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

Senator Elizabeth Warren (D-Mass.) has criticized Federal Reserve Chair Jerome Powell for his handling of the economy, stating that he is attempting to put as many as 2 million Americans out of work in order to restrain inflation.

During an interview with NBC’s “Meet the Press” on March 19, Warren referred to the Fed’s interest rate hikes as “extraordinary” and “extreme.”

Despite the failure of two major banks, Silicon Valley Bank (SVB) and Signature Bank, the Fed is expected to raise interest rates by yet another quarter percentage point this week.

“I don’t think he should raise rates,” said the senator, referring to Powell. She claimed that there were two reasons behind her stance. “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 explained.

She then went on to specify that inflation is being fueled by other factors such as price gouging, ongoing supply chain problems, and Russia’s 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 argued.

Powell is “Failing” in the Fight Against Inflation

In addition, the Massachusetts senator, who had voiced her opposition to President Joe Biden’s nomination of Powell to serve another four years as Fed chairman due to his views on regulation, accused Powell of “failing” in his roles of overseeing major American banks and handling inflation during an interview on ABC’s “This Week” on Sunday.

Warren stated that Powell had established a “flame thrower” approach to bank regulations during the Trump administration, which involved the reduction of regulatory measures such as the Dodd-Frank Act, enacted in 2010 following the 2008 economic crisis, to ensure a more secure 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 explained.

The senator also believes that an independent inquiry into the Fed and the “whole regulatory system” is necessary after the bank stated on March 13 that it is reviewing the supervision and regulation of tech-centric SVB, which collapsed. The analysis is being led by Michael S. Barr, the Fed’s Vice Chair for Supervision.

In a statement announcing the review, Powell stated that the events surrounding SVB’s collapse “demand a thorough, transparent, and swift review by the Federal Reserve.”

The Collapse of Silicon Valley Bank

“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.

SVB, which primarily served tech startups, was shut down by federal regulators on March 10 following the second-largest U.S. banking collapse since Washington Mutual during the 2008 financial crisis. The failure of the bank was prompted by a combination of rising interest rates, a decline in technology stocks, a decrease in venture capital, and the announcement that it needed to raise $2.25 billion to bolster its financial situation.

The bank also had a high percentage of its customer deposits invested in Treasury bonds, which are extremely sensitive to interest rates. Consequently, customers withdrew their money from the bank, causing its stocks to plummet and prompting financial regulators to intervene with emergency lending programs.

Warren’s statements come shortly after Powell informed Congress on March 7 that the Fed will most likely have to increase interest rate hikes to curb 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 stated to 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.