The collapse of Silicon Valley Bank (SVB) and the turmoil in the banking industry provide a moment for Sen. Elizabeth Warren (D-Mass.) to return to the spotlight.
And Warren, who has risen to prominence as a consumer protection advocate and has long made headlines for hammering banks, is jumping at the chance.
Over the past week, Massachusetts’ progressive and one-time presidential candidate has launched a wide-ranging attack.
He unveiled legislation to repeal the 2018 deregulation bill signed by former President Trump, which raised the threshold for federally regulated banks from $50 billion to $250 billion.
He’s been a constant presence on cable news, with more appearances scheduled for this weekend’s Sunday round of shows, writing an op-ed in The New York Times and pressuring former SVB CEO Greg Becker to lobby him to repeal the 2018 regulations.
For many Senate Democrats, he is an invaluable voice on the issue.
“Very important,” Sen. Bob Casey (D-Pa.), a supporter of Warren’s new banking proposal, told The Hill. “He not only has a great commitment to consumers and families, but more broadly, he has a lot of expertise and is a great messenger and advocate on these issues.”
But Warren’s continued criticism is bound to cause headaches for President Biden and other Senate Democrats, especially those who voted for the 2018 repeal and are running again in 2024.
A total of 12 sitting senators, who aligned with Democrats, voted for the bill — including Rep. Kirsten Sinema (I-Ariz.), who voted for it in the House — that raised the asset limit to $250 billion, exempting SVB and dozens of other representative Banks from the strict of federal control.
Warren’s legislation, the Secure Viable Banking Act, was introduced in the House by progressive Rep. Katie Porter (D-Calif.). Despite a warm reception in some parts of the party, the Democratic leadership has not embraced it.
When asked if he supported 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 well aware of Warren during this banking turmoil. When The Hill noted that Warren has spoken about the issue this week, Sen. Debbie Stabenow (Mich.), the No. 3 ranking Democrat in the Senate, quipped, “Has she really?”
“He’s always a valued voice, absolutely,” Stabenow, who voted for the 2018 law, said. “[The question is] what exactly are we trying to solve? … I’m so grateful to have President Biden and his team here. They acted very quickly and in my opinion did an incredibly competent job of being able to move quickly to calm the waters.
On Monday, Biden accused the Trump administration of rolling back Dodd-Frank and called on Congress and regulators to “tighten the rules on banks so that this type of bank failure is unlikely to happen again.”
Press Secretary Karine Jean-Pierre said Thursday that the White House has seen “bipartisan support for the legislation, [Warren]- Porter’s bill.” No Republicans had signed the bill as of Friday.
Jean-Pierre would not say whether SVB’s failure could have been avoided if Dodd-Frank had not been repealed, but said the White House would take a position on the $250,000 limit on deposit insurance waived by the Federal Deposit Insurance Corp. (FDIC) for SVB depositors – “during the next few days”.
The White House is reviewing Warren’s bill as well as other legislative changes, an administration official told The Hill, but would not say whether Biden would support the Massachusetts Democrat’s legislation.
Dozens of Senate and House Democrats have since backed Warren’s bill, but it is a non-starter in the GOP-controlled House or faces a Republican opponent in the Senate.
“We appreciate their leadership in putting ideas on the table,” the official said. “The Obama-Biden administration put in place tough requirements after the 2008 financial crisis to make sure this kind of crisis doesn’t happen again. Unfortunately, the last administration rolled back some of them. As the president said, Congress and regulators need to strengthen the rules for larger banks to prevent this from happening again.”
When Warren ran for the Democratic presidential nomination in 2020, before withdrawing and endorsing Biden, the gap between her views and the president’s was on display on issues such as bank regulation. Biden, who honed in on the message that he is a centrist and believes in capitalism, was joined on stage by Warren, who has a long history of fighting bank practices that he vehemently claims are predatory.
Throughout Biden’s administration, Warren has been at odds, especially with Federal Reserve Chairman Jerome Powell, an official appointed under Trump, but whom Biden has emphasized that he trusts completely. He opposed Powell’s nomination in 2018, warning at the time that he would weaken financial regulations, and has since been his fiercest critic in the Senate, berating him in several hearings.
Warren urged Powell this week to recuse himself from an internal review of the SVB error, arguing that his actions “directly contributed” to the situation, as the Fed chairman has signaled his support for easing banking regulations.
Powell reportedly tried not to include a sentence citing regulatory shortcomings in a joint press release issued by the Fed, Treasury and FDIC on Sunday evening, insisting he wanted to focus instead on the actions being taken. Warren tweeted that the Fed chairman’s “attempt to shut down” government officials was “totally inappropriate.”
“Congress needs to step in to fix these mistakes before things get worse,” he added.
Meanwhile, Warren singled out Biden, who specifically urged Congress to act after SVB’s failure in his decision to introduce his legislation.
“President Biden called on Congress to strengthen bank regulations, and I’m proposing legislation to do just that by repealing the core of Trump’s banking law,” he said in a statement Tuesday.
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