Yahoo Finance Presents: Senator Sherrod Brown

Senator Sherrod Brown, the Democratic Senator from Ohio and Senate Banking Committee Chairman, sat down with Yahoo Finance’s Adam Shapiro to discuss issues like inflation, Biden's Federal Reserve nominees, the debt ceiling, and stablecoins.

Video transcript

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ADAM SHAPIRO: Welcome to "Yahoo Finance Presents." We're joined today by Senator Sherrod Brown from the great state of Ohio. He is also Chairman of the Senate Banking Committee. There's a lot to talk about. But, first, it's always good to see you, Senator. Thank you for joining us.

SHERROD BROWN: Thank you.

ADAM SHAPIRO: The big headline that we're all paying attention to is inflation. And during the recent hearing in which Janet Yellen, Secretary of the Treasury, and Fed Chair Jay Powell were testifying, we heard Jay Powell actually say it's time to retire the Fed's definition of inflation being transitory, time to retire the word transitory. What did you think when he said that?

SHERROD BROWN: I think that nobody really knows what the word means anyway when he said it, which-- and he said it in media, doing their jobs, and had sort of repeated it many times. I think he understands-- and what he also said the rest of the paragraph was how important it is to fix the supply chain and the biggest contributing factors to inflation.

It's surely not government spending. It's surely not the bipartisan Rescue Plan. It's surely not the Recovery Act that has cut the rate of poverty by 50% among poor children. The contributing factor is what happened, the pandemic that nobody quite foresaw-- lumber prices, and chips, and all of those contributing factors.

So I think you look at sort of the whole paragraph of what he said and you understand it better.

ADAM SHAPIRO: In fact, he did say that one of their concerns about inflation is that it becomes more permanent. And, although, the supply chain issues-- we're hearing from CEOs, for instance, the CEO of Walmart saying that those kinds of issues at the ports are now easing up. But the Fed does seem to be a little bit concerned about a more permanent kind of inflation. Are you concerned about this? Is the committee concerned about this?

SHERROD BROWN: Yeah. I think people are concerned. I don't think we should be alarmist. I empathize with people, all of us paying higher prices and are working in every way we can to cut costs and make it as temporary as possible. We also know, though-- headline in "Bloomberg" today-- that corporate profits are their highest in seven years. Go back to 1950, CEOs are making just incredibly high salaries.

And the word "incredibly" is right, because it factors 300 times what the average worker is making, average CEO salaries. They keep making more, and more, and more, and more. And then they, say I can't increase wages. We can't afford it. And then they say we've got to increase prices. Well-- no and no. And that's why we fight back.

And that's what the attention of the committee-- the conservative members of the committee, the Republicans are always going to do corporate America's bidding. And progressives, like me, on the committee are always going to do workers' bidding. And this clearly-- corporate America is doing fine, thank you very much, and workers aren't.

Still, I mean-- you know, Adam, we've seen corporate profits go up and up. We've seen corporate executive compensation just through the roof, yet workers' wages have been pretty much flat. That's starting to change. It's starting to go up. But we've got to get inflation under control. And we've got to get workers' wages up.

ADAM SHAPIRO: In fact, I'm glad you brought up that "Bloomberg" article, because profits at corporations according-- this is data from the Commerce Department-- up 37% from a year ago whereas wages are up about 12%. What the article also said, though, is that wages for people who work at the supermarkets or at pizza restaurants, those are not rising as fast. And you just mentioned that's where inflation hits people the hardest.

And then we heard from the Fed, they're going to start perhaps tapering, pulling back their purchase of different assets-- treasuries and mortgage-backed securities-- faster perhaps-- they're going to determine this at the next meeting-- than they had intended. Do you worry that could negatively impact those people at the lower economic income spectrum?

SHERROD BROWN: I have implored Chair Powell and Secretary Yellen also, but especially Chair Powell, to put workers at the center of our economic policy. And the Fed's not done that over the years. The Fed has been way more-- you remember. You introduced me as Chair of the Banking Committee. Well, the Banking Committee is what it's colloquially called, and that's all about-- this committee's been way too much about Wall Street. The name of the committee is Banking Housing and Urban Affairs. I always call it banking and housing except when I call it housing and banking.

