott;dl!tnyr.t!f!._2017 , ~ pMshed b\' tho Fmldol rlllf1. Otctmber 2016. 

'Tho Fed: l!ettinc on Trumponomics,' PtMCC Slog, ht!Q!ilb!os.oimco·'om'enno!6/12/tl!t:fed·bestin!=OQ:!Nmppnpmjq 

De<:embrr 2016. 

·~the Fed's Rtcotd on lnflodon: A 81& Glp,' Smort O..rts in FDws. httos;//www,p!mco.com/cnuslrC!!!!srmlsnw!!ll!r!sb!Nn<h!J!tS:i!;locy!lcly!ltl•:!be:fcd~-<m>rd-oo;lol!iJ pn f.bitcap, Dewllber 2016. 

'Fed t.lilu!es lnd tho !lecdon: Tht ~for Otctmber Grows Sttq<r: PWCC r.bf, bttm;/Moo pima>.cptn/alll!6/I!Jl!d. 

m!nutmnd:!I!H!re!IQ!l:!l!t;<f!o-lct-d....,...,.,...OWS:WO!!U Ncwomber <016. 

•fed Statement: Ho Waves, Deormber Hike Still Ukely,' PIMCC Slog, bnps·!/b!gc Qlmco com/en/2016/lllf!d·!ll!tiDifl!·nP:w;rm· 

dectmber.f!jkNlll·llkc!y November 2016. 

"W!1r tile World's central Bonb Sometimes Coordlllatt aut Rarely ())operate,' PIMCO BJoo, https:/lbloo, ...... cpm/c!)/2016/J~VII;!ynts;sPm~!@!;Rrcfy;<qoooq!e,OcloW2016. 

'Fed Statement: Let tile Dots-and the Db!ents- Do the Tll<irc,' PIMCC BJoo, bnPI:!Ib!ot.pimco.mmlcnnol6109/!!d1tatcmont· 

!et·tbe-dots.and·d!t;<!l!!to!HIP:tbe-talclnc. September 2016. 
45 


51518018.eps

'Yeleoat Jad<son Holt: Ho Trial Woons," PIMCO BJog, bt!m:llb!os.!limco·1!0!1!1tn/2016L08/ytnC!):It;ltct!on.f!o!H!o:t~i!­

~ AIIIUSt 2016. 

"kd MIMes: Falin to Coolnlu!Gtt. • PIMCO BJog, bUps;/J1!!gc.p<mccom/eni201M!IIfc61J!l!w!{JIW;!2<p!r.,.,..lgtt 

Aur.lll2016. 

"l11t ~:Silent on ~tembet: PIMCO Blog, hUM;/t))!ql p!mcp ll)mfmi2Q1610WI!t.fcd·!!ent=mHPtcmbf!. July 2016. 

"National Monellry Policies Often Correlate, Somctlmts Coordinate, Rarely Cooperate." Global Centn>l Bonk FocuJ, 

bnm:l/www Ri!lltiQ ll!mJC!1111!1nsirht<lwnom!c·and1!1Jtk!Homml!!tarvlrlobal;(t!!t!J!-bani!·!OC!islnt!lonaknonetarv·pol!drt 

oftC!t(«r$ttlO!DC!imts1PQ!dina!Narely;eoope!!!c lilly 2016. 

"!.Qcroln!Wits Fr001 PIMCI1s Global Advis«y Bo¥d."lwftlllilby Clid m:t lllemben ol PMlYs Global Advis«y 8oudl. 

EC1JI'CIIIIc ~ httos;Jfwww p!mtiQ.Il)mJift:!Jl!!m!!ht!lrcgnom!s~spmmc!!tlrtltsgoOI!'!c1!!1!!ootlfNC!o:i'»Johtt 

lrom-pjm!ps:t!gbi=adl!lat'y-board, June 2016. 

"Fed Statcmetlt: In Yellen We TN!!-But Mi<kcts Must Verify,• P/MCO Blog, h!tps:!lblor.plmll) comlenG01§/l)§l!ed:statement·ln· 

ydltn:Wt1M)=b!Jt1J1irl!ets•mustjertfy June 2016. 

"l'tMCO's Starlar Oulloot; Key Takeaways" (with Andrew his and Oarielllvascyn~ PIMCD Blog, 

httPfl/!l!oc m.cpm/tnllOJ6tll6/pimccHtgi!¥;OUdpot.try.l!te!Wll!, June 2016. 

"The Global Oudoot: Stable But Not SCClre" (with Attdtew his m:t OIC1ld J.tmcyn~ Stai/qf Olltbok, l!ttQ!;//wwpimll).mmhn: 

!Jl!!n!llhtsltconom!c·anc!;mitlcet:<O!MJ en!lrt!ltCI!!Jr1!U!Ipokl!hf.!Jobaklu!Jook ·stabft.!!yt .ogs •!fCU!C Jl/ne 2016. 

"l'tMCO 2016 Starlar f«um Preview: looklrc Ahead to 2020." Economic Out~ pimco.com, May 2016. 

"fed Minutes: June Sw0011: PIMCO BJog, nttos:/Jblol p!mcg.mm/cn00!6fOS/fed·mlnutes=l!!ntswpoo. Ml'f 2016. 

"A Door Ajar (But Hot W1de Open) to 1 June Hlkt." PIMCD Slog, bllpS:llb!oo.p!mll).I!0!1)1rn/2016/Q!/tdpoN!ar:buti!OI;'!!idt: 

OOC!t!O=J:M!tMt. Aptl2016. 

"Waccs Ate Rlq: Good Hews tot Worttn,lht Economy_ and lht ftc!," Globol ~Bonk FoM, hnm:llwww.pincp comfort 

us6ns!¢ts/tsp!m!c=toc!:marl!et:<Prnmen!l!ylt4c!W:<C!!!f11:1ifO\.foM&qges-a~DfdC!\:l!!Hcgnot!! 

~April20 6. 

"Some Uke ~ Hotl" PIMCO BJog, h!tos:l/b!oo.pi!!!%<pm!C!l/2016/l)liwme:!i!ce:it:flot Milldl2016. 

"fed Minutes: HUrTy Up and Walt_ r• June?" PlMCO B)og, btt~n;/lb!OR pimco.cam/mi2016/Q24cc!·mi!Jy!e<·hurrtuD=and·WJh· 

~ Fcbtuary2016. 

'Fed Mn.1es: Gt»>ll r.ttw _ Gradllalr PIMCO BJog, h!tm;//b!Qc,Pi!rsp,a!mfm/2016/0itimtut!HRd!!M!ons-md\!i! 

January 2016. 

•eentnl hnks to Olvt<&e as Global EconomiC< Convcrte. • (with Andrew BalsL Cyc/icol OUtlook, hnpsi/www.p!mw.comlm: 

usDns!ol!ts/tconofli:·•nd·mal1<fi:<Ommtlltirvkyd)Q1:9ytiQOI/ct!!tral:bi!l!<s·tO;dlvergtas·•l9bti·C<Onpmlcs<O!Mr!!• Oeeember 

20!S. 
46 


51518019.eps

' Pioddin&Aion&l A Oiscu~ of Today's Global Economy" (with Joacflim Fels), Economic Outlook, ht!pS://I!Iww pimco com/en· 

usOnsights/economic·an<l·marl:et-commentaryleconomlc-oorlook/ptoddinuiQ!!H;discu!Jlon-of·todm:globaJ.economy, 

November 2015. 

'r'•New Neutral, • Gl~l Ceni!OI Bonk Focus, httns;//www.pimco.com/e!t!!!ljnslghts/ecqnomic·and-market;eommentary/glob.a~ central-b.ank.fpoo/r=new:Jleutral. November 2015. 

'October Fed Minutes Reinforce New Neutral VIew, • PIMCO 81og, httos:/Jb!og.oimco.com/en/2015/!Uoctober·fed..ninutes· 

reinforctneW:Jleutral·11iew, November 2015. · 

'Fed Statement Opens a Door for December Wnhout CQmmitting to Step Outside, • PIMCO Slog. 

bttps:llb oa.Dimco com/enf2015110ifed~tatemenr=Opel!s·a door·for-de(ember-w'nhout-commilting.tMteJ!:9utside. October 

2015. 

'Gaps. Growth and Headwinds.' Viewpoinll, httos:ljwww.pimco.comlen1!s0nlightsllliewoointshap!1!rowtl\-and-l!eadwind!. 

ori8)nally published by the F{nondol Timts, October 2015. · 

"Not Such a Oose Call in September, After All,' P/MCO Slog, htt!l!:/Jblog.pimco.com/roi201S/10/not·such·a-dose=g111n· 

septembet·afte!-!11, October 2015. 

'Balancing Risks and Opportunities in the Multi-Speed World.' (with Andrew Balls), cyclicol Outloolc. hnpriJw'Nw.pimco.comZen· 

usOnsi!htsleconomk·and-marl:et<ommentary/tydlcal-outlooklbalaociNHisks·and-opoortunitles.fn·the·multl·s!!ffl!·wor!d. 

September 2015. 

'Lers Clll the Whole Thing Off?' PIMCO Slog, hltps.:l(b!og.pimco.comlen/2015!09/!ets<all·the-'Nhole-tblnK:9!1, September 2015. 

'Jobs Data and the Words of Stanley Fischer,' PIMCO Slog, httos:/Ll!log.pimco.comltn/2915{09fioM-data-an<l·the-wordS=()f· 

stanlgy-f!S<he; Septembei 2015. 

'Data OependenCA! Is Not a Monetary Poficy,llut Ale the Ootsl' G/obol Centro/ Bonk Focus, hnps;//ww.v.plmco,oomle!t 

usl!nslghtsleconomiNnd-market-commentardsloba!;«ntr;!.bank·focusldata·dtpendence·jknot·a·monetarv=ooli<v-but·arg.tfle. 

~/une20JS, 

"Fed Watchers wonder: 'See You In September?" PIMCO Slog, hn0rl/blog oimco wmlen/201SIQ61fed·watchers·wonder·see·vou· 

~June2015. 

'Six Tren<ls to KnO'N, Six Risks to Hedge• (with Andrew 8alb and Daniel l.lvascyn), PIMCO Slog, 

bttps:l/blog.Pimco.com/en/20!5/06/six·trends=tP.know·six·risks·to·hedge tune 201 S. 

' All Eyes on Tomorrow's PayroQ Report- Ex(A!pt at the Fed, • PtMCO Slog, h!tos;//b!oB.oimoo.oom/evi2Q15/061all·nes-on· 

tomorrows·pmolkeoort-txcept·at·tbe-led /une 2015. 

'The New Neutral Re>'lslted, • (with Andi!W Balls and Daniel J.lvascyn), Secular Outlook, httos·l!www pjmoo com/eq. 

usfinsights/econorni<:-and:market-commentary/secular-outlool</the·new·neutraf·re>'lslted May 2015. 

'Q&A with PIMCO Global Strategic AcMsor and Forum Lnder Richard Oarlda, • plmco.com/investments, April lOts. 

'What the Fed Thinks of the Bleak GOP Report,' PIMCO 8/og, bnps;//biO!!.pimco corn/en/20!5/04/w!!at·the-fed·thin!s:9f·tfle. 

bleak-gdP.reoort. Aprii201S. 

'Riding a Wave of Accommodation-Carefully" iw~h Andrew Bails), PtMCO Slog, httprl/blog.plmco.com/en/2015/03/tjdi!!J!:t 

waYMf·accommo<!ation·carefullv March 2015. 

' Riding a wave bf Accommodation- carefully' (With Andrew Bails), Economic Outlook, https:/JW't/W.QM.com/en· 

us/insigbts/ewnomit·and-market<emmentary/econornlt-outlook/ridlnc·a·waw:-of-a«ommo<!ation-carefully March 2015. 

' Navigating the New Neutral,' Economic Outlook, httos:ljwww.pimw.comlen=usOnsights/ewnomic·and:matl!et· 

commentary/economic'9utlook/namatlne-the-neWilevtral November 2014. 
47 


51518020.eps

'Sh¥e and Share Alike; Global Ptrspee!lves, 1\ttDI'i/www plmcMomit!l1!slinslobts/economlc .. nd·marlcet·oommentarv/i!ob!l· 

markeu/elobai=Oeflpec!iveslsharHnd·share..fike August 2014. 

"The New Neutral" (with BiU Gloss~ Stat/or Outlook. bttps;tJwww.pim<p cgm/en11s/lf!!i•h!lhrongmiN!!d·market· 

cpmmtntarylsfMar.Putlookftbtncyr.neutral. May 2014. 

'Is It lime for the Fed to 'level' With Matketsl' Global Perspeaives, htt!!I;{/IIIWW.pimoo.rom/en1Js/in~!!l!ts/economlc and-mafket· 

rommentary/elobal·marlcets/i!obak!ersPediMlt·drnt-lor·tl!e·r.d·to!eyel·with·mj!!kets Febnzary 2014. 

'Guidance Counselon" (with Saumil Parikh), Global PmpecuVts, l!tn»·f/www.plmoo.oom!tn·usfii!Oghts/econornic-and:market· 

commentary/e!obil·marlcflS/slob!l-wsPedives/guldance-coun!$!!. Novembe< 2013. . 

' ReOotion in the Balance," Global Ptrsptetlvts, htt!!l·ff11MW p!mco.com!e!l1!sArniB!!ts/economic .. nd·marlcetsommentarvhlobal· 

marl<e!!le oba perspectlves/rcftotion.;n;he-balance May 2013. 

"WWlatem n Takes in Jipillll! Tokes an 'Audocious' Monetary Policy I' (v.idl Tomoya Masonao), Global Perspectiws, 

https;//www.plmco comltn-usOns!ghts/ecQ!!onjC·and-market·commentarvhlobol-morlcets/global-oerspec!i!!esbvbitmrjt·t•kes: 

in-jopa&jt·!ikmn-audadous-monettry.pofq Match 2013. 

"The Bank of canada Has Bilked, But Will! Bite?' (with Ed Devlin), CollOdion Perspectlvts, pimco.com, November 2012. 

"level aes~· Global Perspeclivt!, pimoo.oom, My 2012. 

'Somethirc Old, Some tiling Hew, Some!hirc Borrowed and Something 2; Global Perspteti'lts, pimco.com, Fdl<uary 2012. 

'Eyes on the Prize; Global PtrspeCiillfS, pimro.oom, October 201L 

"The End of Cwency WaiS?' Stat/or Outlook Sttits, plmoo.tcom. July 201L 

'Anchon Away?' Gfobal Ptrspectlvts, pimco.oom, Apri1201L 

'When Cooencies Collide: Opportunities (and Risks) Emerge foi lnwstors" (v.ith Vinet< Bbansall), Strattgy Spotlight pimco.com, 

November 2010. 

'Whit Has-and Has~~- Been learned About Monetary Poley in a t.ow lnfladon Envlrorvnentl A Review of the 2000s" (with Pa.A 

McCIIIIey), Global Clntto/Bonk Focus, October 2010. 

'Uncertainty Changing lnwstment Undscape• (with Mohamed A. EI·EriJn), V'oewpoint pfmco.COII\ originally published by the 

FiMnciol r ..... Ausust 2010. 

"The Mean of the Hew N"""'l ~ an Observation Raret; Realized: focus Also on the Tails; Global Perspectives, pimco.oom,Jvly 

2010. 

·currency ln'lestirc to Express a Macro View: Global Ptrsptetlvts, pltnro.com, Mardl2010. 

'With Privilege Comes ... ?' Global Perspeellvts, pimco.com, October 2009. 

'The Doc that Didn't Bart-and the One That Did,' Global Perspee!lvts, pltnco.com, Ally 2009. 

'A tot of Bud<s, But How Much Bil\lll' Globol Ptrspeellvts, pimco.com. Marcil 2009. 

'The U.S. Trade Deficit Is Set to Sh~nk: That's a Good Thing-· Right?' Global Ptrspectlvts, pimco.com, October 2008. 

'Exchil\lle Rates Since the Us! Global financial Crisis: What My Crys!aiBaD Didn't Tell Me in 199B; Global PtrspP<IIvts, pimco.com, 

altern!te lll!fsion !Pf!tired previously In Tilt lntemotionol Economy, June 2008. 

'After Futur (with Tomoya M!$inao), Global Ptrsptctivts, pimco.com, Apri12008. 
48 


51518021.eps

"More ShotS to Ocop, But Investment OpportuM~ for 2008 Re~Nill" (with Wiliam Powers), Glollo/ Ptrspt<tivts, pimcMom, 

l<nvary 2008. 

"A I!Md Da(s ~· TheG!obil Finonciil ~~ C«lhonu ~.Not ~JU a.st(aN! tilt Od'ft<enctis ttnporUt~tL" Globol 

PtfJ/Jt<ll"t!, pomco-, Oct~ 2007 

"Is Bad News About Inflation Good News for the Exdlanct Rate?' G/obo/Pmptetivts, plmco.com. Ml'f 2007. 

"Petrodollars, the s..tnss Bus~ and the U.S. Current A«ount Oefl<il." Global Perspectives, plmco.com, March 2007. 

"A Gre•t Model~ But Global Divetsifation b Stol A Great Dta~ • Global PtrspeCIM!, pimoo.com. Januuy 2007. 

"Dolor Downdraft to Rtsumt: The case for CUrrency ~a lion" (~~r.lh Sudi MaNppaL Globol ft~ pmoo.-, 

NOI'tiTibt< 2006. 

,nttrestinc Times, • Global Persperoves, pimco.com. Stptembft 2006. 

N BER Working Papers 

~17 RI<Nrd H. Oarida The Global fjK!opn NMrtl Po!g Riles 5o!!!: lm!!ligtions for E>dlanac Rites MO!!ela!'t Po!i!y and 

~16 Rdlatd II. Clarida ltlttrnationtl fNnoi! Adnlllmtnt jn I (i'>Oil'QI Oocn EC9!!!1!!!'f G!O!!!h lo!od!:l 

llcil6Mac\'M 

2013 Rich"d H. Clarida lfot Tip· Nominal Exchange Ratn •nd lnflatipn lnde§ Bond V'!f!ds 

009 Rlcl\"d Clorlda 

JoshOavis 

Nl<ls Pedersen 

Cynency (arry Trade Rcg!mcr BeYond the Fama Regression 

I20CJ6 RICNrd II. Carie! a Are There Thrtl!dds of Current M91'"' AdM!me!!t in tht G7? 

ManueiiGoretto 

M"tP. Taylor 

2006 Richard H. Oar ida G7 Current Account lmbjllanccs: SU!Itlnabiliw and Adju!!menl 

2002 Richard Oarida 

JordoGtli 

Mart Gertler 

ZCOI Rochard Clarida 

woo Sarno 

M"kToytor 

Giorgio Valente 

001 Richard Clarida 

001 Richard Clarida 

Iordi GII 

Mart Ges1ltr 

A Simole Framework fO! hliCfOJbQntl MoMtarv PoJicv Anatvsk 

The Empicig of MonctJrv Po§cy Ruin In Dorn Economies 

Ootimal Mcmetarv Policy In OoSfd vtrsusOoe~ Economies: An lntnritcd Apprpacb 
49 


51518022.eps

1999 RldlardOIIilla 

Jordl~l 

M.tG411ler 

1999 llicNnl Clarida li!a! Stm ond tht Rn! £.u!l!ra: *" £mp!ica! fl!irNtn 

Jot 1'\'endttpsl 

1999 IWlard Clarida Rf<fnt G3 Cl!trtnt Ac<OI!!lt lmbilaom·!!ow lmpo!li!!t arc StOJC!urt! fi<!O!!l 

Joe 1'\'tlldtrlllt 

1998 Rldlard Clarida Moneta!\' Poll<y Ru!H l!ld Macrpccooornlc $tab!ntv· Evldrnct and Some JbroN 

JordJGtll 

Mart Gcr!ltr 

ja91 l'.lctln Clorido Moc1e!>!y *am 1n ftJ<!!<J: Sor!o "''mw Ey!d!!!cr 

Jot4Gtll 

Mart Gcr!ltr 

1996 RlcNrd Clarida How the SUndcsbant CondYcu Mo!!ttaN Po[q 

Mat1cGtr!ltf 

1994 Richard Clarida Sourcn of Real Extban•• Rite fluqyations: !!ow lmpO!!anJ art Nominal Sl!ocls!l 

JotdiGai 

993 l'.ictln ll Clorido Tbtim Stryc!lrt of f<llwd Mn• PtA j!!'d tl!e fo!CW!J'blty AI Soot E!ll!i!Wt Rates; 

Mart P. Taylot CoqK!inl !ht En9!J 

1991 Richard H. Clarida Endounoys Comoar!li'!t A!lyrfl,.. Goytmment and tl!e Panun o!Tracft 

Ronald Findlay 

1991 IWlard H. Clarida The RW El<llfnR Rate El!po!!s !!ld Mt!lflltc!utinc Profrts: A Thcortt!-a! F!!mcwot1c W'rth Some 

fmom!SUOOM 

1991 Rldlrd ll Clarida E!!!!Y Dumoinuod Sl!ii:C!!U! 

1987 Jolin Y. ~!lpbel HowiJq!d Sllir!C and Pcmynmt lng!m!! in CM!arlu!!d tl!e Ur!lt!d lCtncdom 

Rldlard ll Clarida 

987 JohnY ~mpbcl The llo!lar and Real!nttmt Batn 

llich~rd ll Clarida 

~ IWlardllC!atlda fot!!lli!iona! LendinR and Bouowtw In a S!ocbasts S!gucncc EgujObr!ym 

986 Richard ll Clarida Tbt 8ilm of l'ltmr!!!iMNsmcnt MWism in a RfliM!I £m<latlon! Eguj!i!Wn 

119!6 John Y. ()nopbtl 

8ldlr'd ll Clarida 

11984 8ichird ll Clarida WbYJ:ImSbott·T«m lntcmt Ratn Ban So HiJb? 

Btnj!mlnM. 

Friedman 

1984 Richard H. Clarida Conditional ProlrcJ!on by M!IM of kalmi!!l fjlte<inc 

1984 Rldlard ll Clarida The Bo!I!Yior ol US, 

BtnjamiRM. 

ffildml!l 
50 

PREPARED STATEMENT OF MICHELLE W. BOWMAN 

TO BE A MEMBER, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

MAY 15, 2018 

Chairman Crapo, Ranking Member Brown, and Members of the Committee, thank 

you for this opportunity to appear before you today. I am deeply honored the President has nominated me to serve as a Member of the Board of Governors of the Federal Reserve System. Because community banking is a vital and ongoing part of my 

family’s legacy, I am also humbled that, if confirmed, I will be holding the position 

designated for someone with community banking experience. 

I am also grateful to my family and my husband’s family for their continued support and belief in me. My husband, Wes, our children Jack and Audrey, my sister 

Maggie, a school teacher in Kansas City, Missouri, and my parents, Jan and Hank 

White, are here with me today. My father, Hank, is a fourth generation banker, 

Vietnam veteran, and retired U.S. Air Force officer. My mother, Jan, is a great inspiration. She taught me that with hard work, anything is possible. My in-laws, 

John and Sherry Bowman and Sherry’s 91-year old mother Mary Hopkins, could not 

be here with us today, but they are watching from home in Everest, Kansas. 

My family and I have been in community banking for generations. In 1882, my 

great great grandfather, W.H. White, helped to charter the Farmers & Drovers 

Bank. The bank was named for the customers it served then and continues to serve 

today—the farmers and ranchers of the Flint Hills of Kansas. Today, the fourth and 

fifth generation of my family continue this long tradition of service through the 

bank and through active participation and volunteer work in our rural community 

of 2,300 people. I know firsthand that community banks are a vital part of the backbone of small, rural, agricultural towns and play a critical role in providing access 

to credit and fostering economic activity in communities across our country. Without 

these institutions, many communities and many of our citizens will see their economic opportunities suffer significantly. 

I joined my family’s bank in 2010, and I learned the business from the front line 

to the back office. My most challenging role was as compliance officer—working with 

our small team to implement many of the new post-crisis regulations. Although the 

crisis revealed weaknesses in the U.S. financial system that needed to be addressed, 

I have witnessed firsthand how the regulatory environment created in the aftermath 

of the crisis has disadvantaged community banks. If confirmed, I will bring this perspective to my work at the Board to ensure that rules preserve the resiliency of the 

financial system, but are appropriately tailored to the size, complexity, and risk of 

an institution. 

As a community banker, it was my job to support local businesses and consumers. 

This experience has given me a personal and deep understanding of how the Federal Reserve’s goals of fostering maximum employment and stable prices directly affect the financial system and the broader economy. The dual mandate is critically 

important to our economy, businesses, families, and communities. If I am confirmed, 

I will be very focused on how we can do the best job possible to fulfill that mandate. 

I currently serve as the Kansas State Bank Commissioner and our office oversees 

hundreds of State-chartered banks, trusts companies, money transmitters, and other 

nondepository financial service institutions. Our mission is both proactive oversight 

and protection of the consumers our financial institutions serve. As commissioner, 

I am accountable to the people of Kansas. And as I carry out my regulatory mission, 

my goal is to treat every consumer and institution fairly, respectfully, and with open 

communication. 

I believe the experiences I have described qualify me for this important role. If 

confirmed by the Senate, I will be committed to accountability, transparency, and 

clear communication in all of my responsibilities at the Federal Reserve. Thank you 

for the honor of this hearing, and I look forward to answering the Committee’s questions. 

51 


51518023.eps

STATEMENT FOR COMPLETION BY PRESIDENTIAL NOMINEES 

Name: 

Wlllto 

Position to wbkh nominated: Member, Board of Governors, Federal Reserve System 

Dateoho111illation: 24 April2018 

Date of birth: 25 May 1971 Platt of birth: Honolulu, Hawaii 

Marital Statvs: Married FuU ume of spouse: John Wesley Bowman 

Name nd a&es of thildren: 

John Henry Bowman II 

Audrey Helen Bowman 9 

Iastitvtioa 

Wasllbwn Univmil)' Llw School 

Univenity of Kansas 

Dates Dtgrm 

IHtaded mtivtd 

1/1994 - 811996 Juris DoctOfllt 

811989-S/1993 Bachelor of Scienet 

Dates of 

dqms 

811996 

S/1993 

Hoaors 

and awards: 

List below all seholanhips, fellowships, holl0!8l)' degrees, mililaly medals, honorary 

society memberships and any oiher special rtCOgnitions for outstanding service or 

achiC\'alltnl. 

l.admhip Klnsas- 2016 Class Member. elemd 11 Class RepmclllaiM to Solid o(Tn~~~m 

Kansas 8dtrs Association. Bank !aim o( K1m11 - 2013 Class Member. elemd 11 Class Represe~Uive 

The 01\'isht 0. Eistnhower Series for Excellmct in Nllic SeMct- 2011 Class Member, elecud 11 Class R~vt to 

Board of Govtmors 

British American Project· 2008 Fellowship (lAndon, El\g)and) 
52 


51518024.eps

M1111btrsllips: List below all memberships and offiCeS held in professional, fraternal. business, scholarly, 

civic, charitable and other orpnizations. 

Off~ held (if any) Dates 

Coof<m>ce of State 8ri s.pcMsors Vi<c Choir. Legisbliw Coolmint< 2017......,. 

