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Warren urges Powell to recuse from SVB probe, demands answers of ex-bank CEO

Published 03/14/2023, 08:29 AM
Updated 03/14/2023, 11:06 AM
© Reuters. FILE PHOTO: U.S. Senator Elizabeth Warren (D-MA) looks on as Federal Reserve Chair Jerome Powell testifies before a Senate Banking, Housing, and Urban Affairs Committee hearing on the "Semiannual Monetary Policy Report to the Congress", on Capitol Hill in

© Reuters. FILE PHOTO: U.S. Senator Elizabeth Warren (D-MA) looks on as Federal Reserve Chair Jerome Powell testifies before a Senate Banking, Housing, and Urban Affairs Committee hearing on the "Semiannual Monetary Policy Report to the Congress", on Capitol Hill in

By Pete Schroeder

WASHINGTON (Reuters) -Democratic U.S. Senator Elizabeth Warren on Tuesday called on Federal Reserve Chair Jerome Powell to recuse himself from an internal review of recent bank failures, saying his actions "directly contributed" to them.

In a separate letter, Warren pressed ex-Silicon Valley Bank CEO Greg Becker for details on the bank's lobbying in favor of a 2018 law that eased regulations for large regional banks, which she and others have pointed to as contributing to the bank's Friday collapse. She also asked for information regarding any stock sales by executives or bonuses paid out in the months leading up to its failure.

The Federal Reserve said on Monday it is reviewing its oversight of the bank in the wake of its abrupt failure Friday. Warren argued that Powell's prior support for easing bank rules indicates he should not participate in the review. Fed Vice Chairman Michael Barr, who President Joe Biden nominated, is leading that review.

"Fed Chair Powell's actions directly contributed to these bank failures. For the Fed’s inquiry to have credibility, Powell must recuse himself from this internal review," she said in a Twitter post.

"It’s appropriate for Vice Chair for Supervision Barr to have the independence necessary to do his job," said Warren, a Democrat, who has been a sharp critic of Powell.

A Fed representative declined to comment. Becker could not be immediately reached for comment.

In her letter to Becker, Warren demanded details on the bank's lobbying for the law that eased rules for all but the nation's largest banks, noting that he submitted a statement to Congress arguing his firm should receive less regulatory scrutiny since it did not pose a risk to the financial system and had comprehensive internal risk tools.

On Sunday, regulators announced that all depositors, not just insured funds, at the bank would be protected, invoking a "systemic risk exception" to do so. The bank's collapse set off broader turmoil in the banking system, with regulators moving this weekend to reassure depositors and ensure banks can access emergency funding.

© Reuters. FILE PHOTO: Jerome Powell greets Senator Elizabeth Warren (D-MA) before testifying to the Senate Banking, Housing and Urban Affairs Committee on his nomination to become chairman of the U.S. Federal Reserve in Washington, U.S., November 28, 2017.   REUTERS/Joshua Roberts/File Photo

That law raised the threshold at which banks would be considered "systemically important" and subject to stricter oversight from $50 billion to $250 billion. Silicon Valley Bank had $209 billion in assets at the end of last year.

"You have nobody to blame for the failure at your bank but yourself and your fellow executives. You lobbied for weaker rules, got what you wanted, and used this opportunity to abdicate your basic responsibilities to your clients and the public – facilitating a near-economic disaster," she wrote.

Latest comments

In the face of an authoritative demand for accountability, the reactionaries object merely because of who us making the demand. There is a word that describes staking out a position only based on where the other team is: unprincipled.
feel better now? you can get down from your soap box with your hypocritical nonsense
Yes, Bill. Now that you have weighed in I do feel better, like I just took a big dump. Thank you for your service.
yeah let the fed the the fed actions, what a joke. still what is going on with markets is also a joke, a bad 1
Pocahontas Warren is a cl0wn senator at this point. No credibility remains. This was Biden Treasury OCC failure to regulate so Dems want to move spotlight.
Somebody has to ask the questions that haven't been asked. Most won't. Does it really matter if it's someone you don't like?
Stop saving banks if you are not going to regulate them.
I heard the CEO made a major stock sale a few weeks ago
She's not wrong
Jerome is a politics major. It's obvious that basic math is not his strong suit. The gig is up, time for Jerome to buy puts and resign in the same day..
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