Two bank bosses will be on Capitol Hill in the week ahead. Both will be trying to save their jobs.
In the week ahead, Federal Reserve Chairman Janet Yellen visits the House Financial Services Committee to deliver her biannual update on the American economy. Her appearance comes just days after the Fed’s interest rate setting group decided, again, not to change rates. It acknowledged “the case for an increase … has strengthened,” but it chose to wait. Rather, seven of the 10 members of the committee thought waiting was the best policy. The other three wanted to hike rates.
This was the most division this group has had since Yellen’s first year as its boss. It indicates growing confidence in the economy and bolsters the case for an interest rate increase just after the election.
GOP presidential candidate Donald Trump has accused the Fed, under Yellen’s leadership, of fueling a “false economy” by keeping interest rates at ultra-low levels. If Trump is elected, it’s doubtful he would nominate Yellen to stick around at the central bank after her current term ends. Yellen’s fate rests not with Congress but with voters.
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Wells Fargo CEO John Stumpf will be in front of the same congressional committee a day later. It’s the second week in a row Stumpf has been called to Congress. In the past week he was told by Sen. Elizabeth Warren (D-MA) he should resign over the bank’s massive misuse of customer information to open millions of phony accounts. He hasn’t, and Wells Fargo shares have lost 10 percent since September and 15 percent this year. It won’t be Congress who kicks Stumpf to the curb. If it happens, it will be shareholders who demand new leadership.
Both Yellen and Stumpf will defend their actions and lay out their visions of the future. They need to convince their stakeholders they’re up to the difficult tasks ahead.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.