Lcadetsllip K111sas Boord ofTMI<es 2016- cuntM 

The 0\lig)\1 D. Eiscnholm Series r .. ExcclleOC< in P\Jblic Service, Pmidcnl, Viet Presidenl, B.W Mtmb<r 

2011-cumnr 

Council GnMIMOfrls CoOM)' Chamber orcoromm:e & Tourism Presldtnl. Vke Pr<Sidcn~ Board Member (left 

Boord iD 2017)2010-curreot 

R*Y lolemlliooal, c-eil ()ow Cloal*r Pn:siclell, Viet Pmidnrl 

Ccilatllrolyt.larlorilic,..,.. r ....... C..aiO....PRIDEc-iltt ~TCiryofc....;l 0.... t-ic o...top.al c-iaet 

Morris C<rualy RepobticM C-*t n-.r ~ 8rieB As!«iMion 

Am<ri<an Bonkers A$10Cillion 

S<ut&four 

PEO 

Dtup~m or llle Amcriclll R.....,utloo 

Kappa Kappa o .. m. 

Rtplblicw Abn>od- UK 

ThcRef0111Cklb 

K..,.&Ordsaw..,.·scw. Juoa tape o(l.llllloo, EaPod 

Jllliorl.az'JOofW....,..DC 

NewYOftSIIItllw 

2010<omol 

2010.2017 

2011·2016 

2014·2011 

201~ 

2010.2017 

2010.2017 

2012-currtnl 

201J-cumnr 

1991-cuntM 

1990-1993 

200S-2009 

200S-2009 

~ 

:!C04-2001 

1m2001 

1997-armnl 

Employment record: List below all positions held sinct college, including the Iitle or description of job, name of employment, location of wort, and inclusive dates of employment. 

KaKmsasSuft Boot c-issiooer. Off>CC od' .. Sale 111111: eo-is$ioocr Topob. ~ 

Ya PmldaM. r-a o.-s Book c.a~ a..... Kmsas 

ow-r. rncn a o.-s Boot Cooocil GrM. KMsas 

LawCiott, KMsas Brim Aaocialion Topb. K ... 

LoadH, £~&load 

The Bowman Group. Govmlment& Public Mraln Coosuhioi London. EncJancl 

WasbinC'o.,oc 

212017 _ ...... 

1/2010. 1/2017 

112011-112017 

1994-lm 

11/2004-1/2009 

S.niof M.....,..m Advisor, lmmipion & Customs Enrorctmenl (lntemlliooll Division). Depar1m<111 or Homeland Secwily ~004-

112004 

Polk) Advisor 10 111< Secrelary, Oepu1y Assisunl Secrelary fG<I..qillllivt Afflirs, ~or Hoonelaod s-ily 2/200W2004 

Dinetor, 8caadl Oief. Coropcuioaala ~Affairs Divisico, fcder11 Emerpy ....-Ap:t112002-2/200l 

c-t. SorbcoMiattoa HiPwols& Tnosil. c_., ~ .. Ea>oollic DMiopaarC. Plrbli< Bolldiorp a~ 

,.,.._,us Haase c-a... .. TIIISp>fiMioa a ~orr-1m 2002 

IMstipiYt Aaoraey, US Haase c-iaet oa r.o..r-R.r-& o-ip11997·1999 

Lq;sbiivtCormpoodarl.lllrll. US S..... Robcn J. De*, 199S-1996 

2 
53 


51518025.eps

Government 

experience: 

Kansas 

List any experience in or direct association wilh Federal, State, or local governments. 

including any advisory, consultative, honorary or other part time service or positions. 

Kansas Sllte 8111k Commissiooer. OffiCe oflbe Slue Bank Commissiooer Topeta, Kansas 212017-'"""'l 

City of Council Gro'lt Ecooomic O..elopm<l\l Coolmitt,. Council Grovt, Kaosas 1.014·2017 

Washlogtoo, DC 

Senior Manasem<ol Advisor, lmmi&J1lion & CuSIOilll EAicrccmOIIl, International Divisioo. Depart"""' o!Homelaod Stalrity 412004· 

&12004 

Policy Advisor to the Soat~ary, Deputy Assisunt Secrtt~~y Tor Lqjslative Affairs, ~~of Homeland Security 212003-412004 

DireCIOr, 81111cb Chief. Col1gr<Siiooal & lntersovanmeniJI A flairs Division, Federal Emers""Y Mana&emtnl A&""Y 212002·212003 

Counsc~ Suboommia .. on HigiiW>ys & ansi~ CollllStl, S.bc:ommitl .. on Ecooomie Devtlopm~ Public Buildi11QS & Emert"''Y 

Manasom0111, US Hoost Commin .. on Tnnspo!Uiion & lnTraslnlcM< 1999-2002 

lnvtstigativt AIIOmey, US HOU$< Cornmin" on Gov""""nl Rclom & 0Ytrsigh1 1997-1999 

Lqjslllivt Corrt~pond<..,lntern, US &01\ator Robert J. Dole, 199l-1996 

Published 

Writings: 

None. 

Political 

Affiliations 

List !he titles, publishers and dates of books, articles, reports or other published materials 

you have written. 

and adivities: List memberships and offices held in and services rendered to all political parties or 

election committees during the last 10 years. 

MorTis County, Kansas -Republican Precinct Committee Woman, 2014-<:wrent 

MorTis County, Kansas- Republican Committee, Trei!S1J!er, 2013-cwrenl 

Kansas 1" Congressional District, Alternate Delegate, 2014-2016 

London, England- Republicans Abroad - UK, Chairman, Vice Chairman (not an official party organization) 

2005-2009 

Political 

Contributions: llemize all political contributions of $500 or more to any individual, campaign 

organization, political party, political action committee or similar entity during the last 

eight years and identify specific amounts, dates, and names of recipients. 

$500 Romney for President 8-28-2012 
54 


51518026.eps

Slatt folly your quolificotions 10 UIW in 1ht position 10 wlticlt )IHIW bttn named 

My bac:karound and experientt align diRtily with !he satutory rtquirement thai at lust one member of 

!he Board ofOovtmors of the Federal Reserve S)'$1em have "primary experientt WO!Iting in or supervising 

community banks." My family and I have been in community banking for generations. I havt experienttd 

community banking, not only from that incredibly valuable and rewarding perspective, but also through the 

prism of being the lead state regulator of community banks, in my home state of Kansas. This unique 

combination of experience would serve me well in this incredibly imponant role. 

I t~~~m~tly serve as !he Kansas State Bank Commissioner. The OlfJCt of !he State Bank Commissioner 

(OSBC) ovmees regulatory supervision for hundzeds of state chaneml banks, II1ISI companies,llllll'q 

tJanSmitten, and olher IIOIHiepository financiJI ICTVice institutions. The mission of !he OSBC is both proactive 

ovmight and protection of the cOtlSUIIlers our financial institutions serve. Every bank under my supervision 

qualifies as a community bank a(X)Ording to the definitions currently used, including a heavy prmnce in rural 

and agricultural markets. Our Kansas $\ate-chanered banks range in size from juSt under $7 million in assets to 

just ovtr $3 billion. 

Prior to my appointment as !he Kansas State Bank Commissioner, I served as a VP in my family's state· 

cbarteml bank with asseuofapproximatelySI7S million. I became !he third member of !he fifth generation of 

my family worong in our bank. My m.ies in !he bank included compliance offJCtr, trust offioer, and serving as 

a member of !he board of directors. As a community banker, it was my job to suppon local businesses and 

consumers. This experientt has gjven me a pe1$0nal and deep understanding for how the Federal Reserve's 

goals of fostering maximum employment and stable prices directly affect !he financial s)'$1em and the broader 

economy. 

Chanered in I 881, Farmers & Drovtrs Bank endured the Great Depression, the inflationary 1970s, the 

fann crisis of the I 980s, and the 2008 economic crisis. The 2008 crisis, in panicular, hit all banks hard, but I 

havt firsthand experience of how !he initial impact as well as !he reguatory environment created in its aftermath 

have disadvantaged community banks despite their minimal contribution to the cause of !he economic 

meltdown. 

My banking experience has been supponed and enhanced by more than 15 years of non-banking public 

policy work in the legislative and executivt branches of the federal government in Washington, D.C., where I 

held posts in Senator Bob Dole's office, several U.S. House of Representatives commiuee staff counsel 

positions, and executive level appointments in FEMA and the Depanment of Homeland Security. I also bring 

an international perspective through my work with the UK and EU go\'mlments and industl)' wbile living in 

London, England. 

Congrm enacted legislation to tD$lllt representation of community banks on the Federal Resenoe Board. 

If confirmed, I will bring my broad e~periences and unique perspectives to the deliberations of the Federal 

Reserve to better ensure well-rounded policy decisions. 

Future tmploymtnt 

rdalioDSiaips: I. Indicate whelher you will se~'tr all connections \lith your present employer, business 

fum, amciation or Olpnimion if you are confirmed by !he Senate. 
55 


51518027.eps

Pott~~lial coallitu 

orinltmt: 

Yes. 

2. As far as tan be r-. state wbelher you have any plans after c:oo~pletin& 

government service to =rme employmen~ affiliation or practice with your previous 

employer, business finn, association or organization. 

No. 

3. Has anybody made you a commitment to a job al\er you leave go~"ti1Ul1C:Ill? 

No. 

4. Do you expect to ~trve the fulltenn for which you have been appointed? 

Yes. 

I. Describe any financial arrangements or deferred compensation agJeernents or other 

continuing dealings with business associates, clients or customen who will be 

affected by policies which you will influence in the position to which you have been 

nominated. 

In connection '4ith the nomination process. I have consulted with the Office of Government Ethics and the 

Federal Reserve Board's Designated Agency Ethics Official (DAEO) 10 identify potential conflicts of interest. I 

will resolve any conflicts by following the advice ofthe Board's DAEO and eomplying with the tenns of the 

ethics ag~tement that I have entered into with the DAEO and that has been provided to this Committee. 

2. List any investments, obligations, liabilities, or other relationships wh.ich miiht involve 

potential conflicts of interest with the position 10 wbicb you have been nominated. 

In connection wilh the nomination process, I have consulted with the Office of Government Ethics and lhe 

Federal Reserve Board's Designated Agency Ethics Official (DAEO) to identify potential conflicts of interest. I 

will resolve any conflicts by following the advice of the Board's DAEO and complying '41th the tenns of the 

clh.ics agreement !hat I have entered into with the DAEO and that bas been provided to this Comminee. 

3. Describe any business relationship, dealing or financial transaction (ocher than tax 

paying) which you have had during the last 1 0 yean with the Federal Govemmen~ 

whether for younclf, on behalf of a client, or acting as an agent, that might in any 

way constitute or result in a possible conflict ofinterest with the position to which 

you have been nominated. 

In connection wilh the nomination process. I have c:onsulted with the Office of Govenur.ent Ethics and the 

Federal Reserve Board's Designated Agency Ethics Official (DAEO) 10 identify potential conflicts of interest. I 

will resolve any conflicts by following the advice of the Board's DAEO and complying with the terms of the 

ethics agreement that! have entered into with the DAEO and that has been provided to this Committee. 

5 
56 


51518028.eps

4. List any lobbying activity during the past len years in \lflich you hao;e ~in for the 

purpose of directly or indirectly inlluencing the passage, defeat or modification of 

any legislation at the nationallevtl of government or affecting the administration and 

exetution of national law or public policy. 

As a member of the Kansas Bankers Association and the American Bankers Association from 2010-2017,1 

cJi5cussed a Vlfiety of KBA and ABA supponed legjslatio;e initiath'CS with federal elected represt~~~Jti\'eS. As a 

member of the Conference of Slate Bank Supetvisorsin 2017 and 2018,1 distussed a variety of state banking 

related issues with federal elected represertlatiV'CS. 

S. Explain how you will resolve any conflict of interest that may be disclosed by your 

responses to the items above. 

In c:oonection with the nomination process. I have consulted with the Office of Government Elhies and the 

Federal R~-e Board's Designated Agency EUtics Official (DAEO) 10 identify pocential conRicu of interest. I 

will resolo;e any conflicts by following the advice of the Board's DAEO and complying with the terms of the 

ethics agreement that I have entered into with the DAEO and that has b«n provided to this Commiuee. 

Chi!, crimioal11d 

illvestiptory 

actioas: I. Give the full details of any civil or criminal proceeding in which you were a defendant 

or any inquiry or investigation by a Federal, Slate, or local agency in which you were 

the subjett of the inquiry or investigation. 

None. 

2. Give the full details of any proceeding. inquiry or inV'CStigation by any professional 

association including any bar association in which you were the subject of the 

proceeding, inquiry or investigation. 

None. 

6 
57 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM RICHARD CLARIDA 

Q.1. What is your view on what caused the 2008 financial crisis? 

What responsibility does the Federal Reserve share in terms of failures in regulatory and supervisory policy? 

A.1. Put simply, by 2007 the U.S. financial system was highly fragile. A buildup of leverage and maturity transformation in the years 

leading up to the crisis left the U.S. and global economy vulnerable 

to negative surprises. When the downturn in the U.S. housing market occurred, these vulnerabilities amplified the effects of the initial shocks and the result was the financial crisis. 

The crisis revealed shortcomings and failures at private institutions, in the overall regulatory framework, and in the actions of 

specific agencies, including the Federal Reserve. 

In response to the crisis, the Federal Reserve increased its regulatory and supervisory scrutiny of the largest financial institutions, 

for example, putting in place a comprehensive stress-testing regime. In my view, this response has, broadly speaking, increased 

the resilience of the system. 

The new regulatory regime for large banks ensures that the largest institutions are sufficiently strong to continue to function effectively as intermediaries even in periods of substantial financial 

stress. Capital is critical to ensuring resiliency, as are the availability of high-quality liquid assets, appropriate management of 

risks, and the presence of a plan for resolution in case needed. 

Progress has been made in all of these areas, and newer tools like 

the stress testing regime and the countercyclical capital buffer 

should also contribute to the resiliency of the system going forward. 

Q.2. How did large bank and investment bank leverage contribute 

to the 2008 financial crisis? 

A.2. The buildup of leverage to excessive levels was a key contributor to the spread of the financial crisis. In the run up to the crisis, 

the firms that experienced the worst problems also had some of the 

highest leverage ratios. And when the problems at Bear Stearns 

were resolved through its acquisition by JPMorgan, market participants turned their attention to other firms with similarly high levels of leverage. 

However, leverage at large financial institutions alone was not 

responsible for the 2008 financial crisis. When the housing market 

turned down and housing-related assets fell in value, a series of 

vulnerabilities amplified the effects of that shock, including the reliance on short-term wholesale funding at large financial institutions. Some of these institutions faced runs by investors and had 

to sharply cut back their activities in support of the real economy. 

And, more broadly, the financial system was highly interconnected 

in opaque and surprising ways. 

Q.3. How would you characterize current risk-weighted and leverage capital levels for the largest U.S. banks—too low, too high, or 

the correct amount? 

A.3. It is critical to the safety and soundness of the largest U.S. 

banks and to the broader U.S. financial system and economy that 

these firms are well capitalized. Since the financial crisis, the U.S. 

58 

1https://www.federalreserve.gov/newsevents/pressreleases/bcreg20180411a.htm. 

2https://www.reuters.com/article/us-usa-fed-quarles/u-s-considering-material-changes-tovolcker-rule-feds-quarlesidUSKBN1GH2U8. 

banking agencies have significantly strengthened regulatory capital 

requirements for large banking firms, which has made them much 

more resilient and able to continue lending even when under financial stress. 

If confirmed, I look forward to examining this question more 

closely and consulting with my colleagues. Absent critical supervisory information, it would be premature for me to judge the precise appropriate capital levels. However, given its importance, I am 

very encouraged by the steps that I have observed the Federal Reserve has taken. 

Q.4. As you know, the Federal Reserve recently proposed reducing 

leverage requirements for the eight biggest U.S. global systemically 

important banks (G–SIBs).1 In discussing the impact of its proposal, the Federal Reserve noted that it would reduce the amount 

of tier 1 capital required across the lead insured depository institution (IDI) subsidiaries of the G–SIBs by approximately $121 billion. 

Q.4.a. Could a reduction in IDI capital pose any risks to depositors, 

taxpayers, or financial stability? Why or why not? 

A.4.a. In setting capital requirements, there is a risk that leverage 

ratios may become too binding. When a leverage ratio becomes a 

binding constraint, it can create incentives for firms to increase 

their investments in higher-risk, higher-return assets and, conversely, reduce their participation in lower-risk activities. 

Q.4.b. What is your view on raising the enhanced prudential standards threshold pursuant to Dodd-Frank section 165 from $50 billion to $250 billion in total consolidated assets, as contemplated in 

S. 2155? 

A.4.b. I support increased tailoring of regulation and supervision. 

I believe that it was prudent for the Congress to raise the $50 billion asset threshold for larger bank holding companies in order to 

limit the scope of enhanced prudential standards. In general, regulation and supervision should continue to be tailored to the size, 

systemic footprint, and risk profiles of institutions, and my understanding of the Economic Growth, Regulatory Relief, and Consumer 

Protection Act is that while it adjusts the $50 billion threshold, it 

still allows the Federal Reserve to subject a firm with a higher risk 

profile to more rigorous regulation. 

Q.4.c. Federal Reserve Vice Chair Quarles has said that the 

Volcker Rule ‘‘is an example of a complex regulation that is not 

working well.’’2 Do you agree or disagree? Why? 

A.4.c. I think it makes sense to explore whether or not the Volcker 

Rule can be implemented in a simpler, less burdensome way while 

still achieving the objectives of the statute. 

Q.4.d. What is your view of the Community Reinvestment Act? 

Does it need to be altered or modernized by the Federal Reserve? 

If so, what changes do you support? 

59 

A.4.d. The Community Reinvestment Act (CRA) has been a part of 

banking regulation for 40 years. It would be a very high priority 

of mine, if confirmed, to make sure that it is enforced. 

I support the CRA’s goal of encouraging banks to meet their affirmative obligation to serve their entire community, and in particular, the credit needs of low- and moderate-income communities. 

Doing so benefits low- and moderate-income communities and helps 

them to thrive by providing opportunities for community members, 

for example, to buy and improve their homes and to start and expand small businesses. 

If confirmed, I would be open-minded to discussions for improving or bringing the CRA up to date, but the essential mission of 

the act needs to be respected. 

Q.5. On May 23, the FDIC released their Quarterly Banking Profile. It shows that that bank profits increased 28 percent over the 

last year, and even more for community banks. 

Q.5.a. Do you think it is sound policy to reduce capital requirements for banks that have profit levels this high? 

A.5.a. The financial crisis demonstrated the importance of a financial system that has sufficient capital to absorb losses and allow 

banks to continue lending in an economic downturn. Stronger and 

higher-quality regulatory capital requirements for U.S. banking 

firms have therefore been an essential post-crisis reform. However, 

I believe the banking agencies should continue to examine whether 

the requirements remain effective over time and adjust the capital 

framework as appropriate while preserving the essential gains in 

resiliency and stability of our financial system that have resulted 

from the reforms put in place since the financial crisis. 

Q.5.b. If confirmed, you will be a member of the Federal Open 

Market Committee. What experience will you bring to this role? 

Are there any changes in how monetary policy is currently conducted that you will advocate for? 

A.5.b. In my 35-year professional career, I have achieved recognition among academics, policymakers, and financial market participants as an expert on the economics of monetary policy. My 

academic work on monetary policy as a professor of economics and 

international affairs since 1988 at Columbia University (and before 

that at Yale University) has been frequently cited, and the framework for a more effective monetary policy developed in these papers has been widely consulted by economists at the Federal Reserve and as well as at other major central banks around the 

world. In this regard, since 2007 I have served as a member of the 

Deutsche Bundesbank Academic Research Council and have been 

chairman of this group since 2012. In 2009–2010, I served as an 

external member of the Norges Bank monetary policy review committee, and since 2012 have served on the Academic Advisory 

Board of the Hong Kong Monetary Authority’s Institute for Monetary Research. Earlier in my career—from 1991 to 1992 and again 

between 1995 and 1997—I was a consultant at the economic research department of the Federal Reserve Bank of New York as 

part of a group of academic experts that included Ben Bernanke 

and future Nobel laureate Christopher Sims. And in 1999, I served 

60 

as a consultant to Paul Volcker and the Group of 30 and contributed to their Project on Exchange Rate Regimes. 

I have been an active member of the National Bureau of Economic Research (NBER) since 1983, and since 2004 have served as 

a co-organizer of the NBER’s annual International Seminar on 

Macroeconomics, which is typically hosted by a central bank in Europe. I am also a regular participant in the annual Hoover Institution Conference on Monetary Policy, and, last summer, delivered a 

keynote address at the Bank for International Settlements Annual 

Research Conference. 

Although I have spent most of my career in academia, I have had 

two opportunities to serve in economic policy positions in the executive branch of the U.S. Government: first, as a Senior Staff Economist with Council of Economic Advisers from 1986 to 1987 and second, as Assistant Treasury Secretary for Economic Policy from 

2002 to 2003. These experiences were invaluable in providing me 

a perspective that places a premium on doing economic analysis 

that is practical, robust, and relevant to better understanding how 

economic policy impacts individual American and their communities. 

Since 2006, I have had the opportunity to advise Pacific Investment Management on global economics and strategy, with a particular focus on global monetary policy. While I myself do not manage portfolios, I have worked with the firm’s investment committee 

to help them interpret and assess global economic and monetary 

policy trends. I believe this experience has given me an appreciation for the interaction between macroeconomic developments and 

financial markets that I would not otherwise have obtained. 

The Federal Reserve’s monetary policy decisions are guided by its 

statutory mandate to promote maximum employment and price 

stability. Over the past few years, the Federal Open Market Committee (FOMC) has been gradually reducing monetary policy accommodation. Last year, it raised the target range for the Federal 

funds rate by 3⁄4 percentage point, and in October it initiated a balance sheet normalization program to gradually reduce its securities 

holdings. These steps to normalize the stance of monetary policy 

are welcome, as they reflect the economy’s recovery from the financial crisis and recession, the durability of the economic expansion, 

and the Committee’s confidence that inflation will return to 2 percent on a sustained basis. If confirmed, I look forward to working 

with my colleagues on the FOMC to continue to promote maximum 

employment and price stability. 

Q.5.c. Since the crisis, do you think the Federal Open Market Committee has been on the right course by gradually increasing interest rates? 

A.5.c. I believe that the gradual increases that the FOMC has 

made since December 2015 in the target range for the Federal 

funds rate have been consistent with its statutory mandate to promote maximum employment and price stability. Over the past few 

years, the FOMC has been gradually reducing monetary policy accommodation, reflecting the improvement in the U.S. economy. 

During 2017, it raised the target range for the Federal funds rate 

by 3⁄4 percentage point, and in October 2017, it initiated a balance 

61 

sheet normalization program that is gradually reducing the Federal 

Reserve’s securities holdings. 

As I noted previously, these steps to normalize the stance of 

monetary policy are welcome developments, as they are responses 

to the U.S. economy’s recovery from the financial crisis and recession, the sustained nature of the economic expansion, and the 

FOMC’s confidence that inflation will return to 2 percent on a sustained basis. In addition, as decisions on the pace of policy firming 

have reflected the FOMC’s assessment of incoming data and the 

outlook for the economy, recent years’ monetary policy developments have underlined the fact that monetary policy is not on a 

preset course; rather, it is data dependent and is chosen to promote 

outcomes for the U.S. economy most consistent with the statutory 

goals of maximum employment and price stability. If confirmed, I 

look forward to working with FOMC colleagues on shaping policy 

decisions in pursuit of these goals. 

Q.6. As you know, the Federal Reserve currently uses a variety of 

monetary policy rules, including the Taylor rule, in its analysis and 

monetary policy decisionmaking, but does not rely solely on rules 

to determine interest rate adjustments. 

Q.6.a. Do you agree with the Federal Reserve’s current approach, 

or will you advocate that the Fed use a single rule? 

A.6.a. I understand that the simplicity of monetary policy rules has 

some appeal. But the economy is very complex. 

Conducting monetary policy based on simple formulas has a long 

tradition in the research literature on monetary policy. But economic models are, of necessity, always simplifications of reality, 

and we need to ask ourselves whether adhering to any simple 

rule—even if it worked well in an economic mode—would in practice mean that we were implementing the monetary policy that was 

most consistent with meeting our statutory objectives. 

No simple policy rule can capture the full range of considerations 

that the FOMC must take into consideration when making monetary policy decisions. For example, policymakers must consider not 

just the current levels of economic variable—which are the variables that appear in many simple policy rule—but also the expected future paths of such variables. In addition, we need to take 

account of possible risks surrounding those paths and whether the 

costs associated with particular economic outcomes could be especially high. 

We also need to take account of unobservable structural factors 

that may affect the economy. For example, factors that may persistently lower the level of the neutral Federal funds rate or that 

may affect the longer-run normal level of the unemployment rate. 

In contrast, simple monetary policy rules often embed the assumption that these longer-run levels of the real interest rate or the unemployment rate are fixed. 

In sum, policy rules’ prescriptions can be useful inputs in the 

FOMC’s policy deliberations, but they are not an adequate or satisfactory substitute for FOMC decisions on monetary policy based on 

a wide range of information. 

62 

3http://www.nber.org/papers/w24333. 

4http://www.princeton.edu/∼accase/downloads/MortalitylandlMorbiditylinl21stl 

CenturylCase-Deaton-BPEA=published.pdf. 5https://www.brookings.edu/wp-content/uploads/2018/02/kruegertextfa17bpea.pdf. 

Q.6.b. While the unemployment rate continues to fall, the labor 

force participation rate remains at about its lowest level in 40 

years. What do you think is contributing to this? 

A.6.b. Although we have seen solid job growth this year and further declines in the unemployment rate, the labor force participation rate is still quite low by historical standards. Much of this is 

due to the movement of the large baby boom cohort into ages when 

participation rates tend to fall sharply as workers retire. That said, 

the labor force participation rate for prime-age workers—especially 

men—has also not rebounded to pre-recession levels. A recent survey paper by Katherine Abraham and Melissa Kearney3 attributes 

much of the longer-run decline in participation among prime-age 

men to factors such as technical change and globalization. However, I also think that this group could represent an additional 

margin of slack in the sense that some of them could be enticed to 

reenter the labor force as the demand for labor continues to 

strengthen. 

Q.6.c. Do think the opioid addiction epidemic is related to the decline in labor force participation among prime-age workers? 

A.6.c. Yes I do. Economists Anne Case and Angus Deaton 4 have 

carefully documented the rise in ‘‘deaths of despair’’ in the United 

States, to which the opioid epidemic has contributed. In addition, 

Alan Krueger’s research 5 on the decline in labor force participation 

among adult men suggests that the proportion of adult men taking 

pain medication has risen sharply over the past two decades and 

is one reason for the decline in labor force participation among this 

population. More generally, opioid addiction has adversely affected 

both the health and economic situation of many individuals and 

their families and is an important issue that needs to be addressed 

by policymakers. 

Q.6.d. Over the past 40 years the link between productivity and 

wage increases has eroded. More and more, productivity gains 

aren’t shared with workers. Why do you think wage growth has not 

kept pace with productivity growth? Is there anything the Fed can 

do to increase wages? Can the Federal Reserve, through monetary 

policy or regulatory policy, do more for individuals and communities that have not experienced the benefits from the economic recovery? 

