Elizabeth Warren wants to make banking boring again

Senator Elizabeth Warren wants banking to get “boring” again after the failures of Silicon Valley Bank and Signature Bank.

“What I want to do is get banking back to where it’s supposed to be, which is boring,” Warren, Massachusetts, said Friday morning on CNBC’s “Squawk on the Street.” “Banking is supposed to be there to invest your money and you can count on it to be there, and that’s true if you’re a family, that’s true if you’re a small business.”

Warren said the problem began under the Trump administration, when bank executives lobbied Congress to deregulate regional and midsize banks. The Silicon Valley Bank was among those who lobbied for change, Warren pointed out, noting that the bank’s profits soared in years when rules were relaxed.

During this week’s hearing, Warren, a longtime critic of the financial industry, insisted that SVB and Signature were able to go bust almost overnight earlier this month. Financial regulators closed two banks, citing systemic contagion fears, after negative news triggered bank runs. Bankrupt banks disproportionately catered to startups and crypto companies.

The incident was the largest bank failure in the US since the financial crisis of 2008, and the second and third largest bank failures in US history.

In the weeks following the collapse of the banks, Warren sponsored or sponsored three new bank supervision bills.

The former will repeal a Trump-era bill that loosened oversight of midsize banks. The second provides for the creation of the position of inspector general in the Federal Reserve, and the third prohibits the heads of public companies from selling stock options for three years.

“What we want to do is align incentives,” Warren said Friday. “I have a bipartisan money back bill and the whole idea is to say to these CEOs in the future, ‘Hey, if you load this bank with risk and the bank explodes, you will lose that fancy bonus, you go. to lose that big paycheck, you’ll lose those stock options.”

According to Warren, banking should not be an industry that attracts those who take risks.

“I really want to say to bankers, if you’re the kind of guy or girl who wants to roll the dice and take a big risk, don’t get into banking,” Warren said. “Banking is a stable profit. Banks need to be able to make a profit, but when banks are overloaded with risk, they put savers at risk, they put small businesses at risk, and ultimately, as we’ve learned from these million-dollar banks, they put our entire economy at risk.”

Warren chided bank regulators for not doing enough and urged Congress to join her in restoring security measures.

“You have to look at everything that’s broken here,” Warren said. “We let the regulators get distracted. Banking is a regulated industry because it affects the rest of the economy. As Joe Biden said yesterday, they need to start tightening these rules right now. “