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Sen. Elizabeth Warren is calling for an independent investigation of the Federal Reserve and “the whole regulatory system” after the worst banking-sector crisis in more than a decade.
““I’m calling for an independent investigation of the Fed and the whole regulatory system here. The Fed doesn’t just get to do its own investigation.””
Speaking Sunday on ABC News’ “This Week,” the Massachusetts Democrat said the chaos of the past couple of weeks — in which three U.S. banks failed, throwing financial markets, especially bank stocks, into extreme volatility — was predictable after financial-crisis-era banking regulations were eased during the Trump administration.
“What happened was exactly what we should have predicted, and that is the banks, these big, multi-billion-dollar banks, loaded up on risk; they boosted their short-term profits; they gave themselves huge bonuses and big salaries; and they exploded their banks,” Warren said, according to an ABC News transcript.
Also see: What’s at stake for stocks, bonds as Federal Reserve weighs bank chaos against inflation fight
Warren called on the Fed “right now to reverse its weakened regulations,” and look at banks “with much more scrutiny.” She also called on Congress to roll back the Fed’s ability to weaken regulations and for bank CEOs to be held accountable, including clawing back compensation.
“When you explode a bank, you ought to be banned from banking forever,” she said.
More: Fed had expressed its concerns over Silicon Valley Bank for years: reports
Warren reiterated her calls on NBC News’ “Meet the Press” on Sunday, saying “[The] Fed doesn’t just get to investigate itself. I want to see us make a change in the laws.”
Warren said that while government intervention has eased some concerns, others remain.
“I think it’s fair to say that depositors should be able to take a pretty deep breath,” Warren said, according to an NBC News transcript. “The federal government has indicated there’s going to be a lot of protections for you. But we have to worry about how much risk is in these multi-billion dollar banks because it’s perfectly clear that these regulators were asleep at the switch.”
Warren, who has previously criticized the Fed’s sharp interest-rate hikes, again called for Fed Chair Jerome Powell to end them: “These extreme rate increases are something that he should not be doing.”
“I think he’s failing in both jobs,” Warren said of Powell, “both as the oversight and manager of these big banks, which is his job, and also what he’s doing with inflation.”
Read more: What it may take to calm banking-sector jitters: time, and a Fed rate hike
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