Senator Warren says Fed chair ‘has to recuse himself’ from reviewing regulatory failures
Jerome Powell called for a “thorough, transparent, and swift review” of the Federal Reserve’s supervision and regulatory activities following Silicon Valley Bank’s closure.
Massachusetts Senator Elizabeth Warren, one of the more prominent anti-crypto voices in the United States Congress, has called on Federal Reserve Chair Jerome Powell to recuse himself amid an internal probe at the Federal Reserve.
Speaking to reporters in Washington, D.C., on March 15, Warren said Powell had led “the de-regulatory movement” at the Fed, potentially touching upon some of the conditions that had led to the collapse of Silicon Valley Bank. The Fed chair called for a “thorough, transparent, and swift review” of its activities on March 13, following the bank’s shutdown by the California Department of Financial Protection and Innovation.
“For this review to have any credibility at all, Chair Powell has to recuse himself,” said Warren. “He is the one who not only presided over the Fed, who not only came to Congress and answered questions from me and from others about this de-regulatory move, but actually led it.”
“It’s important that while we’re examining what went wrong, that Chair Powell take a step back and let Michael Barr […] conduct an independent investigation.”
Barr announced he would be leading a review of the Fed’s supervision and regulation of Silicon Valley Bank, to be released on May 1. The U.S. Department of Justice and the U.S. Securities and Exchange Commission have also reportedly announced their own probes related to some of the bank’s executives selling stock in the weeks leading up to the closure.
While the collapse of three major banks have had different causes not necessarily related to crypto, digital assets seem to be taking some of the blame in the media and among certain government officials.
On March 8, Silvergate Bank’s parent company said it would voluntarily close down the crypto bank, saying its plan included “full repayment of all deposits.” Silicon Valley Bank shuttered following a run from firms with roughly $40 billion in assets, but the U.S. government stepped in to announce most uninsured depositors would be made whole.
Related: US lawmaker accuses FDIC of using banking instability to attack crypto
To many, Signature Bank stands out as an aberration among these failures, as it closed following actions from the New York Department of Financial Services claiming “to protect the U.S. economy by strengthening public confidence” in the banking system. Signature board member Barney Frank suggested government officials were attempting to send a “strong anti-crypto message,” while the NYDFS reportedly said the bank had failed to provide “reliable and consistent data” to the regulator.