Senator Warren Calls Fed Chair Powell "Dangerous Person," Opposes Reappointment Face-to-Face

Elizabeth Warren, U.S. Democratic Senator
Photo by EPA Yonhap News

[Asia Economy Reporter Park Byung-hee] U.S. Senator Elizabeth Warren of the Democratic Party has officially announced her opposition to the reappointment of Jerome Powell, Chairman of the U.S. Federal Reserve (Fed).

According to Bloomberg News on the 28th (local time), Senator Warren directly called Powell a "dangerous person" in front of him at the Senate Banking Committee hearing and expressed her opposition to his reappointment. Known as the "Wall Street Reaper," Senator Warren pointed out that Powell loosened regulations too much, allowing banks to easily make risky investments.

Senator Warren criticized Powell for appearing too weak against Wall Street banks' lobbying efforts and expressed concern that Powell's deregulation measures could trigger a financial crisis, leading to the injection of hundreds of billions of dollars in taxpayer money for financial sector bailouts.

Warren pointed out that the financial crisis was already evident in the 2000s, and as the Fed gradually loosened regulations, banks took increasingly risky investments. The Fed stood by until the market collapsed and the mortgage market turned to ashes, ultimately causing American taxpayers, consumers, and the U.S. economy to pay the price.

Warren cited three deregulation measures that have made the U.S. unstable: easing of stress tests (asset soundness reviews) on large banks, relaxation of the Volcker Rule that regulated bank investments, and reduction of bank liquidity requirements. She asked Powell if he regretted these actions. Powell occasionally objected and said he did not regret them but promised to look into the issues raised by Warren.

Warren said, "Because of Chairman Powell, the U.S. banking system has become unstable," and added, "Powell is a dangerous person to lead the Fed, and therefore I oppose his reappointment."

Jerome Powell, Chair of the U.S. Federal Reserve (Fed)
[Photo by AFP Yonhap News]

Powell's term expires in February next year. All Fed personnel must first pass a vote in the Senate Banking Committee before the full Senate confirmation vote. The Senate Banking Committee has a Democratic majority.

Senator Warren is the first among Democratic lawmakers to officially express opposition to Powell's reappointment. Besides Warren, Senator Sherrod Brown, chairman of the Banking Committee, is also reportedly dissatisfied with Powell's reappointment due to perceived lax bank regulations. However, Brown has not yet officially expressed opposition.

Among Republican senators on the Banking Committee, Senator Steve Daines expressed support for Powell's reappointment in a letter to President Joe Biden last August.

Unlike Warren, Powell is known to have broad support within the White House and the Treasury Department. Treasury Secretary Janet Yellen reportedly conveyed the White House's support for Powell's reappointment.

When asked if she had conveyed her views to the White House, Warren said she had not discussed them with White House officials and would not recommend anyone instead of Powell. However, she mentioned that President Biden has other options for Fed chairman and that other senators might scrutinize Powell more strictly.

Bloomberg reported that President Biden is currently considering reappointing Powell as chairman and promoting Lael Brainard to vice chair, putting her in charge of supervision, a key part of bank regulation. Incidentally, the term of Randall Quarles, the current vice chair responsible for bank supervision, expires next month. Brainard is known to have consistently opposed Powell's bank deregulation measures.

This content was produced with the assistance of AI translation services.