Transcript: Senator Elizabeth Warren on “Face the Nation” March 19, 2023

Below is a transcript of an interview with Sen. Elizabeth Warren of the Democratic Party of Massachusetts that aired on “Face the Nation” on Sunday, March 19, 2023.


Margaret Brennan

Sen.Elizabeth Warren

Sen.Warren

Margaret Brennan Now I would like to turn to another big topic: the banking crisis. We’re going to Boston to see Democratic Senator Elizabeth Warren. Good morning, Senator.

Sen. Elizabeth Warren: Good morning.

Margaret Brennan: We’ve seen a multi-billion dollar attempt by a large bank to strengthen one of its regional banks, the First Republic. Still, the banking sector is currently uneasy. Do you think one of the big banks, too big to go bankrupt, needs to be able to buy that little bank in order to stop the bleeding?

Sen. Warren: So I think what we’re trying to do now is figure out different ways to strengthen these banks. It is to return to Takaka. Remember, back in 2016, the CEOs of these banks, multi-billion dollar banks, came to Washington and lobbied for less regulation. Donald Trump ran for president and said he would deregulate these banks. He was then elected and appointed a regulator to deregulate these banks. Donald Trump then went to Congress and said he would pass legislation that would make it easier to further deregulate these banks. And Jerome Powell literally took a flamethrower to these regulations-

Margaret Brennan: Yeah–

Sen. WARREN: To make it less effective. The reason I mention this is

Margaret Brennan: Well, we’re talking about the crisis we’re facing right now. So can we start with the bleeding we are seeing in the banking sector right now. Should we allow mergers to strengthen them? Are there any other White Knights who can save one?

Sen. WARREN: 1:53 Look, it’s the federal government that’s saving all these banks now. And the First Republic—

Margaret Brennan: The First Republic is still alive. It is an actively traded company. It’s not a failed bank.

Sen. Warren: Understood. I know that. But it is true that the federal government went to other banks and said, “We need extraordinary intervention here,” and these other banks stepped in and tried to back it up. The bottom line is that right now the Treasury Department, the Fed, all government regulators, the FDIC are trying to light up all cylinders trying to figure out what they can do to support these banks. The reason I was trying to say they are doing this is because this entire tranche of banks has been underregulated for five years.

Margaret Brennan: Yeah–

Sen. WARREN: Regulators are clearly not doing their job well enough that when people open the hood, they are very concerned about what is under the hood.

Margaret Brennan: Okay so-

Sen. Warren: The reason I’m now calling for a change in the Fed’s regulatory approach and a change in Congress is to roll back the power to deregulate.

Margaret Brennan: Well I know there’s been some controversy over the regulations. I know Bernie Frank is arguing with you about what really happened here. But now I want to talk about –

Sen. WARREN: Well, I wouldn’t call it a tweak.

Margaret Brennan: Senator, I would like to ask what Congress can do now.

Sen. Warren: Yes. right.

Margaret Brennan: Do you think Congress has the will to do so in the environment we find ourselves in?

Sen. WARREN: I think the removal of the FDIC insurance cap is a good move. The question is, what is the right number to lift it? But realize that you have to do this because these banks are poorly regulated. Raising the cap will either require the work of regulators or make them more dependent on them.

Margaret Brennan: How high will you raise that cap?

Sen. WARREN: The government supports them.

Margaret Brennan: And for how long?

Sen. WARREN: This is a problem we have to solve. Two million dollars? $5 million? 100,000? Small businesses need to be able to count on money for payroll and utility bills. Nonprofits need to be able to do that. These are not people who can inspect the safety and health of individual banks. That’s what regulators should do.

Margaret Brennan: Well, I’d like to get to that particular point quickly. Again, are you currently discussing with the White House the proposal to increase insurance levels at the FDIC? is asking you to do that? And can this pass?

Sen. WARREN: I don’t want to talk about private conversations, but that’s one option to consider right now.

Margaret Brennan: You talked about re-regulating small banks, medium banks. The bill you’re proposing would also stress test financial institutions with more than $50 billion in assets. It costs a lot of money to conduct the stress tests that big banks have to do. In fact, according to The Wall Street Journal, such a program could cost the bank $150 million to $250 million. Won’t that put small banks out of business?

Sen. Warren:

Look –

Margaret Brennan: Or in the arms of a larger bank?

Sen.Warren

I want you to think about what that means. When we call these smaller banks, remember that we are talking about SVB, a $200 billion bank. The threshold here is $50 billion. I want to say Get someone to look at it and ask questions like, “Have you offset the risk that interest rates won’t always stay at historically low levels? Do you have enough capital to keep this bank solvent?” If you can’t afford to do it, ask the basics. If that’s the question, this bank is in serious trouble. And this is – this is our difficulty. They inject risk into the system. Remember, Gary Becker came to Congress and said, “We need to deregulate banks like mine because we don’t take risks.” What we have clearly discovered is that they pose risks. And that means they need to be carefully supervised.

