Lever Time - Premium

00;00;10;11 - 00;00;34;06
David Sirota
Hey there. And welcome to another episode of Lever Time, the flagship podcast from The Lever, an independent investigative news outlet. I am your host, David Sirota. On today's show, some continuing coverage of the bank panic of 2023. We have a terrific guest, a really important guest, Sally. I'm a rover. She's the Cornell Law School professor whose name may sound familiar to you.

00;00;34;16 - 00;00;58;25
David Sirota
She was nominated to be one of the federal government's top bank regulators, but her nomination was blocked by Senate Republicans and corporate Democrats. I talked to her about what regulators could have done to halt this current bank crisis and what can be done to prevent future crises. This week, our paid subscribers will also get a bonus segment, The Levers.

00;00;58;25 - 00;01;26;01
David Sirota
Julia Rock and I go over one very big question Should Federal Reserve Chairman Jay Powell be fired? And how could a president fire a Federal Reserve chairman? That's coming up on our bonus segment for our paying subscribers. If you want access to lever time premium to get those bonus segments, you can head over to lever News.com to become a supporting paying subscriber that gives you access to all of our premium content.

00;01;26;08 - 00;01;48;13
David Sirota
And you're directly supporting the investigative journalism that we do here at the lever. Speaking of which, if you're looking for other ways to support our work, share our reporting with your friends and family, leave this podcast a rating and review on your podcast player. The only way that independent media grows is by word of mouth, so we need all the help we can get to combat the inane bullshit that is corporate media.

00;01;48;28 - 00;01;53;08
David Sirota
I'm here today with Lever Times. Producer producer. Jared. Hey, producer. Jared, how you doing?

00;01;53;16 - 00;02;18;14
Jared Jacang Maher
Hey, David. So I got some interesting news for you with some analytics I was looking at the other day, dealing with Lever Time and its audience growth and some interesting things that I noticed is, you know, lever time, the number of listeners across all the different platforms, it's been growing steadily over the last couple of years, you know, adding subscribers and new listeners every single month.

00;02;18;22 - 00;02;45;04
Jared Jacang Maher
But then in February, something crazy happened where it just shot up 30%. And we just got a bulk of new listeners out there in podcast land that have found their way to lever time and new subscribers. And I think it really has to come back to all the breaking news reporting that has been done on Norfolk Southern and the banks.

00;02;45;26 - 00;03;06;26
David Sirota
I mean, we've had it we've been on really a kind of an incredible streak. I mean, it's actually started before that we broke that big story about people to judge and Southwest Airlines, the attorneys general, pushing him to crack down on the airlines, pushing a push that he basically ignored them. We did the East Palestine reporting, then we did the Silicon Valley Bank reporting.

00;03;06;26 - 00;03;35;22
David Sirota
It has been an incredible run and you love to see it in terms of the podcast subscriber growth. That is great. So everybody who's listening, who's spread the word about lever time. Thank you. Thank you so much. It's it's it's obviously helping. It's obviously working. And I should mention it's influencing the policy debate. I mean, there's bipartisan rail safety legislation in the Senate now that that is in part a result of the reporting that we're doing and the reach that our that our work is is having.

00;03;36;07 - 00;04;01;12
Jared Jacang Maher
Yeah. And speaking of the word getting out, there was a really interesting David Sirota profile in the in the Web on the website Air Mail. And I'll go ahead and read the title here. We'll drop a link in the in the episode description because everyone should check this out. If you're a Sirota fan, it's called Politics by other means is David Sirota, who's two year old news site.

00;04;01;12 - 00;04;16;12
Jared Jacang Maher
The lever has been ahead of the media pack on several recent stories. A journalist or an activist? The answer is yes. And David, the thing that surprised me the most was the byline pin on this article, Brian Stelter.

00;04;17;05 - 00;04;36;06
David Sirota
Right. If people hear that name, it sounds familiar. That's the former CNN host of Reliable Sources. The he was a New York Times writer. Well, listen, when Brian called me up and said he wanted to do this profile, I was a little bit circumspect. I was like, oh, no, it's going to be like making fun of us or or sort of criticizing us.