A.6.d. It is the case in recent decades that there has been more dispersion between workers in different categories and that some 

workers have fallen behind. There is no consensus on the primary 

reason for this divergence, but economists tend to attribute this to 

a number of factors, including globalization, technological change, 

and a need to better equip workers with the skills needed in today’s labor market. 

In the aggregate, wage growth is a function of the strength of the 

economy and the growth in productivity. I think the Federal Reserve can best promote faster wage growth by focusing on its full 

employment mandate—that is, by getting the unemployment rate 

63 

to a level that is, on average, consistent with a healthy labor market, but acknowledging that there are factors at work that are impacting different workers in different ways. 

Q.6.e. If confirmed, how will you advocate for increased diversity 

in the Federal Reserve System? 

A.6.e. Diversity is a critical aspect of all successful organizations, 

and it is important to have a diverse workforce at all levels of an 

organization. I believe that better decisions are made, including in 

the policy space, when there are individuals with a broad range of 

backgrounds and perspectives engaged in the process. 

If confirmed, I will have the opportunity to meet and speak with 

individuals and groups throughout the Federal Reserve System, 

the financial and banking sectors, and regional and community organizations. I will use those opportunities to advocate for career opportunities at the Federal Reserve Board (Board) and the System 

for individuals with diverse backgrounds, experience, and perspectives. And I plan to actively support Board and Federal Reserve 

Bank (Reserve Bank) initiatives to identify and recruit individuals 

with diverse backgrounds and perspectives for careers at the Board 

and the Reserve Banks. Of course, I also recognize that attracting 

diverse talent is only the first step. To meet our objectives, we need 

to create an environment where all will thrive and contribute. 

Q.6.f. Federal Reserve Board of Governors nominee Marvin 

Goodfriend, has recommended that the ‘‘central bank put in place 

systems to raise the cost of storing money by imposing a carry tax 

on its monetary liabilities.’’ Do you believe that there should be a 

currency tax, or that there are financial conditions that would call 

for a currency tax? 

A.6.f. I am very skeptical that the real-world effects of a tax on 

currency could justify imposing such a tax. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED 

FROM RICHARD CLARIDA 

Q.1. The Federal Reserve is one of the agencies authorized to enforce the Military Lending Act (MLA), which is a bipartisan law enacted in 2006 that sets a hard cap of 36 percent interest for most 

loans to servicemembers and their families. On July 22, 2015, the 

Department of Defense finalized MLA rules that closed prior loopholes that allowed unscrupulous lenders to prey upon servicemembers and their families. 

Q.1.a. Do you support these stronger MLA rules? If confirmed, will 

you ensure that the MLA is vigorously enforced? 

A.1.a. In enacting the Military Lending Act (MLA), Congress directed the Department of Defense to issue implementing regulations after consulting with the Federal Reserve and other agencies. 

I understand that Federal Reserve staff has worked with Defense 

Department staff to carry out that mandate and, if confirmed, I 

will support that effort and the Federal Reserve’s full enforcement 

of the MLA at the institutions it supervises. 

Q.1.b. If changes are made to the Community Reinvestment Act 

that lead to financial institutions, including those that have an 

64 

online presence, to take deposits from communities but actually 

make less of an effort to reinvest in these same communities, 

would you consider that to be a good or bad outcome? 

A.1.b. The Community Reinvestment Act (CRA) was enacted to ensure that banks help meet the credit needs of the communities 

where they are chartered to do business. It is important that credit 

flow to consumers and businesses in all communities, including in 

low- and moderate-income areas, consistent with safe and sound 

lending to meet their credit needs and further economic development and financial inclusion. Any revisions to CRA that expand 

the area within which a bank’s CRA performance is evaluated 

should ensure that the new areas are consistent with the original 

intent of the law. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR 

MENENDEZ FROM RICHARD CLARIDA 

Q.1. How many times did you meet with President Trump prior to 

being selected as a nominee to the Federal Reserve? 

A.1. I met with President Trump one time. 

Q.2. In that/those meeting(s), did President Trump ask how you 

would vote on proposed increases to the Federal funds rate? 

A.2. The President did not ask how I would vote on proposed increases to the Federal funds rate. 

Q.3. Did the President indicate a preference, one way or the other, 

for how you should approach decisions on whether to increase the 

Federal funds rate? 

A.3. The President did not indicate a preference for how I should 

approach decisions on whether to increase the Federal funds rate. 

Q.4. After meeting with the President, do you believe he understands the value of an independent central bank? If yes, what did 

he say to give you that indication? 

A.4. In addition to my meeting with the President, I had a number 

of meetings over several months with a number of officials in the 

Administration. In no meeting and at no time did I ever have any 

cause for concern that anyone I met with questioned the independence of the Federal Reserve to conduct monetary policy that would 

best achieve the mandates assigned to it by the Congress. 

Q.5. Will you commit that if confirmed, you will ignore any political 

pressure or interference, whether it be direct or indirect from the 

President or any other member of the Administration? 

A.5. I have no reason to expect any political pressure or interference, but I fully commit that if confirmed I would completely ignore any political pressure or interference, whether it be direct or 

indirect from any member of the Administration. 

Q.6. Do you agree that the achievement of full employment should 

be associated with strong and broad-based wage growth for average 

workers, not just senior executives and managers? 

A.6. Absolutely, that is something that we would like to see associated with full employment. It is the case in recent decades that 

there has been more dispersion between workers in different 

65 

categories and that some workers have fallen behind. There is no 

consensus on the primary reason for this divergence, but economists tend to attribute this to a number of factors, including 

globalization, technological change, and a need to better equip 

workers with the skills needed in today’s labor market. 

I think the Federal Reserve can best promote faster wage growth 

by focusing on its full employment mandate—that is, by getting the 

unemployment rate to a level that is, on average, consistent with 

a healthy labor market, but acknowledging that there are factors 

at work that are impacting different workers in different ways and 

encouraging policymakers to address those inequities. 

Q.7. Why isn’t this tight labor market forcing employers to offer 

higher and more competitive wages? 

A.7. It is true that measures of nominal wage growth have been 

increasing more slowly recently than during the strong labor markets of the mid-2000s or late 1990s. While many factors may be 

contributing to the relatively slow growth in wages, the most important factor is likely the slowdown in productivity growth over 

the past decade or so. Indeed, over the past couple of years (and 

over the past decade), productivity growth averaged 1 percent per 

year, well below the average rate of 2 1⁄4 percent since 1950. When 

productivity growth is lower, employers cannot afford to increase 

wages by as much as otherwise. Price inflation has also been slower over the past 2 years than the tight labor market of 2006–2007. 

As a result, real wage growth, which is what matters for workers’ 

welfare, has not slowed as much as nominal wages. Even though 

current wage growth is lower than previously, most measures of 

aggregate wages have increased gradually as the labor market has 

tightened, suggesting that the tighter labor market is pushing up 

wages. If the labor market tightens further, I would expect wage 

growth to rise as well, all else held constant. 

Q.8. To what extent has workers’ decreased leverage to negotiate 

with their employers impacted their ability to demand higher 

wages? 

A.8. It is difficult to assess how much decreased negotiating leverage has affected workers’ ability to demand higher wages. Workers’ 

leverage has increased as the labor market has tightened, producing higher wages and greater employment and employer-provided training. Although wage growth is lower currently than in 

previous periods of strong labor demand—which would be consistent with decreased negotiating leverage—several other factors 

are also likely holding down wages. Productivity growth, which is 

ultimately responsible for the increase in real wages over time, has 

been quite slow in recent years, as has inflation which influences 

the rate of nominal wage growth. It’s possible that changes in technology may have decreased worker negotiating leverage by, for example, increasing employers’ ability to monitor workers and automate jobs, and by making it easier for employers to shift production to different locations. But it is difficult to distinguish the effect 

of any change in workers’ negotiating leverage from the influence 

of other factors. 

66 

1OCC, Policy and Procedures Manual, ‘‘Impact of CRA Ratings on Licensing Applications’’, 

PPM 6300–2, November 8, 2017, www.occ.treas.gov/publications/publications-by-type/otherpublications-reports/ppms/ppm-6300-2.pdf. 

Q.9. Do you agree with Federal Reserve Governor Brainard that it 

is important to retain a focus on place as the Federal Reserve contemplates changes to the Community Reinvestment Act? Do you 

agree that in some low-income and hard to reach communities, 

physical branches are sometimes the only way to meet local credit 

needs? 

A.9. Governor Brainard has stated that the time is right to revise 

the Community Reinvestment Act (CRA) regulations and, in particular, expand the area in which a bank’s CRA activities are evaluated. She also emphasized the importance of retaining a core 

focus on place. In her statement, she cited research that demonstrates that branches are an important vehicle for reaching small 

business customers and low-income consumers. 

I agree with her assessment that the agencies should be thoughtful about how to make the area where CRA activity is evaluated 

more meaningful to both banks and low- and moderate-income 

communities. 

Q.10. Do you agree that robust enforcement against discriminatory 

or unfair and deceptive lending practices must work hand-in-hand 

with any revisions to the Community Reinvestment Act? 

A.10. Discriminatory and other illegal credit practices are inconsistent with helping to meet community credit needs and, as such, 

have a negative effect on a bank’s CRA performance. I understand 

that the Federal Reserve takes evidence of discrimination into account when assigning CRA ratings as prescribed in the CRA regulations. It is important to retain the connection between CRA, fair 

lending, and laws protecting against other illegal credit practices to 

ensure that consumers have fair access to credit. I would support 

examinations that are data-driven, as much as possible, to examine 

for compliance with fair lending laws and regulations. 

Q.11. A Treasury Department report issued in April recommends 

that the Federal Reserve adopt the OCC’s new policy allowing 

banks with failing CRA ratings to merge or expand so long as they 

can demonstrate a potential benefit. 

Do you think the Federal Reserve should adopt this policy? 

A.11. The applications process serves as a means of enforcing CRA, 

which requires that the appropriate Federal supervisory agency 

consider a depository institution’s record of helping to meet the 

credit needs of its local communities and to take that record and 

public comments into account in evaluating applications for deposit-taking facilities, such as for mergers, acquisitions, and 

branches. 

I understand that the Office of the Comptroller of the Currency 

(OCC) issued guidance last November on how it will assess CRA 

ratings in the context of its review of a banking application, which 

varies from the Federal Reserve’s guidance.1 If confirmed, I would 

want to understand better how the agencies’ respective guidance 

differ and ensure that there is clarity and transparency so that 

banks can comply, and applications can be evaluated in a manner 

67 

that is consistent with the congressional intent of enforcing the 

CRA. 

Q.12. Prior to the financial crisis, regulators treated assets like 

subprime mortgage-backed securities as ‘‘low risk,’’ which allowed 

big banks to load up on risky assets without the necessary capital 

backing. When the crisis hit, the Nation’s biggest banks didn’t have 

the capital to withstand the losses. 

Do you agree that regulators and banks misperceived risks before the last crisis, and assigned low ratings to assets that were actually toxic? 

A.12. The financial crisis demonstrated the importance of a financial system that has sufficient capital to absorb losses and allow 

banks to continue lending in an economic downturn. Since the crisis, the U.S. banking agencies have appropriately strengthened and 

improved the quality of the regulatory capital requirements for 

U.S. banking firms. 

Q.13. Last month, the Fed and the OCC proposed a rule that 

would weaken the enhanced supplementary leverage ratio, a requirement that the Nation’s biggest banks hold enough capital to 

support lending and absorb losses in a downturn. Those banks are 

required to meet leverage ratios at the holding company level and 

at the depository institution level—where the deposits are backed 

by taxpayers. According to the FDIC, this proposal would result in 

the departure of more than $120 billion in capital—capital that our 

regulators unanimously deemed necessary after the financial crisis 

to ensure our Nation’s largest banks can withstand losses. Federal 

Reserve Governor Brainard voted against this proposal—the first 

dissent in the history of Board votes it keeps on its website (315 

votes total)—and the FDIC declined to join the proposal, a significant departure from other postcrisis rulemaking, even though the 

Fed and FDIC jointly established this rule after the crisis. 

Are you at all concerned that without the backstop of an adequate leverage ratio for the Nation’s eight biggest banks, banks 

will once again load up on so-called ‘‘low risk’’ assets, and place 

taxpayers at risk of future bailouts? 

A.13. In setting capital requirements, there is a risk that leverage 

ratios may become too binding. When a leverage ratio becomes a 

binding constraint, it can create incentives for firms to increase 

their investments in higher-risk, higher-return assets and, conversely, reduce their participation in lower-risk activities. My understanding of the enhanced supplementary leverage ratio proposal 

is that it was aimed at striking an appropriate balance between leverage and risk-based capital requirements. If I was to be confirmed, I would look forward to better understanding the analysis 

underpinning the proposal and the public comments that were received in response. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNER 

FROM RICHARD CLARIDA 

Q.1. I believe strongly in the importance of the Fed’s independence. 

Recent comments from another Fed candidate (and former Fed 

Governor)—Kevin Warsh—suggest that President Trump has been 

68 

anything but shy in revealing his preference for a low interest rate 

environment. 

Q.1.a. Has the President—or anyone in the Administration—impressed upon you their beliefs on how you should vote on matters 

of monetary policy? 

A.1.a. No. I had a number of meetings over several months with 

a number of officials in the Administration including the President. 

In no meeting and at no time did anyone impress upon me their 

belief on how I should vote on matters of monetary policy. 

Q.1.b. Do you commit to safeguarding the independence of our central bank? 

A.1.b. Yes. I have no reason to expect any political pressure or interference that would challenge the independence of our central 

bank, but I fully commit that if confirmed I would completely ignore any political pressure or interference, whether it be direct or 

indirect from any member of the Administration. 

Q.1.c. What do believe is the biggest threat to financial stability 

at the moment? 

A.1.c. An important lesson of the global financial crisis was the 

need for greater vigilance in monitoring the financial system. This 

includes looking at asset valuations, leverage, liquidity and maturity transformation, and the complexity of the financial system. 

Understanding the key vulnerabilities in the system is a necessary 

step in order to pursue effective policies to ensure the health of our 

financial system should vulnerabilities increase. 

Given that we have enjoyed many years of solid growth amid a 

stable financial system, in my view complacency is a particular 

threat. Failure to remain vigilant even as the financial system 

evolves and grows risks the possibility that the reforms put in 

place since the crisis will lose their effectiveness. 

Q.1.d. Do you believe that Title II’s Orderly Liquidation Authority 

is an important tool available at the Fed’s disposal during a crisis? 

Would you vote to use the Authority if bankruptcy was not an appropriate method for resolving a systemic financial institution? 

A.1.d. Bankruptcy should be the preferred resolution framework 

for a failing financial firm. Companies, counterparties, the markets, and investors understand the rules and procedures under the 

Bankruptcy Code. Nevertheless, Title II’s Orderly Liquidation Authority provides an important backstop resolution framework for 

extraordinary situations. 

Every failure of a systemic financial firm is different, and I 

would consider the facts and circumstances on a case-by-case basis 

in deciding whether to vote in favor of recommending that the 

Treasury Secretary use Title II’s Orderly Liquidation Authority. 

One aspect of Title II that would factor into my analysis is that 

Title II does not allow for Government capital injections and requires that taxpayers suffer no losses from the resolution. 

Q.1.e. Do you think current bank risk-based capital levels are too 

high, too low, or about right? How about the leverage ratio? 

A.1.e. Maintaining the safety and soundness of the largest U.S. 

banks is fundamental to maintaining the stability of the U.S. 

69 

financial system and the broader economy. To be safe and sound 

financial institutions, these firms must be well capitalized. The 

U.S. banking agencies have substantially strengthened regulatory 

capital requirements for large banking firms, improving the quality 

and increasing the amount of capital in the banking system. 

High-quality common equity tier 1 capital (CET1) is important 

because it is available under all circumstances to absorb losses. 

Since the financial crisis, U.S. banks have been required to meet 

new higher minimum requirements for CET1 to ensure a solid base 

of protection against losses. U.S. banks also have been required to 

meet a new capital conservation buffer on top of the minimum to 

preserve flexibility to make capital distributions. For the U.S. global systemically important banks (G–SIBs), the Federal Reserve has 

imposed an additional capital surcharge designed to reduce the 

threat that a failure of any of these firms would pose to financial 

stability. (Commonly referred to as the G–SIB surcharge.) Large 

U.S. banking firms have roughly doubled their capital positions 

from before the crisis to today. 

If confirmed, I look forward to examining this question more 

closely and consulting with my colleagues. Absent critical supervisory information, it would be premature for me to judge the precise appropriate capital levels. However, given its importance, I am 

very encouraged by the steps that I have observed the Federal Reserve has taken. 

Q.2. As you may know in S. 2155, we contemplate raising the enhanced prudential standards from $50 billion to $250 billion, with 

an 18 month-delayed effectiveness to give the Fed time to do a 

rulemaking and decide whether it should apply any of the enhanced prudential standards to banks between $100 billion and 

$250 billion. 

What do you see as the most important enhanced prudential 

standards for these mid-size banks? 

A.2. Throughout our banking regulatory system, we should continue to protect the core tenets of regulatory reform—capital, stress 

testing, liquidity, resolution planning, and orderly liquidation authority. One important post-crisis reform maintained for banks of 

that size by S. 2155 is periodic stress testing. 

The Federal Reserve further helps ensure the capital adequacy 

of our largest banking firms through the annual stress testing and 

Comprehensive Capital Analysis Review (CCAR) exercises, which 

consider the losses these firms would suffer under adverse economic scenarios on a forward-looking basis. In doing so, these programs help determine firms’ capital needs when they will be needed most—in a serious economic downturn. 

As we move away from the crisis and as banks continue to add 

risk to their balance sheets, the stress testing and CCAR programs 

will be critical to ensuring that banks are doing so in a manner 

that does not jeopardize their safety and soundness or the stability 

of the U.S. financial system. 

Q.3. The urban-rural economic divide is an area of particular interest for me and an area where I’ve done a lot of work. I believe that 

someone shouldn’t be forced to leave their community to find a 

good paying job. As we’ve seen in the Great Recession and the 

70 

recovery that’s followed, the impacts of these macroeconomic trends 

are not universal and, in this case, have often been felt more 

harshly in rural areas. 

• What do you believe to be the driving forces behind the decline 

of rural America? Is this trend the result of globalization and 

technological change? 

• Do you believe these trends are irreversible? 

A.3. Research has shown that employment growth relative to population has been slower in rural areas in recent years than in large 

cities, and several important measures of well-being in rural areas 

have declined dramatically over recent decades. While important 

research is being done to better understand these disturbing 

trends, no firm conclusions regarding the underlying causes have 

yet emerged. Research does suggest that globalization and technological change have adversely affected the wages and employment 

of lower-educated workers, many of whom reside in rural areas. 

There is also some research that suggests that the increased availability of opioid drugs has also adversely affected employment and 

welfare in rural areas. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN 

FROM RICHARD CLARIDA 

Q.1. Now that you have had more time to examine the Fed’s recent 

proposal on changes to capital standards, do you support the proposal as currently written? If so, why do you think it is appropriate 

to reduce capital requirements for the country’s largest banks at 

this time? If not, what changes would you need to see to the proposal before supporting it? 

A.1. We need a resilient, well-capitalized financial system that is 

strong enough to withstand even severe shocks and support economic growth by lending through the economic cycle. Since the crisis, the U.S. banking agencies have substantially strengthened regulatory capital requirements for large banking firms, improving the 

quality and increasing the amount of capital in the banking system. It would be important to me not to give up any of the gains 

in resiliency and stability that have been achieved since the crisis. 

Risk-based and leverage capital requirements work best together 

when leverage capital requirements generally serve as a backstop 

to risk-based capital requirements. In cases where the leverage 

ratio becomes a binding constraint, it can create incentives for 

banking organizations to reduce their participation in lower-risk, 

lower-return business activity, such as repo financing, central 

clearing services for market participants, and taking custody deposits, notwithstanding client demand for those services. 

I understand that the Federal Reserve’s enhanced supplementary 

leverage ratio (eSLR) proposal is designed to maintain the eSLR 

standards as a meaningful constraint on leverage while ensuring a 

more appropriate complementary relationship between global systemically important banks’ (G–SIBs) risk-based and leverage-based 

capital requirements, and to help ensure that the leverage-based 

capital requirements generally serve as a backstop to risk-based 

capital requirements. If confirmed, I would look forward to reviewVerDate Nov 24 2008 17:41 Dec 14, 2018 Jkt 046629 PO 00000 Frm 00074 Fmt 6602 Sfmt 6602 L:\HEARINGS 2018\05-15 NOMINATIONS\HEARING\31196.TXT SHERYL
71 

ing the comments that the Federal Reserve receives on the proposal. 

Q.2. Do you believe that any U.S. banks are Too Big to Fail? 

• If so, what can and should the Fed do to address this problem? 

• If not, what evidence supports your conclusion? 

A.2. I believe that the post-crisis regulatory reforms and stronger 

supervision have resulted in a great deal of progress being made 

in strengthening the financial system and making large firms better able to absorb losses. Having said that, it is important for financial supervisors to remain vigilant to ensure that the financial 

system continues to remain resilient as economic conditions and 

market practices evolve. 

Q.3. Section 402 of S. 2155, which recently passed the Senate and 

allows banks ‘‘predominantly engaged in custody, safekeeping, and 

asset servicing activities’’ to have less capital. 

Do you believe that language applies to JPMorgan Chase and 

Citigroup? Would that analysis hold if those two banks created intermediate holding companies to house their custody services? 

A.3. Section 402 of the Economic Growth, Regulatory Relief, and 

Consumer Protection Act provides leverage ratio relief to firms that 

qualify as ‘‘custodial banks’’ with respect to reserves held at certain 

central banks. The bill defines a custodial bank as any depository 

institution holding company that is predominantly engaged in custody, safekeeping and asset servicing activities (and any subsidiary 

depository institution of such a holding company). The Federal Reserve Board (Board) and the other Federal banking agencies have 

authority to issue regulations implementing this section. By its 

terms, the bill does not appear to apply to diversified holding companies, such as JPMorgan Chase or Citigroup, because their custodial operations constitute a relatively small percentage of their 

overall businesses. 

The Board applies regulatory capital requirements to bank holding companies on a consolidated basis. Under this approach, the 

top-tier bank holding company is required to aggregate all its activities and the assets of its subsidiaries. As a result, simply inserting an intermediate holding company would not affect the activities 

or assets of the consolidated banking organization or the analysis 

of whether the consolidated organization was considered to be predominantly engaged in custody, safekeeping, and asset servicing 

activities. This result would apply to an intermediate holding company that controlled the custody services of the banking organization as well as to any other intermediate holding company in the 

structure. An intermediate holding company therefore would not 

affect the capital requirements of the consolidated banking organization. 

Q.4. Banks today reported record profits—up 27.5 percent from the 

first quarter of last year. The economy is nearly a decade into a 

long expansionary period. 

Why is a reduction in capital requirements necessary or appropriate at this time? 

A.4. We need a resilient, well-capitalized financial system that is 

strong enough to withstand even severe shocks and support 

72 

economic growth by lending through the economic cycle. To that 

end, the U.S. banking agencies have substantially strengthened 

regulatory capital requirements for U.S. banking firms, improving 

the quality and increasing the amount of capital in the banking 

system. At the same time, it is important to monitor the capital 

rules on an ongoing basis, to determine whether the framework is 

effectively measuring and addressing risk and working as intended, 

and to adjust the framework as needed. 

Reforms proposed by the Federal Reserve suggest that the enhanced supplementary leverage ratio standards may be currently 

calibrated too high, creating potential incentives for firms to disengage from certain low-risk, low-return financial activities that 

are beneficial for the economy. Modest recalibration may reduce 

these negative incentives while not materially changing overall 

large bank capital requirements. As mentioned previously, if confirmed, I look forward to reviewing the comments received on reform proposals. 

Q.5. Fed Chair Powell recently announced that the Fed’s Board of 

Governors would vote on whether to relieve Wells Fargo from the 

growth restriction the Fed imposed on it pursuant to its February 

2018 consent order. 

Q.5.a. What kind of changes at Wells Fargo would you need to see 

before voting to lift the growth restriction? 

A.5.a. First, let me say that just based upon the news accounts, the 

activities of Wells Fargo in this domain are egregious and unacceptable, and I was as shocked as anyone to read about it in the 

newspaper. If I am confirmed and this matter came before me, I 

would certainly individually want to be absolutely convinced that 

appropriate steps had been taken and could be verified. My understanding is that the firm must fully comply with the terms of the 

Consent Order, which requires a number of improvements to be 

made to the firm’s governance and risk management practices. If 

confirmed, I would only vote to lift the asset cap if the required improvements are implemented to the satisfaction of the Federal Reserve. 

Q.5.b. Do you believe the Fed should place more emphasis on finding diverse leaders for the regional banks? 

A.5.b. Like many others, I was excited to see the appointment of 

Raphael Bostic in 2017 as the first African American Reserve Bank 

president and, more recently, the appointment of Andre Anderson 

as the first African American First Vice President. Andre’s appointment to this senor leadership role was particularly satisfying as I 

understand that he rose through the ranks at the Federal Reserve, 

beginning at the Birmingham Branch where he was hired to process municipal bonds. 

Despite these recent appointments, I know that the senior leadership of the Board, and indeed the System, agree that there is a 

lot more work to be done to move the System toward its objective 

of benefiting fully from a diverse workforce and leadership. I and 

I know my potential future colleagues on the Board as well, view 

this as critical first and foremost because it allows the best possible 

job to be done in meeting the responsibilities enumerated for the 

System in the Federal Reserve Act. 

73 

If I am confirmed, I will arrive on the job eager to engage with 

my colleagues across the System on this important issue. I fully 

understand that the Federal Reserve Act assigns primary responsibility for selecting senior leadership at the Reserve Banks to their 

Class B and Class C directors. But the Act also gives the Board of 

Governors the responsibility to approve such appointments, and I 

intend to take that role seriously, including by doing everything 

that I can to use my position to help attract more diverse leaders 

to the System like Raphael and Andre. 

Q.5.c. If so, how do you recommend changing the current hiring 

process so that it produces more diverse leaders? 

A.5.c. Diversity is a critical aspect of all successful organizations. 

In my experience, and in agreement with Chairman Powell’s sentiments, we make better decisions when we have a wide range of 

backgrounds and voices around the table. 

There is value in having a diverse workforce at all levels of an 

organization. I am committed to achieving further progress, and to 

better understanding the challenges to improving and promoting 

diversity of ideas and backgrounds. 

My understanding is that while different Reserve Banks tried 

different approaches, diversity has been a point of emphasis in all 

recent searches. Specific efforts of which I am aware include advance engagement with community groups and hiring of national 

search firms with specific expertise in diversity. If confirmed I look 

forward to encouraging the continuation of these efforts and I also 

commit to look for additional proven approaches to further expand 

the Federal Reserve’s efforts. 

Q.6. The Fed is apparently participating in an interagency effort 

to reform regulations implementing the Community Reinvestment 

Act. In April, the Treasury Department sent a memo to the Fed, 

the OCC, and the FDIC recommending several rule changes. 

