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Washington, D.C. - Today, Senate Banking Committee Chairman Tim Scott (R-S.C.) held Federal Reserve Chairman Kevin Warsh's first semiannual monetary policy Senate hearing since taking office, emphasizing that the Fed's decisions affect everyday life for families in South Carolina and across the country, from mortgage payments and credit card bills to small business loans and household budgets. Chairman Scott underscored that affordability must be at the center of the Fed's work, that the Fed protects its independence by staying focused on its mission, and that Chairman Warsh's reform efforts can help restore discipline, credibility, and public trust. Chairman Scott also highlighted the need for the Fed to understand AI's economic impact without expanding its mandate and to pursue smart bank rules that preserve resilience without cutting off access to credit.
Chairman Scott's opening remarks as delivered:
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Today, the Committee welcomes Chairman Kevin Warsh for his first semiannual monetary policy hearing since taking office.
I know it's been seven weeks, but it probably feels like a couple of years. We are really happy to have you with us and really excited about the direction of the Fed.
Today is about how the Fed is serving the American people and how Chairman Warsh is working to combat years of mission creep at the Fed and restoring the Fed's credibility, especially to the general public.
The decisions that the Fed makes affect everyday life in South Carolina and around our country.
For example, those decisions affect the mortgage payment a couple is trying to afford, the credit card bill a single mom is trying to pay down, and the decisions a small business owner makes about whether they can afford a loan or not.
Frankly, the Fed even has an impact on the interest rate environment.
As you know, the Ranking Member and I spent over a year working on a housing bill that will actually help us increase housing supply, help us expedite the process of building a house through NEPA reform, and create more diversity in housing selection with the removal of the chassis requirement.
These are important issues that will make housing affordability incredibly easier, but it will never get to the main point of interest rates.
Interest rates are something that you control that we don't control. We want you to follow the facts; however, that is really important for the long-term durability of our economy.
But in North Charleston, where I grew up, families do not talk about monetary policy, Kevin. They just don't talk in those terms, but they fully understand the principle that when prices rise faster than paychecks, it's really hard to make their ends meet.
That is why affordability must be at the center of our conversation.
The Federal Reserve has a mandate to pursue and promote a strong labor market through maximum employment and stable prices. Those are serious responsibilities.
I'm glad that you are the man for the job and that you take it seriously.
They require clear thinking, steady leadership, and the commitment to follow the data no matter the political ramifications.
It also requires understanding the forces shaping our economy, including AI's impact on jobs, wages, productivity, and prices.
Independence is not a slogan.
It is a responsibility.
And the best way for the Fed to protect its independence is to stay focused on its mission.
For too many years, the Federal Reserve drifted into issues outside of its core responsibilities, and America paid a price for it.
Mission creep makes the Fed less accountable and undermines public trust.
I am encouraged by the steps that you are taking to reform our central bank.
That starts with a more disciplined approach to how the Fed communicates.
Moving away from overly detailed predictions about where interest rates might be going in the next several months is a helpful step to make sure the Fed is able to adapt when conditions change.
Families, small businesses, and markets are better served when the Fed follows the data in front of them, not a forecast that may change in an instant.
Less guessing and more discipline will help the Fed stay flexible, credible, and focused.
The five independent task forces that you set up also send a very important signal that the Fed is willing to start from its core principles and pursue thoughtful reforms to deliver on its statutory mandate.
You and I had a very quick conversation before walking in, and I wanted to note that I think that the working groups are fantastic. And frankly, I think that the composition of the working groups is really important. One of the things that we talked about was the balance sheet working group.
I must concede that I'm a fan of Abraham Lincoln's approach of these teams of rivals, and it seems like you have Jeremy Stein, and you might know Jeremy from Harvard, as well as the former governor of the India Central Bank, Mr. Rajan. They have - very nicely put - competing approaches and philosophies on the balance sheet.
But if you're going to be intellectually honest, you need to have a serious debate about what direction to go. And frankly, how to get there. And so, I'm really excited about what you're doing there, and I look forward to hearing how that works out for you and for the Federal Reserve and more importantly for the American people, because unwinding a balance sheet the size that we have today is going to take a deliberate effort that will have to be paced properly not to create instability and volatility in our markets, so thank you for taking it seriously.
As AI reshapes the economy, the Fed should understand its impact on jobs, productivity, prices and the financial system without using technological change to expand its mandate.
That same discipline should guide the Fed's approach to bank regulation.
The U.S. banking system is sound and resilient, but we cannot take that for granted.
Preserving that strength requires regulation and supervision that are clear, appropriately tailored, and focused on real risks. According to the July 2026 Monetary Policy Report, bank capital is near historically high levels.
As the Fed finalizes the Basel III Endgame and other capital rules, it should pursue better-calibrated requirements that preserve resilience without unnecessarily restricting lending.
When capital is stuck on the sidelines, a family in Irmo, South Carolina, may find it very difficult to get a mortgage.
A small business may find it hard to get a loan.
A community bank may spend more time satisfying Washington than serving its own customers.
That is why this Committee will continue pressing for regulations that protect the system without cutting off access to credit.
I want the Fed to be very successful. We need the Fed to be successful.
Prices become more stable when your job is done well.
Markets gain confidence.
Wages grow, and more families have the opportunity to save, invest, buy a home, and live their version of the American Dream.
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