Democratic Senator Elizabeth Warren blamed Federal Reserve Chair Jerome Powell on Sunday for allegedly taking a “flamethrower” to regulations in the financial and banking system during the Trump administration.
“Donald Trump ran for president saying he would lighten the regulations on these banks,” Warren said during an interview on CBS’s Face The Nation. “And then Jerome Powell just literally took a flamethrower to these regulations, in order to make them less and less effective.”
Warren is a member of the committees on banking and finance in the Senate.
“Jerome Powell has said that all he wants to do is lighten regulations on the banks,” Warren said. “I opposed him as chairman of the Federal Reserve Bank precisely for that reason.”
Warren’s comments come after the collapse of Silicon Valley Bank, which has sent the financial industry into a frenzy. High net-worth depositors, composed of many start-ups in the tech and crypto business, made a panicked bank run on SVB after the news leaked that it was rushing to raise equity capital, sending the bank into a tailspin.
The Federal Reserve has come under fire for its role in the blow-up, namely in disrupting banking stability by raising interest rates in response to towering inflation.
Defenders of the Fed have argued the central bank is only responsible for a dual mandate of price stability and low unemployment rather than financial regulating, for which there is an entire apparatus dedicated in the government, from the Comptroller of the Currency to the FDIC to the Treasury.
Critics of the Fed, however, have said the institution should have been more attuned to interest rate risk, of which there have many historical episodes of disaster. Some also criticize the Fed for enabling SVB’s failure by maintaining a zero-interest-rate environment for so many years.
Warren and other Democrats have urged that the Fed and big financial actors be held liable for the fallout of SVB.
“We need accountability for our regulators who clearly fell down on the job, and that starts with Jerome Powell,” Warren said. “And we need accountability for the executives of these large financial institutions.”