Sen. Tim Scott says he will press Fed Chair Powell on 'debanking,' Basel III and regulatory overreach

Sen. Tim Scott, R-S.C., chairman of the U.S. Senate Banking Committee, said he will press Federal Reserve Chair Jay Powell about what Scott described as the Fed's role in "debanking" lawful businesses, the effects of Basel III capital rules and a surge in regulations from federal banking agencies.

"Under Jay Powell, the Fed has been weaponized for liberal causes," Scott said in a television interview. "They've debanked crypto assets. They've had stress tests that puts more capital on the sidelines. And then Basel 3 ... you'll not have the money for mortgages and for small businesses to start because you have so much capital on the sidelines."

Scott framed his questions as part of the Fed chair's semiannual appearance before the Senate Banking Committee this week and the House Financial Services Committee the next day. He said he wants Powell "to get back to calling balls and strikes fairly, not joining green energy schemes for financing," and urged a Fed that prioritizes growth.

The senator criticized what he described as an accumulation of rules and regulatory pressure from agencies, saying higher capital requirements and regulatory scrutiny can restrain banks' willingness to lend. "Basel 3 is another way of saying, you'll not have the money for mortgages and for small businesses to start," Scott said.

Scott repeated claims that federal regulators have applied reputational pressure on banks not to provide services to certain legal industries, citing crypto firms and firearm dealers as examples. He pointed to recent public document releases from the Federal Deposit Insurance Corporation and said regulators had been "weaponized." He did not cite a specific regulation or action by the Fed that directly ordered banks to cut off services.

Scott also raised the Consumer Financial Protection Bureau and other agencies as examples of federal entities he said could be scaled back. "I believe the CFPB can go away and have no negative impact," he said.

Maria, the interviewer, asked whether Scott expected structural changes within federal financial agencies; Scott said he welcomed a review of overlapping responsibilities and repeated his view that the Biden administration's policy priorities had affected banking decisions.

The remarks are a preview of the lines of questioning Scott plans to pursue in committee hearings with Powell. The interview consisted of commentary and preview; no committee action or vote occurred during the segment.

Context: Powell's semiannual testimony to Congress typically covers monetary policy and financial stability; Scott's comments indicate the topics and tone he plans to pursue when questioning Powell. Scott framed his remarks as policy and oversight priorities rather than concrete regulatory proposals presented during the interview.