Sen. Elizabeth Warren this weekend called on federal officials to investigate the causes of recent bank failures and urged President Joe Biden to fire Federal Reserve Chair Jerome Powell, whom she has criticized for intensifying financial deregulation and imposing job- and wage-destroying interest rate hikes.
Asked on Sunday by Chuck Todd of NBC‘s “Meet the Press” about the possibility of Powell imposing yet another interest rate hike despite ongoing market turmoil, Warren (D-Mass.) said, “I’ve been in the camp for a long time that these extraordinary rate increases that he has taken on, these extreme rate increases, are something that he should not be doing.”
Powell “has a dual mandate,” said Warren. “Yes, he is responsible for dealing with inflation, but he is also responsible for employment. And what Chair Powell is trying to do, and he has said fairly explicitly, is that they are trying to, in effect, slow down the economy so that, this is by the Fed’s own estimate, two million people will lose their jobs. And I believe that is not what the chair of the Federal Reserve should be doing.”
“Raising interest rates doesn’t do anything to solve” a cost-of-living crisis driven primarily by “price gouging, supply chain kinks, [and] the war in Ukraine,” Warren said Sunday. “All it does is put millions of people out of work.”
Powell, an ex-investment banker, was first appointed by then-President Donald Trump in 2018 and reappointed by Biden in 2021. Warren noted that she opposed Powell’s nomination in both cases “because of his views on regulation and what he was already doing to weaken regulation.”
“But I think he’s failing in both jobs, both as the oversight and manager of these big banks, which is his job, and also what he’s doing with inflation,” said Warren.
Asked by Todd if Biden should fire Powell, Warren said: “My views on Jay Powell are well-known at this point. He has had two jobs. One is to deal with monetary policy, one is to deal with regulation. He has failed at both.”
“Would you advise President Biden to replace him?” Todd inquired.
“I don’t think he should be Chairman of the Federal Reserve,” the Massachusetts Democrat responded. “I have said it as publicly as I know how to say it. I’ve said it to everyone.”
Meanwhile, in a Saturday letter, Warren asked Richard Delmar, Tyler Smith, and Mark Bialek—respectively the deputy inspector general of the Treasury Department, acting inspector general of the Federal Deposit Insurance Corporation (FDIC), and inspector general of the Fed’s board of governors—to “immediately open a thorough, independent investigation of the causes of the bank management and regulatory and supervisory problems that resulted in this month’s failure of Silicon Valley Bank (SVB) and Signature Bank (Signature) and deliver preliminary results within 30 days.”
Until the Treasury Department, the Fed, and the FDIC “intervened to guarantee billions of dollars of deposits,” the second- and third-biggest bank failures in U.S. history “threatened economic contagion and severe damage to the banking and financial systems,” Warren noted. “The bank’s executives, who took unnecessary risks or failed to hedge against entirely foreseeable threats, must be held accountable for these failures.”
“But this mismanagement was allowed to occur because of a series of failures by lawmakers and regulators,” Warren said.
“I have already asked Chair Powell to recuse himself from the Fed’s internal investigation of this matter, but he has not yet responded to this request,” stated Warren. The progressive lawmaker said “this silence is troubling” in light of recent reporting that “as officials sought to develop a plan responding to SVB’s failure, Chair Powell muzzled regulators from any public mention of the regulatory failures that occurred under his watch.”
“Bank regulators and Congress must move quickly to close the gaps that allowed these bank failures to happen, and your investigation will provide us important insight as we take steps to do so,” added Warren, who has introduced legislation to repeal a vital provision of the Trump-era bank deregulation law enacted five years ago with bipartisan support.