US Senator Elizabeth Warren has called for a “comprehensive and independent investigation into the causes” that led to the failure of Silicon Valley Bank (SVB) and Signature Bank. She alleges that Federal Reserve Chairman Jerome Powell “bears direct responsibility” for regulatory and supervisory issues involving the two banks.
Senator Elizabeth Warren calls for an independent investigation into bank failures
US Senator Elizabeth Warren (D-MA) called for an investigation into the recent collapse of major banks in a March 18 letter to the Treasury Department’s deputy inspector general, the acting inspector general of the Federal Deposit Insurance Corporation ( FDIC) and the Inspector General of the Reserve Board.
“I am writing to ask you to immediately open a thorough and independent investigation into the causes of the bank’s management and regulatory and supervisory problems that resulted in the bankruptcy of Silicon Valley Bank (SVB) and Signature Bank this month and deliver the results. preliminaries within 30 days. ”the Massachusetts senator wrote. Regulators shut down SVB on March 10, while Signature Bank was seized by the New York State Department of Financial Services a couple of days later.
Warren emphasized:
These bankruptcies were extraordinary events: they were the second and third largest bank failures in the nation’s history.
He added that “until the Treasury Department, in consultation with the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), determined they were ‘systemic risk’ and stepped in to guarantee billions of dollars in deposits,” these bankruptcies banks “threaten economic contagion”. and severe damage to the banking and financial systems.”
While noting that “bank executives, who took unnecessary risks or failed to protect themselves against fully foreseeable threats, must be held accountable for these failures,” Warren asserted that “this mismanagement was allowed to happen because of a series of bank failures.” legislators and regulators.”
In addition, he alleged that Congress and former US President Donald Trump “undermined” the Dodd-Frank Act and allowed banks such as Silicon Valley Bank and Signature Bank to “evade key rules and regulations.”
In addition, the lawmaker said the Federal Reserve, under Chairman Jerome Powell, “initiated regulatory rollbacks,” and bank supervisors, particularly the Federal Reserve Bank of San Francisco that oversaw Silicon Valley Bank, “lost or ignored key signs of impending bankruptcy. Warren emphasized: “These regulatory pushbacks created an environment in which failure was inevitable.”
Senator Warren also told inspectors general:
It is also critical that your investigation be completely independent and free from the influence of the bank executives or regulators who were responsible for the actions that led to these bank failures.
“I am particularly concerned that it avoid any interference from Fed Chairman Jerome Powell, who bears direct responsibility for and has a long history of failure related to supervisory and regulatory matters involving these two banks,” it warned.
Furthermore, Warren wrote: “Chairman Powell gagged regulators from any public mention of regulatory failures that occurred on his watch. If these reports were true, they would reveal scandalous and inappropriate interventions by Chairman Powell.”
In an interview with NBC News Sunday, Senator Warren further criticized the Federal Reserve Chairman, stating:
He has had two jobs. One is to deal with monetary policy. One is dealing with regulation. He has failed at both… Look, I don’t think he should be chairman of the Federal Reserve.
Warren also recently blamed the failure of Silvergate Bank on cryptocurrency risks, claiming that Signature Bank collapsed because it adopted cryptocurrency clients without sufficient collateral.
What do you think about Senator Elizabeth Warren calling for an independent investigation into the recent bank failures and holding Fed Chairman Jerome Powell accountable? Let us know in the comments section.
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