Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, on Tuesday gave new Federal Reserve Chairman Jerome Powell a mostly favorable review after Powell's first public remarks before Congress.
"I was very happy to greet Chairman Powell," Hensarling told CNBC's "Power Lunch" after Powell testified before his committee. "I think he presented as a person who is obviously smart and knowledgeable and a steady hand."
Powell's outlook for the economy was generally positive in his testimony, downplaying recent volatility concerns. He cited a strong job market, increased consumer spending and rising wages as reasons to be optimistic. Much like his predecessor, Janet Yellen, Powell said he plans to continue gradually raising interest rates.
"If there is ever a time to unwind the balance sheet, it's in a good economy," said Hensarling, who was first elected to Congress in 2002. "Now is a good time to do it."
In Hensarling's opening statement Tuesday he said, "The Fed must commit to a credible, orderly and well-communicated normalization policy," all of which impacts interest rates and the Fed's balance sheet.
The congressman said Powell did achieve that in his remarks "in part," but Hensarling still had "concern" over the flexibility of caps on the Fed's balance sheet.
"I don't think I got a really credible answer on the composition of the balance sheet," Hensarling said, and pointed out that right now it's roughly two-thirds Treasury, one-third mortgage-backed securities.
"What we won't hear again is monetary policy that's most predictable," Hensarling said. "People need to know what the value of their money is supposed to be. Capital needs to go to where it can most be utilized the best."
With its current balance sheet, which Powell predicted would end up in the $2.5 trillion range — greater than the pre-crisis level — the Fed has "immense power," Hensarling said.
"I'm not sure that you can have a balance sheet that size that doesn't have the Fed have a larger footprint in the economy that ultimately may be healthy," he said.
Hensarling said he looks forward to meeting with Powell for a longer dialogue on these issues.