And it's time that workers are the center of our economy, the center in this chair-- of this committee-- which they haven't been in the past. And that's what I'm hopeful with the new regime, if you will, with the Federal Reserve, with Powell reappointed, with Brainard as Vice Chair, with three new Fed governors coming in, that the Fed will not just be Wall Street's little political business arm but will actually fight for workers.

ADAM SHAPIRO: In fact, there's news today that the Ohioan Richard Cordray may actually be selected by the Biden Administration to be the member of the Board of Governors in charge of regulation, essentially. What would you think of Richard Cordray coming in that role to replace Quarles? Because I know Senator Warren-- actually your colleague during that hearing-- I think was alluding to that potentially coming down the pike.

SHERROD BROWN: I like Rich Cordray. I don't know what-- I've been talking to the White House about all three of these nominations-- the chair, vice chair of supervision, and the other two. I'm not really at liberty to talk about those conversations. There are a number of people I like.

Rich served my state well as attorney general. He served the country well as head of the Consumer Bureau. I think he's one of several that are qualified. And the good news is the difference between the Trump nominee, Quarles and the Biden nominee, whoever it is, it's night and day. Quarles continued to do the bidding of Wall Street over, and over, and over, and over again.

The Biden nominee surely won't do the bidding of Wall Street. And Biden nominee, as I will talk to-- whomever is nominated-- about putting workers at the center of Fed policy and how important that is.

ADAM SHAPIRO: I was reading-- I think it was "Cleveland Crain's Business" magazine-- that you hope to get the confirmation hearings for Jay Powell as early as this coming month. But my question to you-- and some of us-- I certainly need a civics lesson right now. How quickly could you move through other nominees with, for instance, ranking member Senator Pat Toomey? Would he lead an opposition, do you think, to someone like Cordray or anybody who might be, as you are saying, more inclined to support regulations, to support working Americans?

SHERROD BROWN: Well, the ranking member has already expressed concerns about Brainard, because she has been pro consumer protection, pro worker, pro rules around Wall Street-- misbehavior.

So we will see. When I say I want to move quickly, I also recognize that Mitch McConnell has blocked dozens and dozens of US ambassadors. Only five ambassadors have been confirmed on the Senate floor this year as opposed to 40 during Trump's first year.

So I want to move as quickly as we can in the committee. We have a two-week wait that the ranking members always sort of demands from the time the nominations made, two weeks before we start hearing. So we're up against that.

But we're going to move on these as quickly as we can. But we'll do the hearings right for those two, for Paul, and Brainard, and for the other three yet to be named whom we hope will be named in the next couple of weeks.

ADAM SHAPIRO: You know, when you talk about fighting for working men and women, I will never forget the 2017 hearing, you and Orrin Hatch. I know you respected each other during the tax reform debate where you were very aggressively defending working men and women.

We are in 2022, though. And--

SHERROD BROWN: It's hard to lay down. It's hard to lay down on the track when the Republican train loaded up with tax cuts for the rich, is bearing down on you. Because that's what they always do. That's what-- I mean, that's unfortunately-- it used to be more my party. It used to be both parties, at least in the last several years, were pro voting rights and OK on other things. And now they've become a party of denial of civil rights, and all about tax cuts and, we do what we got to do.

ADAM SHAPIRO: The reason I brought that up, though, is there seems to be a shift. I don't know if it's truly happening or not, but people wiser than me talk about it on TV, that the Republican Party appears to be the party that is now championing working men and women in the middle part of the country, rural America, versus the Eastern parts of the country where, for instance, I believe Build Back Better might raise the potential tax cut, the cap, in places like New York.

And we keep hearing the refrain that urban America needs to listen to rural America. I'm curious when we're going to hear the refrain that rural America also needs to listen to urban America. But back to the issue of, do the Republicans-- have they got that now, away from the Democrats, as the party that defends working men and women?

SHERROD BROWN: I was talking to Senator Casey today about something he's trying to fix. And the 2017 tax cut where, as you know Adam, 70-plus percent of the benefits went to the wealthiest 1%. They also took away the tax deduction for union dues.

So an iron worker in Cleveland, or a cement Mason and Cincinnati, or a Carpenter in Columbus might make $65,000, $70,000, $80,000 a year working some overtime. They deduct their union dues of whatever it is. And it saves them a few hundred dollars.

The Republicans took that away. So they're giving huge tax cuts to rich people but took away the deduction of union dues from working class voters and working class taxpayers. So I hear them say they're the party of workers, but I see them as still the party of corporations, and party of tax cuts, and party of Wall Street.

