(MAINNEWS) – WASHINGTON, 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 (SIVB.O) 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.
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.