Ann Wagner Asks Fed Chair Kevin Warsh How Heavy Handed The Fed Should Be In Economy

Chair recognizes the Chair of our Capital Markets Subcommittee, Ann Wagner of Missouri. You're recognized for five minutes. Hi, thank you, Mr. Chairman, and welcome, Chairman Warsh, and congratulations to you. My work on the Capital Markets Subcommittee as Chairman has been focused on giving the American people and our small businesses more options and access to our markets, giving the everyday investor and the local employer better opportunities to grow their financial future and kind of on their own terms, I'd say. Under the previous administration, we saw heavy-handed regulatory approach that aimed to strip risk out of our markets entirely, and time after time, the Biden-Harris administration pushed policies that limited financial freedom and stifled growth. Our capital markets are, as we all know, the envy of the world, and that is because we allow Americans, Americans to weigh risk and reward for themselves and make the financial decisions that are best for them and their families. Chairman Warsh, at a high level, how do you view the Fed's role relative to the financial system, both as a central bank and as a bank regulator? And I guess what I mean is, should the Fed try to engineer all risk out of our economic system, or should it act as a prudent observer that only intervenes when truly necessary? It's a leading question, which I can answer with a, we need to strike the right balance. We are not trying to take risks out of markets in normal times. The economic growth that I mentioned to your colleague just a moment ago comes about because of a certain dynamism in our financial markets, which comes from a dynamism in the real economy. That isn't created by the Federal Reserve, but we can be a foundation with clear, steady policies delivering on the remit that you gave us so that the American spirit and American economic growth can continue to be the envy of the world. Something on the top of mind for myself and certainly for my constituents in Missouri's second congressional district is the state of the economy, including the cost of living, job growth, and interest rates. Though it is often characterized as being tasked with a dual mandate, the Fed, in fact, has multiple statutory mandates, including stable prices, maximum employment, moderate long-term interest rates, and financial stability. When the Fed leans into one of these goals, sir, it can create ripple effects on the others, forcing a balancing act between competing priorities. Chairman Walsh, how do you weigh these different mandates and the trade-offs between them? Well, a little different than some in economics profession on that, Congressman. I do not think we have a cruel choice between stable prices and full employment. I think the mandate that you and Congress gave us are entirely consistent. If we can ensure stable prices, the American economy can thrive, businesses can hire more employees, and the dynamic economic engine we talked about can continue to be the envy of the world. I don't think we have to run a balancing test. I don't think it's an either-or proposition. We're in the business of doing what we can to ensure financial stability over a business cycle and financial cycle, and we're always in the business of ensuring stable prices and full employment. At different times, our focus, our lens has to turn to one of those priorities, but I think they're entirely consistent with each other. Which leads to my next point here. There are some who believe, Chairman Walsh, that the Fed should be used as an everything regulator. Where instead of acting as an observer of markets, the Fed attempts to actively manage them beyond its statutory responsibility. Chairman Walsh, how does this mission creep affect the Fed's reputation, and should the Fed take actions beyond those specifically authorized in federal law? We should follow the law. There is a tendency when circumstances get tough for any regulatory agency, any agency to go to the edge of their authorities, but that's when politics enter the door. My objective, the objective of my colleagues is to keep politics out, and the way we do that is we steer clear of things that we aren't authorized to do. General, Ms. Stahm has expired. My time's expired, and I think that's the answer we're looking for. I yield back. Thank you, Mr. Chairman.