Elizabeth Warren Says “I Told You So,” About the SVB Meltdown—Just Days After Torching Jerome Powell on Interest Rate Hikes

In a scorching March 13 op-ed in The New York Times, Sen. Elizabeth Warren didn’t pull any punches: “No one should be mistaken about what unfolded over the past few days in the U.S. banking system: These recent bank failures are the direct result of leaders in Washington weakening the financial rules.” When government shirks its duties and banks—like Silicon Valley Bank, which was, until it imploded, the 16th-largest bank in the United States—refuse to self-regulate, this is what happens.

Warren offered a history lesson: “In the aftermath of the 2008 financial crisis, Congress passed the Dodd-Frank Act to protect consumers and ensure that big banks could never again take down the economy and destroy millions of lives. Wall Street chief executives and their armies of lawyers and lobbyists hated this law. They spent millions trying to defeat it, and, when they lost, spent millions more trying to weaken it.”

She named names: “Greg Becker, the chief executive of Silicon Valley Bank, was one of the ‌many high-powered executives who lobbied Congress to weaken the law. In 2018, the big banks won. With support from both parties, President Donald Trump signed a law to roll back critical parts of Dodd-Frank. Regulators, including the Federal Reserve chair Jerome Powell, then made a bad situation worse, ‌‌letting financial institutions load up on risk.”

The night before the Senate voted to weaken Dodd Frank, the Massachusetts senator warned: “Washington is about to make it easier for the banks to run up risk, make it easier to put our constituents at risk, make it easier to put American families in danger.” Her warning proved prescient.

California-based S.V.B. was woefully undercapitalized and proved incapable of regulating itself or putting into place safeguards to prevent exactly this kind of meltdown: “Had Congress and the Federal Reserve not rolled back the stricter oversight,” Warren wrote, “S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks. They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit S.V.B‌., the‌ bank couldn’t withstand the pressure—and Signature’s collapse was close behind.”

What she doesn’t mention is that former Massachusetts Rep. Barney Frank, one of the authors of Dodd-Frank, sat on Signature’s board and sought to ease banking regulations and weaken guardrails on so-called small banks like Signature.

Frank insists that New York State officials shuttered the New York-based Signature in order to send a message to banks to stop dealing in cryptocurrencies. “I believe they’re going to get a very good price,” Frank said, “proof that it was not a bank problem.” If Frank is right about the government punishing crypto-friendly banks, then that should be a warning to Miami and the crypto giddiness that has captured the local imagination in the last few years, when new condo projects broadcast that they were accepting crypto as down payments on luxury condos.

But New York State rejects Frank’s claim, insisting that Signature was closed over the weekend when a bank run was not abating: “This is not about a particular sector in the case of Signature Bank, but we moved quickly to make sure depositors were protected,” said New York Financial Services superintendent Adrienne Harris.

Warren’s jeremiad, combined with a plea to Congress to toughen up banking regulations, comes days after the tongue-lashing she delivered to Federal Reserve chair Jerome Powell, when she reminded him that a 1% unemployment hike within a year never stopped a recession yet, despite the fact that that’s exactly his plan.

“Since the end of World War II, there have been 12 times in which the unemployment rate has increased by one percentage point within one year, exactly what you’re aiming to do right now,” she told him last week at a Senate hearing. “How many of those times did the U.S. economy avoid falling into a recession?”

“You know, it’s not as black and white as—very infrequent,” Powell responded.

“Just looking at the numbers, it actually is pretty black and white,” Warren countered. “There’s been 12 times that we’ve seen a one-point increase in the unemployment rate in a year—that’s exactly what your Fed report has put out as the projection. And the plan based on how you’re going to keep raising these interest rates. How many times did the economy fail to fall into a recession after doing that out of 12 times?”

“I think the number is zero,” conceded the Fed Chair.

Warren: “I think the number is zero, that’s exactly right.” Which begs the question: Then why is he considering doing this?

Perhaps the pair of bank failures over the last few days will upend that “logic.”

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Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.