00;04;36;06 - 00;04;56;09
David Sirota
I was actually really pleased with this profile, and I had a couple of people say, Wow, you're like a real fancy person now because you're in air mail. For folks who don't know, air mail is the publication, the new publication by the former long time Vanity Fair editor Graydon Carter. So a couple of my friends were joking, like, wow, you're such a that you're such a fancy person now.

00;04;56;09 - 00;04;57;23
David Sirota
You're in the media elite.

00;04;57;23 - 00;05;17;18
Jared Jacang Maher
They're yeah. And it's also like I what I loved about it was like, you know, Stelter quoted some other people referencing you as, quote, pugilistic, intense and even obsessive, but, you know, you're also funny and humorous. So he got both ends of the Sirota personality there.

00;05;18;20 - 00;05;41;10
David Sirota
You can only survive reporting what we report with having a good a good sense of humor, that's for sure. So I try to keep a sense of humor, even though sometimes it can be a dark sense of humor. I hope people will go read the article again. It's in the episode description. Take a look at it, because it does take take seriously the work that we do here at the leisure and it talks a lot about our growth and what we're trying to accomplish.

00;05;41;10 - 00;05;44;03
David Sirota
So take a look at it if you can. Yeah.

00;05;44;03 - 00;06;08;20
Jared Jacang Maher
And the other people reading the leaver religiously were Representative Rowe Kahana on a live call in show that we had on Friday about the SVP banking crisis. He also namechecked the leavers reporting calling it a must read. Thank you. Thank you to you and labor from the reporting. It's been one story after the other. Now your must.

00;06;08;20 - 00;06;36;11
David Sirota
Read. Yeah and I and I appreciate that. I mean listen Roxana on that Colin, I mean, what I, what I appreciate about Roxana is I don't agree with him on everything, but he always makes himself available to be on independent media. And I think when he said that about our work, I think he was reflecting listen, he's reflecting something that I've always believed in, which is that if you break big stories on and you surface important information, it will ultimately it can ultimately travel around.

00;06;36;11 - 00;06;41;24
David Sirota
But it is it is a lot of work. It has been a lot of it's been a big slog to get our work out there.

00;06;42;02 - 00;07;10;17
Jared Jacang Maher
And Roxana Hannah was an interesting person to talk to in the wake of the banking crisis here, because while at once he's both a progressive lawmaker, he also represents Silicon Valley there. And, you know, is very familiar with the same types of VCs and other financiers that got in so much trouble with their deposits to Silicon Valley Bank.

00;07;10;17 - 00;07;26;14
Jared Jacang Maher
So it was interesting hearing how, you know, the questions you asked him. And also, you know, in the chat some of the ways that people are perceiving. Kahana And in the scheme of this moment.

00;07;27;03 - 00;07;53;15
David Sirota
Yeah, I mean he's in a position where his, the bank is in his district, literally the bank, the collapse collapses in his district. A lot of businesses in his district do rely on financial services at that bank, but he also voted against deregulating that bank. We talked a lot about universal deposit insurance. We also talked about whether Jay Powell, the Federal Reserve chairman, should be fired.

00;07;53;24 - 00;08;17;18
David Sirota
He took the position that it might destabilize the markets. I take the position that it's kind of ridiculous to to argue that we can't fire the Fed chairman who destabilized the markets because it might destabilize the markets. That's kind of a tautology that I don't I don't subscribe to. Like the guy Jay Powell more and more seems like a chaos agent in the entire financial system, in the economy.

00;08;17;18 - 00;08;38;22
David Sirota
But we talk more about that in our bonus segment with Julia Rock. Whether Jay Powell should be fired. For those who who are interested in that topic, go to the website, fire Powell. Welcome. And you will see our open letter to Joe Biden about the question of whether Jay Powell should be fired. Okay, let's stop there because I want to get to our big topic of the day.

00;08;39;04 - 00;09;06;27
David Sirota
What regulations could be put in place to prevent the kind of bank crises that we have seen over and over again over the last many years. We're going to talk to the person who was the nominee to be a top federal bank regulator whose nomination was blocked because she was pushing for regulations that Republicans and corporate Democrats thought would be too tough on the banks.

