Senator Elizabeth Warren (D-MA) says Federal Reserve Chair Jerome Powell has racked up "an astonishing list of failures," which contributed to the implosion of Silicon Valley Bank and Signature Bank, Bloomberg reports.
"SVB and Signature accumulated risk and made dangerous decisions about how to manage that risk," said Warren in a Wednesday letter to Powell. "They did so in part because of greed and incompetence – but were allowed to do so under faulty supervision and in a weakened regulatory environment that you helped to create."
"You owe the public an explanation," Warren continued, demanding that Powell respond to 11 questions by March 29.
This is the biggest disaster in recent Fed history. Four days ago, Powell was saying he could hike 50bps.
— zerohedge (@zerohedge)
Powell has to be fired immediately
Warren's letter outlines several efforts to weaken regulations that were implemented following the 2008 financial crisis, which was enabled by lax supervision by the Fed.
Warren also demanded that Powell recuse himself from an internal investigation by the Fed into regulatory failures concerning SVB - the results of which will be made public by Vice Chair Michael Barr by May 1. Instead, a bipartisan group of lawmakers wants an independent investigation.
The Fed and other regulators announced emergency measures to help contain the budding crisis, including a new loan program from the central bank that will make is easier for banks to borrow to meet deposit withdrawal demand.
In her letter, Warren also said Powell supported a 2018 law that exempted mid-sized banks like SVB from the same stringent oversight requirements faced by the biggest banks, a change that she and some other progressives have said contributed to SVB’s demise. Testifying about the bill at the time, Powell said the Fed would still have the ability to regulate mid-size banks if warranted, and that gave them “the tools that we need.” -Bloomberg
"Make no mistake: your decisions aided and abetted this bank failure, and you bear your share of responsibility for it," wrote Warren.
Meanwhile, woke 'Frisco Fed' chief Mary Daly has also come under fire. As Paul Sperry writes in the NY Post: "Wokeness has replaced competence and merit across the banking sector, and San Francisco Fed Chief Mary Daly is the poster child of this pernicious trend."
A protege of Treasury Secretary Janet Yellen and short-list candidate for Federal Reserve vice chair, Daly was supposed to be supervising Silicon Valley Bank but apparently was too busy playing politics and pushing woke agendas to regulate rogue banks like SVB, the second-biggest bank failure on record.
Daly had other priorities, including climate change, George Floyd and Black Lives Matter, inequities between blacks and whites, LGBTQ+ rights and a host of other woke social-justice issues that had nothing to do with banking and finance. -NY Post
According to Daly's bio, her commitments include "understanding the economic and financial risks of climate change and inequities."
Sperry highlights a recent LinkedIn post from Daly, in which she appears 'sidetracked' by racial justice, writing "What Black voices have I lifted up? Equity & inclusion begins with me. #GeorgeFloyd."
And while Daly has been focused on everything but banking, she was completely oblivious to the warning signs of inflation.
Two years ago, as inflation was spiraling out of control, she said: "I am not thinking that we have unwanted inflation around the corner. I don’t think that’s a risk."
Last year, she denied that the economy was suffering from horrific inflation, saying "That's not what I see."
And in August, Daly - who makes $422,000 per year, said "I don’t feel the pain of inflation anymore."
"I’m not immune to gas prices rising, food prices rising," she continued, adding "But I don’t find myself in a space where I have to make trade-offs, because I have enough, and many, many Americans have enough."
From her policy papers, speeches and interviews, it’s clear that Daly thinks the Fed’s core mission isn’t controlling inflation but achieving full employment — and raising interest rates just hurts that goal. Her agenda is more jobs and higher wages for minorities, so sound money is not a priority for her — even though inflation is a huge tax on the working class and especially minorities.
Until recently, Daly was opposed to the Fed’s hawkish shift to tightening credit to fight inflation. Her bank examiners no doubt shared her dovish mindset and didn’t anticipate rates increasing, which may also explain why alarms weren’t raised at SVB. -NY Post
Sperry also notes that Daly has zero experience in banking or managing risk. According to her, Treasury Secretary Janet Yellen has been an "important mentor in my life . . . [S]he made my career kind of explode."
And now banks under her watch are, 'kind of imploding.'