Q.6.a. Do you disagree with any of the Treasury recommendations? 

A.6.a. I understand that Treasury’s recommendations were based 

on the Department’s outreach effort and the summary sent to the 

agencies includes helpful insights. If confirmed, I look forward to 

reviewing the recommendations in more detail and supporting efforts to ensure that the agencies work together to find ways to improve both effectiveness and transparency in Community Reinvestment Act (CRA) supervision. 

Q.6.b. What are your priorities for CRA reform? 

A.6.b. If confirmed, I would work to better understand the calls 

from banks, community development organizations and others for 

making CRA evaluations more consistent and transparent. As well 

as for calls to revise the CRA in a way that encourages more lending and investment in underserved areas. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR CORTEZ 

MASTO FROM RICHARD CLARIDA 

Community Reinvestment Act 

Q.1.a. Should CRA be expanded to all nonbanks? Some assert that 

in today’s financial landscape, CRA compliance should be expanded 

74 

to all nonbanks, including credit unions, fintechs, mortgage companies, investment, and others. 

A.1.a. The Community Reinvestment Act (CRA) has been a part of 

banking regulation for 40 years. It would be a very high priority 

of mine, if confirmed, to make sure that it is enforced. 

I support the CRA’s goal of encouraging banks to meet their affirmative obligation to serve their entire community, and in particular, the credit needs of low- and moderate-income communities. 

Doing so benefits low- and moderate-income communities and helps 

them to thrive by providing opportunities for community members, 

for example, to buy and improve their homes and to start and expand small businesses. 

If confirmed, I would be open-minded to discussions for improving or bringing the CRA up to date, but the essential mission of 

the act needs to be respected. 

Q.1.b. Do you support a full scope review for CRA exams? Do you 

think geographical assessment areas should define CRA accountability both where the majority of branch lending and the majority 

of nonbranch lending occurs? 

A.1.b. It is important that the agencies with rule writing authority 

for CRA (the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) evaluate ways to provide a meaningful evaluation of a bank’s CRA activities in all of the communities it serves. I understand that the 

agencies are considering ways to make the area in which CRA performance is evaluated more reflective of current banking practices, 

and I support that effort. 

Q.1.c. If a fair lending exam detects a violation after a bank has 

been graded for its CRA exam, do you think the bank should receive a retroactive downgrade? 

A.1.c. Discriminatory and other illegal credit practices are inconsistent with helping to meet community credit needs. I can understand why regulators would want to take into account banks’ 

records in fair lending when evaluating their performance in the 

spirit of community reinvestment. What would seem to be important is that there is clarity in the application and the implications 

of the ratings on a bank’s supervisory record, particularly if the 

timing of the examinations are different. 

Q.2. Many Democratic, Republican and Independent current and 

former regulatory officials raising concerns about the bank deregulation bill range from former Fed Chair Paul Volcker, former Fed 

Governor and Deputy Treasury Secretary Sarah Bloom Raskin, 

former FDIC Chair Sheila Bair, former Counselor to the Treasury 

Secretary Antonio Weiss, and former Deputy Governor of the Bank 

of England Paul Tucker. These former banking regulators either 

State that a $250 billion bank threshold is too high to protect 

financial stability or that we should not weaken the leverage rules 

for the largest banks, or both. 

Do you think anything in S. 2155 puts the financial system at 

risk? Do you share the concerns raised by your predecessors? If so, 

why? If not, why not? 

75 

A.2. Regulation and supervision should continue to be tailored to 

firms’ size, systemic footprint, and risk profiles. I believe that it 

was prudent for the Congress to raise the $50 billion asset threshold for larger bank holding companies in order to limit the scope 

of enhanced prudential standards. As I understand the Economic 

Growth, Regulatory Relief, and Consumer Protection Act, it adjusts 

thresholds but still allows the Federal Reserve to subject a firm 

with a higher risk profile to more rigorous regulation. 

Q.3. There are a number of places in S. 2155 that would require 

the Federal Reserve to conduct additional cost-benefit analysis in 

order to regulate big banks. 

Mr. Clarida, you have said that the Federal Reserve underestimated the human costs of the financial crisis prior to 2008? What 

have you learned from your previous analytic mistakes? How will 

you ensure you will not repeat those previous errors? 

A.3. The financial crisis and its effect on the economy clearly 

harmed millions of Americans who lost their jobs, their homes, 

their savings, access to credit, etc. The crisis served as a cautionary 

tale about the critical importance of a resilient financial system 

that supports economic growth and meets the credit needs of businesses and consumers. I believe this experience underpinned much 

of the post-crisis regulatory agenda, and if I were to be confirmed, 

I would certainly keep the importance of financial stability firmly 

in mind as a policymaker. 

Q.4. Chair Yellen was the first chair in Federal Reserve history to 

share data with this Committee about racial economic disparities 

during her semi-annual testimony. When she presented that data, 

she touted significant progress, and indeed, black unemployment 

fell from 11.8 percent at the beginning of her term to the current 

historically low figure of 6.9 percent. 

What do you attribute this trend to? Do you think the attention 

that Janet Yellen paid to this issue and the policies of the Federal 

Reserve deserve credit for the progress that has been made? 

A.4. The unemployment rate of African Americans has historically 

been more cyclical than the unemployment rate for the economy as 

a whole. It deteriorates more when the economy goes into a recession and improves more during expansions. Thus, the current historically low level of the African American unemployment rate is 

a function of the long economic expansion our country is currently 

experiencing. The efforts of the Federal Open Market Committee 

(FOMC) to achieve its dual mandate have likely contributed to the 

strong overall macroeconomic performance, although many other 

factors have also contributed. With respect to the attention paid by 

former Chair Janet Yellen and the FOMC in recent years to racial 

economic disparities, I would say that understanding the heterogeneity in how different groups in the economy fare can help to improve our understanding of the economy as a whole. That said, the 

tools available to monetary policymakers are not designed to ameliorate long-standing economic disparities. 

Q.5. At that same testimony where Janet Yellen presented information about racial economic disparities, she said, quote ‘‘it is troubling that unemployment rates for these minority groups remain 

76 

1Goodfriend, Marvin. ‘‘The Case for Unencumbering Interest Rate Policy at the Zero Bound.’’ 

Carnegie Mellon University. September 15, 2015. Available at: https://www.kansascityfed.org/ 

∼/media/files/publicat/sympos/2016/econsymposium-goodfriend-paper.pdf. 

higher than for the Nation overall, and that the annual income of 

the median African American household is still well below the median income of other U.S. households.’’ 

Though African American unemployment is lower today, Chair 

Yellen’s point remains true. Do you think the recent progress is 

sufficient? What more can be done to ensure that unemployment 

among African Americans is equal to white unemployment? In addition to increasing employment rates for African Americans, what 

can the Fed do to increase wages and wealth for African Americans 

and Latinos? 

A.5. I have been heartened to see that, as you note, the steady 

macroeconomic performance of recent years has measurably improved employment and income among African American households. That said, I believe more progress could be made. However, 

the tools that the Federal Reserve has at its disposal are not designed for ameliorating long-standing economic disparities. The 

main way in which the Federal Reserve can contribute is by promoting a healthy and stable economy, which will provide economic 

opportunity for a broad range of households. Moreover, to the extent allowed by law, the Federal Reserve can also use its regulatory and supervisory role to ensure that African Americans have 

equal access to credit and the financial system so as to promote 

their economic well-being. In addition, the Federal Reserve produces a variety of datasets and research that can help inform our 

understanding of the economy and policies that could be undertaken by those outside of the Federal Reserve System to help close 

the gap between African Americans and other U.S. households. 

Q.6. Marvin Goodfriend, another nominee to the Federal Reserve 

Board of Governors has urged the Federal Reserve to incent spending by placing a tax on currency.1

Q.6.a. Do you support Mr. Goodfriend’s proposal to tax currency 

kept outside of circulation? 

A.6.a. I am very skeptical that a tax on currency could be justified 

as a tool of monetary policy. 

Q.6.b. If Mr. Goodfriend’s proposal were to be implemented, can 

you estimate what the impact would be on savers and low-income 

depositors? 

A.6.b. I do not have such an estimate, as I have not undertaken 

research on this topic. 

Q.7. The Consumer Financial Protection Bureau has endured new 

leadership that is hostile to its mission. A number of enforcement 

actions aimed at helping people receive redress from fraud or overcharges has been stopped. 

Q.7.a. If the Consumer Financial Protection Bureau’s leadership 

refuses to ask for adequate funding or takes steps that you think 

are harmful to people or our economy, will you let Senate Banking 

Committee Members know? If so, how? If not, why not? 

77 

A.7.a. I understand that the Federal Reserve Board (Board) plays 

a consultative role in Consumer Financial Protection Bureau 

(CFPB) rulemakings and coordinates in the examinations as appropriate, but does not have any oversight of the CFPB organizational 

or structural design, nor of CFPB enforcement priorities. 

If confirmed, I would support efforts to collaborate with the 

CFPB, while supporting the Federal Reserve’s efforts to continue to 

carry out supervisory and enforcement responsibilities for the financial institutions, and for the laws and regulations under its authority to comply with all applicable Federal consumer protection 

laws and regulations. 

Q.7.b. The Federal Reserve retains supervision and enforcement 

authority for financial institutions below $10 billion in assets. 

Please provide a list of public enforcement actions taken toward 

any Fed-regulated institutions in the past 3 years. Please note any 

fines or penalties assessed. Please note if you agree or disagree 

with these enforcement actions. 

A.7.b. Although I cannot comment on the specific circumstances of 

actions the Federal Reserve has taken in the past, I believe bank 

supervisors have a responsibility to ensure that the institutions 

subject to supervision operate safely and soundly and that they 

comply with applicable statutes and regulations, and furthermore, 

that the Federal Reserve should use its formal enforcement authority to achieve these objectives where appropriate. A list of public 

enforcement actions taken against institutions regulated by the 

Federal Reserve in the past 3 years, including any civil money penalties assessed against the institution, is provided in Appendix A 

to this request. 

Q.8. Some current Federal Reserve leaders support reducing banks’ 

capital requirements. This concerns me as capital requirements 

have been a key tool in restoring the safety of the financial system 

since the crisis. Ensuring modest leverage ratios prevents banks 

from lending out more than they can afford to, and especially keeps 

them away from riskier assets like the ones that fueled the crisis. 

For this reason, Democrats and Republicans in the House and 

Senate, as well as FDIC Vice Chair (and former Kansas City Fed 

President) Thomas Hoenig all support higher capital requirements, 

not lower ones. Do you support any changes to the current capital 

requirements for financial institutions? If so, please describe. 

A.8. The financial crisis demonstrated the importance of a financial 

system that has sufficient capital to absorb losses and allow banks 

to continue lending in an economic downturn. Since the crisis, the 

U.S. banking agencies have strengthened and improved the quality 

of the regulatory capital requirements for U.S. banking firms. However, I believe the banking agencies should continue to examine 

whether the requirements remain effective over time and adjust 

the framework as appropriate while preserving the essential gains 

in resiliency and stability of our financial system that have resulted from the reforms put in place since the financial crisis. 

Q.9.a. In recent years, Federal Reserve policymakers have warned 

that we should raise interest rates to counter asset bubbles destabilizing the financial system. Board of Governor Nominee Marvin 

78 

2Senate Committee on Banking, Housing, and Urban Affairs, June 7, 2016, Hearing. Available at: https://www.gpo.gov/fdsys/pkg/CHRG-114shrg21603/pdf/CHRG-114shrg21603.pdf. 

Goodfriend has suggested replacing liquidity coverage ratios and a 

host of other regulations with tighter monetary policy.2

Do you believe that the blunt tool of monetary policy can be a 

substitute for sound financial protections? What is your understanding of the historical evidence surrounding the relationship between monetary policy and asset bubbles? 

A.9.a. Monetary policy, which is already tasked with the goals of 

price stability and full employment, should not be considered a substitute for strong financial and supervisory standards. Such standards are critical for ensuring stability of the U.S. financial system. 

The excessive leverage and maturity transformation in place in 

2007 left the economy vulnerable to a deterioration in the housing 

market and an increase in investor concerns regarding the solvency 

and liquidity of large, interconnected financial institutions. 

Reforms since that time, enacted by Congress and implemented 

by the appropriate agencies, have raised loss-absorbing capacity 

within the financial sector and reduced the susceptibility of the financial system to destabilizing runs. 

Of course, gaps exist in financial regulation, and some institutions, like hedge funds and many finance companies, largely fall 

outside of the prudential regulatory perimeter. Therefore, changes 

in interest rates could at times be appropriate as a supplementary 

tool to address threats to full employment and price stability emanating from widespread imbalances or buildups of risk in areas 

where more-targeted tools are 

inadequate or nonexistent. 

Asset-price swings owe to many factors, and monetary policy has 

not generally been a prime factor in historical episodes involving 

large increases in asset prices. Run-ups in asset prices that are not 

supported by economic fundamentals usually involve an increased 

tolerance for risk or a decreased perception of risk. 

Q.9.b. Besides monetary policy, what other tools are available to 

temper asset bubbles? 

A.9.b. It is always difficult to judge whether the price of an asset 

has reached an unsustainable level, particularly in real time. That 

said, it is important for the appropriate authorities, including the 

Federal Reserve, to monitor asset price developments and to consider whether, for example, unusually rapid increases in asset 

prices are leading to vulnerabilities that could jeopardize the efficient functioning of the financial system, price stability, or full employment. 

The difficulties associated with detecting asset bubbles as they 

emerge highlight the need for strong and appropriately tailored 

regulatory and supervisory standards at all times. Negative shocks, 

including asset price declines, the sudden failure of a major financial institution and so forth are always possible. The core capital 

and liquidity regulations and supervisory policies adopted by the 

Federal Reserve, including stricter standards for the most systemic 

firms, are, in my view, consistent with a view that the system 

should be resilient to such shocks. 

79 

Q.10. In the years since the financial meltdown, the Federal Reserve has played a key role in putting our economy back on stable 

footing and setting the conditions for more robust growth. Still, 

there have been bills introduced that would eliminate the Fed’s full 

employment mandate on the basis that, according to the bill’s findings ‘‘at best, the Federal Reserve may temporarily increase the 

level of employment through monetary policy.’’ 

Can you elaborate on how the Fed influences employment in the 

short-run, and discuss whether failure to use monetary policy effectively in the face of severe downturns could do permanent damage 

to the level of unemployment in the economy? 

A.10. In the short run, the Federal Reserve influences employment 

by adjusting its target range for the Federal funds rate and by influencing the expected future path of short-term interest rates 

through its forward guidance. These monetary policy actions affect 

the interest rates that many households confront when deciding 

whether to borrow and spend, and that businesses face when making their investment plans. Additional spending by households and 

businesses will, in turn, cause businesses to hire more workers to 

meet the higher demand for their products and services. In this 

way, monetary policy can be used to combat recessions and reduce 

the associated rise in unemployment. 

Q.11. Critics of quantitative easing have argued that it is incompatible with the Fed’s price stability mandate; however in discussing quantitative easing the Fed has consistently noted that the 

program is designed to promote a stronger pace of economic growth 

and to ensure that inflation, over time, is at levels consistent with 

the Fed’s mandate. 

Q.11.a. Can you comment on how the Fed’s policies in recent years 

have actually supported the Fed’s price stability mandate? 

A.11.a. Faced with the most severe financial crisis since the Great 

Depression, the FOMC cut short-term interest rates to zero by the 

end of 2008. In order to address the economic downturn and stem 

disinflationary pressures, the Federal Reserve also turned to nontraditional tools such as asset purchases and forward guidance, as 

means of providing the additional accommodation. These policies 

put downward pressure on longer-term interest rates and helped to 

make financial conditions more accommodative, encouraging and 

supporting the economic recovery. By providing a cushion for aggregate demand during the recession and supporting spending during the recovery, the Federal Reserve’s monetary policy measures 

helped to keep inflation close to 2 percent. In particular, in part because aggregate demand was supported by monetary policy, the 

U.S. economy avoided the severe downward pressure on the price 

level that occurred during the Great Depression, which in turn prevented inflation expectations from falling sharply below 2 percent. 

Q.11.b. What does the latest research tell us about the effectiveness of the Fed’s large scale asset purchases? 

A.11.b. Estimates of the effects of large-scale asset purchases vary 

across studies, but most suggest that asset purchases put downward pressure on term premiums and resulted in lower longer-term 

interest rates than would otherwise have been the case. Lower 

80 

3See, for example, Eric M. Engen, Thomas Laubach, and David Reifschneider (2015), ‘‘The 

Macroeconomic Effects of the Federal Reserve’s Unconventional Monetary Policies,’’ Finance and 

Economics Discussion Series 2015–005, Washington: Board of Governors of the Federal Reserve 

System, February, http://dx.doi.org/10.17016/FEDS.2015.005. 

long-term interest rates, in turn, helped to support asset prices 

more broadly and to bolster spending on goods and services by 

households and businesses. That said, there are costs as well as 

benefits to large-scale asset purchases and certainly today I support the Federal Reserve’s program to shrink its balance sheet. 

Q.11.c. Is there any evidence that the Fed’s asset-purchase program, which sought to support the economy by lowering long-term 

interest rates, has been a drag on U.S. productivity as some Republicans have suggested? Is there any evidence that the program has 

created a ‘‘false economy’’ as Trump has asserted? 

A.11.c. I am not aware of research suggesting that the Federal Reserve’s policies have contributed to the sluggish pace of productivity growth observed over recent years. Studies focusing on the 

slowdown in U.S. productivity growth point to various developments such as weak capital spending in the wake of the financial 

crisis, a slower pace of technological advance, a decline business 

dynamism, and a deterioration in workforce skills as factors contributing to recent productivity trends. 

Q.11.d. How would the economy have likely fared in terms of unemployment, GDP, wage growth, etc., had the Fed chosen not to 

pursue its asset purchase program? 

A.11.d. The Federal Reserve conducts monetary policy to promote 

maximum employment and stable prices. Various research studies 

by academic and central bank economists suggest that the Federal 

Reserve’s asset purchase programs helped to make financial conditions more accommodative, support economic recovery, strengthen 

labor market conditions, and foster price stability.3

Q.11.e. Is there any evidence that the Fed’s stimulus program has 

paved the way for the next global meltdown, as Trump claimed? 

A.11.e. While there are many sources of risk and uncertainty in 

the global economy, the Federal Reserve’s conduct of monetary policy has contributed to an improved global economic outlook by supporting the U.S. economic expansion and maintaining low and stable inflation. 

Q.11.f. How does the Fed’s balance sheet as a percentage of GDP 

compare with the balance sheets of the next largest economies? Do 

these countries have a dual mandate similar to the Fed? 

A.11.f. The size of the Federal Reserve’s balance sheet relative to 

nominal GDP currently stands at about 23 percent. Last October, 

the FOMC initiated its plan to normalize the size of the Federal 

Reserve’s balance sheet. Under that plan, the size of the Federal 

Reserve’s balance sheet will decline gradually over coming years. 

With nominal GDP expected to rise over that time, the size of the 

Federal Reserve’s balance sheet relative to nominal GDP will likely 

decline appreciably. 

The size of the Federal Reserve’s balance sheet as a percent of 

GDP is smaller than those of many other major foreign central 

banks. The size of the central bank balance sheets relative to nomiVerDate Nov 24 2008 17:41 Dec 14, 2018 Jkt 046629 PO 00000 Frm 00084 Fmt 6602 Sfmt 6602 L:\HEARINGS 2018\05-15 NOMINATIONS\HEARING\31196.TXT SHERYL
81 

nal GDP for the United Kingdom, the euro area, Japan, and Switzerland are, very roughly, about 28, 40, 100, and 120 percent, respectively. 

All of these central banks employed large-scale asset purchase 

programs to address the implications of the financial crisis in their 

countries. All of these central banks operate with a single mandate 

to pursue price stability. However, in many cases, this mandate is 

treated as medium-term objective, and other goals, including output and employment stabilization and financial stability, are cited 

to justify deviations from price stability in the short run. 

Q.12. It is my understanding that major central banks around the 

world maintain and have drawn on their authority to purchase a 

wide range of assets including corporate bonds, commercial paper, 

real estate investment trusts, and equities among other assets. 

Q.12.a. Given the broad authorities available to other central 

banks, rather than shrink the Fed’s tool kit, do you think Congress 

should consider expanding it? 

A.12.a. As I indicated above, I believe the FOMC’s existing monetary policy toolkit—notably including forward guidance and balance 

sheet policies—has served the Nation well and has supported the 

U.S. economy in the wake of the financial crisis. Currently, I do not 

see compelling reasons why the toolkit needs to be expanded, but 

I do believe that the experience of the past decade suggests the 

value of preserving the existing toolkit. 

Q.12.b. For example, with an expanded authority, could the Fed 

play a useful role in supporting municipal finance, student loan financing or other types of consumer credit during periods where 

each of these sectors experienced heightened distress? Would you 

support or oppose such expansion of the Fed’s authority? 

A.12.b. The Federal Reserve conducts monetary policy to promote 

its statutory goals of maximum employment and stable prices. The 

Congress has granted the Federal Reserve authority to purchase 

and sell certain types of assets in pursuit of these goals. In general, 

the range of assets the Federal Reserve is authorized to purchase 

is limited to very high quality assets with minimal credit risk such 

as Treasury and agency securities. 

The Federal Reserve’s purchases of Treasury and agency securities during the crisis were effective in making financial conditions 

more accommodative and helping to support economic recovery and 

stem disinflationary pressures. 

Limiting the Federal Reserve’s authorities to a narrow range of 

very high-quality assets helps to insulate the Federal Reserve from 

political pressures that could undercut the effective conduct of 

monetary policy and result in poor macroeconomic outcomes. That 

theme was highlighted in the joint statement issued by the Treasury and the Federal Reserve in 2009 on ‘‘The Federal Reserve’s 

Role in Preserving Financial and Monetary Stability.’’ 

That document noted that, ‘‘Actions taken by the Federal Reserve should also aim to improve financial or credit conditions 

broadly, not to allocate credit to narrowly defined sectors or classes 

of borrowers. Government decisions to influence the allocation of 

credit are the province of the fiscal authorities.’’ 

82 

Other central banks have the authority to purchase a broad 

range of assets, and have utilized these authorities in responding 

to the financial crisis. The Congress could consider expanding the 

Federal Reserve’s asset purchase authorities if it wished. In doing 

so, the Congress would need to weigh the possible benefits of expanded purchase authorities for the Federal Reserve as a tool for 

addressing economic weakness versus the possible costs associated 

with exposing the Federal Reserve to heightened political pressures 

and involving the Federal Reserve in decisions involving significant 

credit allocation. 

My own view is that the Federal Reserve’s current authorities for 

purchasing assets have served the country well, and I do not see 

a compelling reason to expand those authorities. 

Q.12.c. As the Fed begins to shrink its balance sheet, what are 

some of the negative impacts that Senate Banking Committee 

Members should monitor? What concerns—if any—do you have 

about shrinking the balance sheet? What will you do to monitor the 

process of maturing securities to avoid a negative impact on the 

economy? 

A.12.c. I believe that the FOMC’s gradual approach regarding the 

removal of policy accommodation has supported the economy’s continued expansion, the ongoing strengthening of the labor market, 

and a likely return to 2 percent inflation on a sustained basis. 

As part of this gradual approach, the FOMC initiated its balance 

sheet program last October. This program will reduce the Federal 

Reserve’s securities holdings in a gradual and predictable manner. 

The program has gone smoothly so far and has not given rise to 

any unduly large reaction of financial markets. 

The FOMC has indicated that, consistent with the data dependence of monetary policy, it could change the details of its plans in 

light of economic and financial developments. If confirmed, I will 

be monitoring developments very carefully along with Board and 

FOMC colleagues for any signs that the normalization of the Federal Reserve’s balance sheet is contributing to strains in the financial system. 

In addition, if confirmed, I will advocate continued clear communication by the FOMC about its longer-term plans regarding the 

Federal Reserve’s balance sheet. 

With regard to the liabilities side of its balance sheet, the FOMC 

has stated that it anticipates a reduction in the quantity of reserve 

balances, over time, to a level appreciably below that seen in recent 

years but larger than that prevailing before the financial crisis. 

Federal Reserve officials have indicated the aggregate level of Federal Reserve liabilities will reflect the public’s demand for currency, 

the banking system’s demand for reserve balances, and the Committee’s decisions about how to implement monetary policy most efficiently and effectively in the future. These statements by the 

FOMC and the Federal Reserve about the ultimate policymaking 

framework strike me as appropriate and correct. 

I support the FOMC’s position that, in the longer-run, it intends 

to hold no more securities than it will need to implement monetary 

policy efficiently and effectively. I believe that the Committee’s expectation that the Federal Reserve’s balance sheet will consist 

83 

primarily of Treasury securities is appropriate and is consistent 

with effective and efficient monetary policy implementation. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM MICHELLE W. BOWMAN 

Q.1. What is your view on what caused the 2008 financial crisis? 

What responsibility does the Federal Reserve share in terms of failures in regulatory and supervisory policy? 

A.1. A buildup of leverage and maturity transformation in the 

years leading up to the crisis left the U.S. and global economy vulnerable to shocks. When the housing market turned down, the effects of that shock were amplified as leverage was wound down and 

funding patterns shifted.The result was what we all painfully experienced as the financial crisis. 

Since then, post-crisis reforms have been designed to reduce the 

likelihood and severity of future financial crises. These efforts have 

been aimed at shoring up issues in the private sector, in regulation, 

and in the mandates and tools of the various regulatory agencies, 

including the Federal Reserve. 

The Federal Reserve’s response to the crisis included boosting 

the resilience of the financial system through stronger capital, liquidity, and other prudential requirements for large banking firms. 

Capital is critical to ensuring resiliency, as are the availability of 

high-quality liquid assets, appropriate management of risks, and 

the presence of a plan for resolution in case it is needed. Progress 

has been made in all of these areas, and newer tools like the stress 

testing regime and the countercyclical capital buffer should also 

contribute to the resiliency of the financial system going forward. 

I believe these actions have, broadly speaking, increased the resilience of the financial system. 

Q.2. How did large bank and investment bank leverage contribute 

to the 2008 financial crisis? 

A.2. The increase in leverage, along with the rise of other 

vulnerabilities, contributed to the negative effects that were felt 

when the housing market turned down sharply in the United 

States. As the crisis unfolded in the Spring of 2008, markets were 

focused on the firms that had the highest leverage ratios, and it 

was one of the factors that led to investors putting more pressure 

on some firms than others. 

It would be a mistake, however, to focus only on leverage. Maturity transformation, for example, also played a critical role, as did 

other vulnerabilities. Many firms relied on short-term wholesale 

funding that they then used to purchase longer-term assets. When 

that funding dried up, firms had difficulty finding new financing 

for those assets. As a result, assets were sold, and the effects were 

felt throughout the financial system and in the real economy. 

Q.3. How would you characterize current risk-weighted and leverage capital levels for the largest U.S. banks—too low, too high, or 

the correct amount? 

