Elizabeth Warren Tears Into Trump's Nominee For Fed's Top Banking Regulator Spot

6 months ago

During remarks on the Senate floor Wednesday, Sen. Elizabeth Warren (D-MA) spoke about the nomination of Michelle Bowman to be Vice Chair of the Federal Reserve for Supervision.

Transcript

00:00Mr. President, I rise today to talk about the nomination of Michelle Bowman to be the

00:04Federal Reserve Board's Vice Chair for Supervision.

00:08Governor Bowman has served on the Federal Reserve Board since 2018, when she was confirmed

00:14as the first governor required to have community bank experience.

00:19But during her tenure, she has consistently prioritized Wall Street over Main Street.

00:25She has weakened safeguards on the largest banks in the country and has opposed common-sense

00:30rules to promote financial stability, to protect consumers, and to drive investment in communities

00:37across this country.

00:39And just yesterday, in another Wall Street giveaway, she voted to lift the asset cap that was placed

00:45on Wells Fargo in an effort to rein in Wells' decades-long track record of customer abuses.

00:54She did this despite the fact that there is no public evidence that Wells Fargo has substantially

01:01changed its approach to banking.

01:04Now Governor Bowman's actions have already imposed serious costs on small businesses and families.

01:11It would be especially dangerous to put her in charge of further deregulating Wall Street

01:18now, just as President Trump has pushed the economy to the edge of a cliff.

01:25Democrats on the Banking Committee unanimously opposed her nomination as Vice Chair for Supervision.

01:31And I urge all of my colleagues, Democrats and Republicans, to do the same now.

01:38In the years leading up to the 2008 financial crisis, the Federal Reserve Board effectively abdicated

01:45its statutory role as a financial regulator and supervisor.

01:50As a result, the agency was asleep at the wheel as dangerous risks built up in the financial

01:57system, especially in the subprime mortgage market.

02:02When the economy tumbled, families, small businesses, and even community banks suffered the consequences

02:10of the Fed's negligence.

02:13Congress established the Vice Chair for Supervision position after the 2008 financial crisis in

02:20order to ensure that the Fed never again ignored its financial regulation and supervision responsibilities.

02:30But in her six years on the Federal Reserve Board, Governor Bowman has hacked away, bit by

02:37bit at the safeguards put in place after the 2008 financial crisis.

02:45So let's take a look at her record.

02:47Governor Bowman has weakened critical safeguards for the largest Wall Street banks.

02:53She has voted to reduce big banks' loss-absorbing capital requirements, and she has voted to undermine

03:01the stress testing framework, both of which have left big banks more vulnerable to collapse.

03:08She has also voted to allow big banks to gamble with people's deposits in financial markets, including

03:15through increased investments in hedge funds and private equity funds.

03:20These actions have allowed Wall Street banks to take on riskier bets and juice their dividends, boost

03:28their buybacks, and pump up executive compensation, all at the expense of financial stability.

03:38Bowman also voted to deregulate massive banks with $100 billion to $250 billion in assets.

03:47That particular error in judgment came back to bite our country quickly, causing the second, third,

03:55and fourth-largest bank failures in U.S. history just a few years later, when these three deregulated

04:04banks—First Republic Bank, Silicon Valley Bank, and Signature Bank—all failed within weeks

04:11of each other in 2023.

04:15For a while, the entire banking system teetered on the edge of collapse.

04:21Now, instead of learning from that near catastrophe, Governor Bowman has refused to take any responsibility

04:29for her votes that led to this banking turmoil, and she has opposed common-sense rules to strengthen

04:37the resilience of large banks even after those failures.

04:43Governor Bowman also voted to approve more than 800 bank merger applications, including

04:49Morgan Stanley's major acquisition of E-Trade and Capital One's recent acquisition of Discover,

04:58which created the largest credit card company in America.

05:03Her lax approach to bank mergers undermines competition and increases concentration in

05:10the banking sector.

05:12And that, in turn, inflicts costs on consumers and threatens the stability of the entire banking

05:20system.

05:21It also poses a direct risk to the future of community banks in this nation.

05:29In addition, Governor Bowman opposed even modest improvements to the Community Reinvestment

05:35Act.

05:36This is a 50-year-old law that was created to prevent racist lending practices by big banks

05:43and to ensure that all communities have access to critical financial services.

05:50Last year, she was the only Fed governor—the only one—to vote against a rule that would

05:56have updated the CRA regulations for the first time in nearly 30 years and would have increased

06:04banks' investments in communities of color, in rural and native communities, and in other

06:11low- and moderate-income areas.

06:14Now, beyond her deeply troubling policy record, Governor Bowman has also demonstrated a worrisome

06:24lack of independence from the White House during her nomination process.

06:30For example, at her hearing, she refused to acknowledge any economic uncertainty created

06:38by President Trump's tariff policies.

06:41And she refused to concede any potential impact of those policies on U.S. financial stability.

06:49That refusal puts her at odds with Chair Powell, with the Fed's staff, and with economic experts

06:58across the political spectrum.

07:01It was clear that Governor Bowman did not want to be seen, even indirectly, criticizing

07:08President Trump.

07:11Ms. Bowman also stated that she plans to submit regulatory actions to the White House for review,

07:18which undermines the Fed's independence and all but guarantees a new deregulatory bonanza

07:27for these Wall Street banks.

07:30She has refused to answer questions about whether she met with then-President-elect Trump or his

07:36transition team while on an official Federal Reserve-funded trip to West Palm Beach in November

07:432024.

07:44Look, our economy is in a precarious moment.

07:50President Trump's disastrous mismanagement of this economy is raising costs for families,

07:57it's putting jobs at risk, and it's threatening to decimate small businesses across this country.

08:05Regulating Wall Street right now would throw gasoline on Trump's economic fire.

08:11The last thing that families and small businesses need is another massive financial crash.

08:19I urge my colleagues to oppose Michelle Bowman's nomination.

08:26Thank you, Mr. President.

08:27I yield the floor.

Elizabeth Warren Tears Into Trump's Nominee For Fed's Top Banking Regulator Spot

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