At Hearing, Warren Questions Fed Nominee on Financial Threats Posed by Trump’s Tariff Chaos
Warren: “President Trump is fanning the flames of disaster with his mismanagement of the nation’s economy. Instead of showing up with the fire department, Governor Bowman brings a can of gasoline.”
Watch Warren exchange with Bowman
Washington, D.C. – Today, U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee gave opening remarks at a nomination hearing for key executive branch appointees. At the hearing, she also questioned Federal Reserve Vice Chair for Supervision nominee Michelle Bowman - who refused to answer - on how Trump’s chaotic tariffs could threaten our financial system.
Below are Ranking Member Warren’s opening remarks and exchange with Bowman:
Opening Statement:
So it has taken Donald Trump less than three months to bring the ghosts of the 2008 financial crisis back to life.
The S&P 500 and Dow Jones are trading like memecoins. Treasury securities, the global safe haven in periods of turmoil, are being sold off. Businesses have put investments on hold. Companies are already announcing layoffs. Consumers are anticipating brutal price hikes on everyday goods.
The economy is teetering because President Trump indiscriminately slapped massive tariffs on pretty much every country in the world for products they sell to the United States. Trump’s tariffs aren’t strategic. They are not carefully designed. They won’t promote jobs and industry here at home. They won’t build resilient supply chains. They won’t level the playing field for American workers against unfair trade practices.
President Trump’s incompetence risks hardworking American families enduring higher prices, lower pay, lost jobs, and broad economic devastation.
We need policymakers who will do their jobs to protect the economy and protect working families. That includes this Committee. We have jurisdiction over key aspects of the law that President Trump is using to impose tariffs – and, Mr. Chairman, every Democratic on the Committee has asked you to hold a hearing on this chaos. We have a responsibility to conduct oversight and to ask hard questions.
Republicans should also join Democrats to pass a resolution to turn off these remaining tariffs and to stop the power of Donald Trump to continue to play red-light, green-light with tariffs around the world. Congress has the power to contain some of the damage.
Meanwhile, the Trump Administration seems hellbent on maximizing additional threats to our economy.
Consider President Trump’s nomination of Michelle Bowman to serve as the Federal Reserve Board’s Vice Chair for Supervision. This would make her the top watchdog – banking watchdog – in the country.
She was confirmed in 2018 to be the Fed’s first community bank governor. But she has spent her tenure at the Fed prioritizing Wall Street over Main Street.
Governor Bowman has weakened safeguards that restrict banks from gambling with people’s deposits. She has loosened rules that prevent derivatives from blowing up big banks. She has reduced Wall Street loss-absorbing capital requirements – which help prevent bank failures in times of economic duress – she’s done that by tens of billions of dollars.
In 2019, Governor Bowman voted to deregulate some of the largest banks in the country, including Silicon Valley Bank. How did that go? Well, a few years later, SVB and two other deregulated banks failed, constituting the 2nd, 3rd, and 4th largest bank failures in American history.
President Trump is fanning the flames of disaster with his mismanagement of the nation’s economy. Instead of showing up with the fire department, Governor Bowman brings a can of gasoline.
We are also considering the nominations of two key nominees to the Department of Housing and Urban Development. Secretary Turner and Elon Musk’s DOGE are currently wreaking havoc at HUD. They are indiscriminately canceling contracts and grants that keep people housed and help boost our housing supply, and they are reportedly working up plans to fire half of the HUD workforce.
These actions will make it more difficult and more expensive for families to access housing. And that in turn will worsen America’s housing crisis just as a Trump recession bears down on us.
Finally, we have three nominees for critical positions at Treasury and Commerce – including officials who will lead our trade and sanctions policies. They deserve their own hearing to answer hard questions about the way President Trump is undermining our economic and national security, including by: launching the dumbest trade war in American history, doing nothing about officials who expose classified information on Signal, gutting national security agencies, and pushing the world economy closer to the brink of a meltdown.
This Committee should not just waive through these nominees who will be on the front lines of implementing those disastrous policies. The American people deserve better.