00;09;06;28 - 00;09;27;27
David Sirota
Up next, our interview with Saleem Rover and Matt Stoller. Welcome back to our time for our big story today. Last week as news spread about the ongoing crisis in the banking system, we reached out to two people who know what's really going on and what can be done to prevent these kinds of emergencies from happening in the first place.

00;09;28;12 - 00;09;53;15
David Sirota
Cornell University Law School Professor Sally Amorosa and Matt Stoller, an analyst and researcher who writes frequently about financial regulation, is at the American Economic Liberties Project. If Omarosa's name sounds a bit familiar, that's because she was nominated by President Biden to be one of the federal government's top bank regulators. But her nomination was blocked in the U.S. Senate by Republicans and a group of corporate Democrats.

00;09;53;27 - 00;10;39;28
David Sirota
They opposed her because she was promising much tougher bank regulations, which might have helped prevent the current bank crisis. In this discussion, I talk to Omarosa and Stoller about the bank industry's lobbying and deregulation that led to this crisis. And we discussed what can be done to move us away from never ending financial panics. The first guest that we have is solely Omarosa, who was a Biden nominee to be one of the top financial regulators in the country, but whose nomination for the Office of the Comptroller of the Currency, whose nomination was blocked by a coalition of Republicans and corporate aligned Democrats.

00;10;40;06 - 00;11;00;25
David Sirota
We also have Matt Stoller of the American Economic Liberties Project, who writes extensively on all of this stuff at his terrific newsletter called Big. So both really terrific experts. Pleased to have them here. I think, Julia, you have the first question for Professor Omarosa.

00;11;01;07 - 00;11;23;07
Julia Rock
Yeah. Thank you so much for joining us on this. Real excited to have you. So your your nomination to the Senate was blocked sort of in part because banks did not like the way you were talking about, you know, systemic risks in the financial system and some of the sort of bigger picture problems in the financial system that that were creating different types of risks.

00;11;24;11 - 00;11;47;15
Julia Rock
I'm wondering if sort of any any of the topics that came up in your confirmation hearing are that that banks were concerned that you were going to take action on as a regulator, had any bearing on what just happened with Silicon Valley Bank. And if there were things that in just the past, I guess, year and a half or so since nation was blocked that you think regulators should have been doing differently.

00;11;48;05 - 00;11;57;29
Saule Omarova
Well, thank you so much, David. Thank you for having me on this wonderful show. And Julie, of course, you asking the question that's not at all complicated, right?

00;11;58;17 - 00;11;59;14
Julia Rock
Yeah, it's an easy one.

00;12;00;13 - 00;12;25;29
Saule Omarova
That's right. During my nomination, as you already said, I was basically portrayed as some kind of bank hating person and for proposing various ways to kind of minimize the risk of bailouts. And what was thrown into my face repeatedly was that, you know, we don't need this radical reforms. We don't need this crazy ideas because everything is going just fine.

00;12;26;10 - 00;12;51;12
Saule Omarova
And of course, now we see that nothing is really going just fine. And in particular, this deregulatory bill during the Trump era that was passed by Congress in 2018, that sadly and sort of unexpected at the time for me became the sort of lightning rod of all these attacks on my not just integrity, but mostly even on my competence, which was kind of ridiculous.

00;12;51;24 - 00;13;33;19
Saule Omarova
So I did testify back in 2017 in the Senate hearing specifically against this idea of deregulating large and so-called midsize banks. And one of the basic premise I made was, look, you know, $50 billion, not chump change. And certainly $250 billion is a lot of money. And also that we should never really listen to just the regulated industry telling us that regulation is too expensive or that they actually have everything under control and that their private profit making interests are somehow naturally and constantly aligned with our interests in financial stability.

00;13;34;01 - 00;14;15;09
Saule Omarova
And of course, nobody listened to me then. And then when I was going through my nomination, that was brought up as some kind of an instance of my incompetence. So what if this 2018 law was not passed, right, and we still had those original Dodd-Frank Act regulatory and supervisory constraints on banks like RSVP or signature? Well, first of all, maybe they would have grown quite so fast, quite so big, because once Congress basically lifts the threshold above which you as a bank are considered systemically important, then there is a lot of room to play.

