FOR IMMEDIATE RELEASE
April 27, 2023
Probe of SVB Failure Must Scrutinize Role of Fed Chair Powell
Washington, D.C. – The investigation into the crisis unleashed by the failure of Silicon Valley Bank must scrutinize Federal Reserve Chair Jerome Powell’s role in the lead-up to the crisis, according to a fact sheet released by Americans for Financial Reform Education Fund.
“Any credible investigation of the banking crisis of 2023 has to reckon directly with Powell’s own very public record advocating lighter bank regulation and supervision and how that played out at the Fed,” said Alexa Philo, senior policy analyst at Americans for Financial Reform Education Fund. “We should not underestimate to what extent his actions, or inaction, undermined the Fed’s role in safeguarding financial stability.”
Reporters following the banking crisis and the response can sign up for the Banking Crisis of ‘23 Brief, a semi-daily email from AFR pulling together news and commentary about it.
The Federal Reserve is set to release findings on the banking crisis on Friday following its own investigation led by Vice Chair for Supervision Michael Barr. Other probes are likely as well.
In the fact sheet, AFREF examines Powell’s record of supporting efforts to deregulate and scale back supervision on the banking sector, including championing changes in S.2155, the partial rollback of the landmark Dodd-Frank law of 2010. The Fed subsequently scaled back even beyond what Congress required in that law.
It also makes note of a particularly damning statement in which Powell promised to avoid exactly the kind of situation that arose with Silicon Valley Bank, which grew into a bank large enough – in the $100-$250 billion range – that the Fed could have stepped up its supervision of the bank, but evidently did not.
“If there are institutions that are currently in that [$100-$250 billion] population or that, over time, become systemically risky or even risky,” Powell said on March 1, 2018. “Then we’ll have that in place.” He added, “we haven’t been shy about finding systemic risk under $250 billion.”