A.3. Maintaining the safety and soundness of the largest U.S. 

banks is fundamental to maintaining the stability of the U.S. financial system and the broader economy. To be safe and sound 

84 

1https://www.federalreserve.gov/newsevents/pressreleases/bcreg20180411a.htm. 

financial institutions, these firms must be well-capitalized. The 

U.S. banking agencies have substantially strengthened regulatory 

capital requirements for large banking firms, improving the quality 

and increasing the amount of capital in the banking system. Indeed, large U.S. banking firms have roughly doubled their capital 

positions from before the crisis to today, making them significantly 

more resilient, as well as able to support lending and financial 

intermediation in times of financial stress. If confirmed, I look forward to looking more closely at this question and consulting with 

my colleagues. 

Q.4. As you know, the Federal Reserve recently proposed reducing 

leverage requirements for the eight biggest U.S. global systemically 

important banks (G–SIBs).1 In discussing the impact of its proposal, the Federal Reserve noted that it would reduce the amount 

of tier 1 capital required across the lead insured depository institution (IDI) subsidiaries of the G–SIBs by approximately $121 billion. 

Q.4.a. Could a reduction in IDI capital pose any risks to depositors, 

taxpayers, or financial stability? Why or why not? 

A.4.a. While capital is good for absorbing losses, the manner in 

which capital requirements are determined can have important 

consequences. If a leverage ratio becomes a binding constraint, it 

can create incentives for banking organizations to reduce their participation in lower-risk, lower return business activity, such as repo 

financing, central clearing services for market participants, and 

taking custody deposits, notwithstanding client demand for those 

services. Similarly, it can create incentives for firms to increase 

their participation in higher-risk, higher-return activities. 

Q.4.b. What is your view on raising the enhanced prudential standards threshold pursuant to Dodd-Frank section 165 from $50 billion to $250 billion in total consolidated assets, as contemplated in 

S. 2155? 

A.4.b. I agree that regulation and supervision should be tailored in 

a manner that allows the financial system to more efficiently support the real economy. The Federal Reserve has been working for 

many years to tailor regulation and supervision to the size, systemic footprint, and risk profile of individual institutions. Recognizing the levels and types of risk of the different institutions in 

the financial system improves the quality and efficiency of regulation, but I believe more tailoring can and should be done. 

It is reasonable for Congress to raise the $50 billion asset threshold to limit the scope of the enhanced prudential standards to larger bank holding companies. My understanding is that the Economic 

Growth, Regulatory Relief, and Consumer Protection Act (Act) preserves the ability of the Federal Reserve to reach below the new 

$250 billion line, if warranted, to subject a firm to more stringent 

regulation. In general, the Act preserves the Federal Reserve’s ability to adequately monitor and regulate systemic risk of banking 

firms as well as its ability to regulate banking firms for safety and 

soundness objectives. 

85 

2https://www.reuters.com/article/us-usa-fed-quarles/u-s-considering-material-changes-tovolcker-rule-feds-quarlesidUSKBN1GH2U8. 

Q.4.c. Federal Reserve Vice Chair Quarles has said that the 

Volcker Rule ‘‘is an example of a complex regulation that is not 

working well.’’2 Do you agree or disagree? Why? 

A.4.c. While Congress recently enacted legislation excluding smaller firms from the Volcker Rule, there is still room for the Federal 

Reserve and the other responsible agencies to tailor and reduce 

regulatory requirements to more efficiently implement the policy 

objectives of the statute in a manner consistent with the safety and 

soundness of the banking system. It is worthwhile for the agencies 

to consider further tailoring the implementing rule as it applies to 

firms that do not engage in a large amount of trading activity, and 

to simplify the requirements for satisfying exemptions for permitted activities such as hedging, market making, and underwriting. These changes would provide clarity to banking organizations and help them more efficiently provide market liquidity and 

facilitate capital formation. 

Q.4.d. What is your view of the Community Reinvestment Act? 

Does it need to be altered or modernized by the Federal Reserve? 

If so, what changes do you support? 

A.4.d. The Community Reinvestment Act’s (CRA) goal of encouraging banks to meet their obligation to serve their entire community, including in low- and moderate-income communities is critically important. All communities, particularly low- and moderateincome communities, thrive when they have access to credit on fair 

terms that increase opportunities for investing in homes, starting 

businesses, and education. 

I believe that the current CRA supervisory and regulatory framework could be improved based on feedback from industry and 

community stakeholders, and that it is time to review the CRA regulations to ensure they are effective in achieving the important objectives set by Congress. In particular, the regulation’s definition of 

‘‘assessment area,’’ should be revised to reflect significant changes 

in the banking landscape since CRA was enacted and the current 

CRA regulations were adopted. 

Technology and other industry advancements have enabled 

banks to serve consumers in areas far from their physical 

branches. As such, it is sensible for the agencies to consider expanding the assessment area definition to reflect the local communities that banks serve through delivery systems other than 

branches. 

I believe that additional input and analysis on this matter will 

be needed to determine how best to define such assessment areas 

and how to evaluate performance in those areas. 

Q.5. On May 23, the FDIC released their Quarterly Banking Profile. It shows that that bank profits increased 28 percent over the 

last year, and even more for community banks. 

Q.5.a. Do you think it is sound policy to reduce capital requirements for banks that have profit levels this high? 

A.5.a. We need a resilient, well-capitalized financial system that is 

strong enough to withstand even severe shocks and support 

86 

economic growth by lending through the economic cycle. To that 

end, the U.S. banking agencies have substantially strengthened 

regulatory capital requirements for U.S. banking firms, improving 

the quality and increasing the amount of capital in the banking 

system. At the same time, it is important to monitor the capital 

rules on an ongoing basis, to determine whether the framework is 

effectively measuring and addressing risk and working as intended, 

and to adjust the framework as needed. 

Q.5.b. If confirmed, you will be a member of the Federal Open 

Market Committee. What experience will you bring to this role? 

Are there any changes in how monetary policy is currently conducted that you will advocate for? 

A.5.b. The Federal Reserve’s mandate to promote maximum employment and stable prices is critically important to our economy, 

to businesses, families and communities, and if I am confirmed, I 

will be very focused on how we can do the best job possible to fulfill 

that mandate. 

My views on employment and the labor market have certainly 

been shaped by the experience of the last 10 to 15 years. We’ve 

seen the Nation go from high levels of employment and solid wage 

growth into a very deep recession. In the crisis, it was clear that 

many people who were able to work lost their jobs and could not 

find work, and businesses that had the capacity to produce and 

grow could not find a market for their goods and services. And 

when you have a huge gap between what the economy can do and 

what it is currently doing, I believe that is where policymakers like 

the Federal Reserve can take appropriate action, sometimes quite 

strong action, and help the economy get back to a more normal 

level of employment and output. 

Of course, as I have seen in my career as a community banker 

and as a regulator, the labor market, in a large, diverse economy 

like ours, is quite complicated and there are many factors to consider in measuring its health. For example, who is available to 

work and what can they do? I have worked with businesses that 

have trouble hiring, because there may be a shortage of highly 

skilled workers. In some communities in my home State, there are 

demographic changes—an aging workforce, for example—that affects how much businesses can hire. My family’s bank lends to 

many consumers, and often we have seen that a strong job market 

will bring people back into the workforce and that is a good thing. 

And, of course, when there is strong demand for workers and the 

economy is growing, we see wages begin to grow. A strong economy 

supports strong wage growth. 

Given the complexity involved in looking at the labor market, 

common sense tells me to be careful in assuming there is a precisely right level of employment that we can be very confident in 

saying is the right level for all economic conditions. In general, my 

approach as a community banker and regulator has been to take 

a look at all the best evidence and analysis you can find, listen 

hard to many different views, and then make your best judgment. 

And that is how I will approach evaluating the health of the labor 

market, should I be confirmed. 

87 

Stable prices and the level of overall inflation is a critical part 

of the dual mandate and, should I be confirmed, I will be focused 

on achieving this important goal. When inflation gets too high or 

too low, or is too volatile, that hurts everyone—consumers, businesses, and communities—because making economic decisions and 

planning for the future becomes more and more difficult. 

I think one of the most important things the Federal Reserve can 

do is make sure that the expectations that people have for where 

inflation is heading remain stable. As a banker, I never wanted 

people to be put in a position where they were coming into my 

bank and showing me a business plan where they were just unable 

to predict what price they would be paying for a very broad range 

of important goods and services a year or two from now. Of course, 

some prices will always be going up while others will be going 

down. That is just how markets work. What is important is that 

the general level of prices remains fairly predictable. When people 

borrow money or make plans, it is important that they feel confident that their future incomes will support that debt and those 

plans. I want people focusing on making good business decisions, 

not spending their time guessing about inflation. So keeping inflation and inflation expectations stable is very important to me. 

I also think we have learned that inflation can be too low. If demand is weak for a prolonged period of time, businesses cannot sell 

goods, they lower prices further, lay people off, keep wages down. 

And we have seen that is a tough cycle to break free from. For the 

Federal Reserve, when you get interest rates very low, it is hard 

to create additional incentives for borrowing and investing. It is 

tough to go below zero. As a policymaker, I would want to make 

sure we keep inflation at an appropriate level, so we reduce our 

risk of getting back to the so called Zero Lower Bound. 

Finally, let me just say that there is a great deal of complexity 

that goes into understanding why the general level of prices 

change. For example, Kansas produces a lot of oil and natural gas, 

so I am well aware of how swings in the supply and demand for 

commodities can shape prices. But it is not always clear how businesses and consumers set their expectations for inflation. Productivity and technological change affect prices too. This is an important area for more research, and I look forward to learning more 

about these topics, if I am confirmed. 

Q.5.c. Since the crisis, do you think the Federal Open Market Committee has been on the right course by gradually increasing interest rates? 

A.5.c. I believe the Federal Open Market Committee’s (FOMC) 

monetary policy decisions should be guided strictly by its responsibilities under current law to promote maximum employment and 

price stability. The FOMC has been raising its target for the Federal funds rate since December 2015 and reducing the size of its 

holdings of Treasury securities and mortgage-backed securities 

since October of 2017. The FOMC’s gradual approach to reducing 

monetary accommodation in this way has been instrumental in 

supporting the economic recovery and a return of inflation to the 

FOMC’s 2 percent objective. The FOMC has also stressed and I 

also believe that it is appropriate that monetary policy is not on a 

88 

preset course. Instead, it is data dependent and chosen to best 

achieve the objectives set forth by Congress. If confirmed, I would 

look forward to working with other members of the FOMC to further promote the attainment of the FOMC’s statutory goals. 

Q.6. As you know, the Federal Reserve currently uses a variety of 

monetary policy rules, including the Taylor rule, in its analysis and 

monetary policy decisionmaking, but does not rely solely on rules 

to determine interest rate adjustments. 

Q.6.a. Do you agree with the Federal Reserve’s current approach, 

or will you advocate that the Fed use a single rule? 

A.6.a. The economy is very complex, and monetary policy is determined in an environment in which a multitude of indicators and 

conditions must be taken into account. Simple rules, by definition, 

cannot accommodate such a wide variety of considerations. For example, simple rules generally do not accommodate variation in the 

expectations of investors and consumers, risks to the economic outlook, or deep economic conditions such as productivity growth that 

may be time varying. All that said, simple monetary policy rules 

do have some appeal because they capture some key elements of 

appropriate policy, and I believe that it is useful for policymakers 

to routinely consult the recommendations from a variety of benchmark rules. I also believe it can be useful for the FOMC to explain 

to Congress and the public the differences between its policies and 

those prescribed by simple rules, and the reasons for those differences. 

Q.6.b. While the unemployment rate continues to fall, the labor 

force participation rate remains at about its lowest level in 40 

years. What do you think is contributing to this? 

A.6.b. The labor market remains strong. Job gains have been solid, 

on average, in recent months, and the unemployment rate has fallen to 3.9 percent, the lowest level in many years. As you note, however, the labor force participation rate is still quite low by historical standards. To some extent, the downward trend in the overall 

participation rate reflects demographic forces, most prominently increased retirements among members of the large baby boom generation. However, the labor force participation rate for prime-age 

workers is also below its level prior to the financial crisis, although 

it has risen more recently in response to the tight labor market. 

Longer-term trends in globalization and automation have likely 

contributed to the decline in prime-age participation over time, but 

my hope and expectation is that a strong labor market will continue to pull many of these workers back into the labor force. 

Q.6.c. Do think the opioid addiction epidemic is related to the decline in labor force participation among prime-age workers? 

A.6.c. The opioid epidemic is a very serious crisis that has had severe consequences for the affected individuals and their families. In 

addition, the opioid epidemic undoubtedly has had adverse effects 

on the economy. For example, I think the evidence shows that 

opioid addiction adversely affects an individual’s ability to participate effectively in the labor market and thus has contributed to the 

decline in labor force participation among prime-age workers. Of 

course, causality may go the other way as well, with a lack of job 

89 

opportunities, particularly in rural areas, contributing to both withdrawal from the labor force and increased opioid abuse. 

Q.6.d. Over the past 40 years the link between productivity and 

wage increases has eroded. More and more, productivity gains 

aren’t shared with workers. Why do you think wage growth has not 

kept pace with productivity growth? Is there anything the Fed can 

do to increase wages? Can the Federal Reserve, through monetary 

policy or regulatory policy, do more for individuals and communities that have not experienced the benefits from the economic recovery? 

A.6.d. Wage growth is a very important issue, and while it is encouraging that wages seem to be rising a little faster than a few 

years ago, I would like to see stronger wage growth. In addition, 

I think that, as the economy improves, it is important that a wide 

range of individuals and communities benefit from a strong labor 

market. However, monetary policy is a blunt tool that is not well 

equipped to affect specific sectors of the economy. Rather, the Federal Reserve can best help individuals and communities by focusing 

on achieving its dual mandate of full employment and stable inflation. 

Q.6.e. If confirmed, how will you advocate for increased diversity 

in the Federal Reserve System? 

A.6.e. There is great value in having a diverse workforce at all levels of an organization. Diversity, including diversity of thought, 

perspective, and experience, is an important attribute of all successful organizations. Better decisions are made when we have a 

wide range of backgrounds and voices to draw from. 

I am committed to achieving further progress, and to better understanding the challenges to improving and promoting diversity of 

ideas and backgrounds at the Federal Reserve Board (Board) and 

the Federal Reserve Banks (Reserve Banks), including in the senior 

leadership ranks. My position will provide opportunities to meet 

and speak with individuals and groups throughout the System, the 

financial community, and regional and community organizations. 

Those opportunities will enable me to express strong support for 

the System’s initiatives to encourage individuals with diverse cultural, academic, and professional backgrounds to consider positions 

with the Federal Reserve. I will also welcome the opportunity to 

work with Board and System groups to enhance programs and initiatives to identify and recruit individuals with diverse backgrounds and perspectives for careers at the Board and the Reserve 

Banks, as well as to create an environment where all will be successful. 

Q.6.f. Federal Reserve Board of Governors nominee Marvin 

Goodfriend, has recommended that the ‘‘central bank put in place 

systems to raise the cost of storing money by imposing a carry tax 

on its monetary liabilities.’’ Do you believe that there should be a 

currency tax, or that there are financial conditions that would call 

for a currency tax? 

A.6.f. The United States dollar enjoys a well-earned status as a 

store of value and a reliable means of exchange both domestically 

and across the world. Any new policy that could undermine the 

90 

confidence that is placed in the dollar should be thought through 

very carefully and undertaken only after a great deal of study. Fortunately, the United States economy is strong and inflation is close 

to 2 percent, so there is no need to consider such a policy. Moreover, the Federal Reserve’s main monetary policy tools have helped 

to meet the goals set forth for the Federal Reserve by statute. 

Q.6.g. Please provide a complete list of The Bowman Group’s clients. 

A.6.g. The Bowman Group provided consulting services to the following entities in the United Kingdom and European Union between 2004 and 2009: UK Industry and Parliament Trust; Titan 

Corporation, UK LTD; Conservative Shadow Homeland Security 

Spokesman Patrick Mercer, MP (Homeland Security Advisory 

Panel); DKE Aerospace; Conservative Friends of America; and 

Localis. 

Q.6.h. Please describe in detail greater than you provided in your 

Office of Government Ethics letter how you will comply with the 

Federal Reserve Act requirement that you cannot hold stock in any 

bank, banking institution, or trust company? 

A.6.h. I will divest shares of bank stock currently held in my name 

in accordance with the ethics agreement following confirmation. In 

addition, following confirmation, in accordance with the ethics 

agreement, the two trusts containing bank stock will be rewritten 

with advice of counsel according to a provision in Missouri trust 

law that provides for ‘‘decanting’’—or rewriting—the trusts to exclude me and my heirs as beneficiaries of the trusts. While serving 

as a member of the Board, I will not acquire any stock in a bank, 

banking institution, or trust company. 

Q.6.i. If confirmed, do you intend to serve for the entirety of your 

term? 

A.6.i. Should I be confirmed, I intend to serve the entirety of the 

term. 

Q.6.j. After your term as a member of the Federal Reserve Board 

of Governors, do you have any plans to resume employment or 

serve on the Board of your family’s bank? 

A.6.j. At this time, I do not intend to, nor have I been asked to, 

return to employment or board service at my family’s bank. 

Q.7. This is the first time this Committee has considered a 

nominee to fill the position on the Fed Board ‘‘with experience 

working in or supervising community banks having less than 

$10,000,000,000 in total assets.’’ 

Q.7.a. If confirmed, do you believe it is your role to advocate for 

the community banking industry? 

A.7.a. The Federal Reserve seeks to foster a strong and stable financial system that serves banking needs in a fair and transparent 

manner. I believe that this objective can best be achieved when we 

have a diversified and competitive banking industry that includes 

a healthy community bank segment. My experience as a banker 

and State supervisor has shown me the vital role community banks 

play in providing credit and services to small businesses and communities both large and small. Consequently, I believe it is 

91 

important to support the community bank model and avoid imposing regulatory burdens that are unnecessary to ensure their safe, 

sound, and fair operation. 

Q.7.b. If confirmed, what would you like to achieve for community 

banks? 

A.7.b. I am strongly committed to working to tailor the regulation 

and supervision of community banks in a manner that ensures 

their safety and soundness but is appropriate to their size and simplicity. I am particularly interested in working on simplifying capital rules for these banks and reducing the burden of their regulatory reporting requirements. As a community banker and State 

bank supervisor, I have seen small banks struggle with the burdens imposed by regulation. If confirmed, I want to ensure that the 

Federal Reserve Board fully considers the perspectives and challenges faced by these banks when it formulates and implements its 

regulations. 

Q.7.c. Can you clarify your answer to Senator Scott on whether or 

not you believe the stock market is a pillar of monetary policy? 

A.7.c. Current law requires the Federal Reserve’s monetary policy 

decisions to be guided by its obligation to promote maximum employment and price stability. Many factors must be considered as 

inputs into monetary policy decisionmaking, and the financial conditions facing business and households, including stock market performance, are often relevant aspects of the outlook for macroeconomic performance. However, the FOMC should not take into 

account stock market performance for any purpose outside of what 

is necessary to achieve its goals as established by Congress. Fortunately, the United States economy is strong and inflation is close 

to 2 percent, and financial market conditions currently appear sufficiently accommodative to further support macroeconomic performance. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED 

FROM MICHELLE W. BOWMAN 

Q.1. The Federal Reserve is one of the agencies authorized to enforce the Military Lending Act (MLA), which is a bipartisan law enacted in 2006 that sets a hard cap of 36 percent interest for most 

loans to servicemembers and their families. On July 22, 2015, the 

Department of Defense finalized MLA rules that closed prior loopholes that allowed unscrupulous lenders to prey upon servicemembers and their families. 

Q.1.a. Do you support these stronger MLA rules? If confirmed, will 

you ensure that the MLA is vigorously enforced? 

A.1.a. The Military Lending Act (MLA) provides special consumer 

protections for service members and their dependents. In enacting 

the MLA, the Congress directed the Department of Defense to issue 

implementing regulations after consulting with the Federal Reserve and other agencies. I understand that Federal Reserve staff 

has worked with Department of Defense staff to carry out that 

mandate and, if confirmed, I will support that effort as well as the 

Federal Reserve’s full enforcement of the MLA at the institutions 

it supervises. 

92 

Q.1.b. If changes are made to the Community Reinvestment Act 

that lead to financial institutions, including those that have an online presence, to take deposits from communities but actually make 

less of an effort to reinvest in these same communities, would you 

consider that to be a good or bad outcome? 

A.1.b. The Community Reinvestment Act (CRA) was enacted to ensure that banks help meet the credit needs of the communities 

where they are chartered to do business. 

As a community banker and bank commissioner, it is my interest 

to see credit flowing to consumers and businesses in all communities consistent with safe and sound lending—including in lowand moderate-income areas—to further economic development and 

financial inclusion. 

I believe that any revisions to CRA that expand the area within 

which a bank’s CRA performance is evaluated should ensure that 

the new areas are consistent with the original intent of the law, 

and that changes would include clear guidance to banks so that 

they are able to comply. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR 

MENENDEZ FROM MICHELLE W. BOWMAN 

Q.1. Will you commit that if confirmed, you will ignore any political 

pressure or interference, whether it be direct or indirect from the 

President or any other member of the Administration? 

A.1. Yes. 

Q.2. Do you agree that the achievement of full employment should 

be associated with strong and broad-based wage growth for average 

workers, not just senior executives and managers? 

A.2. The labor market remains strong. Job gains have been solid, 

on average, in recent months, and the unemployment rate has fallen to 3.9 percent, the lowest level in many years. However, wage 

growth is also a very important issue, and while it is encouraging 

that wages seem to be rising a little faster than a few years ago, 

I would like to see stronger wage growth. In addition, I think that, 

as the economy improves, it is important that a wide range of individuals and communities benefit from a strong labor market. The 

Federal Reserve can best help a broad range of workers by focusing 

on achieving its dual mandate of full employment and stable inflation. 

Q.3. Why isn’t this tight labor market forcing employers to offer 

higher and more competitive wages? 

A.3. Even though wage growth has been slow relative to previous 

decades, most measures of aggregate wages have increased gradually over the past few years as the labor market has tightened. 

Moreover, we have seen some indications that workers are benefiting from a tighter labor market in ways other than higher wages. 

Firms appear to be searching out workers whom they might have 

previously passed over and seem to be more willing to offer training to workers whose skills need to be improved. I expect these 

trends to continue and expect workers to reap greater benefits from 

the strong labor market. 

93 

Q.4. To what extent has workers’ decreased leverage to negotiate 

with their employers impacted their ability to demand higher 

wages? 

A.4. Over much of the recovery, many workers had very little negotiating leverage with employers because labor was abundant, but 

jobs were not. This has changed in recent years, and there are 

signs that negotiating leverage for at least some workers has increased. Some firms are exerting considerably greater effort to find 

and sign workers, which gives sought-after employees some negotiating leverage. Looking back over a longer time period, it could be 

that changes in technology, or other factors, may have decreased 

worker negotiating leverage by, for example, increasing employers’ 

ability to monitor workers, automate tasks or shift production to 

different locations. But it is difficult to know how much such 

longer-term developments have affected negotiating leverage and 

wages. 

Q.5. Do you agree with Federal Reserve Governor Brainard that it 

is important to retain a focus on place as the Federal Reserve contemplates changes to the Community Reinvestment Act? Do you 

agree that in some low-income and hard to reach communities, 

physical branches are sometimes the only way to meet local credit 

needs? 

A.5. In Governor Brainard’s recent remarks on Community Reinvestment Act (CRA) modernization, she stated that the time is 

‘‘ripe for a refresh to make it even more relevant to today’s challenges.’’ In particular, she focused on finding a way to expand the 

area in which a bank’s CRA activities are evaluated, in addition to 

the importance of retaining a core focus on location. 

In her statement, she cited research that demonstrates that 

branches are an important vehicle for reaching small business customers and low-income consumers. 

I agree with her assessment that the agencies should focus on 

how to make the area where CRA activity is evaluated more meaningful to both banks and low- and moderate-income communities. 

Q.6. Do you agree that robust enforcement against discriminatory 

or unfair and deceptive lending practices must work hand-in-hand 

with any revisions to the Community Reinvestment Act? 

A.6. Discrimination and other illegal credit practices are barriers 

to helping to meet community credit needs and, as such, are inconsistent with the CRA. 

I understand why the regulators take evidence of discrimination 

into account when assigning CRA ratings as prescribed in the CRA 

regulations. 

I believe that there is a connection between CRA, fair lending, 

and laws protecting against other illegal credit practices, and this 

connection should be clear to bankers trying to comply with laws 

designed to ensure that consumers and communities have fair access to credit. 

Q.7. A Treasury Department report issued in April recommends 

that the Federal Reserve adopt the OCC’s new policy allowing 

banks with failing CRA ratings to merge or expand so long as they 

can demonstrate a potential benefit. 

94 

Do you think the Federal Reserve should adopt this policy? 

A.7. One means of enforcing CRA is the bank applications process. 

An institution’s most recent CRA record is a particularly important 

consideration in the applications process. In addition to wanting to 

serve their communities, banks know that CRA ratings are also important to their ability to grow and expand. 

I understand that the Office of the Comptroller of the Currency’s 

(OCC) guidance on how it will assess CRA ratings in the context 

of its review of a banking application has recently changed and 

varies from the Federal Reserve’s guidance. If confirmed to the 

Federal Reserve Board (Board), I would want to understand how 

the Federal Reserve guidance is applied and the nature of the differences between its guidance and the OCC’s approach. 

Fundamentally, I believe that it is important to maintain the 

Congress’ intent to use the CRA as a measure in evaluating banking applications, while ensuring that there is clarity and transparency for banks to understand how the guidance is applied. 

Q.8. Prior to the financial crisis, regulators treated assets like 

subprime mortgage-backed securities as ‘‘low risk,’’ which allowed 

big banks to load up on risky assets without the necessary capital 

backing. When the crisis hit, the Nation’s biggest banks didn’t have 

the capital to withstand the losses. 

Do you agree that regulators and banks misperceived risks before the last crisis, and assigned low ratings to assets that were actually toxic? 

A.8. The financial crisis highlighted deficiencies in both the quantity and quality of capital required by the banking agencies’ regulatory capital rules. Since the crisis, U.S. banking agencies have 

substantially strengthened regulatory capital requirements for 

large banking firms. Maintaining the safety and soundness of the 

largest U.S. banks is fundamental to maintaining the stability of 

the U.S. financial system and the broader economy. 

Q.9. Last month, the Fed and the OCC proposed a rule that would 

weaken the enhanced supplementary leverage ratio, a requirement 

that the Nation’s biggest banks hold enough capital to support 

lending and absorb losses in a downturn. Those banks are required 

to meet leverage ratios at the holding company level and at the depository institution level—where the deposits are backed by taxpayers. According to the FDIC, this proposal would result in the 

departure of more than $120 billion in capital—capital that our 

regulators unanimously deemed necessary after the financial crisis 

to ensure our Nation’s largest banks can withstand losses. Federal 

Reserve Governor Brainard voted against this proposal—the first 

dissent in the history of Board votes it keeps on it’s website (315 

votes total)—and the FDIC declined to join the proposal, a significant departure from other postcrisis rulemaking, even though the 

Fed and FDIC jointly established this rule after the crisis. 

Are you at all concerned that without the backstop of an adequate leverage ratio for the Nation’s eight biggest banks, banks 

will once again load up on so-called ‘‘low risk’’ assets, and place 

taxpayers at risk of future bailouts? 

