Sen. Warren says Fed’s Powell should recuse himself from bank review : NPR

Senator Elizabeth Warren questions Treasury Secretary Janet Yellen and Federal Reserve Chairman Powell during the Senate Banking, Housing and Urban Affairs Committee hearing on Sept. 28, 2021 in Washington, DC.

Kevin Deitch/Getty Images

hide caption

toggle caption

Kevin Deitch/Getty Images

Senator Elizabeth Warren questions Treasury Secretary Janet Yellen and Federal Reserve Chairman Powell during the Senate Banking, Housing and Urban Affairs Committee hearing on Sept. 28, 2021 in Washington, DC.

Kevin Deitch/Getty Images

Banks across the country are assuring their customers that they won’t go bankrupt like Silicon Valley Banks and Signature Banks. Massachusetts Democratic Senator Elizabeth Warren has said Congress and the Federal Reserve are to blame for the bank failure.

“Remember, after the crash of 2008, we understood that unless we put some pretty tight regulation on these big banks, they would take a lot of risk and boost their profits.” Warren told NPR’s Leila Fadell morning paper.

“Then in 2018, Republicans under Donald Trump said no, we need to loosen regulations,” Warren said. “And they, with the help of Democrats, finally passed a bill that rolled back such protections for banks with more than $50 billion and less than $250 billion.

“And we certainly saw the results over the weekend,” said Warren.

In March 2018, 16 Democrats joined Republicans in a 67-31 vote to pass economic growth, deregulation and consumer protection laws. Warren voted against the bill, and Senate Majority Leader Chuck Schumer said on Tuesday the Senate would investigate what caused the bank failure.

“Had the damage spread throughout the financial system, the deposits and savings of tens of millions of families and small businesses could have been at serious risk,” Schumer said on the Senate floor. “[T]Americans can be confident that banking regulators are acting quickly and doing everything they can to protect consumers. In the coming days and weeks, Congress will take a closer look at what prompted the crackdown on Silicon Valley banks and how to prevent similar events in the future. ”

Bernie Frank, a former congressman and former signatory bank officer, told NPR’s Juana Summers yesterday that these bank failures happened because of crypto, not because of the Dodd-Frank Act rollback. .

Warren disagreed, saying, “In both cases, we were taking risks to make a profit.”

“It’s not just Congress. It’s also the Fed that has intervened.”

The Fed on Monday announced a review of the SVB’s supervision and regulation after its takeover by financial regulators led to the largest bank failure since the 2008 financial crisis.

“Look, for this investigation to be credible, (Jerome) Powell would have to step down.” He led the charge.He not only eased regulations, he did more than some people thought the law allowed.”

“You know, this is one of the reasons I opposed his re-nomination as Fed chairman. I thought this was a very risky move on his part.”

For those with smaller local banks, Warren says there’s no need to worry.

“He said the federal government was going to step in and make sure depositors were protected. should be changed to prevent this problem from happening again.

Speaking on the Senate floor late Tuesday, Warren stressed that Congress and the Federal Reserve need to re-enforce strict rules on financial institutions to prevent future bank ruin. I continued.

“If Congress and the Federal Reserve had done their job and exercised strong oversight of the big banks, the bank failures we experienced this weekend could have been avoided entirely,” she said. “And now we must act quickly to prevent the next crisis by repealing the dangerous Trump-era provisions that have undermined the banks.”

Federal regulators are about to put up for auction nearly $200 billion in assets held by Silicon Valley Banks. Federal Deposit Insurance Corporation officials say any deposit support that isn’t available from insurance funds or asset auctions will rely on special bank assessments, or taxes that are inherently borne by most banks.

Oklahoma Republican Senator James Lankford said Tuesday that the special assessment is a “back door tax increase” for all Americans because the money is coming from all US banks. ‘s hometown bank and “local towns are trying to pay a special rate to be able to bail out a San Francisco billionaire.”

“Listen, I don’t want to see the contagion to the banks either, but let’s be honest, what’s really going on is a backdoor tax increase for all Americans, just not using the IRS,” Ranks said. Mr Ford said. “We use Community Bank to quickly charge higher fees to banks across the country, but they know it means higher fees for people who are members of the bank. It is a method to be done.”

There is currently nothing prohibiting banks from collecting valuations by charging their customers.

The digital story was edited by Heidi Glenn, Padmananda Rama and Majid Al Wahaidi. NPR Business his reporter Bobby Allyn contributed to this report.