US Senator calls for investigation into bank failures – says Fed Chair Powell ‘has direct responsibility’ – Economics
US Senator Elizabeth Warren has called for a “thorough, independent investigation into the causes” that led to the failure of the Silicon Valley Bank (SVB) and Signature Bank. It claims that Federal Reserve Chair Jerome Powell has “direct responsibility” for regulatory and supervisory issues affecting the two banks.
Senator Elizabeth Warren calls for independent investigation into bank failures
U.S. Senator Elizabeth Warren (DMA), in a March 18 letter to the Assistant Inspector General of the Treasury Department, the acting Inspector General of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, called for an investigation into the recent collapse of large banks.
“I am writing to request that you promptly launch a thorough, independent investigation into the root causes of the bank’s management and regulatory and regulatory issues that led to the failure of Silicon Valley Bank (SVB) and Signature Bank this month, and within 30 days to submit preliminary results,” the Massachusetts senator wrote. SVB was shut down by regulators on March 10, while Signature Bank was seized by the New York State Department of Financial Services a few days later.
Warren emphasized:
These bankruptcies were exceptional events: they were the second and third largest bank failures in the country’s history.
She added that “until the Treasury Department, in collusion with the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), identified them as a ‘systemic risk’ and intervened to guarantee billions of dollars in deposits,” these bank failures “posed the threat of economic contagion and… severe damage to the banking and financial system.”
While noting that “bank executives who took unnecessary risks or failed to hedge against fully foreseeable threats must be held accountable for those failures,” Warren asserted that “this mismanagement is due to a series of failures approved by legislators and regulators.”
She further claimed that Congress and former US President Donald Trump had “weakened” the Dodd-Frank Act, allowing banks like Silicon Valley Bank and Signature Bank to “circumvent key rules and regulations.”
In addition, lawmakers said the Federal Reserve under Chairman Jerome Powell was “initiating regulatory rollbacks” and bank regulators, particularly the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, were “giving critical signals of imminent collapse.” missed or ignored. Warren emphasized, “These regulatory rollbacks created an environment where failure was inevitable.”
Senator Warren also told the inspectors general:
It is also important that your investigation be completely independent and free from the influence of the bank boards or regulators responsible for the actions that led to these bank failures.
“I am particularly concerned that you avoid any interference from Fed Chair Jerome Powell, who has direct responsibility for regulatory and supervisory matters affecting these two banks and who has a long track record of failures,” she warned.
In addition, Warren wrote: “Chairman Powell has muzzled regulators to prevent any public mention of the regulatory failures that have occurred under his oversight. If these reports were true, they would expose outrageous and inappropriate interventions by Chair Powell.”
In an interview with NBC News on Sunday, Senator Warren further slammed the Federal Reserve chairman, stating:
He had two jobs. One of them is monetary policy. One of them is regulation. He failed at both… Look, I don’t think he should be Chairman of the Federal Reserve.
Warren also recently blamed crypto risks for the failure of Silvergate Bank, claiming that Signature Bank collapsed because it accepted crypto customers without adequate safeguards.
What do you think of Senator Elizabeth Warren calling for an independent investigation into the recent bank failures and holding Fed Chair Jerome Powell accountable? Let us know in the comment section below.
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Source: Crypto News Deutsch
