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Mar 23, 2023
Warren Wants Biden’s Fed Vice Chair Pick to Be Tougher on Banks
(Bloomberg) -- Senator Elizabeth Warren was focused before the banking turmoil on getting President Joe Biden to name a Federal Reserve vice chair who would resist Jerome Powell’s rate increases. Now, she wants a nominee who wants tougher bank regulation, too.
“We need somebody to counter Powell on both rates and regs,” Warren said in a recent interview.
Warren’s shifted focus underscores how the failures this month of Silicon Valley Bank and Signature Bank have changed the political calculus for any eventual nominee. Like Warren, Senate Banking Committee Chair Sherrod Brown has said he doesn’t want a “bank apologist” in the post.
The frontrunner had been seen as Northwestern University Professor Janice Eberly, who was assistant Treasury secretary for economic policy in the Obama administration.
“I’m not convinced anybody is now,” Brown, an Ohio Democrat, said Wednesday.
Brown, whose committee would have to approve the eventual nominee, said he thinks the banking crisis likely slowed the White House’s process for picking the vice chair.
Eberly has met with top Biden aides including Chief of Staff Jeff Zients, Treasury Secretary Janet Yellen and National Economic Council Director Lael Brainard, whose move to the White House created the opening.
It isn’t yet clear how her positions on banking regulations would be viewed on Capitol Hill.
White House Press Secretary Karine Jean-Pierre declined to offer an update on the search. “The president’s taking this open appointment very seriously. As soon as we have something to share, we certainly will do that,” she said.
Warren wants someone who would dissent from Powell’s deregulatory views, like Brainard did when she was on the Fed board.
“Remember, I opposed Powell last year because of his position on regulation,” she said of the chairman’s renomination. “The fact that Powell had already weakened regulations time and time again meant that he was a dangerous man to have running the Fed.”
Warren blames Powell’s approach on regulation for the bank failures. “We just saw one of the consequences of the kind of danger he posed,” she said.
Powell on Wednesday said he supported a tighter leash on banks.
“It’s clear we do need to strengthen supervision and regulation,” he said, adding he plans to back a package to be proposed by Fed Vice Chair for Supervision Michael Barr, who is leading the Fed’s internal view of what went wrong.
Warren smiled when asked about Powell’s turn toward more regulation. “I wish he’d started saying it five years ago before he weakened all these regulations,” she said.
Senator Thom Tillis of North Carolina, a Republican member of the Banking Committee, warned against a pick that would create a split at the Fed when asked about Warren’s comments on Powell.
“Senator Warren will never miss an opportunity to make a banking regulatory agency partisan,” he said. “You’re already seeing it at the FDIC, CFPB was lost forever, you’re seeing it at the SEC. This is the last consensus-based organization there, and what she’s doing makes that likely to not be there at the worst possible time.”
Brown noted that prospects for quick action would depend on Republican backing. Freshman Senator John Fetterman of Pennsylvania, a Democrat, has been absent while undergoing treatment for depression.
“The committee’s 11-11 without Fetterman,” he said.
--With assistance from Josh Wingrove and Jonnelle Marte.
(Updates with reaction from Republican Senator Thom Tillis in the 16th paragraph.)
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