The collapse of the Silicon Valley Bank (SVB) and the turmoil in the banking industry provide Sen. Elizabeth Warren (D-Mass.) with a moment to return to the spotlight.
And Warren, who rose to prominence as a consumer protection advocate and long made headlines for hammering banks, is seizing this opportunity.
Over the past week, the progressive and former presidential candidate from Massachusetts has launched a wide-ranging offensive.
She unveiled legislation to repeal a 2018 deregulation bill signed by former President Trump that raised the threshold for banks subject to federal scrutiny from $50 billion to $250 billion.
A constant presence on cable news, with more appearances for this weekend’s Sunday show circuit, she penned an op-ed in The New York Times and has pressured former SVB CEO Greg Becker to lobby for regulation to be rolled back in 2018.
For a number of Senate Democrats, she is an invaluable voice on this issue.
“Very important,” Sen. Bob Casey (D-Pa.), a supporter of Warren’s new banking proposal, told The Hill. “Not only does she have a great dedication to consumers and families, she has a lot of expertise more generally and is a great messenger and advocate on these issues.”
But Warren’s persistent criticism is about to give President Biden and other Senate Democrats a headache, especially those who voted for the 2018 rollback and are up for re-election in 2024.
A total of 12 sitting senators who consulted with Democrats voted for the bill — including Sen. Kirsten Sinema (I-Ariz.), who voted for it in the House — raising the asset threshold to $250 billion, so SVB and dozens of other banks were exempt from strict federal supervision.
Warren’s legislation, the Secure Viable Banking Act, was introduced in the House by Progressive Rep. Katie Porter (D-Calif.). Despite the warm welcome from some corners of the party, it has not been embraced by Democratic leadership.
When asked if he supports Warren’s blueprint, Senate Majority Leader Chuck Schumer (DN.Y.) told reporters that “strong legislation” is needed, but any bill must be bipartisan.
Still, the leadership is well aware of Warren in this period of banking turmoil. After The Hill noted that Warren was speaking out on the subject this week, Sen. Debbie Stabenow (Mich.), the No. 3 ranked Senate Democrat, quipped, “Is she for real?”
“She’s always a respected voice, for sure,” said Stabenow, who voted in favor of the 2018 bill. “[The question is] what exactly are we trying to solve? … I am so grateful that we have President Biden and his team. They acted very quickly and I think they do an incredibly competent job of being able to act quickly to calm the waters.
Biden on Monday blamed the Trump administration for rolling back Dodd-Frank and called on Congress and regulators “to strengthen the rules on banks to make it less likely that these types of bank failures will happen again.”
Press secretary Karine Jean-Pierre said Thursday that the White House has “gained bipartisan support for a piece of legislation, the [Warren]- Porter bill. As of Friday, no Republicans had yet signed the bill.
Jean-Pierre wouldn’t say whether the SVB’s bankruptcy could have been avoided if the Dodd-Frank regulations hadn’t been reversed, but said the White House will rule on its position on the $250,000 cap on deposit insurance – which the Federal Deposit Insurance Corp. (FDIC) waived for SVB depositors – “in the coming days.”
The White House is reviewing Warren’s bill, as well as other regulatory changes, a government official told The Hill, but would not say whether Biden supports the Massachusetts Democrat’s legislation.
Dozens of Senate and House Democrats have since co-sponsored Warren’s bill, but it will either be a nonstarter in the GOP-controlled House or face a Republican filibuster in the Senate.
“We appreciate their leadership in bringing ideas to the table,” the official said. “After the 2008 financial crisis, the Obama-Biden administration made strict demands to ensure that crises like this would not happen again. Unfortunately, the last government has reversed some of them. As the president said, Congress and regulators need to tighten the rules for bigger banks so this doesn’t happen again.”
When Warren ran for the 2020 Democratic presidential nomination before dropping out and endorsing Biden, the difference between her views and the president’s on issues such as regulating banks became apparent. Biden, who sharpened the message that he is a centrist and believes in capitalism, was joined on the debate stages by Warren, who has a long history of fighting back against the practices of banks she says are adamantly predatory.
Throughout the Biden administration, Warren has been particularly at odds with Federal Reserve Chairman Jerome Powell, an official appointed under Trump but in whom Biden has stressed he has complete confidence. She opposed Powell’s nomination in 2018, warning at the time that he would weaken financial regulation, and has since been his fiercest critic in the Senate, berating him at several hearings.
Warren this week called on Powell to withdraw from the internal review of the SVB bankruptcy, arguing that his actions “directly contributed” to the situation as the Fed chairman has indicated he would support easing banking regulations .
Powell reportedly urged not to include a sentence citing regulatory shortcomings in a Sunday night press release issued jointly by the Fed, the Treasury Department and the FDIC, arguing that he wanted instead to concentrate on the measures being taken. Warren tweeted that the Fed chairman’s “attempt to silence government officials” was completely inappropriate.
“Congress needs to step in to fix these mistakes before things get worse,” she added.
Meanwhile, Warren cited Biden specifically calling on Congress to act after the SVB failed over its decision to introduce its legislation.
“President Biden called on Congress to strengthen banking regulations, and I am proposing legislation to do just that by repealing the core of Trump’s banking bill,” she said in a statement Tuesday.
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