Exchange with Bowman
Warren: Thank you, Mr. Chairman. So, anyone who has been awake for the last week has seen the self-inflicted economic maelstrom that both the United States and the world have lived through. The Trump administration is living in a fantasy land, and evidently, not living there alone. According to Team Trump, the economy is booming, tariff money is rolling in, massive tax cuts for billionaires will be free, and the research scientists DOGE has fired from the National Institute of Health and the customer service specialists they fired from the Social Security Administration are happily screwing in tiny little iPhone screws as they work in iPhone factories that have magically sprung up across the country. Look, the Trump administration is in desperate need of financial regulators who live in the real world.
Governor Bowman, if confirmed, you would be the number one financial cop on the beat during an incredibly dangerous time. As we've learned from previous crises, the tremors in the financial system can lead to avalanches in the rest of the economy, and vice versa. You would be the person on the front line of defense to prevent that from happening. So, Chair Powell said that President Trump's tariffs will lead to, and I quote, “both higher unemployment and higher inflation.” We have seen wild swings in the financial markets over the past week, at least some of us have seen them. Governor Bowman, I want to understand how you see the risks of the current moment. In what ways could President Trump's tariffs and their economic effects threaten the stability of our financial system?
Bowman: Senator, that is a great question.
Warren: Thank you.
Bowman: I would like to start by stating that the economy is strong.
Warren: Okay, fine, but answer my question if you would, please. We’re going to be limited on time. We’ve got a tough chairman here.
Bowman: Economic growth has been solid, though it may be slowing, and the unemployment rate is still historically low. Inflation came down today, as we saw with the recent CPI report, and I think that the stability of the economy—
Warren: Okay, Governor Bowman, could you answer my question, please? I asked in what ways President Trump's tariffs and their economic effects threaten the stability of our financial system. Chair Powell has already identified it. Higher inflation and higher unemployment. I would like to hear from you what ways you think Trump's tariffs potentially threaten our financial system.
Bowman: Senator, as you know, the mandated goals, or the goals that have been mandated by Congress for the Federal Reserve, are maximum employment and price stability. As the path for these policies continues to evolve—
Warren: Could you use the word tariff? My question, I've asked it now twice, is in what ways do President Trump's tariffs threaten the financial system? Jay Powell has already answered this question. You're over at the Fed. Could you just give me a straight answer on that?
Bowman: I think as we were watching and waiting to see how the path for these evolve, these policies continues to evolve, we'll understand what the economic effects—
Warren: So are you saying you don't know if the tariffs could have any effect on the financial system?
Bowman: Well, I think it's unclear at this point, since we don't know how the economic policies will be calibrated—
Warren: So, let me get this straight—
Bowman: And what their effects on the industries will be.
Warren: President Trump's tariffs threaten to strangle the economy. This is according to the Fed chair. The stock market is experiencing the kinds of swings we don't see outside financial crises, even Treasury securities, they're supposed to be resilient, when people fly to safety, have started to experience volatility, and you don't see any risks to the financial system? Nothing? You got nothing for me here?
Bowman: Senator, what I would tell you is that we're starting on a strong economic foundation.
Warren: Okay, what I'm hearing is nothing.
Bowman: As we see that there has been volatility in the stock market that’s existed for a number of years—
Warren: So look, the worst scenario we have here is that this Trump-inflicted economic crisis undermines confidence in our financial system. Banks and other lenders may face huge losses as households and businesses struggle to meet their debt payments. If we plunge into a recession, hedge funds and other leveraged financial firms are already facing margin calls and may be forced to dump assets, including treasuries, at fire sale prices. Financial instability would amplify the harms of these irrational tariffs, and you want to just sit here and say, ‘Oh, it's all good.’ So let me ask you, Governor Bowman, will you immediately conduct a stress test of the big banks to probe whether they can endure a deep and prolonged recession triggered by a massive trade shock? Just run the tests. Are you willing to do that?
Bowman: We have a process for stress testing that has already been underway this year, and it will continue to move forward as we planned.
Warren: So, are you saying you will not run a stress test immediately? Is that exactly right? You just—all of the things that have happened in the last week and in the last two months, you're just going to cover your eyes and cover your ears and say, ‘I'm sure the banks will be fine. We'll check them out in several months’.
Bowman: Senator Warren, we are always watching the—
Warren: Always watching, but not running a stress test. I apologize for going over, Mr. Chairman. Lord.
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