3 Min Read
(Adds details from letters, background on Fed role, byline)
By Jonathan Spicer
Feb 14 (Reuters) - Federal Reserve Chair Janet Yellen, in response to a warning from a U.S. congressman to halt international negotiations in the early stages of Donald Trump's presidency, said in a letter the Fed has the authority and responsibility to consult with its foreign counterparts and does so to benefit the United States.
The letter to Republican Representative Patrick McHenry, reviewed by Reuters, suggested the U.S. central bank will carry on as usual in discussions on international financial regulations to help, according to Yellen, promote U.S. stability and competitiveness.
"We will continue to coordinate with the Treasury Department, which is itself a member of several international forums related to financial services, such as the Financial Stability Board and the International Association of Insurance Supervisors, as well as with the other U.S. supervisory agencies that participate in various international forums," Yellen wrote in a Feb. 10 letter to McHenry, who is vice chairman of the House Financial Services Committee.
"In exercising our longstanding authorities and responsibilities for consulting with our foreign counterparts, we share the objective that the whole U.S. government must work constructively to ensure a strong, stable U.S. economy and financial system," she added.
Yellen on Tuesday began two days of congressional testimony, her first since Republicans took control of the White House and both houses of the legislature. She faces a Senate panel on Tuesday and the House panel on Wednesday, when McHenry, who like several of his fellow Republicans have long criticized Fed policy, could again raise the topic of international negotiations.
In a Jan. 31 letter to Yellen, the congressman from North Carolina said the Fed "must cease all attempts to negotiate binding standards burdening American business until President Trump has had an opportunity to nominate and appoint officials that prioritize America's best interests."
The Fed operates independently from Congress even while lawmakers oversee it. Fed officials such as Governor Daniel Tarullo, who announced last week he would retire in April, often participate in forums including the Basel Committee on Banking Supervision and the Financial Stability Board. (Reporting by Jonathan Spicer; Editing by Meredith Mazzilli)