Margaret Brennan

understood.

Senator Warren:

Jerome Powell needs to turn 180 degrees and scrutinize these banks more carefully.

Margaret Brennan:

have understood.

Senator Warren:

And Congress needs to tighten regulations.

Margaret Brennan:

understood. Let’s talk about it.

Senator Warren:

We also need to detain these bank executives –

Margaret Brennan:

good. Let’s discuss that with the Fed.As you know, we already had requirements and disclosures here, and in December there were flashing red lights. SVB reported to his SEC that there were no interest rate hedges in the company’s fixed income portfolio. In March, the San Francisco Fed published this, noting that banks in the district had the largest pace of declines and withdrawals in the country, possibly due to their high exposure to accounts over $250,000. So this was already in public.

Sen. Warren: Yeah.

Margaret Brennan: Why didn’t the Silicon Valley area’s chief regulator enact the San Francisco Federal Reserve Act here? Do you trust President Mary Daly?

Senator Warren:

no i don’t. The Federal Reserve should have acted, but the San Francisco Fed and the Federal Reserve have acted. Remember, the Federal Reserve and Jerome Powell are ultimately responsible for oversight and oversight of these banks. And they made it clear that they see their job as deregulating these banks. We have now seen the results.

Margaret Brennan: But these were publicly reported regulations. So this means that the signal of what was there was missing. So what do you think the outcome will be for regulators in San Francisco and Washington?

Sen. WARREN: See, this is the point I’ve been making all along. Jerome Powell said all he wanted to do was deregulate banks. I said it was a dangerous man to take.

Margaret Brennan You opposed him when President Biden reappointed him.

Sen. WARREN: I disagreed with him.

Margaret Brennan: Understood.

Sen. Warren: That’s right. And for this very reason. Because what he’s been doing all along has been deregulating banks. And what we have to do is-

Margaret Brennan

But are you worried that at this moment there is a crisis of confidence that is sowing the seeds of distrust in the federal government?

Sen.Warren

What I do is be honest about what went wrong.I don’t think you can build trust at all without starting with why it broke and who broke it – sorry , is it responsible for it? We need accountability to regulators who have clearly failed their jobs, and it starts with Jerome Powell. And we need accountability to the executives of these big financial institutions. See, Gary Becker and the others who blew up these banks should have clawbacks. So you get a big paycheck back –

Margaret Brennan:

Will the bill pass?

Senator Warren:

It certainly should. Both sides need support for this. You should also borrow them from banking again. We do that with our stockbrokers. You should do the same with bankers.

Margaret Brennan:

Elizabeth Warren. Senator, thank you for your time.

