U.S. Senator Elizabeth Warren has actually called for a “thorough, independent investigation of the causes” that resulted in the failure of Silicon Valley Bank (SVB) and Signature Bank. She declares that Federal Reserve Chairman Jerome Powell “bears direct responsibility” for regulative and supervisory concerns including the 2 banks.
Senator Elizabeth Warren Calls for Independent Investigation Into Bank Failures
U.S. Senator Elizabeth Warren (D-MA) called for an investigation into the current collapse of significant banks in a March 18 letter to the Treasury Department’s deputy inspector general, the Federal Deposit Insurance Corporation (FDIC)’s acting inspector general, and the Federal Reserve Board’s inspector general.
“I am writing to ask that you 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 and deliver preliminary results within 30 days,” the senator from Massachusetts composed. SVB was shut down by regulators on March 10 while Signature Bank was taken by the New York State Department of Financial Services a number of days later on.
These failures were remarkable occasions: they were the 2nd- and third-largest bank failures in the country’s history.
She included that “until the Treasury Department, in consultation with the Federal Reserve and Federal Deposit Insurance Corporation (FDIC), determined them to be ‘systemic risk’ and intervened to guarantee billions of dollars of deposits,” these bank failures “threatened economic contagion and severe damage to the banking and financial systems.”
While keeping in mind that “The bank’s executives, who took unnecessary risks or failed to hedge against entirely foreseeable threats, must be held accountable for these failures,” Warren claimed that “this mismanagement was allowed to occur because of a series of failures by lawmakers and regulators.”
She even more declared that Congress and previous U.S. President Donald Trump “weakened” the Dodd-Frank Act and enabled banks like Silicon Valley Bank and Signature Bank “to evade key rules and regulations.”
In addition, the legislator stated the Federal Reserve under Chair Jerome Powell “initiated regulatory rollbacks,” and the banks’ managers, especially the Federal Reserve Bank of San Francisco that managed Silicon Valley Bank, “missed or ignored key signals about the impending failure.” Warren highlighted: “These regulatory rollbacks created an environment in which failure was inevitable.”
Senator Warren furthermore informed inspectors basic:
It is also important that your investigation be totally independent and without impact from the bank executives or regulators that were accountable for action that resulted in these bank failures.
“I am particularly concerned that you avoid any interference from Fed Chair Jerome Powell, who bears direct responsibility for — and has a long record of failure involving — regulatory and supervisory matters involving these two banks,” she warned.
Moreover, Warren composed: “Chair Powell muzzled regulators from any public mention of the regulatory failures that occurred under his watch. If these reports were true, they would reveal outrageous and inappropriate interventions by Chair Powell.”
In an interview with NBC News Sunday, Senator Warren even more knocked the Federal Reserve chairman, mentioning:
He has actually had 2 tasks. One is to handle financial policy. One is to handle guideline. He has actually stopped working at both … Look, I don’t believe he must be chairman of the Federal Reserve.
Warren also just recently blamed Silvergate Bank’s failure on crypto dangers and declared that Signature Bank collapsed due to the fact that it welcomed crypto customers without adequate safeguards.
What do you think of Senator Elizabeth Warren calling for an independent investigation into current bank failures and holding Fed Chair Jerome Powell liable? Let us understand in the comments area below.
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