Sen. Warren calls for independent investigation into bank collapses, regulatory failures

Senator Elizabeth Warren is continuing to publicly call for accountability in connection to the collapses of Silicon Valley Bank and Signature Bank earlier this month.

After penning a New York Times op-ed and calling for the Senate to hear testimonies from the CEOs of the two banks, the Massachusetts Democrat is now directing her attention at multiple federal watchdogs. 

Warren pushed for an independent investigation into the causes of the bank failures in a letter sent to the inspectors general at the Department of the Treasury, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve on Saturday. She requested a report with preliminary findings within 30 days. 

The bank failures, which Warren called “extraordinary events,” were the second- and third-largest bank failures in American history. 

In her letter, Warren wrote that the bank’s executives must be held responsible. But she said that an investigation should not stop there. 

Multiple failures by lawmakers and regulators contributed to the collapses. Banks like SVB and Signature were able to skirt certain rules because of laws passed during the Trump presidency that weakened the Dodd-Frank Act, Warren wrote. The Dodd-Frank Act, which reorganized the financial regulatory system, was enacted in the wake of the 2008 financial crisis.

The regulatory rollbacks initiated under Federal Reserve Chair Jerome Powell’s leadership “created an environment in which failure was inevitable,” Warren wrote. She also placed blame on the Federal Reserve Bank of San Francisco, which oversaw SVB. 

Powell has often been in Warren’s crosshairs. Earlier this month, she aggressively questioned Powell regarding the Fed’s role in rising unemployment rates. During an appearance Sunday on NBC’s “Meet The Press,” Warren said that Powell had “failed” and that he should not be leading the Fed. 

“I am particularly concerned that you avoid any interference from Fed Chair Jerome Powell, who bears direct responsibility for – and has a long record of failure involving – regulatory and supervisory matters involving these two banks,” Warren wrote. 

Any investigation should be completely independent from any bank executives and regulators tied to the collapses, like Powell, she added. 

Warren has asked Powell to recuse himself from the Fed’s internal investigation of the bank failures, but Powell has not yet responded, Warren wrote. She called this silence “troubling,” and referenced reports that Powell “muzzled” regulators from publicly mentioning the regulatory failures that occurred under his watch.

As regulators prepared to announce the rescue of depositors at SVB  and Signature, the Biden administration pushed to highlight the regulatory failures that they blamed for the chaos, the Times reported last week. 

But Powell reportedly blocked the inclusion of a phrase that mentioned regulatory failures in a joint statement issued by the Fed, the Treasury Department, and the FDIC. 

“If these reports are true, they would reveal outrageous and inappropriate interventions by Chair Powell,” Warren wrote.