Sen. Warren Says Fed Chair Wants to Make Millions of Americans Jobless to Fight Inflation

Sen. Elizabeth Warren (D-Mass.) gestures as Federal Reserve Chair Jerome Powell testifies before a Senate Banking, Housing, and Urban Affairs Committee hearing on the "Semiannual Monetary Policy Report to the Congress" on Capitol Hill in Washington on June 22, 2022. Elizabeth Frantz/Reuters

Sen. Elizabeth Warren (D-Mass.) has criticized Federal Reserve Chair Jerome Powell’s handling of the economy, accusing him of trying to put up to 2 million Americans out of work as part of the central bank’s efforts to bring down inflation.

Warren made the comments in an interview on NBC’s “Meet the Press” on March 19 in which she called the Fed’s interest rate hikes “extraordinary” and “extreme.”

The Fed is widely expected to raise interest rates by a quarter percentage point again this week, despite the collapse of two major banks, Silicon Valley Bank (SVB) and Signature Bank.

“I do not think he should raise rates,” the senator said of Powell, adding that her reasoning for this is twofold.

“The first is to remind Chair Powell he has a dual mandate. Yes, he is responsible for dealing with inflation, but he is also responsible for employment. And what Chair Powell is trying to do, and he has said fairly explicitly, is that they are trying to, in effect, slow down the economy so that—this is by the Fed’s own estimate—2 million people will lose their jobs,” Warren said.

She then went on to note that other factors are increasing inflation such as price gouging, continued supply chain issues, and Russia’s ongoing invasion of Ukraine.

“Raising interest rates doesn’t do anything to solve those problems. All it does, at least by the way the chair wants to do this, is put millions of people out of work,” Warren said.

Powell ‘Failing’ in Fight Against Inflation

The Massachusetts senator, who also noted that she had opposed President Joe Biden’s nomination of Powell to serve another four years as chairman of the Fed owing to his views on regulation, accused Powell of “failing” in his roles of overseeing big American banks and handling inflation.

In a separate interview Sunday on ABC’s “This Week,” the Democrat accused Powell of taking a “flamethrower” to bank regulations during the Trump administration, stripping back regulatory measures such as the Dodd-Frank Act, which was enacted in 2010 in the wake of the 2008 economic crisis, to ensure a safer U.S. financial system.

“And what happened was exactly what we should have predicted, and that is the banks, these big, multi-billion-dollar banks, loaded up on risk; they boosted their short-term profits; they gave themselves huge bonuses and big salaries; and they exploded their banks. And so where we stand now is now the federal government’s got to step back in and back up these multi-billion-dollar banks,” Warren said.

The senator also called for an independent investigation of the Fed and the “whole regulatory system” after the central bank announced on March 13 it is conducting a probe into the supervision and regulation of tech-focused SVB following its collapse. Fed Vice Chair for Supervision Michael S. Barr is leading the review.

In a statement announcing the probe, Powell said that the events surrounding the demise of SVB “demand a thorough, transparent, and swift review by the Federal Reserve.”

Silicon Valley Bank Collapse

“We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” said Barr.

Federal regulators shut down SVB on March 10 after it suffered the second-largest U.S. banking failure since Washington Mutual during the 2008 financial crisis.

The collapse of the bank, which predominantly serviced tech startups, was prompted by a combination of rising interest rates, the recent decline of technology stocks, a dry-up in venture capital, and its announcement that it needed to raise $2.25 billion to shore up its finances.

The bank also had a high percentage of its customer deposits invested in Treasury bonds, which are highly sensitive to interest rates, which sent customers racing to withdraw their money from the bank, sending its stocks plummeting and leading financial regulators to intervene with emergency lending programs.

Warren’s comments come shortly after Powell told lawmakers on March 7 that the Fed will likely need to increase their interest rate hikes to bring down inflation.

“Although inflation has been moderating in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy,” Powell told the Senate Banking Committee. “As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.”

The Epoch Times has contacted the Federal Reserve for comment.