Sen. Elizabeth Warren (D-Mass.) has called for the Senate to hold hearings on the recent collapse of two major banks in the aftermath of their failures.
Sarafina Chitika, the deputy communications director for Warren, confirmed to The Hill that the senator believes the body should hold hearings that include testimony from the CEOs of Silicon Valley Bank and Signature Bank, both of which collapsed over the weekend.
Igor Bobic, a senior politics reporter for The Huffington Post, first reported Warren’s call for hearings. Bobic reported that Warren said senators should ask the CEOs about “what went wrong” with their companies and their roles in pushing for regulations from the Dodd-Frank Wall Street Reform and Consumer Protection Act to be rolled back “so they could load up their banks with risk.”
Congress passed the Dodd-Frank Act and then-President Obama signed it into law in 2010 to increase financial regulations to prevent the types of failures of major banks that were seen at the start of the Great Recession in the United States in 2008.
Silicon Valley Bank collapsed at the end of last week after it could not fulfill all of its withdrawal requests from customers amid a bank run because it did not have enough cash on hand.
The federal government responded Sunday when the Federal Deposit Insurance Corporation, which normally insures up to $250,000 per account at the banks it regulates, took over the bank.
President Biden also announced on that day that customers who had deposits at the bank would be able to access their money even if they had more than the $250,000 limit. But he also vowed that taxpayers would not pay any money to bail out the bank.
Signature Bank became the second major bank casualty in recent days when New York state regulators shut it down to protect those with deposits following another bank run.
Warren previously criticized Congress for a 2018 law that rolled back some regulations from the Dodd-Frank Act and that she said enabled the situation with the bank. She said in an op-ed in The New York Times that the failures were “entirely avoidable” and are the result of the government weakening financial rules.
The Trump-administration law, which passed with support from Republicans and some Democrats, allowed banks to carry less liquid assets and exempted those with less than $250 billion in assets to not be subject to more rigorous tests from the Federal Reserve.
Warren, who voted against the deregulation law, and other liberals have slammed it in recent days, arguing that it created financial vulnerabilities.
Warren called on former Silicon Valley Bank CEO Greg Becker in a letter on Tuesday to answer questions about his role in pushing for Congress to roll back some Dodd-Frank regulations in the years since it became law.