Thread by @RealBankReform

GREAT SCOOPS: Last weekend, Federal Reserve Chair Powell sought to DOWNPLAY role of failed regulation/supervision -- partly by the Fed! -- in collapse of #SiliconValleyBank

H/T @TheProspect @ddayen & @nytimes trio 🧵1/12

"the Biden administration pushed to formally spotlight shortcomings in financial regulation that they blamed for the banks’ rapid descent to insolvency." But Powell "blocked efforts to include a phrase mentioning regulatory failures" 2/12 nytimes.com/2023/03/16/bus…

As @ddayen points out, that statement was pretty anodyne, and included praise for (unnamed) Dodd-Frank law of 2010 but no mention of the 2018 partial rollback that eased oversight of SVB 3/12 federalreserve.gov/newsevents/pre…

For context: the Fed took that 2018 rollback further than Congress mandated, with Powell's vote, under former vice chair for supervision Randal Quarles. See this thread for some gritty details 4/12

https://twitter.com/Jeremy_Kress/status/1636085094409728002

Then @ddayen takes it further: Fed tried to avoid mention of regulator failures in @POTUS Biden statement 5/12 prospect.org/economy/2023-0…

Happily, @POTUS went with accountability in remarks the next day: "We must get the full accounting of what happened and why those responsible can be held accountable." 6/12 whitehouse.gov/briefing-room/…

From @jimtankersley @FlitteronFraud and @jeannasmialek we learn too that "Mr. Quarles’s moves on supervision were cited derisively by some participants in the discussions over how to protect Silicon Valley Bank depositors in Washington over the weekend." 7/12

Yeah, if you brag that moving bank supervision AWAY from its tougher, post-2008 state, it SHOULD come back to bite you. Changing culture will be "the least visible thing I do and it will be the most consequential thing I do,” Quarles said while at the Fed. 8/12

Don't forget either that, as AFR pointed out many times, Powell was on board with what Quarles did 100% 9/12 ourfinancialsecurity.org/2021/08/fact-s…

Former Fed gov Sarah Bloom Raskin was scathing in comment to @TheProspect: “What they’re doing is really trying to brush the supervisory aspects under the rug. I think it would be embarrassing about their fundamental failure.” 10/12

Another detail from @ddayen: Powell's effort delayed the public response "an indeterminate period of time." That's no trivial matter, since the U.S. response was urgently needed so market could digest it before trading began in Asia 11/12

So, Powell held up the statement the measures that he argued were so essential in an effort to prevent accountability at the Fed. That sounds a lot like putting the institutional interests of Fed and personal interests of the chair above financial stability 12/end

@threadreaderapp unroll please