Sen. Elizabeth Warren (D-Mass.) announced Tuesday, Sept. 28, that if President Biden chooses to reappoint Federal Reserve Chair Jerome Powell, she will vote against it because of his banking regulatory record.
Senator Elizabeth Warren called him “a dangerous man” for his handling of regulations for large banks.
The announcement was made during a Senate Banking Committee hearing with Powell and Treasury Secretary Janet Yellen. Warren, known for being a regulatory hawk, chastised the chairman for what she saw as his cozy relationship with Wall Street, Washington Examiner reported.
“Renominating you is gambling the next five years of a Republican majority on the Fed board, and a Republican chair—who has regularly voted to deregulate Wall Street—won’t drive this economy off a financial cliff again,” Warren said evoking the 2007-08 financial crisis.
“With so many qualified candidates for this job,” she continued, “this risk is not worth taking.”
Warren said Powell has been “lucky” and argues that his deregulatory actions could put the economy in jeopardy in the future.
“I know that some argue that your deregulatory actions are mostly harmless. I disagree. I think they’ve put taxpayers at risk for hundreds of billions of dollars, but even at that, so far you’ve been lucky,” Warren said.
“I came to Washington after the 2008 crash to make sure that nothing like that would ever happen again. Your record gives me grave concern,” she continued. “Over and over, you have acted to make our banking system less safe. And that makes you a dangerous man to head up the Fed, and it’s why I will oppose your renomination.”
According to The Hill, Powell’s time as Fed head expires in February, and progressive Democrats and activist groups are putting pressure on Biden to replace the Republican with a strong liberal,
Powell was nominated to the Fed board by former President Trump in 2017, replacing then-Fed Chair Janet Yellen with a Republican who shared Yellen’s backing for open monetary policy but had laxer views on bank regulation.
Democrats have commended Powell for refocusing the Fed’s efforts on maximizing employment and leading the bank’s successful efforts to stabilize markets during the pandemic’s outbreak. However, there is disagreement within the party about whether Powell’s employment-driven monetary policy is worth the expense of potential regulatory rollbacks.
Under Powell’s leadership, the Fed reduced the frequency of specific bank stress tests, streamlined liquidity requirements, and tweaked aspects of a rule prohibiting banks from making risky trades with their own assets, all of which were enacted as part of the 2010 Dodd-Frank Wall Street reform law.
While Warren and many other banking industry critics have blasted the Powell Fed for putting the country in jeopardy, some Democrats, including the former Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass. ), argue that Powell isn’t that hazardous.
If Biden decides to renominate Powell, Warren’s opposition may motivate additional progressive Democratic senators to join her, putting more pressure on the president to reverse course. Nonetheless, Powell has strong bipartisan support and would need less political capital for Biden to confirm than a liberal replacement, especially in the Senate’s evenly divided chamber.