A.9. The supplementary leverage ratio is an important component 

of the regulatory capital framework. The enhanced supplementary 

95 

leverage ratio standards applicable to U.S. global systemically important banks were intended to serve as an appropriate complement and strong backstop to these firms’ risk-based capital requirements. It is important to get the relative calibration of the leverage and risk-based requirements right. 

Experience suggests that the enhanced supplementary leverage 

ratio standards are currently calibrated too high, creating potential 

incentives for firms to disengage from certain low-risk, low-return 

financial activities that are beneficial for the economy. Similarly, 

they potentially incent high-risk, high-return activities. Modest recalibration can reduce these negative incentives while not materially changing overall large bank holding companies’ capital requirements. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNER 

FROM MICHELLE W. BOWMAN 

Q.1. I believe strongly in the importance of the Fed’s independence. 

Recent comments from another Fed candidate (and former Fed 

Governor)—Kevin Warsh—suggest that President Trump has been 

anything but shy in revealing his preference for a low interest rate 

environment. 

Q.1.a. Has the President—or anyone in the Administration—impressed upon you their beliefs on how you should vote on matters 

of monetary policy? 

A.1.a. I have had no communication with the President or members of the Administration seeking to influence my position or future vote, if confirmed, on monetary policy issues. 

Q.1.b. Do you commit to safeguarding the independence of our central bank? 

A.1.b. I believe that Congress wisely chose to insulate monetary 

policy decisions from short-term political influences. Insulation 

from short-term political pressures is crucially important for the effective conduct of monetary policy, the Federal Reserve is and must 

also remain accountable to the public. If confirmed, I will be committed to building on the Federal Reserve’s tradition of transparency, openness, and accountability while maintaining the independence of the Federal Reserve in the conduct of monetary policy. 

Q.1.c. What do believe is the biggest threat to financial stability 

at the moment? 

A.1.c. We have enjoyed many years of economic growth since the 

recession that followed the financial crisis. The financial system 

has been relatively stable during that period. As a result, there is 

a tendency to forget the lessons that we have learned. When we 

forget, however, we make ourselves vulnerable again. 

A crucial lesson from the financial crisis is that we always need 

to be prepared. The reforms that have been implemented since the 

crisis have helped us to build a more resilient financial system. 

However, we cannot rest. We must be vigilant in monitoring the financial system, both the vulnerabilities that were important contributors to the financial crisis—like asset valuations, leverage, 

maturity transformation, and complexity—as well as new 

vulnerabilities that could emerge. Only with vigilance can we avoid 

96 

the natural slide toward complacency that overtakes us as the distance between us and the crisis grows. 

Q.1.d. Do you believe that Title II’s Orderly Liquidation Authority 

is an important tool available at the Fed’s disposal during a crisis? 

Would you vote to use the Authority if bankruptcy was not an appropriate method for resolving a systemic financial institution? 

A.1.d. Bankruptcy should be the preferred resolution framework 

for a failing systemic financial firm, in the same way that it is the 

resolution framework for the holding companies of our Nation’s 

community banks. However, as the Treasury noted in their report 

on Orderly Liquidation Authority and Bankruptcy Reform, it is important to have an emergency tool for use in extraordinary circumstances. 

I would need to know all of the facts and circumstances before 

deciding whether it was appropriate to vote in favor of recommending that the Treasury Secretary use Title II’s Orderly Liquidation Authority in connection with a specific failure. One aspect 

of Title II that I would weigh is that it does not allow for Government capital injections and requires that taxpayers suffer no losses 

from the resolution. 

Q.1.e. Do you think current bank risk-based capital levels are too 

high, too low, or about right? How about the leverage ratio? 

A.1.e. Maintaining the safety and soundness of the largest U.S. 

banks is fundamental to maintaining the stability of the U.S. financial system and the broader economy. To be safe and sound financial institutions, these firms must be well-capitalized. The U.S. 

banking agencies have substantially strengthened regulatory capital requirements for large banking firms, improving the quality 

and increasing the amount of capital in the banking system. Indeed, large U.S. banking firms have roughly doubled their capital 

positions from before the crisis to today, making them significantly 

more resilient, as well as able to support lending and financial 

intermediation in times of financial stress. 

It is my understanding that reforms proposed by the Federal Reserve suggest that the enhanced supplementary leverage ratio 

standards may be currently calibrated too high, creating potential 

incentives for firms to disengage from certain low-risk, low-return 

financial activities that are beneficial for the economy. Additionally, I understand that modest recalibration may reduce these negative incentives while not materially changing overall large bank 

capital requirements. 

Q.2. As you may know in S. 2155, we contemplate raising the enhanced prudential standards from $50 billion to $250 billion, with 

an 18 month-delayed effectiveness to give the Fed time to do a 

rulemaking and decide whether it should apply any of the enhanced prudential standards to banks between $100 billion and 

$250 billion. 

What do you see as the most important enhanced prudential 

standards for these midsized banks? 

A.2. I believe the bank regulatory framework should continue to 

protect the core tenets of regulatory reform—capital, stress testing, 

liquidity, resolution planning, and orderly liquidation authority. 

97 

However, not all standards are appropriate for all banking organizations, and it is appropriate to tailor regulation and supervision 

to the size, systemic footprint, and risk profile of individual institutions. Recognizing the levels and types of risk of the different institutions in the system improves the quality and efficiency of regulation. 

Periodic supervisory stress testing is an important post-crisis re- form maintained for banks with assets between $100 billion and 

$250 billion by the Economic Growth, Regulatory Relief, and Consumer Protection Act, and will help the Federal Reserve Board ensure that these firms are engaged in less burdensome but still robust, forward-looking capital assessments. 

Q.3. The urban-rural economic divide is an area of particular interest for me and an area where I’ve done a lot of work. I believe that 

someone shouldn’t be forced to leave their community to find a 

good paying job. As we’ve seen in the Great Recession and the recovery that’s followed, the impacts of these macroeconomic trends 

are not universal and, in this case, have often been felt more 

harshly in rural areas. 

• What do you believe to be the driving forces behind the decline 

of rural America? Is this trend the result of globalization and 

technological change? 

• Do you believe these trends are irreversible? 

A.3. I agree that the relatively poor labor market outcomes in rural 

areas in recent years is a big concern. Globalization and technological change may be playing a role, but determining the causes 

of these adverse trends is difficult. What’s clearer to me is that 

these trends are reversible. Public policy can ameliorate, if not fully 

reverse, these trends by, for example, increasing infrastructure investment and promoting greater educational and job-training opportunities. Moreover, some current or future changes in technology can prove favorable to workers in rural areas by increasing 

their ability to work remotely, or by making it easier for production 

to be located in rural areas but still be connected to supply chains. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN 

FROM MICHELLE W. BOWMAN 

Q.1. Do you believe that any U.S. banks are Too Big to Fail? 

• If so, what can and should the Fed do to address this problem? 

• If not, what evidence supports your conclusion? 

A.1. I believe substantial progress has been made in making the 

financial system more resilient, particularly as a result of stronger 

capital, liquidity, stress testing, and resolution planning requirements that were introduced in the wake of the financial crisis. Activities and risks in the financial sector evolve quickly, however, especially at the largest firms, so I also believe that regulators need 

to closely monitor risks to the financial system over time and act 

accordingly. 

Q.2. Section 402 of S. 2155, which recently passed the Senate and 

allows banks ‘‘predominantly engaged in custody, safekeeping, and 

asset servicing activities’’ to have less capital. 

98 

Q.2.a. Do you believe that language applies to JPMorgan Chase 

and Citigroup? 

A.2.a. Section 402 of the Economic Growth, Regulatory Relief, and 

Consumer Protection Act allows depository institution holding companies that qualify as ‘‘custodial banks’’ to exclude reserves 

at certain central banks for purposes of leverage capital requirements. This section defines a custodial bank as any depository institution holding company that is predominantly engaged in custody, safekeeping and asset servicing activities (and any subsidiary 

depository institution of such a holding company) and the banking 

agencies could issue regulations to implement these provisions. Diversified bank holding companies, such as JPMorgan Chase and 

Citigroup, have significant custodial operations but these operations are relatively small compared to the companies’ overall operations. Therefore, these organizations would not appear to qualify 

as ‘‘custodial banks.’’ 

Q.2.b. Would that analysis hold if those two banks created intermediate holding companies to house their custody services? 

A.2.b. The Federal Reserve Board’s (Board) regulatory capital rules 

are based on financial consolidation. Consolidation combines the 

assets and activities of the top-tier company and its subsidiaries so 

that they can be viewed holistically. In my current understating, 

if a depository institution holding company reorganized all of its 

custodial services under an intermediate holding company but 

made no other changes, the assets and activities of the top-tier, 

consolidated depository institution holding company would not be 

affected. Housing the custody services under an intermediate holding company therefore would not affect whether a company received capital relief under section 402 of the Economic Growth, 

Regulatory Relief, and Consumer Protection Act. 

Q.3. Banks today reported record profits—up 27.5 percent from the 

first quarter of last year. The economy is nearly a decade into a 

long expansionary period. 

Why is a reduction in capital requirements necessary or appropriate at this time? 

A.3. It is clear that a resilient, well-capitalized financial system 

that is strong enough to withstand even severe shocks and support 

economic growth by lending through the economic cycle is needed. 

To that end, the U.S. banking agencies have acted to substantially 

strengthen regulatory capital requirements for U.S. banking firms, 

resulting in improved quality and an increase in our amount of 

capital in our banking system. At the same time, it is important 

to monitor the capital rules on an ongoing basis, to determine 

whether the framework is effectively measuring and addressing 

risk and working as intended, and to adjust the framework as 

needed. 

Reforms proposed by the Federal Reserve suggest that the enhanced supplementary leverage ratio standards may be currently 

calibrated too high, creating potential incentives for firms to disengage from certain low-risk, low-return financial activities that 

are beneficial for the economy. Modest recalibration may reduce 

99 

these negative incentives while not materially changing overall 

large bank capital requirements. 

Q.4. Fed Chair Powell recently announced that the Fed’s Board of 

Governors would vote on whether to relieve Wells Fargo from the 

growth restriction the Fed imposed on it pursuant to its February 

2018 consent order. 

Q.4.a. What kind of changes at Wells Fargo would you need to see 

before voting to lift the growth restriction? 

A.4.a. As specified in the Consent Order, the firm must adopt and 

implement the remediation plans the Consent Order requires to 

improve Wells Fargo’s governance and risk management, including 

internal controls and testing of those controls, particularly for compliance and operational risk. 

I understand that the firm must also engage a third party to review the implementation of the plans and required improvements. 

And furthermore, that a number of improvements must be made 

to the firms’ governance and risk management practices to be fully 

compliant with the terms of the Consent Order. If confirmed, with 

regard to lifting the asset cap imposed, I would only vote to do so 

if the required improvements are implemented to the satisfaction 

of the Board. 

Q.4.b. Do you believe the Fed should place more emphasis on finding diverse leaders for the regional banks? If so, how do you recommend changing the current hiring process so that it produces 

more diverse leaders? 

A.4.b. My impression is that the Federal Reserve System and its 

leadership has placed considerable emphasis on increasing the diversity of senior leadership, and with some significant successes. 

However, I think all also agree that more must still be done. If confirmed, I will join the Board with the intent to devote time and attention to understanding the full range of challenges in this space, 

and think creatively about how the Board in particular can engage 

more effectively in support of the shared goal of a more diverse 

senior leadership. 

In reviewing recent searches, I have observed that search committees have used a variety of new channels to solicit input on important attributes for the districts’ presidents, as well as suggestions of specific individuals for consideration. They have also 

worked to make the process as transparent as possible. Outreach 

has occurred through social media—for example, webinars and 

YouTube videos—and also through more traditional efforts, such as 

meetings with key constituencies, including nonprofit and advocacy 

groups as well as the business community. All of this seems promising and important, and represents a foundation on which I hope 

we can continue to build. 

I believe the Federal Reserve is committed to making further 

progress and to better understanding the challenges to promoting 

and improving diversity of ideas and backgrounds. It has described 

this as an ongoing objective, and I assure you that diversity will 

remain a high-priority objective for the Federal Reserve, if I am 

confirmed. 

100 

Q.4.c. The Fed is apparently participating in an interagency effort 

to reform regulations implementing the Community Reinvestment 

Act. In April, the Treasury Department sent a memo to the Fed, 

the OCC, and the FDIC recommending several rule changes. Do 

you disagree with any of the Treasury recommendations? 

A.4.c. I understand that the Treasury’s recommendations were 

based on a broad outreach effort and the summary sent to the 

agencies includes helpful insights. 

As with any process, I believe that it is likely that some recommendations may be difficult to implement as a practical matter, 

such as the recommendation to standardize the examination schedules across the regulatory agencies. 

If confirmed, I would want to review the recommendations to see 

which would result in improving the effectiveness of the Community Reinvestment Act (CRA), while focusing on potential ways to 

relieve regulatory burden for community banks. 

I would like to see the agencies work together to find ways to accomplish both goals. 

Q.4.d. What are your priorities for CRA reform? 

A.4.d. There is a great deal of consensus among banks, community 

development organizations, and others regarding the need to make 

CRA evaluations more consistent and transparent. 

I also agree that CRA should be revised in a way that encourages 

more lending and investment in underserved areas. 

I believe these are good goals for the agencies to pursue and that 

any revisions to the CRA regulations need to balance the interests 

of both community and industry stakeholders. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR CORTEZ 

MASTO FROM MICHELLE W. BOWMAN 

Community Reinvestment Act 

Q.1.a. Should CRA be expanded to all nonbanks? Some assert that 

in today’s financial landscape, CRA compliance should be expanded 

to all nonbanks, including credit unions, fintechs, mortgage companies, investment, and others. 

A.1.a. If confirmed, I assure you that I would be committed to 

using the authorities available to the Federal Reserve to identify 

and take action against discriminatory lending practices. However, 

as the scope of the Community Reinvestment Act (CRA) is mandated by statute, any expansion of its coverage to nondepository institutions would require a statutory change. 

Q.1.b. Do you support a full scope review for CRA exams? Do you 

think geographical assessment areas should define CRA accountability both where the majority of branch lending and the majority 

of nonbranch lending occurs? 

A.1.b. It is important that the agencies with rule writing authority 

for CRA (the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency) 

evaluate ways to provide a meaningful evaluation of a bank’s CRA 

activities in all of the communities it serves. 

101 

My understanding is that the agencies are considering ways to 

make the area in which CRA performance is evaluated more reflective of current banking practices. I support that effort. 

Q.1.c. If a fair lending exam detects a violation after a bank has 

been graded for its CRA exam, do you think the bank should receive a retroactive downgrade? 

A.1.c. Discriminatory and other illegal credit practices hinder access to credit, which can limit opportunity in communities, and 

that is inconsistent with the spirit of the CRA. 

I believe that regulators do take fair lending matters into consideration when assigning CRA ratings, as prescribed in the CRA regulations. 

Given the importance of both the CRA and fair lending laws, I 

believe it is critical to ensure clarity in the rules and an understanding of compliance with those rules, and to ensure credit is 

flowing to consumers and businesses in all communities consistent 

with safe and sound lending, including in low- and moderate-income areas. Doing so, will help meet credit needs and further economic development and financial inclusion. 

Q.2. Many Democratic, Republican, and Independent current and 

former regulatory officials raising concerns about the bank deregulation bill range from former Fed Chair Paul Volcker, former Fed 

Governor and Deputy Treasury Secretary Sarah Bloom Raskin, 

former FDIC Chair Sheila Bair, former Counselor to the Treasury 

Secretary Antonio Weiss, and former Deputy Governor of the Bank 

of England Paul Tucker. These former banking regulators either 

State that a $250 billion bank threshold is too high to protect financial stability or that we should not weaken the leverage rules 

for the largest banks, or both. 

Do you think anything in S. 2155 puts the financial system at 

risk? Do you share the concerns raised by your predecessors? If so, 

why? If not, why not? 

A.2. I believe that regulation and supervision should be tailored in 

a manner that allows the financial system to more efficiently support the real economy. The Federal Reserve has been working for 

many years to tailor regulation and supervision to the size, systemic footprint, and risk profile of individual institutions. Recognizing the levels and types of risk of the different institutions in 

the system improves the quality and efficiency of regulation, but I 

believe more tailoring can and should be done. It is reasonable for Congress to raise the $50 billion asset threshold to limit the scope of the enhanced prudential standards to larger bank holding companies. My understanding is that the Economic 

Growth, Regulatory Relief, and Consumer Protection Act preserves 

the ability of the Federal Reserve to reach below the new $250 billion line, if warranted, to subject a firm to more stringent regulation. In general, the Act preserves the Federal Reserve’s ability to 

adequately monitor and regulate systemic risk of banking firms as 

well as its ability to regulate banking firms for safety and soundness objectives. 

I also support the Act’s exemption for community banks from the 

Volcker rule. Such a move provides relief for thousands of small institutions that face ongoing compliance costs simply to confirm that 

102 

1 CRA Examination Procedures Overview: Available at: https://www.ffiec.gov/cra/pdf/ 

cralexsmall.pdf. 

their activities and investments are indeed exempt from the statute. An exemption at this level is not likely to increase risk to the 

financial system. 

Q.3. CRA regulations establish different CRA exams for banks with 

different asset levels. Small banks, those with less than $307 million in assets, have the most streamlined exam that consists of only 

a lending test. Intermediate small banks (ISB), those with assets 

of $307 million to $1.226 billion, have exams that consist of a lending test and a community development (CD) test. The CD test assesses the level of CD lending and investing for affordable housing, 

economic development, and community facilities. Large banks, 

those with assets above $1.2 billion, have the most complex exams 

which consist of a lending test, an investment test, and a service 

test. 

It is my understanding that your bank qualified as a small bank, 

so it had a streamlined exam focused on lending only. In your response to my question on what it would take for your bank to earn 

an outstanding rating instead of a satisfactory rating, you stated 

you found the exam guidelines unclear. Please identify where you 

feel CRA guidelines for small banks are unclear.1

A.3. In general, community bankers seek to serve their customers 

in ways that are safe and sound and within their institution’s ability. I believe that community bankers, in spirit, would say they 

strive to be viewed as outstanding bankers by their customers and 

in their communities. 

The CRA examination procedures describe a variety of factors 

that are taken into account, such as the economies and opportunities that may exist in the markets that the bank operates in. Given 

that such conditions can vary between examinations, and that the 

regulations are not prescriptive, it can be difficult for banks to have 

certainty as to what factors may be viewed as more favorable and 

result in an ‘‘Outstanding’’ rating. 

Q.4. Chair Yellen was the first chair in Federal Reserve history to 

share data with this Committee about racial economic disparities 

during her semi-annual testimony. When she presented that data, 

she touted significant progress, and indeed, black unemployment 

fell from 11.8 percent at the beginning of her term to the current 

historically low figure of 6.9 percent. 

What do you attribute this trend to? Do you think the attention 

that Janet Yellen paid to this issue and the policies of the Federal 

Reserve deserve credit for the progress that has been made? 

A.4. With the aggregate unemployment rate near its lowest point 

since the 1970s, it is not surprising that the unemployment rate for 

African Americans is also close to its lowest point since then. Both 

figures reflect the long economic expansion our country has been 

enjoying. Although our macroeconomic performance cannot be attributed to any single factor, the efforts of the Federal Open Market Committee (FOMC) to achieve its dual mandate have likely 

been a contributing factor. Moreover, while monetary policy is 

blunt tool, which works by lifting the economy as a whole rather 

103 

2Goodfriend, Marvin. ‘‘The Case for Unencumbering Interest Rate Policy at the Zero Bound.’’ 

Carnegie Mellon University. September 15, 2015. Available at:https://www.kansascityfed.org/ 

∼/media/files/publicat/sympos/2016/econsymposium-goodfriend-paper.pdf. 

than by targeting the well-being of any single group in our society, 

the efforts of the Federal Reserve to pay attention to the diversity 

of our economy contributes to a better understanding of how it 

works for all Americans, which should help to improve policymaking. 

Q.5. At that same testimony where Janet Yellen presented information about racial economic disparities, she said, quote ‘‘it is troubling that unemployment rates for these minority groups remain 

higher than for the Nation overall, and that the annual income of 

the median African American household is still well below the median income of other U.S. households.’’ 

Though African American unemployment is lower today, Chair 

Yellen’s point remains true. Do you think the recent progress is 

sufficient? What more can be done to ensure that unemployment 

among African Americans is equal to white unemployment? In addition to increasing employment rates for African Americans, what 

can the Fed do to increase wages and wealth for African Americans 

and Latinos? 

A.5. The economic disparities between African American households relative to other U.S. households, with respect to both unemployment and incomes, are long-standing, and I would like to see 

the gap close further. By promoting a strong stable economy, the 

Federal Reserve can create widespread economic opportunities that 

both reduce unemployment and boost incomes among all households. African-Americans have also had problems accessing credit 

and other financial resources on an equal footing, and the Federal 

Reserve can use its regulatory and supervisory role to make sure 

that financial institutions meet their obligations in this regard. 

However, the tools available to the Federal Reserve cannot address 

many of the longstanding challenges facing African American communities. These actions would require action by Congress and 

State and local governments. 

Q.6. Marvin Goodfriend, another nominee to the Federal Reserve 

Board of Governors has urged the Federal Reserve to incent spending by placing a tax on currency.2

Q.6.a. Do you support Mr. Goodfriend’s proposal to tax currency 

kept outside of circulation? 

A.6.a. The United States dollar enjoys a well-earned status as a 

store of value and a reliable means of exchange both domestically 

and across the world. Any new policy that could undermine the 

confidence the world places in the dollar should be thought through 

very carefully and undertaken only after a great deal of study. Fortunately, the United States does not find itself in such a situation 

presently, as the U.S. economy is strong and inflation is close to 

2 percent, so there is no need to contemplate such a tax. 

Q.6.b. If Mr. Goodfriend’s proposal were to be implemented, can 

you estimate what the impact would be on savers and low-income 

depositors? 

104 

A.6.b. The effects of a currency tax on savers and low-income depositors are certainly part of the myriad of potential consequences 

that would have to be investigated if this policy were to be considered. As stated above, I believe that any new policy that could undermine the confidence the world places in the dollar should be 

thought through very carefully and undertaken only after a great 

deal of study. Moreover, the United States is not in a position of 

needing to consider such a policy at present. 

Q.7. The Consumer Financial Protection Bureau has endured new 

leadership that is hostile to its mission. A number of enforcement 

actions aimed at helping people receive redress from fraud or overcharges has been stopped. 

Q.7.a. If the Consumer Financial Protection Bureau’s leadership 

refuses to ask for adequate funding or takes steps that you think 

are harmful to people or our economy, will you let Senate Banking 

Committee Members know? If so, how? If not, why not? 

A.7.a. My understanding is that the Consumer Financial Protection Bureau (CFPB) consults with the Federal Reserve Board 

(Board) in its rulemakings and coordinates in the examinations as 

appropriate, but the Board does not have oversight of the CFPB organizational or structural design. 

If confirmed to serve on the Board of Governors, I would fully 

support the Federal Reserve as it continues to carry out its supervisory and enforcement responsibilities to ensure that the banks it 

regulates are held accountable for compliance with all applicable 

Federal consumer protection laws and regulations. 

Q.7.b. The Federal Reserve retains supervision and enforcement 

authority for financial institutions below $10 billion in assets. 

Please provide a list of public enforcement actions taken toward 

any Fed-regulated institutions in the past 3 years. Please note any 

fines or penalties assessed. Please note if you agree or disagree 

with these enforcement actions. 

A.7.b. Bank supervisors have a responsibility to ensure that the institutions subject to the Federal Reserve’s supervision operate safely and soundly and that they comply with applicable statutes and 

regulations, and additionally, that the Federal Reserve should use 

its formal enforcement authority to achieve these objectives where 

appropriate. I cannot comment on the specific circumstances of actions the Federal Reserve has taken in the past. A list of public enforcement actions taken against institutions regulated by the Federal Reserve in the past 3 years, including any civil money penalties assessed against the institution, is provided in Appendix A 

to this request. 

Q.8. Some current Federal Reserve leaders support reducing banks’ 

capital requirements. This concerns me as capital requirements 

have been a key tool in restoring the safety of the financial system 

since the crisis. Ensuring modest leverage ratios prevents banks 

from lending out more than they can afford to, and especially keeps 

them away from riskier assets like the ones that fueled the crisis. 

For this reason, Democrats and Republicans in the House and 

Senate, as well as FDIC Vice Chair (and former Kansas City Fed 

President) Thomas Hoenig all support higher capital requirements, 

105 

3Senate Committee on Banking, Housing, and Urban Affairs, June 7, 2016, Hearing. Available at: https://www.gpo.gov/fdsys/pkg/CHRG-114shrg21603/pdf/CHRG-114shrg21603.pdf. 

not lower ones. Do you support any changes to the current capital 

requirements for financial institutions? If so, please describe. 

A.8. We need a resilient, well-capitalized financial system that is 

strong enough to withstand even severe shocks and support economic growth by lending through the economic cycle. To that end, 

the U.S. banking agencies have substantially strengthened regulatory capital requirements for U.S. banking firms, improving the 

quality and increasing the amount of capital in the banking system. At the same time, it is important to monitor the capital rules 

on an ongoing basis, to determine whether the framework is effectively measuring and addressing risk and working as intended, and 

to adjust the framework as needed. 

Q.9.a. In recent years, Federal Reserve policymakers have warned 

that we should raise interest rates to counter asset bubbles destabilizing the financial system. Board of Governor Nominee Marvin 

Goodfriend has suggested replacing liquidity coverage ratios and a 

host of other regulations with tighter monetary policy.3

Do you believe that the blunt tool of monetary policy can be a 

substitute for sound financial protections? What is your understanding of the historical evidence surrounding the relationship between monetary policy and asset bubbles? 

A.9.a. Monetary policy is the primary tool through which the Federal Reserve works to achieve the goals of price stability and full 

employment. To use that tool for other purposes could undermine 

its effectiveness for those goals, and thus monetary policy should 

not be considered a substitute for prudent financial and supervisory standards. As we learned in the crisis, the lack of such 

standards had significant consequence. The buildup of leverage and 

maturity transformation in the years leading up to the crisis left 

the U.S. and global economy vulnerable to shocks. When the housing market turned down, the effects of that shock were amplified 

as leverage was wound down and funding patterns shifted. The result was what we all painfully experienced as the financial crisis. 

Post-crisis reforms have raised loss-absorbing capacity within the 

financial sector and reduced the susceptibility of the financial 

system to destabilizing runs. Of course, gaps exist in financial regulation, and therefore, changes in interest rates could at times be 

appropriate as a supplementary tool to address threats to full employment and price stability emanating from widespread imbalances or buildups of risk in areas where more-targeted tools are 

inadequate or nonexistent. 

Understanding movements in asset prices is very difficult, and 

there are many factors that contribute to their short- and longterm movements. Monetary policy has not generally been a prime 

factor in historical episodes involving large increases in asset 

prices. 

Q.9.b. Besides monetary policy, what other tools are available to 

temper asset bubbles? 

