Sen. Elizabeth Warren charged Tuesday that Federal Reserve Chairman Jerome Powell has led an effort to weaken the nation’s banking system, and she vowed to oppose his renomination.
In remarks made during a hearing before the Senate banking committee, the Massachusetts Democrat cited three instances where the Powell Fed has watered down post-financial crisis bank regulations.
“Your record gives me grave concerns. Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed, and it’s why I will oppose your renomination,” Warren said.
Powell did not respond to Warren’s comment that she will oppose him.
Warren said deregulatory moves could cause another calamity the likes of which the U.S. saw during the 2008-09 breakdown of Wall Street institutions.
She called Powell “lucky” that banks thus far have been able to avoid major problems, citing the Archegos Capital Management collapse and the banks’ need for Fed assistance during the pandemic as dangers to the system exacerbated by deregulatory moves.
“So far you’ve been lucky. But the 2008 crash shows what happens when the luck runs out,” she said. “The seeds of the 2008 crash were planted years in advance by major regulators like the Federal Reserve that refused to rein in big banks. I came to Washington after the 2008 crash to make sure nothing like that would ever happen again.”
Powell has served since 2018 and his term expires in February. Wall Street widely expects President Joe Biden to renominate Powell, though Warren and other more liberal senators are expected to provide some resistance.
Powell has served since 2018 and his term expires in February. Wall Street widely expects President Joe Biden to tap Powell for a second term though Warren and other more liberal senators are expected to provide some resistance.
Even if he does seek to give Powell another term, Biden will have a chance to remake the Fed.
Randal Quarles, the current vice chair in charge of supervision, will see his term expire in October, and current Fed Governor Lael Brainard, who favors a stronger regulatory hand, has been given frequent mention as a potential replacement.
Vice Chairman Richard Clarida will see his time on the board expire in January, and there remains another vacancy on the Federal Reserve Board of Governors.
Sen. Robert Menendez, D-N.J., grilled Powell during teh hearing on the lack of diversity at the Fed. Biden will face pressure to provide a diverse set of nominees for the Fed vacancies.
This is breaking news. Please check back here for updates.
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