U.S. Senator Elizabeth Warren has been one of the loudest voices on banking regulations, and the collapse of Silicon Valley Bank has given her a renewed opportunity to pitch her fever dream of increased regulations on the nation’s largest banks.
However, her calls on Sunday make absolutely no sense in that regard, because as much as she says she wants to keep them in line, her latest demands benefit those banks and the wealthy.
Via the Washington Post:
“Small businesses need to be able to count on getting their money to make payroll, to pay the utility bills,” she said. “Nonprofits need to be able to do that. These are not folks who can investigate the safety and soundness of their individual banks. That’s the job the regulators are supposed to do.”
The problem with Warren’s claim, which on its face sounds like a defense of small business owners, is that it also greatly benefits the larger companies that use our nation’s biggest banks to hold on to their assets.
What’s more, Warren wants regulations that most large banks can easily comply with while smaller banks struggle to follow.
The brief financial crisis last week was centered around fears that there would be a run on small and regional banks rather than the biggest firms. What’s more, the regulators who are supposed to be checking these things knew about SVB’s problems for more than a year and did nothing. The SVB crisis wasn’t about a lack of regulation, it was about unmonitored, high-risk behavior.
“Those are the banks for whom the principal regulator is the Federal Reserve Bank. And those are the banks that took on these risky practices that ultimately have … blown up at least three banks,” Warren said. “We need tough regulation. If you’ve got more than $50 billion … you ought to be subjected to stress tests and decent capital requirements and so on.”
How exactly does Warren, or any progressive for that matter, propose more regulations when the current regulations simply aren’t being enforced? How would a company be motivated to be safer with its investments and money if the government offers to bail them out time and time again?
What Warren is proposing isn’t a way to protect you and me. Whether she knows it or not, what she’s offering benefits the nation’s wealthiest and hurt you and me. Once again, Wall Street actually gets favored over Main Street. That’s anathema to what she actually stands for, but she doesn’t actually understand what her policies are doing.
She also blasted the Federal Reserve’s continued interest rate hikes. “Raising interest rates doesn’t do anything to solve those problems. All it does … is put millions of people out of work,” she said. But, unable to cite her work, she comes just short of calling on President Joe Biden to fire Fed Chair Jerome Powell. She also completely ignores that what the Fed is doing is working – inflation has been cooling off, bit by bit, over the last few months.
But Warren and other progressives are full of rhetoric and little else when it comes to the financial health of the country. She once again proved that today.
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