Senator Elizabeth Warren is ramping up the pressure on the Federal Reserve and Chair Jerome Powell in the wake of a series of stunning bank collapses earlier this month.
During an interview on Wednesday with CNN’s Jake Tapper, the Massachusetts Democrat said that Powell should not have been reconfirmed as chair of the Fed, and that his actions could push the country towards a recession.
“Remember, there are only two jobs for the Federal Reserve chair. One is monetary policy, inflation. I think he’s doing a very bad job there and it’s risking pushing our economy into a recession,” Warren told Tapper.
Powell is also failing in his other job, that of regulatory oversight, Warren added. She said that he has spent five years weakening regulations over multibillion-dollar banks, which contributed to the failures of Silicon Valley Bank and Signature Bank.
Warren also touched on Powell and the Fed’s role in rising unemployment rates, a topic she aggressively questioned Powell on earlier this month.
“He wants to raise the unemployment rate by more than a point within a single 12-month period,” she said of Powell on CNN. “We have done that before in this country, in fact we have done it 12 times before. And out of all 12 times, how many times has it resulted in a recession? The answer is 12.”
The Fed on Wednesday projected that unemployment will be lower this year, The New York Times reported. When asked about the possibility of unemployment rising and getting out of control, Powell reportedly said that recessions are difficult to predict and that lowering inflation is his top priority.
The Fed reportedly “considered” pausing interest rates hikes due to the banking issues, but said promising economic data dissuaded them, according to the Times. In a Twitter post, Warren said this was a mistake.
Fed officials raised interest rates by a quarter-point on Wednesday, matching last month’s increase. Economic growth was predicted to be slightly slower this year, and inflation slightly higher than what the Fed predicted in December, the Times reported.
Powell reportedly acknowledged that the Fed needs to strengthen “supervision and regulation” of banks.
A group of lawmakers argued just that in a letter sent to the Fed Wednesday. Warren and 11 other senators called for the Fed to clamp down on large regional banks with assets between $100 billion and $250 billion, CNN reported. Both Sen. Ed Markey of Massachusetts and Sen. Bernie Sanders of Vermont also signed the letter.
“Irresponsible and excessive risk taking by SVB and Signature executives should serve as a clear reminder that banks cannot be left to supervise themselves,” Warren and the other Senators reportedly wrote. “The Fed has a responsibility to ensure financial stability, and in order to fulfill that responsibility, it must ensure that all banks with potential systemic significance are subject to rigorous safety and soundness rules.”
Warren sent a letter to federal watchdogs Saturday urging them to undertake an independent investigation into the causes of the bank failures.
She argued that regulatory rollbacks initiated under Powell’s leadership “created an environment in which failure was inevitable.”
Warren has been extremely vocal on this topic in recent weeks, writing an opinion piece for the Times and telling NBC’s “Meet The Press” that Powell had “failed” and that he should not be leading the Fed.
Warren even teamed up with Sen. Rick Scott, a Florida Republican, to introduce bipartisan legislation that would replace the Fed’s internal watchdog with a presidentially-appointed, Senate-confirmed independent inspector general. The goal, they said, was to increase accountability at the Fed.
“The recent bank collapses and regulatory failures by the Fed have underscored the urgent need for a truly independent Inspector General to hold Fed officials accountable for any lapses or wrongdoing,” Warren said in a statement. “Last year, during the largest ethics scandal in the history of the Federal Reserve System, I led a bipartisan bill to bolster accountability at the Fed and I appreciate Senator Scott’s work to advance this effort.”
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