Senator Elizabeth Warren released Federal Reserve Chair Jerome Powell, calling him a “dangerous man” and announcing she will oppose a second term at a Senate Banking Committee hearing on economic recovery. of 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 would reappoint Powell, pulling back from progressives like Warren and Rep. Alexandria Ocasio-Cortez from New York.
Warren argued that Powell was weakening the U.S. banking system by rolling back the financial regulations put in place after the 2008 financial crisis.
“I came to Washington after the 2008 crash to make sure nothing like this ever happened again. Your file is of great concern to me,” the Massachusetts legislature said.
“You’ve acted time and again to make our banking system less secure, and that makes you a dangerous man to run the Fed, which is why I will oppose your renomination.”
Senator Elizabeth Warren confronted Federal Reserve chairman Jerome Powell about regulations he has eased since the 2008 financial crisis
In 2019, the Fed toned down the rules that ensure companies have sufficient liquidity to meet their obligations by lowering liquidity requirements for banks. The guidelines were introduced after the 2008 crisis.
Overseen by Powell in March 2020, the Fed intervened in the US economy to mitigate the effects of COVID-19 on financial markets, including up to $2.3 trillion in loans to support households, employers, and state and local governments. .
Since the start of his tenure, Powell has also rolled back or relaxed a number of other rules from the financial crisis era to boost economic growth.
“I know some say your deregulatory actions are mostly harmless. I do not agree. I think they put taxpayers at risk for hundreds of billions of dollars,” Warren said.
She said renominating him for the job would put the US economy at risk.
Warren told Powell that renominating him is an economic risk not worth taking
“Renaming you guys means betting that for the next five years, a Republican majority of the Federal Reserve with a Republican chairman, who has regularly voted to deregulate Wall Street, won’t push this economy over another financial cliff,” Warren said. .
“And with so many qualified candidates for this job, I don’t think that’s a risk to take.”
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 brought Reps. Rashida Tlaib and Ayanna Pressley issued a statement demanding that Biden not reappoint Powell.
“Under his leadership, the Federal Reserve has taken very little action to mitigate the risk of climate change to our financial system,” the writing writes, adding later: “Second, the Federal Reserve under Chairman Powell has made many of the reforms those in the wake of the Great Recession.’
That pits them against Treasury Secretary Janet Yellen, one of the most prominent members of Biden’s economics team who is in favor of Powell’s reappointment, according to the report. Wall Street Journal.
Yellen, who testified with Powell today, reportedly backs his possible return to serve as Fed chairman
Yellen also testified at Tuesday’s hearing alongside Powell, where she delivered a stark warning that by October 18, for the first time in history, the U.S. will run out of money unless urgent action is taken to raise or suspend the debt ceiling. .
“It would be disastrous for the American economy, for the 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 cap.
Tuesday’s hearing came a day after two regional Fed presidents announced their retirements under ethical review for their investment transactions.
Powell was forced to defend the Fed’s image and impartiality, especially when Senator Raphael Warnock called the scandal a “blow” to the Central Bank.
Warnock asked Powell what steps he is taking to protect the Fed’s “impartiality.”
This followed some criticism shared at the beginning of the hearing, when Democratic Senator Sherrod Brown, the head of the Banking Commission, said he plans to introduce legislation that would prohibit Fed officials from owning individual stocks.
Powell, who ordered a review of the Fed’s ethical rules earlier this month, added that the central bank is also examining the transactions of regional Fed presidents to make sure they were legal and compliant with the rules. current ethical guidelines.
“Even if it appears that these transactions were in compliance with existing rules, that just says 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 tackle this.”