Federal Reserve Chair Jerome Powell offered some new assurances Tuesday about payments routed to the central bank from the Treasury Department, his first comments about the fallout resulting from Elon Musk’s access to a sensitive Treasury payments system.
When asked by Republican Sen. Mike Rounds if that Treasury system was safe, Powell said, “I believe it is.”
“I will tell you we are very strongly committed to the integrity, efficacy, resilience, and all of those things of this system,” Powell added during his appearance before the Senate Banking Committee. “People do depend on this in a big way.”
When later asked by Democratic Sen. Raphael Warnock whether Musk had attempted to access the Fed, Powell said: “I don’t believe so.”
Many Democratic lawmakers on Tuesday appeared more interested in getting Powell’s take on the work of Musk at the Treasury Department and the Consumer Financial Protection Bureau than in the direction of monetary policy.
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Both of those situations, after all, do have some connection back to the Fed.
The Fed acts as the fiscal agent of the Treasury and processes its payments. The Fed also acts as funder for the CFPB, which oversees consumer finance behavior at large banks, mortgage lenders, student loan servicers, and online payment apps.
Last weekend a federal judge temporarily blocked Musk’s team at the Department of Government Efficiency from accessing the sensitive Treasury system, citing the risk of “irreparable harm.” The Trump administration also ordered a halt to effectively all work at the CFPB.
Musk seemed to signal the CFPB move was imminent on Friday afternoon, tweeting, “CFPB RIP” just hours after members of his team set up shop at the agency.
Powell on Tuesday made it clear that in the case of the Treasury and the CFPB, the Fed doesn’t make decisions on how and why money is spent.
But when pressed by Massachusetts Sen. Elizabeth Warren, the highest-ranking Democrat in the committee, he did acknowledge that if the CFPB is not doing its regulatory work there is “no other regulator” paying attention to consumer finance issues at big banks.
The legislation that created the CFPB gave it sole authority over those issues among US regulators. Warren was a driver behind the creation of the agency in the wake of the 2008-2009 financial crisis.
Republican lawmakers on Tuesday were more interested in asking Powell about bank capital standards and the actions of big lenders to “debank” certain customers.
