Senators Warren and Blumenthal Call for Criminal Investigation into SVB Insider Trading, Consequences of Contagion
As bank stocks tumble in the markets amid growing fears of bank infection, Democratic Senator Elizabeth Warren, D-Mass., is questioning the credibility of the Federal Reserve and is calling on Chairman Jerome Powell to drop the Silicon Valley review. Bank collapse.
“For this review to be credible at all, Chairman Powell must recuse himself. He not only chaired the Fed, who not only came to Congress and answered questions from me and others about this deregulation move, but actually led it,” said Warren Grady Trimble of FOX Business on Capitol Hill at Wednesday.
“And it’s important that while we’re figuring out what went wrong, Chair Powell takes a step back and allows Michael Barr, the new vice chair who wasn’t there during all of this, to let him do an independent investigation,” she added. “That’s the only way we can be sure of it.”
Before the stock market opened on Wednesday morning, Dow Jones Industrial Average futures were down more than 500 points, while S&P 500 and Nasdaq Composite futures were down more than 70 and 200 points, respectively. Shares of Credit Suisse also hit a new record low, losing nearly a quarter of their value; other regional banks seeing sharp declines include First Republic, PacWest and KeyBank.
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The fall comes just days after California-based Silicon Valley Bank went insolvent and was bailed out by federal regulators through an auction and insured up to $250,000 in deposits, the second-biggest U.S. bank failure since 2008.
In response, Warren also proposed a bill to repeal the Trump-era law that had rolled back banking reforms. The senator told Trimble that she believes the law has a chance of being passed in a “crisis like this.”
“We just need tighter and more stable rules,” Warren said. “The important thing is that if there was proper regulation, this mismanagement would have been discovered before it blew up these banks and before the government was forced to intervene and support all savers.”
“I thought it was dangerous to have someone like Powell, who is willing to deregulate banks, as head of the Fed, and I think part of that danger has now come out in public.”
“The government should not be put in this position because we need hard rules to prevent this problem from occurring,” she continued.
When Powell was named chairman, Warren also claimed that he was on a path of deregulation that made regulators “lightweight” and let the “big” issues pass.
“Stress tests during the Powell administration became easier, they became less frequent. And that means the problems that come up are problems because the executives want to increase those profits, and the best way to increase those profits is to take a little more. risk and a little more risk so that these problems are not eliminated ahead of time,” the senator explained.
Warren also reflected on her initial impression of Powell in office, recalling that she thought his “dangerous” policies would one day come to the fore in the economy.
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“I opposed him when he was renominated, and I opposed him precisely because he was too flippant about the rules,” Warren said.
“I said at the time that I thought it was dangerous to have someone like Powell, who was willing to deregulate banks, as head of the Fed,” she continued, “and I think some of those dangers have now surfaced. right in public.”
Credit: www.foxbusiness.com /