Photo: Andrew Caballero-Reynolds/AFP/Getty Images
Political wrangling in the US following the collapse of the Silicon Valley bank continued on Sunday as left-leaning Senator Elizabeth Warren appeared on morning talk shows, repeatedly calling for an independent investigation into US bank failures and slamming Federal Reserve Treasury officials .
The progressive Massachusetts Democrat, who positions herself as a consumer protection advocate and harsh critic of the US banking system, told CBS’s Face the Nation that she has no confidence in San Francisco Federal Reserve Chair Mary Daly or the chair the Fed, Jerome Powell.
“We need accountability for our regulators, which have clearly failed at the job,” Warren said, adding that it “starts with” Federal Reserve Chair Jerome Powell, who she said “was a dangerous man in that position.” “.
“Remember that the Federal Reserve Bank and Jerome Powell are ultimately responsible for the oversight and supervision of these banks. And they have made it clear that they believe it is their job to relax regulations on these banks. We’ve seen the consequences now,” Warren added.
When asked if she had “trust” in Daly, who was responsible for SVB, Warren said flatly, “No, I don’t.”
After the collapse of Silicon Valley and Signature banks, the former presidential candidate has launched a broad offensive in recent days against politicians left and right who supported the deregulation of smaller US banks during the Trump era.
Warren sent a letter to the inspectors general of the US Treasury, the Federal Deposit Insurance Corp (FDIC) and the Federal Reserve, urging regulators to investigate recent management and oversight of the banks that collapsed earlier this month.
Last week, Warren introduced legislation that would repeal that law and increase “stress tests” for “too big to fail” banks from $50 billion to $250 billion. On Sunday, Warren also advocated increasing federal guarantees on consumer deposits above the current $250,000.
“Is it $2 million? Is it $5 million? Is it $10 million? Small businesses need to be confident that they’re getting money to pay their payroll and utility bills,” Warren said. “These are not people who can examine the safety and soundness of their individual banks. That is the job of the regulators.”
Expanding on her criticism of NBC’s Meet the Press, Warren called for a halt to rate hikes when central bankers meet next week and claimed Powell was pushed by Congress to back deregulation in 2018.
“You see, my views on Jay Powell are well known at this point. He had two jobs. One of them is monetary policy. One of them is regulation. He failed at both,” she said.
US prosecutors are investigating the SVB’s collapse, a source familiar with the matter told Reuters last week, after the $212 billion bank collapsed as depositors rushed out their money.
A blame game broke out, with some arguing that the bank’s apparent lack of proper risk management combined with deregulation and sharp interest rate hikes had created an accident waiting to happen.
US banks have lost around half a trillion dollars in value since then. On Friday, President Joe Biden promised that bank customers’ deposits were safe and that the crisis had calmed down.
In Warren’s letter, released Sunday, the senator also called for executives at the failed banks to be held accountable.
“Bank executives who took unnecessary risks or failed to hedge against fully foreseeable threats must be held accountable for those failures,” Warren said. “But this mismanagement was allowed to happen because of a series of failings by lawmakers and regulators.”