U.S. Senator Elizabeth Warren has called for a “thorough and independent investigation into the causes” that led to the collapse of Silicon Valley Bank (SVB) and Signature Bank. She claims that Federal Reserve Chairman Jerome Powell is “directly responsible” for the regulatory and supervisory problems involving the two banks.
Senator Elizabeth Warren calls for an independent investigation into the bank failures
Senator Elizabeth Warren (Democrat) sent a letter on March 18 to the Deputy Inspector General of the Treasury Department, the Acting Inspector General of the Federal Deposit Insurance Corporation (FDIC), and the Inspector General of the Federal Reserve Board, calling for an investigation into recent major bank failures.
The Massachusetts senator wrote, “I request that you immediately initiate a thorough independent investigation into the causes of the bank management and regulatory and supervisory problems that led to this month’s failures of Silicon Valley Bank (SVB) and Signature Bank, and provide preliminary results within 30 days. SVB was closed by regulators on March 10, and Signature Bank was seized by the New York State Department of Financial Services a few days later.
Warren emphasized.
These failures were an anomaly, the second and third largest bank failures in U.S. history.
Moreover, “until the Treasury Department, in consultation with the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), determined that they were ‘systemic risks’ and intervened to guarantee billions of dollars in deposits,” these bank failures “threatened an economic chain and severe damage to the banking and financial system . there was a risk of economic cascading and severe damage to the banking and financial system.”
Warren noted that “bank executives who took unnecessary risks or failed to hedge against entirely foreseeable threats must be held accountable for these failures,” but argued that “this mismanagement was allowed to happen because of a series of failures by lawmakers and regulators.”
She further claimed that Congress and former U.S. President Donald Trump “weakened” the Dodd-Frank Act and allowed banks like Silicon Valley Bank and Signature Bank to “skirt important rules and regulations.”
The congressman further stated that the Federal Reserve, led by Chairman Jerome Powell, “began rolling back regulations” and that bank regulators, particularly the Federal Reserve Bank of San Francisco, which oversees Silicon Valley Bank, “missed or ignored important signals about the impending failure.” Warren emphasized that ” Warren emphasized that “these regulatory eliminations have created an environment in which failure is inevitable.
Senator Warren further told the inspectors.
It is also important that your investigation be completely independent and uninfluenced by bank executives or regulators.
