Sen. Elizabeth Warren, the Democrat from Massachusetts who has made a career trying to increase government oversight of the banking system, had some strong departing words for the Federal Reserve’s top bank regulator, a Republican with more of a deregulatory bent.
Warren criticized Fed Vice Chairman for Supervision Randal Quarles — who was appointed by former President Donald Trump, and whose four-year term is set to expire in October — during a Senate Banking Committee hearing.
“ ‘Our financial system will be safer when you are gone.’ ”
“Your term as chair is up in five months and our financial system will be safer when you’re gone. I urge President Biden to fill your role with someone who will actually serve,” Warren told Quarles.
“Instead of protecting the system, you have spent your time at the Fed cutting holes in the safety net,” Warren added.
Warren’s comments came at the end of questioning when she argued the Fed should not have removed Credit Suisse CS, +0.65% and a few major foreign entities from a program overseeing the biggest banks. This lack of scrutiny ultimately played a role in the Swiss banking giant suffering over $ 5 billion in losses from the collapse of Archegos Capital Management, Warren said.
As the two officials talked over each other during the virtual hearing, Quarles denied Warren’s allegation.
“We did not weaken the supervision of a bank like Credit Suisse. The civil servants who are supervising Credit Suisse… would take issue with you,” Quarles said.
The Fed vice chairman said the central bank had simply decided to supervise Credit Suisse with other foreign banks “of the same-size footprint” in the United States. He said the Archegos losses occurred outside the U.S., where the Fed lacks regulatory power.