In yet another episode of Elizabeth Warren lashing out at a Biden Administration official, it was Janet Yellen's turn this time. Despite clarifying that she favors competition, the Treasury Secretary has encouraged bank mergers and acquisitions, which evidently did not please the senator from Massachusetts, who did not hesitate to suggest a change of approach.
Yellen is one of the most audible voices in the federal government on bank mergers and acquisitions. "We certainly don't want excessive concentration, and we're in favor of competition, but that doesn't mean there won't be (mergers)," she said in an interview with the Wall Street Journal published Friday. "We have more banks, in relative terms, in the United States than in almost any other country that I know of," she added.
For Warren, it is simply the "wrong approach." According to the former presidential candidate, the Treasury Secretary learned "the wrong lessons" from the SVB, Signature Bank and First Republic cases.
"Allowing for additional bank consolidation would be a dereliction of their responsibilities, harming U.S. consumers and small businesses, betraying President Biden's commitment to promote competition in the economy and threatening the stability of the financial system and the economy," she said in a letter also addressed to the Deputy Attorney General Jonathan Kanter, the Chairman of the Federal Deposit Insurance Corporation (FDIC) Martin Gruenberg, the Acting Comptroller of the Currency Michael Hsu, and the Vice Chairman of Supervision of the Federal Reserve Michael Barr.
"Shoring up our banking system will require stronger regulation and more vigorous supervision of large banks to prevent them from failing in the first place, and stricter merger guidelines and rules that meaningfully check consolidation and limit the size and number of banks too big to fail to put taxpayers at risk," the senator added in her letter.
Moreover, according to Warren's website, the administration's approach contradicts "President Biden's commitment to increase scrutiny of large corporate mergers," thereby rushing regulators to update review guidelines for future bank mergers.
