Sen Warren Calls for Limiting Bank Backstops as She Continues to Hammer Fed Chair
Also Powell “doing a really terrible job” as Fed chair, Senate Banking committee member adds
A prominent member of the Senate Banking, Housing and Urban Affairs Committee is looking to cap bank backstops on huge accounts, in the wake of the failure of Silicon Valley Bank (SVB) and the spate of other bank troubles in recent weeks.
Meanwhile, the same senator, one-time presidential candidate Elizabeth Warren (D-Mass), continued her crusade against Federal Reserve Chair Jerome Powell.
The health of the nation's — and the world's — banking system, as well as the regulation of that system, has come under intense scrutiny since SVB failed earlier this month, prompting the Biden administration to step in and guarantee deposits beyond the currently mandated $250,000 Federal Deposit Insurance Corporation (FDIC) cap.
Other banks, such as Signature Bank and even the international Credit Suisse, have also run into trouble recently, causing a broader look at how banking regulations are done.
“There’s got to be a cap somewhere. Somebody can’t, quote, ‘deposit’ a billion dollars, get a special deal from the bank and still get backed up by taxpayers that they’ll get their money back if the bank fails,” Warren said in an on-camera interview with Fox Business. “That’s not going to cut it.”
Meanwhile, Warren is continuing her campaign against Powell, the incumbent Fed chair after the two tangled this month when Powell testified that 2 million Americans might be pushed into joblessness to better control inflation.
“Chair Powell, if you could speak directly to the 2 million hardworking people who have decent jobs today who you’re planning to get fired over the next year, what would you say to them? How would you explain your view that they need to lose their jobs?” Warren asked at the time.
Nothing has changed to improve Warren's view of Powell, a Republican first nominated to lead the central bank by Donald Trump and renominated to a second term by President Biden. Powell was confirmed to that second, four-year term just last year.
“So, I’m not going to talk about private conversations, but what I will say is I’ve made it very clear, as publicly, as humanly possible, that I didn’t think that he should be reconfirmed as chair of the Fed. And I think he’s doing a really terrible job,” Warren said Wednesday. “And he’s doing a terrible job on both fronts. Remember, there are two — only two — jobs for the Federal Reserve chair. One is monetary policy, inflation. I think he’s doing a very bad job there, and it’s risking pushing our economy into a recession. His other job is regulatory oversight. And he has spent five years weakening regulations over these multibillion-dollar banks.
“I predicted five years ago, the consequence of that kind of weakening would be that we would see these banks load up on risk, build their short-term profits, give themselves ginormous bonuses and big salaries, and then some of those banks will explode. And that is exactly what has happened on Chair Powell’s watch,” Warren added, during an on-camera appearance on CNN.
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