Sen. Elizabeth Warren, D-Mass., on Tuesday blamed Federal Reserve chair Jerome Powell for triggering the collapse of Silicon Valley and Signature banks — and demanded he recuse himself in an internal review of the failures.
In a tweet, Warren unloaded on Powell, whom she has sharply criticized in the past.
“Fed chair Fed Chair Powell’s actions directly contributed to these bank failures,” Warren tweeted. “For the Fed’s inquiry to have credibility, Powell must recuse himself from this internal review.”
“It’s appropriate for Vice Chair for Supervision [Michael] Barr to have the independence necessary to do his job,” she added.
The Fed said Monday it’s reviewing its oversight of the Silicon Valley Bank in the wake of its abrupt failure Friday, Reuters reported.
Financial markets have been in turmoil since the double collapse — with some conservatives faulting the Biden administration for bailing out a financial sector too willing to take on risky ventures, and some liberals like Warren accusing Washington of weakening regulation.
“Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” Warren wrote Monday in the New York Times.
“They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses.”
The Federal Deposit Insurance Corporation announced Friday it was taking over SVB, putting about $175 billion in customer savings under the control of the federal regulator.
But in a commentary for the Daily Mail, former Vice President Mike Pence said it would still translate into higher fees for any American with a bank account.
“Instead of encouraging dangerous behavior in the private sector, government should allow bad actors to bear the brunt of their bad decisions. We have bankruptcy laws for a reason,” he wrote.
“Bankruptcy is an orderly process that allows a failed business to restructure or be bought out by a solvent competitor – ensuring that the strong survive and the weak fall to the wayside, which is critical for maintaining a functioning free market.”
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