Fed chair says bank accounts 'safe' despite Trump's teardown of consumer protection agency

WASHINGTON (AP) — Americans’ bank accounts are safe despite the Trump administration's shutdown of a consumer financial regulatory agency, Federal Reserve Chair Jerome Powell said Tuesday.

Powell, testifying before the Senate Banking Committee, said “bank accounts overall across the economy are safe” and backed by government deposit insurance. Powell's comments followed partisan comments from Republican and Democratic senators regarding the Trump administration's order over the weekend for the Consumer Financial Protection Bureau to end all of its supervisory and rule-making work.

Sen. Elizabeth Warren, a Democrat from Massachusetts who pushed for its creation of the CFPB in the wake of the 2008 financial crisis and recession, said, "I’d be really worried about doing business with a giant bank when there’s no cop on the beat.”

Powell, meanwhile, received little scrutiny from senators about the Fed's interest-rate policy, which has contributed to higher borrowing costs but has also been credited for helping bring down inflation.

And while several senators flagged the spike in inflation that followed the pandemic, Powell faced little questioning about when the Fed believes it could return inflation — now at 2.6%, according to the Fed's preferred measure — to its 2% target.

Sen. John Kennedy, a Republican from Louisiana, praised Powell and the Fed for bringing down inflation from a 7.2% peak in June 2022. Kennedy noted that many economists had forecast that the Fed’s steep rate hikes in 2022 and 2023 would cause a recession. Yet, instead, the economy has continued to expand.

“The fact is, knock on wood, we have experienced a soft landing,” Kennedy said. Fed officials “deserve credit” for that, he added.

Powell largely sought to avoid responding when asked about the potential impact of additional tariffs, which President Donald Trump has proposed, on inflation and the Fed's key rate, which is currently at about 4.3%, down from a two-decade high of 5.3% last year.

Powell instead underscored his previous comments that with the economy generally healthy the Fed can afford to wait and see how the economy evolves and whether tariffs affect growth and inflation before making any further rate cuts. The Fed cut its key rate three times last year, but last month left it unchanged.

"We do not need to be in a hurry to adjust our policy stance,” Powell said in the first of two days of testimony on Capitol Hill.

Powell was quickly thrust into the partisan turmoil surrounding Trump’s flurry of executive orders and the efforts of billionaire Elon Musk, through the Department of Government Efficiency, to slash government programs.

Warren, who repeatedly referred to “co-president Musk,” also urged Powell to maintain the Fed’s support for the CFPB, which gets its funding from the Fed.

“Do not make the Federal Reserve an accomplice to this illegal act, and forever sully the reputation of the Fed,” Warren said.

Republican senators, however, downplayed the impact of dismantling the CFPB. The bureau has sought to cap overdraft fees, ban junk fees, and says it has returned $20 billion to consumers since its inception.

Sen. Pete Ricketts, a Republican from Nebraska, said that state agencies can still provide consumers with regulatory protections.

“To say that nobody is out there looking after consumers is inaccurate and we ought not to try and scare consumers right now,” Ricketts said.

The Fed Chair also said the central bank has launched a second review of its policy strategies and its communications tools. Powell reiterated that the review would not focus on whether to change its 2% inflation target, which some economists argue is too low. Powell has repeatedly said that the Fed shouldn’t change the target while it is still struggling to get inflation down to 2%.

After the Fed’s last policy review in 2019, it said it would seek inflation that averaged 2% over time. Some economists have argued that the change led the Fed to react too slowly to the inflation spike in 2021 and 2022. The Fed didn’t begin raising its key interest rate until March 2022. Rate hikes are intended to slow borrowing and spending to cool inflation.

Last week, comments by many Fed officials — as well as a decline in the unemployment rate — suggested the odds of a rate cut anytime soon have dwindled.

Fewer cuts could translate into a longer period of elevated mortgage rates and higher costs to borrow money for everything from autos to credit cards. Still, mortgage rates are closely tied to the yield on the 10-year Treasury note, which can move independently of the Fed's actions.

Last Friday, Fed governor Adriana Kugler said that the labor market was “stable” and that “gives us a little bit of time to make some decisions.”

“The cautious and the prudent step is to hold the (Fed's key) rate where it is for some time,” Kugler said.