A.9.b. Making a determination about the appropriate value of an 

asset is extremely difficult. Many factors come into play in the 

106 

determination of both the short-term and long-term value. Instead 

of trying to determine every assets’ appropriate value, it is important to monitor asset prices more broadly, along with the other crucial vulnerabilities that contribute to financial market difficulties, 

like leverage, maturity transformation, and interconnectedness. 

When shocks occur, it is those vulnerabilities that amplify the effects of the shocks and jeopardize the efficient functioning of the 

financial system, price stability, or full employment. 

Because determination of the appropriate level of asset prices is 

difficult, we need to be prepared at all times by ensuring the safety 

and soundness of our financial institutions and our financial system through prudent regulations and supervisory standards. We 

never know when a negative shock can occur, including asset price 

reversals. As a result, the prudent capital, liquidity, and other regulations and policies adopted by the Federal Reserve are critical for 

the protection of our financial system going forward. 

Q.10. In the years since the financial meltdown, the Federal Reserve has played a key role in putting our economy back on stable 

footing and setting the conditions for more robust growth. Still, 

there have been bills introduced that would eliminate the Fed’s full 

employment mandate on the basis that, according to the bill’s findings ‘‘at best, the Federal Reserve may temporarily increase the 

level of employment through monetary policy.’’ 

Can you elaborate on how the Fed influences employment in the 

short-run, and discuss whether failure to use monetary policy effectively in the face of severe downturns could do permanent damage 

to the level of unemployment in the economy? 

A.10. In the short run, the Federal Reserve influences employment 

primarily through its effect on the financial conditions facing 

households and businesses. For example, lower interest rates promote household spending by reducing the cost of borrowing for bigticket purchases such as houses and cars. Similarly, lower interest 

rates make it less costly for businesses to invest in new plants and 

equipment. This additional demand, in turn, leads to higher production, faster job growth, and rising household income and wealth. 

A failure to use monetary policy to effectively combat a severe 

downturn would risk persistently high unemployment and perhaps 

even risk falling into a harmful deflation where wages and prices 

actually fall. 

Q.11. Critics of quantitative easing have argued that it is incompatible with the Fed’s price stability mandate; however in discussing quantitative easing the Fed has consistently noted that the 

program is designed to promote a stronger pace of economic growth 

and to ensure that inflation, over time, is at levels consistent with 

the Fed’s mandate. 

Q.11.a. Can you comment on how the Fed’s policies in recent years 

have actually supported the Fed’s price stability mandate? 

A.11.a. Faced with the most severe financial crisis since the Great 

Depression, the FOMC cut short-term interest rates to zero by the 

end of 2008. The Federal Reserve also turned to nontraditional 

tools such as asset purchases and forward guidance, as means of 

providing the additional accommodation. These policies put downward pressure on longer-term interest rates and helped to make 

107 

4See, for example, Eric M. Engen, Thomas Laubach, and David Reifschneider (2015), ‘‘The 

Macroeconomic Effects of the Federal Reserve’s Unconventional Monetary Policies,’’ Finance and 

Economics Discussion Series 2015–005, Washington: Board of Governors of the Federal Reserve 

System, February, http://dx.doi.org/10.17016/FEDS.2015.005. 

financial conditions more accommodative, encouraging and supporting the economic recovery. By providing a cushion for aggregate demand during the recession and supporting spending during 

the recovery, the Federal Reserve’s monetary policy measures 

helped to keep inflation close to 2 percent. In particular, in part because aggregate demand was supported by monetary policy, the 

U.S. economy avoided the severe downward pressure on the price 

level that occurred during the Great Depression, which in turn prevented inflation expectations from falling sharply below 2 percent. 

Q.11.b. What does the latest research tell us about the effectiveness of the Fed’s large scale asset purchases? 

A.11.b. It is difficult to say with certainty what the effects of largescale asset purchases have been, but most studies find that the 

purchases put 

downward pressure on long-term interest rates, which in turn lowered borrowing rates for businesses and consumers, and boosted 

stock prices. These effects served to bolster spending on goods and 

services by households and businesses, supporting the recovery. 

Q.11.c. Is there any evidence that the Fed’s asset-purchase program, which sought to support the economy by lowering long-term 

interest rates, has been a drag on U.S. productivity as some Republicans have suggested? Is there any evidence that the program has 

created a ‘‘false economy’’ as Trump has asserted? 

A.11.c. I find it unlikely that the Federal Reserve’s policies have 

contributed to the sluggish pace of productivity growth observed 

over recent years. It is more likely that factors such as subdued 

spending on investment and research and development by businesses, as well as a reduction in the skills of the labor force resulting from the financial crisis and ensuing recession, have weighed 

on productivity. 

Q.11.d. How would the economy have likely fared in terms of unemployment, GDP, wage growth, etc., had the Fed chosen not to 

pursue its asset purchase program? 

A.11.d. The Federal Reserve conducts monetary policy to promote 

maximum employment and stable prices. Various research studies 

by academic and central bank economists suggest that the Federal 

Reserve’s asset purchase programs helped to make financial conditions more accommodative, support economic recovery, strengthen 

labor market conditions, and foster price stability.4

Q.11.e. Is there any evidence that the Fed’s stimulus program has 

paved the way for the next global meltdown, as Trump claimed? 

A.11.e. While there are many sources of risk and uncertainty in 

the global economy, I believe the Federal Reserve’s conduct of monetary policy has contributed to an improved global economic outlook by supporting the U.S. economic expansion and maintaining 

low and stable inflation. 

108 

Q.11.f. How does the Fed’s balance sheet as a percentage of GDP 

compare with the balance sheets of the next largest economies? Do 

these countries have a dual mandate similar to the Fed? 

A.11.f. The size of the Federal Reserve’s balance sheet relative to 

nominal GDP currently stands at about 23 percent. Last October, 

the FOMC initiated its plan to normalize the size of the Federal 

Reserve’s balance sheet. Under that plan, the size of the Federal 

Reserve’s balance sheet will decline gradually over coming years. 

With nominal GDP expected to rise over that time, the size of the 

Federal Reserve’s balance sheet relative to nominal GDP will likely 

decline appreciably. 

The Federal Reserve’s balance sheet as a percentage of GDP is 

smaller than those of most other major foreign central banks. The 

central bank balance sheets of the United Kingdom, the euro area, 

Japan, and Switzerland are about 28, 40, 100, and 120 percent of 

their nominal GDP, respectively. All of these central banks employed large-scale asset purchase programs to address the implications of the financial crisis in their countries. 

All of these central banks operate with a single mandate to pursue price stability. However, in many cases, this mandate is treated as medium-term objective, and other goals, including output and 

employment stabilization and financial stability, are cited to justify 

deviations from price stability in the short run. 

Q.12. It is my understanding that major central banks around the 

world maintain and have drawn on their authority to purchase a 

wide range of assets including corporate bonds, commercial paper, 

real estate investment trusts, and equities among other assets. 

Q.12.a. Given the broad authorities available to other central 

banks, rather than shrink the Fed’s tool kit, do you think Congress 

should consider expanding it? 

A.12.a. As mandated by Congress, the Federal Reserve conducts 

monetary policy to promote maximum employment and price stability. It is important that the Federal Reserve has the tools it 

needs to fulfill this mandate. The Federal Reserve’s purchases of 

Treasury securities and agency securities in the wake of the financial crisis were designed to ease financial conditions and promote 

the recovery. 

The Federal Reserve is quite limited in the kinds of assets it can 

purchase, and those limits seem appropriate to me. Expanding the 

Federal Reserve’s authority to allow it to purchase a broad range 

of securities could expose the Federal Reserve to pressures to influence the allocation of credit to particular sectors. Such pressures 

could threaten the Federal Reserve’s independence, which is essential to allow the Federal Reserve to make decisions in the best interest of the Nation as a whole. Of course, it is up to Congress to 

determine the Federal Reserve’s authorities. 

Q.12.b. For example, with an expanded authority, could the Fed 

play a useful role in supporting municipal finance, student loan financing or other types of consumer credit during periods where 

each of these sectors experienced heightened distress? 

Would you support or oppose such expansion of the Fed’s authority? 

109 

A.12.b. Please see response to question 12a. 

Q.12.c. As the Fed begins to shrink its balance sheet, what are 

some of the negative impacts that Senate Banking Committee 

Members should monitor? What concerns—if any—do you have 

about shrinking the balance sheet? What will you do to monitor the 

process of maturing securities to avoid a negative impact on the 

economy? 

A.12.c. I believe that the gradual approach to removing policy accommodation that the FOMC has been pursuing has supported the 

economic recovery and helped the Committee make progress toward its 2 percent inflation objective. The program has proceeded 

smoothly thus far with no outsized financial market movements. If 

confirmed, I would support a continuation of clear communication 

about the FOMC’s plans to shrink the Federal Reserve’s balance 

sheet. My understanding is that, in the longer-run, the Federal Reserve intends to hold no more securities than it will need to implement monetary policy efficiently and effectively. I also understand 

that the Federal Reserve expects its holdings will eventually consist primarily of Treasury securities. The FOMC has stressed and 

I believe it is appropriate that the shrinking of the balance sheet 

remains data dependent, and that it could change its plans if confronted with a substantial deterioration in the economic outlook. 

Q.13. Ms. Bowman, in your testimony, you stated, ‘‘the regulatory 

environment created in the aftermath of the crisis has disadvantaged community banks. If confirmed, I will bring this perspective 

to my work at the Board to ensure that rules preserve the resiliency of the financial system, but are appropriately tailored to the 

size, complexity, and risk of an institution.’’ 

As you know, the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (P.L. 111–203) rules are tailored so larger banks 

have higher standards than smaller banks. Of the 14 ‘‘major’’ rules 

issued by banking regulators pursuant to the Dodd-Frank Act, 13 

either include an exemption for small banks or are tailored to reduce the cost for small banks to comply. Supervision and enforcement are also structured to pose less of a burden on smaller banks 

than they do on larger banks, such as by requiring less frequent 

bank examinations for certain small banks. 

Q.13.a. Please explain which rules you think ‘‘have disadvantaged 

community banks?’’ Please explain which rules you think should be 

changed and how? 

A.13.a. In my experience, both as a community banker and as the 

Kansas State Bank Commissioner, two aspects of bank regulation 

can be particularly problematic for community banks: complexity 

and a one-size-fits-all approach that does not sufficiently differentiate between large and small banks. I believe it is worth exploring 

whether some regulations can be made simpler while still achieving their prudential aims (the regulatory capital framework for 

community banks, for example, could perhaps be simplified). Likewise, I would support exempting small banks from regulations that 

address large-bank issues, such as the Volcker rule. 

Q.13.b. Do you think community banks, those with less than $2 

billion in assets, should follow Federal consumer protection rules? 

110 

A.13.b. Decisions about the application of Federal consumer protection rules and compliance by particular institutions are for Congress to decide through law, and as implemented by the responsible 

rulewriting agency. In this case the rulewriting agency is the 

CFPB. 

That being said, I believe that consumer protection is important 

regardless of where a consumer chooses to bank or to seek credit 

or other financial products. I also believe there is agreement across 

the industry that one-size-fits-all regulation does not always work. 

Exemptions to rules are sometimes warranted, and asset size of financial institutions can be a factor used to make that determination. 

Q.13.c. Do you think community banks should comply with the requirement that loans should be made to people who can repay 

them? This is called the ‘‘know before you owe’’ rule. Community 

banks are largely exempt from both mortgage origination and servicing rules because they are small creditors with less than $2 billion in assets or service fewer than 500 loans. 

A.13.c. I feel strongly that we should not allow the risky underwriting standards used by many originators prior to the housing 

crisis to return. It is also important, however, that laws and rules 

do not needlessly prevent creditworthy borrowers from getting a 

mortgage. 

Decisions about which banks must comply with consumer financial service laws are up to Congress through statute or implementation of the statute by the CFPB, as the responsible rulewriting 

agency, through regulation. 

As Congress and the CFPB consider which banks should comply 

with particular underwriting rules, it is important to consider the 

impact of any rule on a community bank’s ability to provide credit 

to reliable borrowers but whose creditworthiness may be difficult to 

capture in a broad, universally applied rule. 

Q.13.d. Rules protecting people who send remittances apply to any 

financial institution that sends more than 100 remittances a year. 

Do you support changes to Regulation E/Electronic Fund Transfers? If so, how would you change this rule? 

A.13.d. Under the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act), the CFPB has exclusive rule writing authority to implement most consumer laws, including the 

Electronic Fund Transfer Act provisions governing remittance 

transfers, which the Bureau implements through Regulation E. 

The CFPB, however, generally is required to consult with prudential regulators or other Federal agencies, including the Board, 

prior to proposing a rule and during the comment process regarding consistency with prudential, market, or systemic objectives administered by such agencies. (Sec. 1022(b) of the Dodd-Frank Act). 

If confirmed, I will work to ensure that the Board continues to fulfill its consultative role in Bureau rulemakings, including any 

rulemakings related to remittance transfers. 

Q.13.e. Dodd-Frank limited compensation requirements for loan 

originators to prevent steering to high-cost loans. Only originators 

that make fewer than 10 loans in a 12-month period are exempt. 

111 

Do you support changes to the Loan Originator Compensation Requirements (Regulation Z)? 

A.13.e. Under the Dodd-Frank Act, the CFPB has exclusive rule 

writing authority to implement most consumer laws, including the 

compensation rules for loan originators issued under the Truth in 

Lending Act. The Dodd-Frank Act also provides that the CFPB’s 

rules are not subject to approval or review by the Board. 

However, the Dodd-Frank Act also requires the CFPB to consult 

with prudential regulators, which includes the Board, before and 

during any rulemaking regarding the rules’ consistency with prudential, market, or systemic objectives administered by the respective agency. 

If confirmed, I will work to ensure that the Board continues to 

fulfill its consultative role in connection with the CFPB’s 

rulemakings, including any rulemaking related to the loan originator compensation rules. 

Q.13.f. Mortgage Servicing Rules under Regulation X and Z are designed to protect home buyers from high-cost loans. Servicers with 

fewer than 5,000 mortgage loans are exempted from some of these 

rules. What changes do your recommend to Regulations X and/or 

Z? 

A.13.f. The CFPB has exclusive rule writing authority to implement most consumer laws, including the mortgage servicing rules 

under Regulation X and Z. The Dodd-Frank Act also speaks to the 

autonomy of the CFPB’s rulemaking authority by providing, for example, that no rule can be subject to approval or review by the 

Board. (Sec. 1012(c) of the Dodd-Frank Act). Therefore, changes to 

the mortgage servicing rules under Regulations X and/or Z are up 

to the CFPB to decide. 

The Dodd-Frank Act requires that the CFPB engage in an interagency consultation process during the proposed and final rulemaking process with all the prudential regulators. 

If the CFPB decided to amend the mortgage servicing rules, I 

would expect that Board staff would participate in the CFPB’s 

process, and review rulemakings to identify principal areas of concern and potential effects with respect to credit availability, safety 

and soundness, regulatory burden, consumer protection and compliance supervision. 

Q.13.g. Do you think banks that make more than 25 mortgage 

loans should share the loan and borrower characteristics through 

the Home Mortgage Disclosure Act database? 

A.13.g. Decisions about what information banks should provide 

under the Home Mortgage Disclosure Act (HMDA) are up to Congress through statute or as implemented by the CFPB, as the responsible rulewriting agency, through its regulation. 

HMDA is a valuable public disclosure law, with the data reported being instrumental in enhancing supervisory and research 

efforts for more than 30 years. 

I am aware that an intent of the recently passed Economic 

Growth, Regulatory Relief, and Consumer Protection Act is to provide regulatory relief from the HMDA data collection and reporting 

requirements as expanded by the Dodd-Frank Act for certain banks 

that have a lower volume of loan origination. I am also aware that 

112 

the CFPB plans to revisit its 2015 rulemaking under HMDA to reevaluate institutional and transactional coverage, as well as what 

data should be collected and reported under HMDA. 

As noted above, Congress requires the CFPB to engage in an 

interagency consultation process during the rulemaking process. If 

confirmed, I will work to ensure that the Board continues to fulfill 

its consultative role in connection with such rulemakings, including 

any rules under HMDA. 

Q.13.h. Banks with assets under $50 billion are not required to 

comply with the liquidity coverage ratio. Do you think they should 

be? Why or why not? 

A.13.h. Prudent liquidity management is important at all banks. 

Longstanding supervisory guidance emphasizes the importance of 

banks regularly monitoring their liquidity positions and maintaining sufficient levels of liquidity to meet anticipated and unexpected 

demands for funding. Supervisors monitor banks’ liquidity levels 

using financial data provided by banks on quarterly Call Reports 

and review liquidity risk management practices in depth during 

bank examinations to ensure that banks are managing their liquidity in a safe and sound manner. In my experience, this supervisory 

approach has been effective for smaller banks. For larger, systemically important banks that have more complex funding profiles, 

the liquidity coverage ratio requirements are more important. In 

the case of these entities, the liquidity coverage ratio helps ensure 

that acceptable levels of liquidity are maintained in order to minimize the risk that a liquidity strain at one large bank causes 

broader disruptions to the financial system. 

I understand that the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act provides additional discretion to the Federal Reserve to determine the appropriate supervisory tools to monitor liquidity in institutions with assets between 

$50 billion and $250 billion. If confirmed, I look forward to studying the liquidity coverage ratio and its effectiveness more closely 

and working with my Board colleagues to ensure that Federal Reserve supervision continues to promote effective liquidity risk management in all institutions under its supervision, regardless of 

their size or complexity. 

Q.13.i. Banks with assets under $250 billion are not required to 

comply with regulatory capital rules. Do you think they should be? 

Why or why not? 

A.13.i. Banks of all sizes must maintain adequate capital to ensure 

their safety and soundness. All banks are required to comply with 

regulatory capital rules. I believe it is appropriate that large banks 

are subject to more stringent capital requirements, reflecting their 

greater complexity and the greater risk they pose to the stability 

of the U.S. financial system. 

Q.13.j. The Volcker rule which prohibits proprietary trading applies to all banks but has streamlined policies and procedures for 

banks with less than $10 billion in assets. Do you think banks 

under a certain size should be allowed to invest in hedge funds and 

private equity funds on their own behalf? Do you think the Volcker 

Rule should not apply to banks under a certain size? 

113 

A.13.j. Congress has recently spoken to this question by enacting 

legislation that excludes certain small banking organizations from 

the restrictions of the Volcker Rule. These firms do not have large 

trading operations in relation to their size. I believe that this reform will reduce regulatory burdens on community banks without 

causing harm to the financial system because these banks do not 

engage in the type of trading that the Volcker Rule was intended 

to restrict. Additionally, I believe that the regulatory regime that 

applies outside of the Volcker Rule is sufficient to protect the safety 

and soundness of community banks. 

Q.13.k. Collateralized debt obligations backed by Trust Preferred 

Securities are restricted. Do you think banks under a certain size 

that hold CDO–TruPs should not have to comply with restrictions? 

A.13.k. Interconnectedness in the banking system increases when 

banking organizations invest in other banking organization’s capital securities, including through structured products. This interconnectedness heightens the likelihood that instability at one banking organization will spread to others, regardless of the size of the 

banking organizations involved. 

Q.13.l. Debit card interchange fees and routing requirements do 

not apply to banks that have fewer than $10 billion in assets. Do 

you think banks under this size should comply with interchange 

fees and routing requirements? 

A.13.l. I believe that it is a matter for Congress to decide what, if 

any, additional exemptions from these provisions should be provided. 

Q.14. Let me ask you about other regulations that apply to banks 

but were not enacted by the Dodd-Frank Wall Street Reform and 

Consumer Protection Act. 

Q.14.a. Do you think the ‘‘primary duty’’ of a bank’s board of directors is ‘‘to ensure the bank operates in a safe and sound manner’’? 

I believe that an effective board of directors is integral to the 

continuing safety and soundness of a banking firm, including its 

compliance with laws and regulations. I understand that the Federal Reserve has proposed guidance on board effectiveness in part, 

and in recognition that the supervisory expectations in existing 

guidance did not consistently focus on the core responsibilities of 

boards. The proposed guidance would eliminate unnecessary or outdated expectations and encourage boards to devote more time and 

attention to their core responsibilities, which when exercised effectively, promote the safety and soundness of the firm. 

Q.14.b. Do you have recommendations for changes to the Bank Secrecy or Anti-Money Laundering rules? 

A.14.b. Banks are required to comply with the Bank Secrecy Act 

and Anti-Money Laundering (BSA/AML) laws and regulations in 

order to safeguard the U.S. financial system from the risks of 

money laundering and terrorist financing. In my time as a banker 

at Farmers & Drovers Bank in Kansas, and as the Kansas State 

Bank Commissioner, I know that banks take this responsibility seriously, but this compliance incurs significant costs and resources, 

especially for smaller banks. 

114 

BSA/AML regulations are generally issued by the Department of 

Treasury’s Financial Crimes Enforcement Network (FinCEN) or on 

an interagency basis, which means that most BSA/AML requirements are handled on an interagency basis. Further, I understand 

that the Federal Reserve participates in several groups designed 

specifically for BSA/AML issues. Notably, the Federal Reserve participates, along with other Federal banking agencies and the Conference of State Banking Supervisors, in the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Working Group, 

which meets regularly to discuss various BSA/AML supervisory 

and policy matters. The Federal Reserve also participates in the 

BSA Advisory Group (BSAAG), which brings together Federal and 

State financial regulatory agencies, FinCEN, law enforcement and 

industry. 

I do not have any recommendations for changes to the BSA/AML 

laws and regulations at this time; however, I support continuation 

of the Federal Reserve’s interagency efforts to increase the efficiency, transparency, and effectiveness of the supervision and regulation of financial institutions, including those related to compliance with BSA/AML rules. 

Q.15. In 2017, when you served as the Banking Commissioner of 

Kansas, George and Agatha Enns conspired with Plains State 

Bank employees to launder money. The Enns were sentenced to 3 

years of probation and forfeited nearly $2 million in ill-gotten 

gains. 

Q.15.a. What was the Enns’ crimes? What was the role of the Kansas Banking Commission and your role personally in this investigation and lawsuit? 

A.15.a. The Office of the State Bank Commissioner (OSBC) shares 

regulatory authority with Federal agencies in enforcing banking 

laws. The Department of Justice, in consultation with the FDIC, 

IRS and DEA, prosecuted George and Agatha Enns and certain employees of the Plains State Bank for crimes of conspiracy to commit 

money laundering, failing to file a Suspicious Activity Report, and 

money laundering that occurred from 2011 to 2014. The indictments were unsealed in April 2015. The Department of Justice did 

not consult with the OSBC in this matter, and no Kansas Bank 

Commissioner has played a role in this Federal criminal action. 

The charges alleging that the Plains State Bank employees failed 

to file SAR reports for activity conducted 2011–2014 were dropped 

in this case. 

Q.15.b. Please describe other criminal and civil lawsuits that occurred during your tenure as Commissioner. 

A.15.b. The OSBC is currently involved in an ongoing case filed in 

2008 resulting from the actions of a previous Bank Commissioner 

as described below. 

Columbian Financial Corporation v. Bowman, in her official 

capacity as Bank Commissioner of Kansas, et al. 

Columbian Bank and Trust Company was a State-chartered 

bank regulated by the OSBC. On August 22, 2008, the then-Kansas 

Bank Commissioner declared the bank insolvent and appointed the 

FDIC as receiver due to a liquidity failure. Shortly thereafter, CoVerDate Nov 24 2008 17:41 Dec 14, 2018 Jkt 046629 PO 00000 Frm 00118 Fmt 6602 Sfmt 6602 L:\HEARINGS 2018\05-15 NOMINATIONS\HEARING\31196.TXT SHERYL
115 

lumbian Financial Corporation, as the sole shareholder of Columbian Bank and Trust Company, began litigating the Declaration of 

Insolvency and Tender of Receivership in State and Federal courts. 

Most recently, Columbian Financial Corporation filed in the District Court of Kansas alleging violations of 42 U.S.C. § 1983 by the 

Bank Commissioner of Kansas in the Commissioner’s official capacity. Due to being appointed as the Bank Commissioner of Kansas, 

I was substituted as a defendant in this official capacity on September 18, 2017. 

In 2008, Columbian Financial Corporation alleged that the Bank 

Commissioner in his official capacity denied Columbian Bank and 

Trust Company and Columbian Financial Corporation due process 

by declaring the bank insolvent, seizing the bank’s assets and not 

providing adequate constitutional protections and remedies before 

and after the declaration and seizure. The allegations contained in 

the suit arise from the actions of the former Bank Commissioner 

who made the decision to close the bank. On November 21, 2017, 

I, in my capacity as Bank Commissioner, filed a motion for 

summary judgment and alterative motion for judgment on the 

pleadings based on the doctrinal bars of res judicata and collateral 

estoppel alleging Columbian Financial Corporation had a full and 

fair opportunity to litigate these allegations in an administrative 

hearing and judicial review in the Kansas court system. On May 

17, 2018, the District Court of Kansas granted the Commissioner’s 

motion for summary judgment and dismissed the case finding the 

previous State proceedings did not fall below the minimum procedural requirements of the Due Process Clause. As of this writing, 

Columbian Financial Corporation has not filed an appeal. 


51518029.eps

At .... dh: A Jl'Ncftl R.Hft"o<e 

Jan.. 20 • M.a)' 2013 

Nam4!: o f £nthy l ypeof 

E nforcement Action 

Affinhy f'lnanetal Corp .. Newpon Beach. California. and Wa1crOeld IC&D Order 

Fin.a.n<:ia.l Service&.. Inc •• lndia.n.apolis, Indiana 

Agricultural Bank ofChJna, Beijing. Peoples RcpubUc of China, and lc&O Order 

B!Wk orCb.i.l')ll New York Brancb. Now York., Now York 

Bank, Mulbefl'Y. Attcansas IPCA 

Banco Oflbao Vlxcaya Argentaria S.A .• Bilbao. Spain, and BBVA )$27.000.000 CMP 

Scc;uritics.ln<,;,. New York. New York 

Bank & Tna:s:t.. S.S.B., Del RJo, Texas IC&D Order Bank of Atnerica Corp., Chlltlou e, NOrth Carolina )C:&O Or<icc- & $205,000,000 CMP 

Sank of paye;-ue IS-t2.000"CMP 

LOuisiana S7 .ooo CMP 

Oa.nkofMonroc., Vnion, West Vitginia )$28.640 CMP Oa.nk of New Vofk Melton COC1> .• New York. New York )$).000.000 CMI, 

J)anlc of Nova Scoci.a. T()f()c'lto. and Bank of Nova ScOliA I Written Aar'H'ment 

New Vortc A.gency, New Vortc. New Vortc 

fJCLnk'ofSttar City, SturChy, Arkan$1\11: )$ 11.000 CMP 9r;Lnk of the Orient. San Frunc:i.Soo. California IC&-0 Order Onrtlft)'S l):ank pte. I..Ondoo, Ena1and. tllld Uart-laYf Bnnk pic New C&.O Order&. S:\42.000.000 CMP 

York Braneh. Now York, Now V041c 

BB&.T Com .. Wituton-Salcm, North C.rolina C&.O O rder BCBank. Inc. , Philippi, West Virainia ISS,()()() CMP BNP Puribas S.A., Puris. Fmnce. ond BNP Paribas USA. Inc., New le&O Order & $246.375,000 CMP 

Yotk, New Yotk. and llNP Patibos Cetp .• New V(H1c, Now 

York 

l$tue T y pe 

(e.a. Safe1y •.nd 

OSAIA.MJ,,. etc.) 

