Two years have passed since the collapse of Silicon Valley Bank, and U.S. Senator Elizabeth Warren has expressed strong criticism towards the Federal Reserve's response. In a letter addressed to Federal Reserve Chair Jerome Powell, Warren highlighted concerns over the Fed's handling of the situation and its lack of action against those responsible for the bank's downfall.
“These executives drove the bank into the ground, requiring extraordinary government intervention and costly support to stave off another catastrophic banking crisis that would have harmed working families. But the Federal Reserve Board has not exercised its clear enforcement authorities against the individuals that egregiously violated banking laws and regulations,” wrote Ranking Member Warren.
She further stated: “The Federal Reserve Board has also failed to complete any meaningful rulemakings to prevent another similar blow-up. This is an abdication of your responsibility to maintain the safety and soundness of the nation’s banking system and an invite for future mismanagement by the next generation of wealthy bank executives.”
Warren emphasized that while the Federal Deposit Insurance Corporation (FDIC) has conducted its investigation and initiated legal action against former bank executives, it is crucial for the Federal Reserve, as the primary regulator, to take steps in holding these individuals accountable. She called for clarity on how their ongoing investigation is progressing.
The senator reiterated her long-standing concerns about rolling back financial stability safeguards established under Dodd-Frank, which she believes contributed significantly to Silicon Valley Bank's collapse in 2018.