Call for an investigation of the Fed,
arguing that Jerome Powell has failed.
Now his defenders say
the pandemic was a black swan event
that sent the economy into a tailspin.
And he has correctly read
the labor markets
ability to sustain
full employment
in the face of rate hikes.
What do you say
to those who argue,
who disagree with you and argue?
POWELL
Since this unprecedented
cataclysmic economic
event of the pandemic,
that he's actually done a decent job?
Well, you know,
if you want to treat this
as a cataclysmic event,
which certainly the pandemic was,
keep in mind it drove inflation in ways
that are different
from how we usually have it.
So, for example,
we have seen supply
chain kinks that have driven up prices.
Then add to that
we have a war in Ukraine.
And then one of the big pieces
has been a lot of price gouging.
We've seen these giant corporations,
particularly in industries
that are very concentrated,
really pushing their prices up.
So there are three things
that are helping push prices up.
And do you know how many of those three
can be affected
by raising interest rates? None of them.
The whole point is that Powell is using
the one tool the Fed has,
and that is raise interest rates.
But he has said himself in hearings,
nope,
it won't affect any of those things.
But here's what it will effect.
When the Fed uses language
like we're trying to cool the economy
or slow down the economy,
the translation behind that is
we're trying to increase unemployment.
Right.
And in fact,
the Fed has said this
in the last hearing
that I have with
with Chair Powell,
when we had him in front of us
and the Finance Committee,
I looked at the Fed's own
predictions, their report in December,
in which they said, we want to keep
trying to slow down the economy.
And what we're hoping for out of this
is that we increase unemployment
by 2 million jobs.
Now, that's a lot of people for whom
that's a lot of hurt.
These are people right now
who are paying the rent,
putting groceries on the table.
They're not and they're not hiding this.
They're saying this. He said it today.
I think more than a million jobs
to be lost this year
because of these rate hikes.
That's right.
And actually,
by the Fed's own production,
it's more than 2 million.
That is their target here.
And the point I want to make is
that's not going to help us on supply
chain.
It's not going to help us on the war
in Ukraine.
It's not going to help us on these
the price gouging
from these big corporations.
So I think we ought to be not doing the
extra ordinary, these extreme
interest rate hikes.
We've never seen hikes
at this rate in the modern economy
and bearing down harder
on these other costs
that are these other factors
that are driving up.
But you think Fed Chair
Powell should be doing things
about these other things are,
I think, what he should say.
He should call, for example,
for more on price gouging, but back off
using his tool and keep trying to say
that he's
going to keep using it
until he puts 2 million
people out of work.
So a December
Washington Post
column said
that this is not the Warren presidency,
but it's
certainly a Warren infused
presidency, meaning
that the president, President Biden,
is taking a lot of your suggestions
and trying to enact them into law.
Have you ever directly told
President Biden
that you think you should fire
the chair, fire Jerome Powell?
And who would you like to see
replace him?
So I'm not going to talk
about private conversations,
but what I will say is
I've made it very clear
as publicly as humanly possible
that I didn't think
that he should be
reconfirmed as president,
as chair of the Fed.
And I think he's doing
a really terrible job,
and he's doing a terrible job
on both fronts.
Remember, there are two only two jobs
for the Federal Reserve chair.
One is monetary policy, inflation.
I think he's doing a very bad job there.
And it's risking
pushing our economy into a recession.
His other job is regulatory oversight,
and he has spent five years
weakening regulations
over these multibillion dollar banks.
I predicted
five years ago
the consequence of that kind of weakening
would be that we would see these banks
load up on
risk, build
their short term profits,
give themselves ginormous
bonuses and
big salaries,
and then some of those banks
will explode.
And that is exactly what has happened.
On Share.
Powell
what you just mentioned,
the prospect of a recession.
Do you think the United States
is headed for a recession?
I think that that is where Jerome Powell
is trying to drive it.
And he's got two different ways
because he's purposely
trying to drive it to a recession.
Well, what he's trying to do is get 2
million people laid off.
And one of the things
that we need to understand
when he wants to raise the unemployment
rate by more than a point
within a single 12 month period.
We have done that before in this country.
In fact, we have done it 12 times before.
And out of all 12 times,
how many times has
it resulted in a recession?
The answer is 12.
So that's the direction
he's trying to push this.
That is a danger to our economy.
It's why I said five years ago,
I think he's a dangerous man
to have in this job.
So CNN has exclusively obtained
a letter written
by you and six other senators
after the collapse
of the Silicon Valley Bank.
You're calling for the Fed to crack down
on these large regional banks, arguing
that they cannot be left
to supervise themselves.
As you know,
Powell is not the only banking regulator.
It's the Oxy, the S.E.C., FINRA, the
the CFP,
which you know
a little bit about the FDIC,
Treasury, in short,
the Biden administration.
