Warren takes center stage in banking struggle after SVB collapse
The collapse of the Silicon Valley Bank (SVB) and turmoil in the banking industry give Senator Elizabeth Warren (D-Massachusetts) an opportunity to be back in the spotlight.
And Warren, who gained notoriety as a consumer advocate and has long made headlines for hitting banks, doesn’t miss the opportunity.
Last week, the progressive Massachusetts candidate, a former presidential candidate, launched a massive offensive.
She introduced legislation to repeal the 2018 deregulation law signed by former President Trump, which raised the threshold for banks subject to federal control from $50 billion to $250 billion.
She’s been a consistent feature on cable news, with more performances scheduled for the Sunday show this weekend. article in The New York Times and put pressure on former SVB CEO Greg Becker for his lobbying for the repeal of the rules in 2018.
For a number of Democrats in the Senate, she is an invaluable voice on this issue.
“Very important,” Sen. Bob Casey (D-Pennsylvania), a supporter of Warren’s new banking proposal, told The Hill. “Not only does she have a strong commitment to consumers and families, but more broadly she has a lot of experience and is a great ambassador and advocate on these issues.”
But continued criticism of Warren could give President Biden and other Democrats in the Senate a headache, especially those who voted to rollback in 2018 and are up for reelection in 2024.
A total of 12 sitting senators who voted with the Democrats for the bill, including Senator Kirsten Sinema (D-Arizona), who voted for it in the House of Representatives, raised the asset threshold to $250 billion, so SVB and dozens of other banks were exempt from strict federal oversight.
Warren’s law, the Safe Viable Banks Act, was introduced in the House of Representatives by Progressive Rep. Kathy Porter (D-CA). Despite a warm reception from some party circles, the democratic leadership did not support him.
When asked if he supported the Warren plan, Senate Majority Leader Chuck Schumer (DN.Y.) told reporters that “strong legislation” is needed, but any bill must be bipartisan.
Nevertheless, management is well aware of Warren during this period of banking turmoil. After The Hill noted that Warren had spoken out on the subject this week, Senator Debbie Stabenow (D-M), who is the 3rd seed Democratic Senate, joked, “Is she real?”
“Of course, she is always respected,” said Stabenov, who voted in favor of the 2018 bill. “[The question is] what exactly are we trying to solve? … I am so grateful that we have President Biden and his team. They acted very quickly and I think it’s an incredibly competent job to be able to move quickly to calm the water.”
Biden on Monday blamed the Trump administration for Dodd-Frank’s rollback and called on Congress and regulators to “strengthen rules on banks to reduce the likelihood of this kind of bank failure happening again.”
Press Secretary Karine Jean-Pierre on Thursday said the White House saw “bipartisan support for the bill, [Warren]-Porter Bill. As of Friday, no Republicans have signed the bill.
Jean-Pierre did not say whether the collapse of the SVB could have been avoided if the Dodd-Frank rules had not been repealed, but said the White House would state its position on the $250,000 deposit insurance limit that the Federal Deposit Insurance Corporation ( Federal Deposit Insurance Corp.) (FDIC) turned down SVB depositors – “in the next few days.”
The White House is considering Warren’s bill, as well as other regulatory changes, an administration official told The Hill, but did not say whether Biden supports the Massachusetts Democrat bill.
Dozens of Democrats in the Senate and House of Representatives have since cosponsored Warren’s bill, but it will either fail in the GOP-controlled House or face a filibuster from Republicans in the Senate.
“We appreciate their leadership in presenting ideas,” the official said. “The Obama-Biden administration made tough demands after the 2008 financial crisis to make sure this kind of crisis doesn’t happen again. Unfortunately, the last Administration rolled back some of them. As the president said, Congress and regulators need to tighten up the rules on big banks to make sure this doesn’t happen again.”
When Warren ran for the Democratic presidential nomination in 2020 before leaving to support Biden, the difference between her and the president’s views on issues such as bank regulation was on display. Biden, who has honed messages about being a centrist and a believer in capitalism, was joined in the debate stages by Warren, who has a long history of fighting what she categorically calls predatory banking practices.
Throughout the Biden administration, Warren has been at odds, notably with Federal Reserve Chairman Jerome Powell, a Trump-appointed official but whom Biden has stressed he has full confidence in. She opposed Powell’s 2018 nomination, warning at the time that he would loosen fiscal rules, and has since been his fiercest critic in the Senate and scolded him during various hearings.
This week, Warren urged Powell to drop internal scrutiny of the SVB’s failure, arguing that his actions “directly contributed” to the situation as the Fed chairman signaled he would support easing banking rules.
It is reported that Powell clicked do not turn on a phrase referring to regulatory failures in a press release Sunday night that was jointly issued by the Fed, the Treasury and the FDIC, claiming that he wanted to focus on the actions being taken instead. Warren tweeted that “the Fed chairman’s attempt to silence government officials was ‘completely inappropriate’.”
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“Congress must intervene to correct these mistakes before things get worse,” she added.
Meanwhile, Warren cited Biden specifically urging Congress to act after the failure of the SVB for its decision to introduce its law.
“President Biden has urged Congress to tighten regulations on banks, and I am proposing to do just that by repealing the bulk of the Trump Banking Act,” she said in a statement Tuesday.
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