Senator Elizabeth Warren unleashed on Federal Reserve Chairman Jerome Powell, calling him a ‘dangerous man’ and announcing she’ll oppose a second term during a Senate Banking Committee hearing on the economic recovery from the COVID-19 pandemic Tuesday.
Powell, who was nominated by former President Trump, will see his term expire in February. President Biden has indicated that he’d reappoint Powell, earning pushback from progressives like Warren and Rep. Alexandria Ocasio-Cortez of New York.
Warren argued that Powell weakened the US banking system by rolling back financial regulations that were enacted after the 2008 financial crisis.
‘I came to Washington after the 2008 crash to make sure that nothing like that would ever happen again. Your record gives me grave concern,’ the Massachusetts lawmaker said.
‘Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed, and it’s why I will oppose your re-nomination.’
Senator Elizabeth Warren confronted Federal Reserve Chairman Jerome Powell on regulations he’s eased since the 2008 financial crisis
In 2019, the Fed weakened rules that ensure that firms have adequate cash to meet their obligations by lowering liquidity requirements for banks. The guidelines were put in place after the 2008 crisis.
Under Powell’s watch in March 2020, the Fed intervened in the US economy to mitigate repercussions from COVID-19 within financial markets, including up to $2.3 trillion in lending to support households, employers, and state and local governments.
Since his tenure began Powell has also rolled back or loosened a number of other financial crisis-era regulations in a bid to spur economic growth.
‘I know that some argue that your deregulatory actions are mostly harmless. I disagree. I think they’ve put taxpayers at risk for hundreds of billions of dollars,’ Warren said.
She said nominating him for the job again would put the US economy at risk.
Warren told Powell that re-nominating him is an economic risk that isn’t worth taking
‘Re-nominating you means gambling that for the next five years, a Republican majority of the Federal Reserve with a Republican chair, who has regularly voted to deregulate Wall Street, won’t drive this economy over a financial cliff again,’ Warren said.
‘And with so many qualified candidates for this job, I just don’t think that’s a risk worth taking.’
The White House has not yet announced a decision on whether to reappoint Powell or choose an alternative.
Last month, a group of progressives led by Ocasio-Cortez and fellow Squad members Reps. Rashida Tlaib and Ayanna Pressley released a statement demanding that Biden not reappoint Powell.
‘Under his leadership the Federal Reserve has taken very little action to mitigate the risk climate change poses to our financial system,’ the write, later adding: ‘Secondly, under Chair Powell the Federal Reserve has substantially weakened many of the reforms enacted in the wake of the Great Recession.’
That pits them against Treasury Secretary Janet Yellen, who is among the most prominent members of Biden’s economic team who favor reappointing Powell, according to the Wall Street Journal.
Yellen, who testified alongside Powell today, is reportedly supportive of him possibly serving as Fed chair again
Yellen was also testifying at the Tuesday hearing alongside Powell, where she delivered a sharp warning that the US will run out of cash for the first time in history around October 18 if urgent action isn’t taken to raise or suspend the debt ceiling.
‘It would be disastrous for the American economy, for global financial markets, and for millions of families and workers,’ Yellen warned a day after Senate Republicans blocked a Democratic effort to suspend the debt limit.
Tuesday’s hearing came a day after two regional Fed presidents under ethics reviews for their investment trades announced their retirements.
Powell was forced to defend the Fed’s image and impartiality, particularly when Senator Raphael Warnock called the scandal a ‘blow’ to the Central Bank.
Warnock asked Powell about what steps he is taking to protect the ‘impartiality’ of the Fed.
This followed some criticisms shared at the start of the hearing, when Democratic Senator Sherrod Brown, the head of the Banking Committee, said he plans to introduce legislation that would ban Fed officials from owning individual stocks.
Powell, who earlier this month ordered a review of the Fed’s ethics rules, added that the central bank is also examining the trades done by regional Fed presidents to make sure they were legal and in compliance with current ethics guidelines.
‘Even if it appears to be the case that these trades were in compliance with existing rules, that just tells you the problem is the rules and the practices and the disclosure needs to be improved,’ Powell said in response to a question. ‘We will rise to this moment and address this.’