Elizabeth Warren urges Fed’s Powell to ‘step back,’ recuse himself from SVB review

Sens. Warren, Blumenthal call for criminal investigation of SVB insider trading, contagion fallout

As bank shares tumble in the markets amid growing bank-run contagion fears, Democratic Sen. Elizabeth Warren, D-Mass., is questioning the credibility of the Federal Reserve and calling on Chair Jerome Powell to step back from the review of the Silicon Valley Bank collapse. 

"For this review to have any credibility at all, Chair Powell has to recuse himself. He is the one who not only presided over the Fed, who not only came to Congress and answered questions from me and from others about this deregulatory move, but actually led it," Warren told FOX Business’ Grady Trimble on Capitol Hill Wednesday.

"And it's important that while we're examining what went wrong, that Chair Powell take a step back and let Michael Barr, who is the new vice chair, who was not there during all of this, let him conduct an independent investigation," she added. "That's the only way we can have some confidence in it."

Before the stock market open Wednesday morning, Dow Jones Industrial Average futures fell more than 500 points, while S&P 500 and Nasdaq Composite futures fell more than 70 points and 200 points, respectively. Credit Suisse shares hit a new record low as well, losing almost a quarter of its value; other regional banks seeing sharp declines include First Republic, PacWest, and KeyBank.


The plunge comes just days after California-based Silicon Valley Bank became insolvent and was bailed out by federal regulators via an auction and insured deposits up to $250,000, marking the second-largest U.S. bank failure since 2008.

Elizabeth Warren speaks to reporters

Sen. Elizabeth Warren, D-Mass., called for Federal Reserve Chair Jerome Powell to recuse himself from a possible congressional investigation into the Silicon Valley Bank bailout. (Getty Images)

In response, Warren has also proposed a bill to repeal a Trump-era law that rolled back bank reforms. The senator told Trimble that she believes the regulation stands a chance at passing amid a "crisis like this."

"We just need tougher, steadier regulations," Warren said. "What matters is that, if there had been appropriate regulation, that mismanagement would have been caught before it blew those banks up, and before the government was forced to intervene and back up all of the depositors."

"I thought it was dangerous to have someone like Powell who was willing to deregulate the banks in the position as the head of the Fed, and I think some of that danger has now shown itself right out in public."

- Massachusetts Democrat Sen. Elizabeth Warren 

"The government shouldn't be put in that position because we need tough regulations to keep that problem from ever occurring," she continued.

When Powell was appointed as chairman, Warren further argued he started down a deregulatory path which caused regulators to "lighten up" and miss "big" problems.

"The stress tests during Powell's term have become easier, they've become less frequent. And that means that problems that bubble up, problems because the executives want to boost those profits and the best way to boost those profits is to take a little more risk and a little more risk, that those problems don't get tamped out early," the senator explained.

Warren also reflected on her initial impression of Powell in office, recalling that she thought his "dangerous" policy would one day bring itself to the economic forefront.


"I opposed him when he was renominated and I opposed him for specifically the reason that he was too light on regulations," Warren said.

"I said at the time, I thought it was dangerous to have someone like Powell who was willing to deregulate the banks in the position as the head of the Fed," she continued, "and I think some of that danger has now shown itself right out in public."