US political fallout from the collapse of Silicon Valley Bank continued on Sunday as left-leaning Senator Elizabeth Warren hit the morning talk shows, repeatedly calling for an independent investigation into US bank failures and heavily criticizing Federal Reserve finance officials.
The progressive Democrat from Massachusetts, who has positioned herself as a consumer protection advocate and sharp critic of the American banking system, told CBS’s Face the Nation that she did not trust San Francisco Federal Reserve President Mary Daly or Fed Chairman Jerome Powell.
“We need accountability for our regulators, who clearly failed on the job,” Warren said, adding that it “starts with” Federal Reserve Chairman Jerome Powell, who she said “was a dangerous man to have in this position.” .
“Remember, the Federal Reserve Bank and Jerome Powell are ultimately responsible for the supervision and oversight of these banks. And they’ve made it clear that they believe their job is to ease the regulations on these banks. We’ve now seen the consequences,” Warren added.
Asked if she had “faith” in Daly, under whose jurisdiction SVB fell, Warren flatly said: “No, I don’t.”
In the wake of the collapse of Silicon Valley and Signature banks, the one-time presidential candidate has launched a broad offensive in recent days against politicians on both the left and right who supported Trump-era deregulation of smaller US banks.
Warren sent one letter to the inspectors general of the U.S. Treasury Department, 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 unveiled legislation that would repeal that law and raise “stress tests” on “too big to fail” banks from $50 billion. to $250 billion. On Sunday, Warren also argued for raising 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 able to count on getting their money to make payroll, to pay the utility bills,” Warren said. “It’s not people who can examine the safety and soundness of their individual banks. That’s the job the regulators have to do.”
Expanding on her criticism on NBC’s Meet the Press, Warren called for a halt to rate hikes when central bankers meet next week and claimed Powell was pressured by Congress to support deregulation in 2018.
“Look, my view of Jay Powell is well known at this point. He’s had two jobs. One is dealing with monetary policy. One is dealing with regulation. He’s failed at both,” she said.
U.S. prosecutors are probing the SVB collapse, a source familiar with the matter told Reuters last week, after the $212 billion bank collapsed as depositors rushed to withdraw their money.
A blame game erupted, with some arguing that the bank’s apparent lack of adequate risk management, combined with deregulation and sharp interest rate hikes, had created an accident waiting to happen.
American banks have since lost about half a trillion dollars in value. On Friday, President Joe Biden promised that bank customers’ deposits are safe and that the crisis had calmed down.
In Warren’s letter, published Sunday, the senator also called for the leaders of the troubled banks to be held accountable.
“The bank’s executives, who took unnecessary risks or failed to hedge against entirely foreseeable threats, must be held accountable for these failures,” Warren said. “But this mismanagement was allowed to occur because of a series of mistakes by lawmakers and regulators.”