ADAM SHAPIRO: I want to get to the debt ceiling, because there were some words at the hearing regarding that again from ranking member Toomey. Help us understand-- why not just throw out a figure, we need to raise it by this much? And why not do it through reconciliation?

SHERROD BROWN: Well that's the reason that my colleagues and the Democrats aren't doing it through reconciliation. Reconciliation will eat up more and more time. It will take-- the Senate will vote on 20 or 30 things that are literally non-binding, irrelevant kinds of votes to get to it.

Go back two years, in 2019-- Republican president, Republican Senate, Republican House. 45 of my colleagues, including me-- Democrats-- voted to raise the debt ceiling. 45 of us voted to raise the debt ceiling. Because it's bipartisan. It didn't matter that Trump was president-- I was no Trump fan-- or that McConnell was Senate leader. I'm no real McConnell fan either. That doesn't matter. I did it as of 45 of my Democratic colleagues did it, because we knew it was the right thing for the country.

They should do it. We should put it behind us. Let us then work on the bipartisan infrastructure bill-- on implementing it, and getting the money out the door, and do what we need to do, and to bring the price of prescription drugs down, and to extend the child tax credit. The bill that will give 90% of families-- where you used to live, Adam, 90% of families with kids will get at least a $3,000 tax cut-- at least that, depending on the number of kids they have.

Those are the things we should be doing and implementing, not playing around on something that's always been bipartisan until Mitch McConnell decided it wasn't.

ADAM SHAPIRO: When we talk about the debt ceiling, just out today, if Treasury does go ahead and transfer the funds to the highway bill-- I forget the actual name of it. But those funds, we essentially lose the ability to finance the government fully mid-December. Can you confidently tell us that we're going to get a debt ceiling increase before that cut-off?

SHERROD BROWN: I can only repeat that-- I'd like to say, yes absolutely. We've never-- we've always done. it's never-- we've never had the government default. We know that our country's reputation, our country's internal finances and our prosperity depend on it, so does our reputation in the world. I can't believe Mitch McConnell would drive us to that when it's always been bipartisan.

I can't guarantee it. I know that McConnell and Schumer are talking more seriously than they have in the past on this. So I'm very, very hopeful. But I'm not going to say yes and have you play this back in three weeks and say, wrong. So I just can't be absolutely certain.

ADAM SHAPIRO: And one last question for you-- because I know you have to go-- a big discussion about stablecoins and the role they can play going forward. We're going to get the Fed report on these kinds of currencies very soon. What is the committee-- what do you want to see as we move forward with the integration of stablecoins?

SHERROD BROWN: Yeah, we talked about it in committee today-- Yellen, Secretary of Treasury; Powell, Chair of the Federal Reserve; and not in the committee today, but talked to the chair of the Securities Exchange Commission, Gary Gensler. All of us are working on building rules around stablecoins that-- we've seen this movie before-- for a moment, put it in historical context.

Not the same people, but we heard the same arguments about derivatives, about over-the-counter derivatives, about subprime lending, even about payday lending, that, trust us. We'll do this right. Any regulation any rules around this are going to-- are going to stifle innovation. This will be better for the economy. This, in fact, will allow people who don't have banking services now to get access.

Well, it doesn't usually work out that way. And that's why you need rules. And this group of people, not necessarily the same people-- but maybe-- this group of people tanked the economy a decade and a half ago, around the time you left Cleveland was the time that the economy just went south. And it's never the speculators that pay. It's rarely them. It's they. It's never the big banks pay. It's always workers. It's always my zip code in Cleveland that had more foreclosures in '07 than any zip code in the United States. And my job is to protect them.

ADAM SHAPIRO: Appreciate you being here. And just for those who like to play trivia-- what you were just alluding to, the warnings-- Brooksley Born I think was the attorney when we were talking about derivatives back in the late 1990s. But that's another discussion. Senator Brown-- go ahead.

SHERROD BROWN: Nobody listened to her. That's right.

ADAM SHAPIRO: Senator Brown, it is always a pleasure to have you here. And thank you for taking time to speak with us. And just a reminder that Senator Brown is Chairman of the Banking, Housing and Urban Affairs Committee in the US Senate.

SHERROD BROWN: All right.

ADAM SHAPIRO: All the best to you, sir.

SHERROD BROWN: Thanks, everybody. Good to see you.