Published: March 19, 2023 at 7:05 PM ET
Senator Elizabeth Warren is calling for an independent investigation into the Federal Reserve and “the entire regulatory system” following the banking sector’s worst crisis in more than a decade.
On Sunday, the Massachusetts Democrat told ABC News’ This Week that the chaos of the past few weeks — in which three U.S. banks failed, sending financial markets, especially bank stocks, into extreme volatility — was predictable after the financial crisis. During the Trump administration, era banking rules were relaxed.
“What…
Senator Elizabeth Warren is calling for an independent investigation into the Federal Reserve and “the entire regulatory system” following the banking sector’s worst crisis in more than a decade.
On Sunday, the Massachusetts Democrat told ABC News’ This Week that the chaos of the past few weeks — in which three U.S. banks failed, sending financial markets, especially bank stocks, into extreme volatility — was predictable after the financial crisis. During the Trump administration, era banking rules were relaxed.
“What happened was exactly what we should have predicted, which is the banks, these big multi-billion dollar banks, brimming with risk; they increased their profits in the short term; they gave themselves huge bonuses and high salaries; and they blew up their couches,” Warren said, according to an ABC News transcript.
Also see: What’s at stake for stocks, bonds as the Federal Reserve weighs banking chaos against inflation struggles
Warren called on the Fed to “undo the weakened regulation now” and look at banks “with much more supervision.” She also called on Congress to reverse the Fed’s ability to weaken regulation and to hold bank CEOs accountable, including recovering compensation.
“If you blow up a bank, you should be banned from banking forever,” she said.
More: Fed had expressed concerns about Silicon Valley Bank for years: reports
Warren repeated her calls on NBC News’ “Meet the Press” on Sunday, saying: “[The] Fed should not just examine itself. I want us to change the laws.”
Warren said that while government intervention has eased some concerns, others remain.
“I think it’s fair to say that savers should be able to take a pretty deep breath,” Warren said, according to an NBC News transcript. “The federal government has indicated that there will be a lot of protection for you. But we should be concerned about how much risk these multibillion-dollar banks pose, because it is quite clear that these regulators were asleep in the switch.”
Warren, who had previously criticized the Fed’s sharp rate hikes, again called on Fed Chairman Jerome Powell to end it: “These extreme rate hikes are something he shouldn’t be doing.”
“I think he fails at both jobs,” Warren said of Powell, “both as a supervisor and manager of these big banks, which is his job, and also what he does with inflation.”
Read more: What it takes to calm the jitters in the banking sector: time and a rate hike by the Fed
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