Silicon Valley Bank’s (SVB) collapse and turmoil in the banking industry provide a moment for Sen. Elizabeth Warren (D-Mass.) to jump back into the spotlight.
And Warren, who rose to prominence as a consumer protection advocate and has long made headlines for bashing banks, is jumping at the chance.
Over the past week, the Massachusetts progressive and one-time presidential candidate has launched a sweeping offensive.
She unveiled legislation to repeal a 2018 deregulation law signed by former President Trump that raised the threshold for banks subject to federal scrutiny from $50 billion to $250 billion.
She has been a constant presence on cable news, with multiple appearances set for the weekend Sunday broadcast circuit, wrote an op-ed in The New York Times and has pressed former SVB CEO Greg Becker on his lobbying for the 2018 rollback of the rules.
For a number of Senate Democrats, she is an invaluable voice on the issue.
“Very important,” Sen. Bob Casey (D-Pa.), who supports Warren’s new banking proposal, told The Hill. “Not only does she have a great commitment to consumers and families, more generally she has a lot of expertise and is a great messenger and advocate for these issues.”
But Warren’s ongoing criticism is poised to cause headaches for President Biden and other Senate Democrats, especially those who voted for the withdrawal in 2018 and are up for election in 2024.
In all, 12 sitting senators who caucus with Democrats voted for the bill — including Sen. Kirsten Sinema (I-Ariz.), who voted for it in the House — which raised the asset limit to $250 billion, said SVB and dozens of others banks were exempted from strict federal supervision.
Warren’s legislation, the Secure Viable Banking Act, was introduced in the House by progressive Rep. Katie Porter (D-Calif.). Despite the warm welcome from some corners of the party, it has not been embraced by the Democratic leadership.
Asked if he supports Warren’s plan, Senate Majority Leader Chuck Schumer (DN.Y.) told reporters that “strong legislation” is needed but that any bill must be bipartisan.
Still, management is paying close attention to Warren amid this period of banking turmoil. After The Hill noted that Warren has been vocal on the issue this week, Sen. Debbie Stabenow (Mich.), the No. 3 ranking Senate Democrat, said, “Has she really?”
“She’s always a respected voice, definitely,” said Stabenow, who voted for the 2018 bill. “(The question is) what exactly are we trying to solve? … I’m so grateful that we have President Biden and his team in place. They acted very quickly, and I think in an incredibly competent job, being able to move move quickly to calm the water.”
Biden on Monday blamed the Trump administration for the rollback of Dodd-Frank and called on Congress and regulators to “strengthen regulations on banks to make it less likely that this kind of bank failure will happen again.”
Press Secretary Karine Jean-Pierre said Thursday that the White House has seen “bipartisan support for a piece of legislation, the (Warren)-Porter bill.” No Republicans had signed onto the bill Friday.
Jean-Pierre would not say whether the SVB failure could have been avoided if the Dodd-Frank rules were not rolled back, but said the White House will talk about its position on the $250,000 deposit insurance limit — which the Federal Deposit Insurance Corp. (FDIC) waived SVB depositors – “in the next few days.”
The White House is looking at the Warren bill as well as other legislative changes, an administration official told The Hill, but would not say whether Biden supports the Massachusetts Democrat’s legislation.
Dozens of Senate and House Democrats have since co-sponsored Warren’s bill, but it will be a non-starter in the GOP-controlled House or face a Republican filibuster in the Senate.
“We appreciate their leadership in putting ideas on the table,” the official said. “The Obama-Biden administration put tough requirements in place after the 2008 financial crisis to make sure that kind of crisis wouldn’t happen again. Unfortunately, the last administration rolled back some of them. As the president said, Congress and regulators need to strengthen rules for larger banks, so this doesn’t happen again.”
When Warren ran for the Democratic presidential nomination in 2020 before dropping out and endorsing Biden, the difference between her and the president’s views on issues such as bank regulation was on display. Biden, who played on messages that he is a centrist and believes in capitalism, was joined on the debate stages by Warren, who has a long history of fighting back against banking practices that she clearly claims are predatory.
Throughout the Biden administration, Warren has been particularly at odds with Federal Reserve Chairman Jerome Powell, an official appointed under Trump but whom Biden has stressed he has full confidence in. She opposed Powell’s nomination in 2018, warning then that he would weaken financial regulations, and has since been his fiercest critic in the Senate, speaking out against him at various hearings.
Warren this week called on Powell to recuse himself from the internal review of the SVB failure, arguing that his actions “directly contributed” to the situation because the Fed chair has signaled he would support easing banking rules.
Powell reportedly pushed not to include a sentence mentioning regulatory failures in a Sunday night press release issued jointly by the Fed, the Treasury Department and the FDIC, arguing that he wanted to focus instead on the actions taken taken. Warren tweeted that the Fed chairman’s “attempts to snoop” on government officials were “completely inappropriate.”
“Congress needs to step in to fix these mistakes before things get even worse,” she added.
Meanwhile, Warren cited Biden specifically urging Congress to act on the SVB failure for her decision to introduce her legislation.
“President Biden called on Congress to strengthen regulation of banks, and I am proposing legislation to do just that by repealing the core of Trump’s banking law,” she said in a statement Tuesday.
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