“Small businesses need to be able to count on getting their money for payroll and utility bills,” he said. “Regulators need to be able to do that. These are not people who can examine the safety and soundness of individual banks. That’s for regulators.”
Warren, who was part of a group of Democrats who vocally opposed the 2018 law that repealed key provisions of the 2010 Dodd-Frank law and weakened banking regulations, said raising the FDIC insurance cap would be “a good move” if done together. stricter banking regulations.
In another appearance, on ABC’s “This Week,” Warren elaborated, saying she wants Congress to repeal a provision of the 2018 law that imposed restrictions on banks with at least $50 billion in assets.
“These are banks whose main regulator is the Federal Reserve Bank. And these are the banks that adopted these risky practices that ultimately have … blown up at least three banks,” Warren said. “We need strict regulation. If you have more than $50 billion … you should have stress tests and proper capital requirements and so on.
Warren, a longtime critic of Federal Reserve Chairman Jerome H. Powell, also said he should ensure the central bank pauses its rate-hiking campaign, citing factors such as the war in Ukraine and rising prices. The Fed’s next policy meeting is this Tuesday and Wednesday, with an interest rate announcement scheduled for Wednesday afternoon.
“Raising interest rates will not solve these problems. It just makes millions of people unemployed, Warren said.
He did not directly say that he had advised President Biden to remove Powell as chairman of the Fed, but said he should no longer be in that position.
“Look, my views on Jay Powell are well known at this point,” he added. “He’s had two jobs. One is dealing with monetary policy. One is dealing with regulation. He’s failed at both.”
Other legislators are also involved. On Face the Nation, Rep. Patrick T. McHenry (RN.C.), chairman of the House Financial Services Committee, said that while Warren’s interview was the first time he had heard of the proposal to raise the deposit insurance cap, he did not rule it out. McHenry noted that the FDIC had raised its deposit insurance cap from $100,000 to $250,000 in 2010, after the last financial crisis.
“I haven’t had any conversations with the White House or the administration [changing the level on] deposit insurance,” McHenry said. “However, I’m going to decide whether or not we need to address the FDIC deposit level.”
On NBC’s “Meet the Press,” Sen. Mike Rounds (RS.D.), a member of the Senate Banking Committee, suggested the $250,000 deposit cap was not high enough, citing inflation.
“When we talk about allowing a bank to fail, it’s one thing to say it’s OK to let the bank’s owners lose their resources. It’s another thing to say that depositors should necessarily be allowed to lose their deposits,” Rounds said. “That’s why we start with a quarter of a million dollars in protection. Maybe that’s not enough.”
Warren’s proposal came a week after federal officials announced they would protect all deposits at two failed banks — Silicon Valley Bank and Signature Bank of New York — to stabilize and strengthen public confidence in the U.S. banking system. But the bank collapse has also renewed battles over federal banking regulation.
On Friday, Biden urged Congress to impose tougher penalties on top bank executives whose mismanagement contributes to the collapse of their institutions, saying current law limits his administration’s authority to hold bank executives accountable when their institutions fail and go into receivership under the FDIC. as Silicon Valley Bank did about a week ago.
Biden asked Congress to expand the FDIC’s authority to impose tougher penalties on the executives of such banks, including barring them from taking other jobs in the banking industry, imposing fines and clawing back their compensation.
That compensation should include gains from stock sales, the White House clarified later Friday, noting that Silicon Valley Bank CEO Greg Becker sold $3.6 million in company stock days before the bank collapsed.
Under current law, the FDIC can only fine bank executives who “recklessly” engage in “dangerous or unsound” practices. The federal agency can also bar executives from working at other banks only if they show “willful or persistent disregard for the safety and soundness of their bank.”
“Congress should strengthen this tool by lowering the statutory standard for imposing this prohibition when a bank is placed under FDIC receivership,” the White House said Friday. “The president believes that if you’re responsible for the collapse of one bank, you shouldn’t be able to just turn around and run another.”
Azi Paybarah contributed to this report.