Aren't you
are you pointing the finger
too much at Powell
and not enough at President Biden
in all the agencies and departments
that he's in charge?
The one who is responsible
on safety and soundness.
That's the part we want to go here.
Is this financially solvent
and stable bank?
That's what the Fed
for all of these
$50 billion and above banks.
And that's where it is that Jerome
Powell has spent years now
weakening the regulations.
In fact,
I had him at a hearing not long ago
in which I talked about the fact
that he has weakened
the regulations over these banks
not once, not twice,
but literally dozens of times.
And so I said to him, of all the things
you've done for these banks
and a lot of it's way down in the weeds,
can you name just one
where you kind of tightened
the regulations a little bit,
where you increased oversight
a little bit?
His answer was no, no.
After the Silicon Valley bank failure,
you sent a
letter to the former CEO
of that bank
arguing that his lobbying
to weaken the rules.
I don't know if you mean
with Congress, which actually
acquiesced.
Yes.
In 2018,
but also or also with with him
with Fed Chair Powell.
But but you said his lobbying
is what enabled the collapse,
and you asked him to submit answers
to your questions by March 28th.
It is not yet March 28th, I should note.
Have you heard back?
And what are you hoping? No, we have not.
But this really is the reminder.
This is not a story
that just one day fell out of the sky.
This is a story that starts
back with you remembers
the last crash put Dodd-Frank in place,
promised the American people,
we're going to have tough regulations
and that means we're not going to have
any more bank failures
then these multibillion dollar banks,
including the CEO of the Silicon
Valley Bank, come in and say, no, no, no.
They want to be treated
not like the multibillion dollar banks
they are.
They said
we're just like those little tiny
local community banks
that do such a great job
of providing local loans and so on.
So regulate us very lightly, they said,
because they claimed they posed
no risk to the economy.
Now, Donald Trump
then ran for president, saying
to those banks, right,
multibillion dollar banks,
I will tighten regulations on you.
Once he was elected,
he put in regulators
who believed in deregulation.
Then he went to Congress
and said to Congress,
roll back
the part of Dodd-Frank that requires
more supervision over these $50 billion.
And most Republicans went along with it.
But also a bunch of Democrats, too. Yup.
No. He got help from both parties.
And then what happened is that Jerome
Powell said you've opened the door
for much more deregulation.
Massive deregulation.
And he said he's actually on the record
saying this because you opened the door.
I am now going to go full steam ahead
and lighten the regulations.
And then his
then vice chair, who was Randy
Quarrels, said that his job was to
change the culture at the Fed
in order to let these banks
do what they wanted
to do
to be able to take on
risk, run up profits.
And I'm going to say
he didn't add this part
and run the risk of exploding.
Do you want other parts of the Biden
administration to be more aggressive
on these issues?
All of the Treasury Department
and all of the other agencies and
and regulatory departments
that I mentioned.
What do they need to be more
aggressive as well?
I think right now
this really is at the Fed.
And then I want to say the regional Fed.
So the whole Fed structure, the CFP,
for example,
they're dealing with consumer contracts.
And that's not the heart of what's gone
wrong here.
FDIC is trying to figure out
how to manage the insurance
for deposit rates.
And actually, I think this is a place,
thanks to the intervention,
that the Treasury was forced
to take weakened before last.
I think this is a place now
we're going to have to have
statutory change
because in effect, the Treasury
combined with the Fed,
has said we're going to come in
and start
backstopping all deposits, backstop
ing the banks,
and that means they're providing,
in effect, a form of insurance
and not charging for it. Hmm.
Is there a way we saw some elements
after the East
Palestine, Ohio train derailment travesty
where we saw
some elements of the populist right,
the JD Vance's of the world
joining with some elements
of the populist left,
the Sherrod Browns of the world.
Is there an area here
for the kind of actions
you're talking about
that conservatives could join with you?
I think there is
and it's the reminder
that there are regulations
that are helpful to all of us
and the regulations are about safety.
That's what
obviously the train derailment was about.
It's also about economic safety.
We need a Federal Reserve
that is doing its job
and that is to keep these banks safe.
Look,
no depositor, no
small business, no family, individual
should have to say,
I need to see the bank's
balance sheet before
I know that it's safe
to put money in the bank.
The whole idea is
the regulators
are supposed to keep those banks safe.
You know,
I used to talk about exploding toasters
that you shouldn't
have to be an expert on toasters
to buy a toaster.
Yeah, we ought to know that they're safe.
That's what regulations are about.
Same thing ought to be true
about putting money in banks.
It should be safe.
Banking
should not be a place for risk takers
who want to.
Who want to build up,
you know, fast profits.
Silicon Valley Bank.
Increase their profitability by 40%
the last three years.
That's not what we want from banks.
We want banks that are boring
and that are safe.