Sen. Elizabeth Warren (D-Mass.) said Sunday that Jerome Powell should no longer be chairman of the Federal Reserve following the collapse of two US banks under his supervision earlier this month.
Warren, who has been critical of Powell for years, most recently over his decision to keep raising interest rates to curb inflation, said he was ineffective in carrying out the agency’s mandates.
“He’s had two jobs,” Warren told NBC’s “Meet the Press.” “One is to deal with monetary policy. One is to deal with regulation. He failed at both.”
When asked if she would call on President Joe Biden to replace him, Warren replied, “Look, I don’t think he should be chairman of the Federal Reserve. I’ve said it so publicly if I know how to say it. I’ve told everyone.”
The Fed, which was reportedly aware of the problems at California’s Silicon Valley Bank for at least a year, has launched an investigation into the cause of the bank’s demise. The findings are expected to be published in early May. (BuzzFeed, parent company of HuffPost, banker at SVB.)
Warren also called for Powell to withdraw from the review.
The Democratic senator criticized a 2018 law backed by Powell that repealed parts of the Dodd-Frank Act regulations for medium-sized banks introduced after the 2008 financial crisis, saying it contributed to the collapse of the SVB and the Signature Bank in New York.
Republicans and some Democrats have defended their support for the legislation, which was signed into law by then-President Donald Trump in 2018.
“Jerome Powell just took a flamethrower to the lines, weakened them, weakened them, weakened them, weakened dozens of lines,” said Warren. “And then the CEOs of the banks did exactly what we expected. They took risks that boosted their profits in the short term. They gave themselves huge bonuses and salaries and exploded their banks.”
Now Warren and California Representative Katie Porter (D), along with other Democrats, are calling for those safeguards to be reintroduced.
Biden has also urged Congressional lawmakers to make it easier for regulators to punish executives of bankrupt banks.
“If banks go bankrupt due to mismanagement and excessive risk-taking, it should be easier for regulators to recover executive compensation, impose civil penalties and ban executives from working in the banking industry again,” he said .
Meanwhile, the Fed is expected to announce its next rate decision this week. Powell will hold a press conference on the same day, where he is expected to be questioned about the bankrupt banks.
Warren said the Fed should not raise interest rates any further, adding that Powell also has a responsibility to ensure full employment.
“He has a double mandate,” Warren told NBC’s Chuck Todd. “Yes, he is responsible for dealing with inflation, but he is also responsible for employment.”
Powell, who was first appointed to the Fed’s board of directors by then-President Barack Obama and then nominated by Trump for the role of chairman, was reappointed by Biden in 2021. But Warren voted against him, after calling him “a dangerous man” to run the organization.
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