U.S. Senator Elizabeth Warren is calling for an independent investigation into the recent collapse of major banks, Silicon Valley Bank (SVB) and Signature Bank.
In a letter addressed to the Treasury Department’s deputy inspector general, the Federal Deposit Insurance Corporation’s acting inspector general, and the Federal Reserve Board’s inspector general, Warren requested a thorough investigation into the causes of the bank management and regulatory and supervisory problems that led to these failures.
She emphasized that these were the second- and third-largest bank failures in the nation’s history and that until they were determined to be a “systemic risk,” they threatened economic contagion and severe damage to the banking and financial systems.
Warren attributed these bank failures to a series of failures by lawmakers and regulators, including Congress and former U.S. President Donald Trump, who weakened the Dodd-Frank Act and allowed banks like SVB and Signature Bank to evade key rules and regulations.
She also alleged that the Federal Reserve, under Chair Jerome Powell, initiated regulatory rollbacks, and the banks’ supervisors, particularly the Federal Reserve Bank of San Francisco that oversaw SVB, missed or ignored key signals about the impending failure. According to Warren, these regulatory rollbacks created an environment in which failure was inevitable.
The senator stressed the importance of an independent investigation that is free of influence from bank executives or regulators responsible for the failures.
She cautioned against any interference from Chair Powell, whom she blamed for regulatory and supervisory failures involving these two banks. Warren further criticized Powell’s record, stating that he has failed at both dealing with monetary policy and regulation, and that he should not be the chairman of the Federal Reserve.
Warren recently blamed Silvergate Bank’s failure on crypto risks and claimed that Signature Bank collapsed because it embraced crypto clients without sufficient safeguards.
The senator’s call for an investigation is likely to renew scrutiny of the banking industry and regulatory oversight, as well as the role of cryptocurrencies in the financial system.