The collapse of Silicon Valley Bank (SVB) and turmoil in the banking industry is giving Sen. Elizabeth Warren (D-Mass.) a moment to step back into the spotlight.
And Warren, who has made a name for himself as a consumer protection advocate and has long made headlines for pounding banks, is seizing the opportunity.
Over the past week, the Massachusetts progressive and former presidential candidate has launched a wide-ranging offensive.
She unveiled legislation to repeal a 2018 deregulation act signed by former President Trump that raised the threshold for banks subject to federal scrutiny from $50 billion to $250 billion.
She’s been a constant presence on cable news, with more appearances scheduled for the Sunday shows circuit this weekend, wrote an op-ed in The New York Times and pressed former SVB CEO, Greg Becker, to push for the cancellation of the regulations in 2018.
For a number of Senate Democrats, she is an invaluable voice on the subject.
“Very important,” Sen. Bob Casey (D-Pa.), a supporter of Warren’s new banking proposal, told The Hill. “Not only does she have a great commitment to consumers and families, but more broadly, she has a lot of expertise and is a great messenger and advocate on these issues.”
But Warren’s continued criticism is poised to cause headaches for President Biden and other Senate Democrats, especially those who voted to step back in 2018 and are up for re-election in 2024.
A total of 12 sitting senators who caucus with Democrats voted for the bill — including Sen. Kirsten Sinema (I-Arizona), who voted for in the House — which raised the asset threshold to 250 billions of dollars, so SVB and dozens of other banks were exempt from strict federal oversight.
Warren’s legislation, the Secure Viable Banking Act, was introduced in the House by progressive Rep. Katie Porter (D-Calif.). Despite warm reception from some corners of the party, it was not embraced by the Democratic leadership.
When asked if he supported Warren’s plan, Senate Majority Leader Chuck Schumer (DN.Y.) told reporters that “strong legislation” was needed, but that any plan of law should be bipartisan.
Still, management is keenly aware of Warren amid this period of banking turmoil. After The Hill noted that Warren spoke out on the subject this week, Sen. Debbie Stabenow (Mich.), the No. 3 ranked Senate Democrat, joked, “Did she really?”
“She’s still a respected voice, certainly,” said Stabenow, who voted for 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 in place. They acted very quickly and I think in an incredibly competent job to be able to act quickly to calm the waters.
Biden on Monday blamed the Trump administration for the Dodd-Frank rollbacks and called on Congress and regulators “to strengthen the rules for banks to reduce the risk of this type of bank failure happening again.”
On Thursday, press secretary Karine Jean-Pierre said the White House had seen “bipartisan support on a bill, the [Warren]- Carrier invoice. No Republican had signed the bill Friday.
Jean-Pierre did not say whether the SVB’s failure could have been avoided if the Dodd-Frank regulations had not been overturned, but said the White House would discuss its position on the insurance limit. deposits of $250,000 – which the Federal Deposit Insurance Corp. (FDIC) lifted for SVB depositors – “in the next few days”.
The White House is considering the Warren bill, along with other regulatory changes, an administration official told The Hill, but would not say whether Biden supports the Massachusetts Democrat’s legislation.
Dozens of Senate and House Democrats have since co-sponsored Warren’s bill, but it will be a non-runner in the GOP-controlled House or in the face of a Republican filibuster in the Senate.
“We appreciate their leadership in putting ideas on the table,” the official said. “The Obama-Biden administration put in place tough requirements after the 2008 financial crisis to ensure this type of crisis never happened again. Unfortunately, the last administration canceled some of them. As the president said, Congress and regulators need to tighten the rules for big banks so this doesn’t happen again.
When Warren ran for the 2020 Democratic presidential nomination before dropping out and endorsing Biden, the difference between her views and those of the president on issues like bank regulation was apparent. Biden, who has honed the message that he is centrist and believes in capitalism, was joined on the debate stages by Warren, who has a long history of fighting banking practices that she adamantly claims are predatory.
Throughout the Biden administration, Warren has been particularly at odds with Federal Reserve Chairman Jerome Powell, an official appointed under Trump but whom Biden has stressed he has full confidence in. She opposed Powell’s nomination in 2018, warning at the time that he would weaken financial regulation, and since then has been his fiercest critic in the Senate and berated him at various hearings.
Warren called on Powell this week to recuse himself from the internal review of the SVB’s failure, arguing that his actions “directly contributed” to the situation because the Fed chairman signaled he would support easing of banking regulations.
Powell reportedly pushed for not including a sentence mentioning regulatory failures in a press release issued jointly Sunday night by the Fed, Treasury Department and FDIC, arguing that he wanted to focus instead on the actions taken. Warren tweeted that the Fed Chairman’s “attempt to muzzle” government officials was “completely inappropriate.”
“Congress needs to step in to correct these mistakes before things get even worse,” she added.
Meanwhile, Warren quoted Biden as specifically calling on Congress to act after the SVB failed over its decision to introduce its legislation.
“President Biden has called on Congress to toughen the rules for banks, and I’m proposing legislation to do just that by repealing the heart of Trump’s banking law,” she said in a statement Tuesday.
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