The government said last Friday that employers added a solid number of jobs last month while the unemployment rate ticked down for the second straight month to 4%, historically quite low. Hiring in November and December was revised much higher.

The jobs report “bolsters our confidence that the Fed cutting cycle is over,” economists at Bank of America wrote in a note Friday.

Federal Reserve Chair Jerome Powell speaks to the Senate Banking Committee, Tuesday, Feb. 11, 2025, on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)

Federal Reserve Chair Jerome Powell takes his seat to speak to the Senate Banking Committee, Tuesday, Feb. 11, 2025, on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)

Federal Reserve Chair Jerome Powell speaks to the Senate Banking Committee, Tuesday, Feb. 11, 2025, on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)

FILE - The Marriner S. Eccles Federal Reserve Board Building, June 19, 2015, in Washington. (AP Photo/Andrew Harnik, File)

Federal Reserve Chairman Jerome Powell speaks during a news conference after the Federal Open Market Committee meeting, Wednesday, Jan. 29, 2025, at the Federal Reserve in Washington. (AP Photo/Jacquelyn Martin)

Federal Reserve Chairman Jerome Powell walks out after holding a news conference following the Federal Open Market Committee meeting, Wednesday, Jan. 29, 2025, at the Federal Reserve in Washington. (AP Photo/Jacquelyn Martin)

MELBOURNE, Australia (AP) — McLaren’s Lando Norris has won a chaotic rain-affected Australian Grand Prix, his first at Albert Park, with the Brit just managing to stay ahead of Red Bull’s Max Verstappen following a third safety car late in Sunday's race.

Lewis Hamilton had a miserable Ferrari debut. The seven-time champion finished 10th and was annoyed by constant radio messages from his pit team.

Norris started the wet race, Melbourne’s first since 2010, from pole position. But, while he initially came under increasing pressure from Piastri, who set a series of fastest laps until his papaya team told him to hold position, the Australian spun at the penultimate corner on lap 44 with intensifying rain and dropped down the order - with a late race fightback to ninth, nabbing two points.

Red Bull’s Max Verstappen finished second — 0.895 of a second behind Norris — after starting from third on the grid, and took advantage of Piastri’s misfortune and the final safety car and stops. Mercedes’ George Russell closed out the top-three.

The Melbourne race had a thrilling start with Racing Bull’s Isack Hadjar out on the formation lap, and Alpine’s Jack Doohan and Williams’ Carlos Sainz — who won here last year driving for Ferrari — crashing out on the opening lap.

There were just 14 finishers, after Aston Martin’s Fernando Alonso hit the turn eight barriers on lap 34, while Red Bull’s Liam Lawson and Sauber’s Gabriel Bortoleto went into the barriers and out of the race 10 laps from home in treacherously wet conditions at the Albert Park circuit.

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Red Bull driver Liam Lawson of New Zealand spins off the circuit during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Scott Barbour)

Ferrari driver Charles Leclerc of Monaco steers his car during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Scott Barbour)

Red Bull driver Liam Lawson of New Zealand stands by his car after crashing during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Scott Barbour)

Mercedes driver Kimi Antonelli of Italy steers his car during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Asanka Brendon Ratnayake)

McLaren driver Lando Norris, right, of Britain and Red Bull driver Liam Lawson of New Zealand complete to get out of turn two during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Asanka Brendon Ratnayake)

Ferrari driver Lewis Hamilton of Britain steers his car during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Asanka Brendon Ratnayake)

McLaren driver Lando Norris of Britain talks with Zak Brown, McLaren team chief, after winning the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Scott Barbour)

McLaren driver Lando Norris of Britain waves to the crowd after winning the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Heath McKinley)

Aston Martin driver Fernando Alonso of Spain steers his car during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Scott Barbour)

McLaren driver Lando Norris of Britain leads teammate Oscar Piastri of Australia during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Scott Barbour)

Williams driver Carlos Sainz of Spain's car is taken from the track after he crashed during the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Asanka Brendon Ratnayake)

McLaren driver Lando Norris of Britain leads the field into turn two at the start of the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Asanka Brendon Ratnayake)

Team RB driver Isack Hadjar of France is assisted by a track marshal after his car hit a wall on the formation lap ahead of the Australian Formula One Grand Prix at Albert Park, in Melbourne, Australia, Sunday, March 16, 2025. (AP Photo/Asanka Brendon Ratnayake)