Safe()' and Soundness 

BSNAML. 

Safety and Soundness Safety and Soundness 

BSNAML. 

I'X 

F10cXI rns-unmce Flood l'nsuraneo 

Flood I nsurance 

Safety a •'l<l Soundness 

BSNAML 

Flood I O!IUnlnCC 

BSNAML 

FX. 

BSNAML FlOOd l ns\lmnQC 

I'X 

Da te 

611.3120 16 

9128120 16 

8/15120 16 

1212112016 

8/1812017 

5120120 15 

4/26120 18 

101612017 111231201S 

6127120 17 

II/5/20 JS 

3127120 17 6/ 17/201S 

5120120 15 

1125/2017 

611/20 1S 

7117/20 17 

51518030.eps

Appendtl< A 

J-.20I$·Ma)t201$ 

Name or EnUey 

Columel Coun•y Bank, Brillion, WisconSin Cc..-eii _B3nk, Elkton, Maryland 

Type or 

Enroree-ment Action 

Written Agreement 

J>CA 

Chicaao Shore Corp •• Chica.ao. lllinoi-5, and Security Chica.go COT)) •• I Written Aarccment 

Chicuao, IllinoiSChino Cons-true-cion Bank COrp,, Ucijina. People's Republic- ofCh.ina.IWrinen Aa,recmenc and Chino Constn.tction Bank New YOt"k Bnmch, New York, New 

York 

CIT Group, Inc., Livingston, New Jersey 

C itigroup Inc., New York. New York 

Clear Mountain Bank, Bruceton Mills. West Vintinia 

COm-me..CeWetlt Bol'\k. riv-iI\C,-CQufOrnia _Commer?..bank AO. Ftankt'Un #m Mi\-in, Ocl"mAnY Cooperatieve Centrale RaifTeiscn·Boercnlccnbank B.A., Utrecht, 

Netherlands, and Rabobnnk Nederland New Y ortc Branch, New 

York. NewYortc 

Covenant 6aneA:rouo. Inc .. Leeds-. Alab..'l.ma Credit Agricolc S.A .• Paris, France 

Customers Bank. Phoenixville, Pennsylvania 

Deutsche Bank AG. Frankfurt am Main, Germany Deutsche Oan.k AG, Frunkfur1 am Main, Oermany Deutsche Bank AO. Frank fun am Main, Gcnnany. and DB USA 

Corp •• New York. New York. and OeubChe Bank AGNew York 

Bmnch, New York. New York 

SS,200,000 CMP 

C&O Order & $342.000,000 CMP 

Sl4.000CMP 

C&oon,er 

C&D 6tder & $200.000.000 CMP 

Written Written Akrceme:tu 

C&O Order & $90,.300,000 CMP C&O Order & $960,000 CMP C&O Order&SI9,710.000 CMP C&D Order & $58,000,000 CMP C&O Order & S 136,9$0,000 CMP 

hsueType 

(e.g. Safety and I EffectJve/h s ued D•tc 

BSAIAML:.etc.) 

Snfety and Sound.ne$$ I12/17/201S Safety and Soundn('$$ l8n12-0IS 

Sa.fety \\nd Soundne$$ 10/2812016 

OSNAMl. 7/ 1612015 

MOC'tgagc Servicing 111212018 

FX SI201201S 

Flood Insurance 211212018 

OSNAMl. 4.112/l016 

LlSAIAML And 6FAC 3/ 121201S 

BSA/AML 6130/2015 

Safioty and SOUndOC$$ 12/281201S 

OFAC 1()1191201 s 

FTC Act 121212016 

Votcker 4/2Q/2017 

OFAC 1 114/201S 

FX 4/2012017 

51518031.eps

Name of Entlfy 

OeutS<:hc Bonk AQ, Frunkfur1 am Mnin, Oemumy. und DB USA Corp.-, New York. New York. and DeulKhe ·eank AGN-ew York 

Bmnch, New York, New York. ond Deutsche BDilk Trusl Company 

Amcric:.M, New York, New York 

Di!l:cover F1nanei31 SC..Vices-. Rivei"'WWOds. lllinoi_j 

East West Pasadena, California Everbank Financial Core. Jacksonville. Florida 

& Mcf'(:hfiniS Bank Of Ashland. AAhland. N-ebc"Mkl'l 

Fanners State Bank, VIctor, Montana Fayette County St. Blmo. Illinois Fayette County Bank, St. Elmo. Illinois Federal One Holdings, LLC, Milton, Ma.uachusetts, and Admirals Bancorp. lnc .• Boston. Massachusetts FiNit Bankshnrcs, Inc., Barboursville, West Virginia First Community Bank, Glasgow. Montana Flrsl Iowa State B-ank. KC0$8uqua.. Iowa F'il'$t Nebraska Bank,. Valley, Nrbrnska 

Fll'$t State Bank of Colorado. Hotchkiss. Colotado 

Four Oaks Bank & TntSt Company, Four Oaks. North Carolina Freedom Bank Fairfax. Virginia 

Ooldmnn Sachs B.a1\k USA. New York, New York Ooldmnn Sachs Oroup. Inc., New Yorlt. New York. and Ooldman 

Sachs Bank USA. New York. New York 

Appendtl< A 

J-.20I$·Ma)t201$ 

Type-of 

Enforce-ment Action 

C&D Order & $41,000,000 CMP 

Written 

Written Agreement 

$1.800.000 CMP 

S6.200CMI) 

Sl2,000CMP 

Written Agreement PCA Written Agreement Written 

S27.28S CMP $7.$00CMP 

$SS.SOOCMP 

$9.28SCMP 

Written Agreement 

$2.100 C.M I) 

S90.000CMP 

$14.000.000 CMP 

hsue-Type 

(e.g. Safety and 

BSAIAML:.etc.) 

OSNAMl. 

BSNAMl. 

BSAIAML. Mort.saac Servicins Flood lnsuronee Flood Insurance 

Snfety and Soundness Safety and Soundness Safety and Soundness Safety and Soundness 

Flood Insurance Flood I n:surance Flood Insurance Flood Insurance 

Snfe\y and Soundness 

FlOOd lruuro.nce 

Flood Insurance 

MortgA.&.C Servicing 

EffectJve/h s u ed D•tc 

S/2612017 

SI26/201S 

I 119/2015 

61812017 

4i2'6i2ci'i6 

10/6/2017 

6122.12015 

1013112016 

7/2812017 

818/2016 

Slll/2016 

6/11201S 9/13/2017 9/1812015 

71301201S 

SlllflOIS 

1112.12018 1112.12018 

51518032.eps

Appendtl< A 

J-.20I$·Ma)t201$ 

Name or EnUey 

Ooldmnn Sachs Croup. Jnoc., New York. New York, und Ooldmtul, 

Sachs & Co. New Yortc .. NC'v York 

Ool<imtm Snchs OrOup, Inc,. New York. New YOrk 

Habib Bank Limited. Karachi, Paki$tan, nnd Hnbib Bonk Limited 

New YOrk Brnnch, New York. New York 

HI\Uird Bancorp, HaT.ard. Kcntu<:k;y, o.nd Pc<>ples Bank o.nd Trus1 

ComP'!nY or Hazard. Hv.ard, Kentuc:ky 

He:o.rthind 13an)(. L-ittle Rock. Arkan.$aS 

Niaf'ter One. ln<:., New Htaven, Conn<:<:ti<:u1 

HSOC l>loldlna,:s pic, L.ondon, Qnd I•ISOC NQ,i,h Am<::ii¢a 

HoldinKS Inc •• New YOrk, New YOr'k 

HSBC Noi1h America Hofd-in$'. fne.:-New NewVori<. Qi\d 

HSOC Corp .. Mettn.w'ft, Illinois Huia Ni;\n Commer<:-i.,tan.ik -Tio.-ip.if CilY.-T4hwn. tmd Hua Nun 

Commert.:hll Bnn_k Ltd .. New York AaenQy, New York, New York 

Independent Bank, Grund Rapids. 

t\nd commerciftl Ba•tk ofChil\0' Ltd., Uel]in&, People's 

Republic lnd\IIStriol, ond Commcrci:tl Oank orChil'l-3 Ltd. 

New York Brnneh, New Yotk, New York 

Type or 

Enroree-ment Action 

C&D Ordc• & $36,300,000 CMP C&D Order & $54,150,000 CMP C&DOrder 

Wrincn Aa,reemcnt PCA 

C&D 0.-de< & 52.231.250 CMP &. 

$24,000,000 R.cstitution 

C&D OO'dc• & $175,2%,000 CMP 

SIJI,OOO.OOOCMI' 

c&660'dot 

$56.205CMP 

C&DOrder 

lndUJtriol Bank of Koren, Seoul. South Kon:a, and Industrial Bank or( Written Agreement 

Kon:a New York Branch. New Yortc. New York 

JPMorgnn ChMe & Co., New York, New York IC&D Order & $342,000.000 CMP JPMorann Chuc & Co .. New York. New York C&D Order & S61,932.SOO CMP 

Libertv Bank. South San FtanciS<:o, Cal ifomio Written ARreenlt:f'H 

Markesan State Bank. Markegn. Wl<t.eoauin Wriuen Aatezment Mega lntemaliona.l Commercial Bank Co., Ud .• Taipei. Taiwnn C&D Order & $29.000,000 CMP 

hsue Type 

(e.g. Saf e ty and 

BSAIAML:.etc.) 

Snfety und Soundneu 

FX 

BSAIAML 

Snfety oM SOundnC$$ 

And Soundness 

FTC A<:t 

FX 

MM.&ase-ScNlelna 

OSNAMJ.. 

Flood lnsuranee BSAIAML. BSA!AMl.. and OPAC 

FX 

Snfcty and Soundness 

9SAIAML. 

Safety and Soundncu 

BSNAML. 

EffeetJve/h s u ed D•te 

v.l/2016 

S/1/lOIS 

12/11/lOI 5 

313/l016 

811512017 

12/2312015 

912912017 

2l$1iC!16 

4/ 19/2018 

8127/2015 

3/ 12/2018 

2.1l4/2016 

S/2012015 

11/1712016 

8.1512016 

9/812017 

ii'i"m''i" 8 

51518033.eps

Appendtl< A 

J-.20I$·Ma)t201$ 

Name of Entlfy 

Mcaquit.c ServiCe$, In<: .. Alice. Texas Mid Americu Bn.nk und Trust Company, Dixon, Mi»ouri 

MOfPn Stanley, New Yo&., New York. 

Type of 

E n forcement Action 

Written Agreement 

C&D & SS.OOO,OOO Re:nhution 

$8,000.000 CMP 

BG.nk ofP$kisuan, Komchi, PoldS-tan, Ncniona.l Bank-of lwrinen Aa,reement 

Pakisttan. New Y ortc Bmnch, New York. New York 

Nona,Hyup Bonk, Seoul, South and Nont;Hyup 013..nk,. New IWrine:n A&reem¢1ll 

Yortt: 91"\\nc:h, New Y(lrll;. New York 

osa Community Bank. Brook.lyo, Miebi$3(1 IWrhten 

Peoples Bnnk, J<onJAs IC&:D &. $2,800,000 R.e$,ilution 

t)tiuie-Vat-toY ·a".nk. SC0it$btlirf, NebrMh ISJJ:iSS-CMP 

PNC·F-iMi.elat In¢ .. Piuiburah. J>erin!Ytva,lftt (S3.S00.0oo CMP Raton Capital CCX"p., Raton, New Mexico I Written Rock Bancsharcs. Inc .. Liulc Rock. Arkansas. nnd Heartland I Written Agreement Bank. Linle Rock. Artcnnsas Royal Bank <>fSCQIIAnd, Edinbut'Q.h, Scotland, And R'ilS IC&.O Otdct & $274.000.000 CMP 

Inc .• Stamford, Connecticut 

Santander Holdings USA, Inc. Boston. Massachusetts. and Santander I Written Agreement 

Consumer USA, lne .• Dallas, Texas 

Slanta.ndcr Holdin&$ USA, Inc. Boston. Massachusetts 

Seaway Banc5hares, lne., Chicago. llllnols Service Link Holdings, LLC, Jacksonville, Florida 

S.A., Franee, and Societ6 Ci-Cn6mle New 

York Branch. New Yoric:, New York 

Wriuen Aareement Written Agreement 

$65,000,000 CMP 

C&DOrder 

hsue.Type 

(e.g. Saf ety and I EffeetJve/h s u ed D•tc 

BSAIAML:.etc.) 

Snfety and Sound.ne$$ 171612017 

FTC II 01261201 7 M011.aaae Servlcina 11112/2018 

OSNAMl. 311412016 

BSNAMl- 111712017 

Soundness 7/30/201$ 

fi·CAet 11/Z81l017 

Flood lnsu.runee 3/612017 

Moniia\Ae -SeNfdnA. 111212018 

Safety and Soundness 7/10/2015 Safety and Soundness 12/13/ZOI6 

FX $J201201S 

Safety and Soundness 312112017 

sarcty ond 7/l/lOIS 

Safety and Soundness 6i24J2015 

MOI1;RaJt.C Servicing I/Z3/ZOI7 

OSNAMl. 12/14/:i!:OT? 

51518034.eps

Appendtl< A 

J-.20I$·Ma)t201$ 

Name or EnUey Type or 

E n roree-me n t Action 

Stntc Street Corp .. .. MassnchuSoCUs, nnd Stl\tc Street Dunk ond I Written Agreement 

Trust Comoanv, Boston. Musachusetts 

SunTNSt Atlon1a, OcorvW ISI,$0 1,000 CMP 

Tri·County Bank, Brown C.ity, Michi&on lss.ooo CM11 

Truxttm Trwn COmpany, Tennessee _ l$11.285 CMI> 

U.S. Bancorp, Minneapolis, M inncsOla l$4 ,400,000 CMP 

U.S. Bancorp. Minneapolis, M inn0$0ta and USB Americas Holding IC&D Order & S 15,000.000 CMP 

Co., Minneapolis. Minnesota 

UBS AG. Zurich, Swilxerland, and UBS AO Stamford C&..D Order & $342,000,000 CMP 

S'lamford. Connecticut 

Wavnc Bank and Trust Comoonv. Cambridg_c City, Indiana $23.000 CMP Wells Farao. So.n Fm.nci.s.co .• Colifomia I CAD Order 

h s ue Type 

(e.g. Safe ty and 

BSAIAM L:.etc.) 

OSNAML 

Flood LO.Su.tanc:e Flood ln.svronc:e 

Flood lnsuranc:e 

Mortgage Servicing 

BSAIAMLandOFAC 

FX 

Flood Insurance 

Safe1-y .-nd Soundness 

EffectJve/h s u ed D• tc 

sn812o1s 

sn•no11 

1111812015 

4/291201S 

1/ 12/2018 

2/141'2018 

512012015 

1013112017 

:ln/2018 
122 


51518035.eps

The Honorable Michael Crapo 

Chairman 

May 14,2018 

U.S. Senate Committee on Banking, Housing and Urban Affairs 

United States Senate 

Washington, DC 20510 

The Honorable Sherrod Brown 

Ranking Member 

U.S. Senate Committee on Banking, Housing and Urban Affairs 

United States Senate 

Washington, DC 20510 

Dear Chairman Crapo and Ranking Member Brown: 

We write today in support of the nomination ofDr. Richard Clarida to be the Vice Chair 

of the Board of Governors of the Federal Reserve. Each of us has known Dr. Clarida for many 

years and has high regard for his academic work and professional qualifications. 

Dr. Clarida is one of the nation's leading monetary policy scholars. He has been a 

Professor of Economics at Columbia University for three decades and has published widely in 

the top economics journals. His expertise in monetary issues, together with his thoughtfulness 

and good judgment, will be invaluable assets to the Federal Open Market Com mince and the 

Federal Reserve System. 

Dr. Clarida also possesses extensive public and private sector experience. He served as 

the Assistant Secretary for Economic Policy at the United States Treasury, where he was 

awarded the Treasury Medal for Distinguished Service, and as a Senior Staff Economist at the 

Council of Economic Advisers. In addition, his private sector roles have given him important 

experience 11~th the functioning of financial marl<ets, which will be useful for making monetary 

policy as well as in discharging the Federal Reserve's responsibilities to oversee banking 

institutions and to promote financial stability. 

Finally, we are confident that Dr. Clarida, if confirmed, will uphold the Federal Reserve's 

tradition of independence and nonpartisan policymaking. He understands the importance of 

hearing all sides of an issue and making policy decisions based on the best available data. 

Accordingly, we believe he is well qualified to serve as the Vice Chair of the Federal Reserve 

Board and strongly support his nomination. 

Sincerely, 
123 


51518036.eps

Dr. Ben Bemanke 

Former Chairman ofthe Board of Governors of the Federal Reserve 

Former Chairman of the Council of Economic Advisors 

Dr. Stanley Fischer 

Former Vice-Chairman of the Board of Governors of the Federal Reserve 

Or. Alan Blinder 

Fonner Vice-Chairman of the Board of Governors of the Federal Reserve 

Dr. Martin Feldstein 

Former Chairman of the Council of Economic Advisors 
124 


51518037.eps

~NDENTCoMMUNITY BANKERS of AMERICA~ 

May 14,2018 

The Honorable Mike Crapo 

Chairman 

Committee on Banking, Housing. 

and Urban Affairs 

Washington, D.C. 20510 

The Honorable Sherrod Brown 

Ranking Member 

Committee on Banking, Housing, 

and Urban Affairs 

Washington, D.C. 20510 

Dear Chairman Crapo and Ranking Member Brown: 

TIJ!lOi,y K.ZMrmeuoon, dlOilnon 

Pr8lbl L Kemedy, Cloaitrrmfled 

Nooll w. w,b:ft., Vu C11oirmon 

Kollv.,.. Undelwood, Tte0$1tet 

Ovi$1ophe< ]Oidon, Secrool)' 

R. Scol Hei&.omp, lnmediole Poll OIOirma~ 

Rebeco 20111e10 201ney. l'resldoot ood ao 

On behalf of the nearly 5,700community banks represented by lhe Independent Community 

Bankers of America (ICBA), Iwrite to express our enthusiastic support for the nomination of 

Michelle "Miki" Bowman for the Federal Reserve Board of Governors (Board). Ms. Bowman is 

highly qualified to fill this important post by virtue of her broad government and bank regulatory 

experience and her impressive community banker credentials. I expect her to make an invaluable 

contribution to Board deliberations and to strengthen the Board's rulernaking and open marl<et 

operations. 

Ms. Bowman is a superb choice to fill !he Board seat reserved for an individual with community 

banking regulatory or business experience. ICBA worl<ed hard to ensure the Board had a 

dedicated member with community bank experience and fought to have that requirement enacted 

into law. That position has not been filled since it was required by Congress in 2014. We are 

proud that Ms. Bowman has been nominated to fill this important seaL Ms. Bowman knows 

community banking from the inside as a fifth generation Kansas community banker. She is also a 

top finaneial regulator, currently serving as Kansas Bank Commissioner. She has been an officer 

of the Farmers and Drovers Bank of Council Grove, Kansas, where she was involved in both lhe 

lending and compliance aspects of the business. She has also worked in her family's cattle and 

farm operation and thus appreciates the link between agriculture and community banking and the 

importance of both to our national economy. 

In Washington, Ms. Bowman has worked both in Congress and lhe Administration. She served 

on the personal staff of Senator Bob Dole and as counsel to several House committees. She was 

appointed by President George W. Bush to serve as an executive at the Federal Emergeney 

Management Agency and later as Deputy Assistant Secretary and Policy Advisor to the 

Secretary for Homeland Security. She holds a Juris Doctorate from Washburn University School 

of law and a Bachelor ofScienee from the University of Kansas. 

The Nation~ Voice for Community Banks.• WAIHtlGION, OC 

161SIS....r-IN 

SuileQOO 

~.OC20036 

SAU<CENIRE, w-1 

Sl8~tcod 

IQ8oo<261 8668434222 

Sa1JtC....,NN51>378 _..,.Jcbo.ag 
125 


51518038.eps

I can tell you Utat the oommunity bankers who know Ms. Bowman bes~ her industry oolleagues 

in Kansas, are thrilled by her nomination and the prospect of her sen• ice on the Board. With 

nearly 5,700community banks nationwide, we look forward to Ms. Bowman's representation 

and input on the Federal Reserve Board. Thank you for scheduling her nomination hearing. I 

urge that she be I'Oled out of oommittce and oonfirmed by the Senate expeditiously. 

Sincerely, 

Is/ 

Rebeca Romero Rainey 

President & CEO 

CC: Members of the Senate Committee on Banking, Housing, and Urban Affairs 

The Nation's Voice for Community Banks.• 

WASHNGTON, DC 

lol5tS.eeoW'I 

5..010900 

OC20030 

SAU< CFNIIIf, /IJ'l 

518Uncolntood 

PO&. 21>7 861>843-4222 

So!Caa,l.cNS6378 ...wicbo.ag 
126 


51518039.eps

Chapter 2 • Structural Change Among Community 

and Noncommunity Banks 

In th<J'1Sil5l'""' the ntJmbeto(l\mk;hos<lxlmcJ 

;haqfr. llcowo<n 19&1 and 1011, rh< rc.,J ntJmm ri («J.r. 

allr in•tr<J bank and thrift chanm d«liool by S9 

1'<10011, from 17,901 m 7,))1. A coon"""" o( "' ... char· 

tm, f.uhrrn, ~ belll'ttnl\1nkml((otl\f'iln!G!, and 

consol•btroo of duncrs withm holdtt'Qt COOt!<ln<> un.lcr· 

loc tho <kclrnc. MCl«<l\~ . the.< c.hangcs and 01her ~""" 

tural <h>l\l"' 111 the irdtSII\' l<ueh., the""'''""'' 

gtOO'th •lliOOJ! the ''CfJ' btgcst bnki) h:11~ Liken pbce m 

d&tn<t waws :u.<ocratod .,;,h bankn-.g cnses •nd rlw bu.. 

""''~'k arJ me rnfu..nc<>l by n~"btot)' <h•l'4." th:ll 

h:1w~ <r.l!ly bo<.>eordtd•t toconsoltd.M""'"'" tint<'. 

CommunKJ b.1nk• ~ from thiS r«iod (,.,...,in 

number ,,nJ With a domi!U!hod lh.1rt o( lxtnkong tndu•tr 

2~-b. ~n helc». dw:r comitw.: ro rq:l'txm hrt· (:n the 

m<lll c:ommon hu•lle$S model among R)JCtruurod 

IMimuoru. 

Th~ chol'tct ona~·,.. the declmc rn rh< nuonl:cr cibanks 

to dttctmint rh< c((cm c( consoi.Jonon. ""Ill'"' f.ulm<$. 

and..., ch3!t<t<tndh·idually.ln ...der to g;M~ the ,...hd· 

IIV cibonb o( dtikring asset a:e, rates ol coruolo.btoon. 

m«;<r. (,,;(u.,, and IUrvl'oohip art cakul:llod by""" ~ ... 

~"'""and b <•:cMU~nity :tnd n"oo-unoty hank!. The 

lmJOO. o( bonk l'oih~rcs among ff~ hnk grours is 

C1'1'(Uh'l by C<)(llpullllg 0 (;lllute om, •ilic:h tnea•lltS the 

freytlt'I'ICl' '~fail res "'ilhm one ,:n.lp rd,,, ,~ hl ~~~It,'$ 

(or all lxmb duri"l! any pctiod. 

Chon2.t 

Diol-onl lndCri!ts,~bJMor<Tl• llrilf ... -- .. ·---· llocodeolf""f ..... 

FDIC CONWmiWo:H:l SJU>r I D!aA«t 2012 

Consolidation 

The loanking induory "'pctic:nct<ll1ll.dl cOMOlod:nm 

Juring rlw lludy pmad from 1984 thRlllgh 1011.' Of the 

1;,4J2 hanks (;H "'' """hi bonk ill~ •KJ!'IIOatiltn>) th:tt 

l'llitod dte in®,rry "'"""" 19ShnJ 2011.17 ptn:Cf\1 

lnikd, 4'1 pcrccru me~ .,than nn:Ufll"'t"l bonk. and 

"'~her 31 ~"'<"" <OAA~ .loc<>l •itlt other chart"' 

.. uhm thetr ex•trng ltonk holdi ~ comronv.' These far~ 

urt.s, mergers, and coruoltdatl(lft h:wt occumd in dUunct 

,,. .... Must lailur.s .Lnru: the ptr>>d (l.m m alii 

occutted bc<.1use o( the bankn~ ond thrift crisi> o( the 

L11< 19&15 and rorly 199Cs arJ the fitunctal ai!i> of 1007· 

lOllS and its aft,'Ttltilth ~""Chan 1.1~ In C\II\U3ll, ooly •7 

insrnutions latk.J Juring tlx· num•;tl (nltll 1996 ro 100). 

Me~J!<n peaked m the mi<l-19&lsunJ mid·I99Cs. dun!lli 

pc~iods o( cconorntc txl"nslon («< O..n 1~ The a~·tr· 

11!,"1: numb..'f (-/ un<tiSb:l-.'1.1 mer~ w.·:b .346 per )\'2t 

"'"'""" 198; •nd 1000 and declmod to 181 r« l"'' from 

ZOOI through 1011, •1th the thret sk,..... )'tatS lor mcrgtr 

r.:ri'\itl' \ICCmring bd:Wt'tn 2Vt» a~ Z.O.J 1. The :mnual 

roumltn cr( Ultr.><mlf'lllV , .. ,. • .t.tnu (see O.art IJI 

abo y""' in the Ia« 19&15 arJ tlx'll d«loool 

after rlw mtd-199Cs. O,vt<r cOMOlllut<W a\~'C\1134 

' TI>tstodyptrioimllldslromytundiSIIIIvO!IIItJW·•ndlOil 

r1111e Ufie.s aGalylisofs:oct.,ariablts tr¥iablt$IMISUffd a~ poinl ill 

,_,,09011Hot.,.......td.,tlftdlt,.l!lltlot""'lliii.Timt 

strits wlys1solflownrilbftstvwWH meuwed JU~H$1 ptriod of 

lilotldoxttod ftorni98Sifi<OI9>lllll 

AA additionaiU'S ins:~IICionJCabo l2percentotc:Unttsl stll·~qui. 

lf,etfdorotbttwiltexWtheirldusl.r'widloul,.totlllfllffltdotirte 

djs~iod. 

Cltart:Z.2 

IJna$$isled Mo<ge<> c1 s.w:s ltd Tlvllls Peoted 

~ing !he E<oonomic Expwloosolthe t!lOsonllm! 

2-1 

51518040.eps

18,000 16,000 

14,000 

12,000 

10,000 

8 ,000 

6,000 

4,000 

2,000 

0 

1984 1990 

o f ll.S. Community Banks 

2000 

Dodd •FranSc 

enact ed 

2010 2016 

Source: Ft:dcrul Deposit Ins urance 

Co rpo rdtion, Histo rical Community Banktng Rclc rc ncc Data