Summarize this content to 100 words Below is a transcript of an interview with Sen. Elizabeth Warren of the Democratic Party of Massachusetts that aired on “Face the Nation” on Sunday, March 19, 2023.Margaret BrennanSen.Elizabeth Warren Sen.WarrenMargaret Brennan Now I would like to turn to another big topic: the banking crisis. We’re going to Boston to see Democratic Senator Elizabeth Warren. Good morning, Senator. Sen. Elizabeth Warren: Good morning.Margaret Brennan: We’ve seen a multi-billion dollar attempt by a large bank to strengthen one of its regional banks, the First Republic. Still, the banking sector is currently uneasy. Do you think one of the big banks, too big to go bankrupt, needs to be able to buy that little bank in order to stop the bleeding? Sen. Warren: So I think what we’re trying to do now is figure out different ways to strengthen these banks. It is to return to Takaka. Remember, back in 2016, the CEOs of these banks, multi-billion dollar banks, came to Washington and lobbied for less regulation. Donald Trump ran for president and said he would deregulate these banks. He was then elected and appointed a regulator to deregulate these banks. Donald Trump then went to Congress and said he would pass legislation that would make it easier to further deregulate these banks. And Jerome Powell literally took a flamethrower to these regulations-Margaret Brennan: Yeah– Sen. WARREN: To make it less effective. The reason I mention this isMargaret Brennan: Well, we’re talking about the crisis we’re facing right now. So can we start with the bleeding we are seeing in the banking sector right now. Should we allow mergers to strengthen them? Are there any other White Knights who can save one?Sen. WARREN: 1:53 Look, it’s the federal government that’s saving all these banks now. And the First Republic—Margaret Brennan: The First Republic is still alive. It is an actively traded company. It’s not a failed bank.Sen. Warren: Understood. I know that. But it is true that the federal government went to other banks and said, “We need extraordinary intervention here,” and these other banks stepped in and tried to back it up. The bottom line is that right now the Treasury Department, the Fed, all government regulators, the FDIC are trying to light up all cylinders trying to figure out what they can do to support these banks. The reason I was trying to say they are doing this is because this entire tranche of banks has been underregulated for five years. Margaret Brennan: Yeah–Sen. WARREN: Regulators are clearly not doing their job well enough that when people open the hood, they are very concerned about what is under the hood. Margaret Brennan: Okay so-Sen. Warren: The reason I’m now calling for a change in the Fed’s regulatory approach and a change in Congress is to roll back the power to deregulate. Margaret Brennan: Well I know there’s been some controversy over the regulations. I know Bernie Frank is arguing with you about what really happened here. But now I want to talk about -Sen. WARREN: Well, I wouldn’t call it a tweak. Margaret Brennan: Senator, I would like to ask what Congress can do now.Sen. Warren: Yes. right.Margaret Brennan: Do you think Congress has the will to do so in the environment we find ourselves in? Sen. WARREN: I think the removal of the FDIC insurance cap is a good move. The question is, what is the right number to lift it? But realize that you have to do this because these banks are poorly regulated. Raising the cap will either require the work of regulators or make them more dependent on them.Margaret Brennan: How high will you raise that cap?Sen. WARREN: The government supports them. Margaret Brennan: And for how long?Sen. WARREN: This is a problem we have to solve. Two million dollars? $5 million? 100,000? Small businesses need to be able to count on money for payroll and utility bills. Nonprofits need to be able to do that. These are not people who can inspect the safety and health of individual banks. That’s what regulators should do.Margaret Brennan: Well, I’d like to get to that particular point quickly. Again, are you currently discussing with the White House the proposal to increase insurance levels at the FDIC? is asking you to do that? And can this pass?Sen. WARREN: I don’t want to talk about private conversations, but that’s one option to consider right now. Margaret Brennan: You talked about re-regulating small banks, medium banks. The bill you’re proposing would also stress test financial institutions with more than $50 billion in assets. It costs a lot of money to conduct the stress tests that big banks have to do. In fact, according to The Wall Street Journal, such a program could cost the bank $150 million to $250 million. Won’t that put small banks out of business? Sen. Warren:Look – Margaret Brennan: Or in the arms of a larger bank?Sen.Warren I want you to think about what that means. When we call these smaller banks, remember that we are talking about SVB, a $200 billion bank. The threshold here is $50 billion. I want to say Get someone to look at it and ask questions like, “Have you offset the risk that interest rates won’t always stay at historically low levels? Do you have enough capital to keep this bank solvent?” If you can’t afford to do it, ask the basics. If that’s the question, this bank is in serious trouble. And this is – this is our difficulty. They inject risk into the system. Remember, Gary Becker came to Congress and said, “We need to deregulate banks like mine because we don’t take risks.” What we have clearly discovered is that they pose risks. And that means they need to be carefully supervised.Margaret Brennan understood. Senator Warren:Jerome Powell needs to turn 180 degrees and scrutinize these banks more carefully. Margaret Brennan: have understood. Senator Warren: And Congress needs to tighten regulations. Margaret Brennan:understood. Let’s talk about it.Senator Warren: We also need to detain these bank executives –Margaret Brennan: good. Let’s discuss that with the Fed.As you know, we already had requirements and disclosures here, and in December there were flashing red lights. SVB reported to his SEC that there were no interest rate hedges in the company’s fixed income portfolio. In March, the San Francisco Fed published this, noting that banks in the district had the largest pace of declines and withdrawals in the country, possibly due to their high exposure to accounts over $250,000. So this was already in public. Sen. Warren: Yeah. Margaret Brennan: Why didn’t the Silicon Valley area’s chief regulator enact the San Francisco Federal Reserve Act here? Do you trust President Mary Daly?Senator Warren:no i don’t. The Federal Reserve should have acted, but the San Francisco Fed and the Federal Reserve have acted. Remember, the Federal Reserve and Jerome Powell are ultimately responsible for oversight and oversight of these banks. And they made it clear that they see their job as deregulating these banks. We have now seen the results. Margaret Brennan: But these were publicly reported regulations. So this means that the signal of what was there was missing. So what do you think the outcome will be for regulators in San Francisco and Washington?Sen. WARREN: See, this is the point I’ve been making all along. Jerome Powell said all he wanted to do was deregulate banks. I said it was a dangerous man to take.Margaret Brennan You opposed him when President Biden reappointed him.Sen. WARREN: I disagreed with him. Margaret Brennan: Understood.Sen. Warren: That’s right. And for this very reason. Because what he’s been doing all along has been deregulating banks. And what we have to do is- Margaret Brennan But are you worried that at this moment there is a crisis of confidence that is sowing the seeds of distrust in the federal government?Sen.Warren What I do is be honest about what went wrong.I don’t think you can build trust at all without starting with why it broke and who broke it – sorry , is it responsible for it? We need accountability to regulators who have clearly failed their jobs, and it starts with Jerome Powell. And we need accountability to the executives of these big financial institutions. See, Gary Becker and the others who blew up these banks should have clawbacks. So you…
https://www.cbsnews.com/news/elizabeth-warren-face-the-nation-transcript-03-19-2023/ Transcript: Senator Elizabeth Warren on “Face the Nation” March 19, 2023

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