Sen. Rick Scott (R-FLa.) on Tuesday took aim at Federal Reserve Chair Jerome Powell for the problems with the central bank’s balance sheet.
It is Powell along with his predecessors, namely Janet Yellen and Ben Bernanke, who are to blame for the Fed’s bloated balance sheet, said Scott in an interview with CNBC’s Squawk Box.
The senator noted that when former President Barack Obama was election, the Fed’s balance sheet, which is the statement listing the central bank’s assets and liabilities, was around $800 billion. But Powell was the one who doubled it from around $4.5 trillion-$4.6 trillion to around $9 trillion, he added.
“He [Powell] promised to bring it down and he hasn’t. He is bringing it down very slowly,” Scott said. The senator also questioned why the Fed chair went so fast at a rate of $145 billion a month. Now, he was going down by $95 billion a month,” said Scott in his criticism to the Fed Chair.
After the securities held by the central bank peaked at $8.5 trillion in March 2022, it decided to unwind the bets, beginning in June 2022.
Scott also slammed the lack of accountability among Fed officials. “There are 23,000 people that work there. Nobody has been held accountable for the financial crisis of 2008. Nobody has been held accountable for Silicon Valley Bank. There’s no accountability,” said Scott.
“They don’t even have an Inspector General that’s independent,” he added.
The senator highlighted the Fed’s balance sheet and the lack of accountability as the major problems.
When asked whether pulling the rug out too quickly would create more financial stress, the senator noted that building the balance kept long-term interest rates down when they should have been allowed to go with the market.
For the first time since the Federal Reserve has been created, it’s losing money on an annual basis, he noted.
Then Powell began to raise interest rates so quickly and the Fed’s balance sheet has gone down by $1.2 trillion in the last 15 months.
“Powell made all those choices. He made the decision to buy all those assets and then he made the decision to raise interest rates the way he did,” said Powell.
A $1.2 trillion reduction in the value of the assets has come on top of that, Scott said. “I wouldn’t want to have a report card if I was Jay Powell right now,” he added.
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