The collapse of the Silicon Valley Bank (SVB) and turmoil in the banking industry provide an opportunity for Sen. Elizabeth Warren (D-Mass) to return to the spotlight.
Warren, who has emerged as a consumer advocate and has long made headlines for her influence on banks, is seizing the opportunity.
Over the past week, the one-time progressive presidential candidate from Massachusetts launched a massive attack.
She unveiled legislation to repeal the 2018 Deregulation Act signed by former President Trump that raised the minimum for banks under federal audit from $50 billion to $250 billion.
She’s been a constant presence on cable news, with more shows appearing on the weekend shows circuit on Sunday, wrote an article for the New York Times and pressed former SVB CEO Greg Baker about his push to roll back the 2018 regulations.
For a number of Senate Democrats, she is an invaluable voice on this issue.
“Very important,” Sen. Bob Casey (D-Penn), a supporter of Warren’s new banking proposal, told The Hill. “Not only does she have a great commitment to consumers and families, but she has a lot of experience in general and she is a fantastic reporter and advocate for these issues.”
But Warren’s continued criticism is bound to cause headaches for President Biden and other Senate Democrats, especially those who voted to back down from the election in 2018 and who are up for re-election in 2024.
In total, 12 senators caucus with Democrats voted in favor of the bill — including Sen. Kirsten Sinema (I-Ariz.), who voted for it in the House of Representatives — raising the asset threshold to $250 billion, so SVB and dozens of others Banks were exempted from strict federal oversight.
Warren’s legislation, the Applicable Safe Banking Act, was introduced in the House of Representatives by progressive Rep. Katie Porter (D-Calif.). Despite a warm welcome from some corners of the party, he was not accepted by the democratic leadership.
When asked if he supports Warren’s blueprint, Senate Majority Leader Chuck Schumer (DNY) told reporters that “strong legislation” is needed, but any bill must be bipartisan.
However, the leadership is keenly aware of Warren’s presence amidst this period of banking turmoil. After The Hill pointed out that Warren was vocal about it this week, Sen. Debbie Stabenow (Mich.), the No. 3 Democratic senator, quipped, “Is she really?”
“She’s always a respectable voice, for sure,” 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 an incredibly competent job to be able to move quickly to de-escalate the situation.”
Biden on Monday blamed the Trump administration for undoing Dodd-Frank and called on Congress and regulators to “strengthen rules for banks to reduce the likelihood of this type of bank failure happening again.”
Press Secretary Karen Jean-Pierre said Thursday that the White House has seen “bipartisan support on legislation, [Warren]-Porter’s bill.” No Republicans had signed the bill until Friday.
Jean-Pierre didn’t say whether the SVB failure could have been avoided if the Dodd-Frank regulations weren’t rolled back, but he did say the White House will speak about its position on the $250,000 deposit insurance limit — announced by the FDIC. (FDIC) waived the SVB depositors – “in the next few days.”
The White House is looking into 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’s legislation.
Dozens of senators and House Democrats have since co-sponsored Warren’s bill, but he wouldn’t be a starter in the GOP-controlled House or face a Republican filibuster in the Senate.
“We appreciate their leadership in bringing ideas to the table,” the official said. The Obama-Biden administration put in place stringent requirements after the 2008 financial crisis to make sure this type of crisis does not happen again. Unfortunately, the recent administration has backtracked on some of them. As the President has said, Congress and regulators must strengthen the rules for the larger banks so that this does not happen again.”
When Warren ran for the Democratic presidential nomination in 2020 before dropping out and endorsing Biden, the difference between her views and the president’s on issues like bank regulation was evident. Biden, who has honed her messages that he is a centrist and believes in capitalism, is joined by debater Warren, who has a long history of resisting practices of banks that she adamantly says are predatory.
Throughout the Biden administration, Warren has been at odds in particular with Federal Reserve Chairman Jerome Powell, an official appointed under Trump but whom Biden has maintained he trusts completely. She opposed Powell’s nomination in 2018, warning at the time that it would weaken financial regulations, and has since been his harshest critic in the Senate and berated him during various hearings.
Warren Powell this week called for him to step down from an internal review of the SVB fiasco, arguing that his actions “contributed directly” to the situation because the Fed chairman has indicated he would support loosening banking regulations.
Powell reportedly pushed not to include a phrase pointing to regulatory failures in a Sunday night press release jointly drawn up by the Fed, the Treasury Department and the FDIC, arguing that he wanted to focus instead on the actions being taken. Warren tweeted that the Fed Chairman’s “attempt to silence” government officials was “totally inappropriate”.
She added, “Congress needs to step in to fix these wrongs before things get worse.”
Meanwhile, Warren cited Biden specifically calling on Congress to act after the SVB failed in its decision to advance its legislation.
“President Biden has called on Congress to strengthen the rules on banking, and I am proposing legislation to do just that by eliminating the core of the Trump Banking Act,” she said in a statement on Tuesday.
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