Tuesday’s charge by Senator Elizabeth Warren was that Jerome Powell, Federal Reserve Chairman, had led an effort at weakening the banking system of the United States. She pledged to resist his renomination.
During a Senate Banking Committee hearing the Massachusetts Democrat cited several examples where the Powell Fed has dilated post-financial Crisis bank regulations.
Your record raises grave concerns. Warren stated, “Your record raises grave concerns. You have repeatedly acted in ways that make our banking system less secure. That makes you dangerous to lead the Fed. It’s why you will not be renominated.”
Warren said that Powell would oppose her. Powell didn’t respond.
Warren warned that deregulation could bring another crisis similar to what the U.S. experienced during 2008-09’s collapse of Wall Street banks.
Powell was called “lucky” by her, as banks have so far been able avoid major problems. She cited the collapse of Archegos Capital Management and the collective need of Fed assistance for the banking sector during the crisis. coronavirus pandemicDeregulatory actions can make the system more vulnerable.
“So far, you have been fortunate.” She said that the 2008 crash showed what happens when luck runs out. The Federal Reserve refused to regulate big banks, and major regulators planted the seeds that led to the 2008 crash many years ago. To ensure that nothing similar to 2008’s crash would happen again, I arrived in Washington.
Powell was elected in 2018 and his term ends February 2018. Wall Street is expecting President Joe BidenPowell to be renominated, but Warren and other liberal senators will likely resist.
Biden, even if Powell is elected to another term in the future, will still have an opportunity to restructure the Fed.
Randal Quarles will be retiring in October as the vice-chair in charge of supervision. Current Fed Governor Lael brainard has often been mentioned in passing as someone to replace him.
Richard Clarida is the Vice Chairman of Federal Reserve Board of Governors. His term expires in January and another vacant seat remains.
D-N.J. Sen. Robert Menendez questioned Powell on his lack of diversity at central bank. Biden is expected to be under pressure to nominate diverse candidates for Fed vacancies.
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