Senator Warren says the Fed chief “must recuse himself” from assessing regulatory failures

Massachusetts Senator Elizabeth Warren, one of the more prominent anti-crypto voices in the US Congress, has asked Federal Reserve Chairman Jerome Powell to recuse himself amid an internal Federal Reserve investigation.

Speaking to reporters in Washington, DC on March 15, Warren said Powell had led “the de-regulatory movement” at the Fed, potentially touching on some of the conditions that had led to the collapse of Silicon Valley Bank. The Fed chairman called for a “thorough, transparent and prompt review” of its activities on March 13, following the bank’s shutdown by the California Department of Financial Protection and Innovation.

“For this review to have any credibility at all, Chairman Powell needs to step down,” Warren said. “He’s the one who not only presided over the Fed, who not only came to Congress and answered questions from me and from others about this deregulation move, but actually led it.”

Warren added:

“It is important that, while we investigate what went wrong, that Chairman Powell step back and allow Michael Barr […] conduct an independent investigation.”

Barr announced that he would lead a review of the Fed’s supervision and regulation of Silicon Valley Bank, to be released on May 1. The US Department of Justice and the US Securities and Exchange Commission have also reportedly announced their own investigations related to some of the Bank’s executives selling shares in the weeks leading up to the shutdown.

While the collapse of three major banks has had various causes not necessarily related to crypto, digital assets seem to be taking some of the blame in the media and among certain government officials.

On March 8, Silvergate Bank’s parent company said it would voluntarily shut down the crypto bank, saying the plan included “full repayment of all deposits.” Silicon Valley Bank closed after a run by firms with about $40 billion in assets, but the US government stepped in to announce that most uninsured depositors would be made whole.

Related: US lawmaker accuses FDIC of using bank instability to attack crypto

For many, Signature Bank stands out as an outlier among these failures, as it closed following actions by the New York Department of Financial Services that claim to “protect the American economy by strengthening public confidence” in the banking system. Signature board member Barney Frank suggested that government officials were trying to send a “strong anti-crypto message,” while the NYDFS reportedly said the bank had failed to provide “reliable and consistent data” to the regulator.