00;14;15;22 - 00;14;44;09
Saule Omarova
So quickly, within a few years, Silicon Valley Bank grew from $50 billion all the way to $200 billion. Market rationality tells us that this is probably a very risky enterprise. You cannot grow so fast without incurring certain risks. But at the same time, conveniently, the same regulators, the same legislation enabled the regulators, including the Federal Reserve, to roll back a lot of the regulatory constraints on what banks could do.

00;14;45;03 - 00;15;09;26
Saule Omarova
For example, like you said, David, the liquidity ratios and various other stress test requirements and all of that stuff was either lifted or significantly weakened. For Silicon Valley Bank and in Japan, consumer banks. So now, of course, the question of what to do, the first and the easiest answer is, well, first of all, let's just go back to where we were back in 2018.

00;15;10;19 - 00;15;45;09
Saule Omarova
It wasn't perfect by any means. It was not perfect. But let's at least restore certain prudential supervisory and regulatory requirements that could tighten some of this some of this prospect's business prospects for some of these banks. And I agree with that. But I also think that there are bigger questions to be asked. And you've you've been asking Rowhani about his views on this universal deposit insurance proposal, for example, and whatever one might think of it.

00;15;46;02 - 00;16;10;13
Saule Omarova
It is an example of how at least the rhetoric of the political debate is shifting today as compared to where it was several years ago and even in 2008. And it's kind of interesting because, you know, if you think about it, this particular crisis was not and so far, thank goodness it's not yet quite as systemic and quite as devastating as the crisis in 2000 was.

00;16;10;27 - 00;16;46;22
Saule Omarova
And yet we are prepared to push a little bit further in our conversation about what is possible, what is feasible, as a response. And I think it has a lot to do with the optics, which are super important, of course, but also without a learning curve. Right. One time after another, yet another time in the last 13 years, how many times have we experienced this kind of a situation where some structural problem surfaces and somehow those with the loudest voices and deepest pockets get away with a lot more than what regular folks can get away with.

00;16;47;00 - 00;17;01;19
Saule Omarova
And I think this is where we should cherish this moment to the extent that there is anything positive to be taken out of it as an opportunity to push further. And I'm happy to talk about what you think or what I think that might look like.

00;17;01;29 - 00;17;31;04
David Sirota
Before we get to that, I want to bring Matt Stoller into this conversation. Matt, sort of the American Economic Liberties Project, you've written critically about the entire role of the Fed, where the Fed exists in our politics. I think it's not all that widely well understood. But Tim put a fine point on the question about, for instance, the Fed, this question about whether it's the regulations or the regulators.

00;17;31;04 - 00;17;54;10
David Sirota
You know, I tweeted out today the old picture of the two spider-men pointing at each other. Right. And it's one the politicians, you know, saying it was the regulators, the politicians who deregulated these banks, pointing at the regulator, saying the regulators weren't doing their job, they had power to do their job. Then you've got the regulators pointing at the politicians saying, no, it's the politicians who deregulated these banks.

00;17;54;17 - 00;18;07;21
David Sirota
So I guess my question through the prism of, for instance, the Fed, the top bank regulator is is it the deregulation or is it the regulators? I'm guessing you're going to say both. But but where do you come down on that that that discourse?

00;18;07;25 - 00;18;34;07
Matt Stoller
Well, the Fed wrote the 2018 law, right? The Fed always hated Dodd-Frank. They never thought that the banks were the the big banks were the cause of the financial crisis in 2008, which they always wanted to rollback these rules because they think that the large, powerful banking institutions represent the strength of America, and they want to do everything they can to help them.

00;18;34;20 - 00;18;56;20
Matt Stoller
And they think it's unfair that they're placing constraints on them. The way I think about the Fed, well, I mean, I have many ways of thinking about the Fed, but the best analogy was from someone using the regulatory agencies who said who he was. He said that the Fed is kind of like the parents of Veruca Salt and the dad of Veruca Salt and Willy Wonka.

00;18;57;12 - 00;19;21;24
Matt Stoller
Right. Who just like constantly indulges his incredibly spoiled child. That I think that's kind of the best analogy. But just institutionally, the Fed is pretty angry about this bailout. But one of the things that's been really nice to see, and I think it's I'm pretty optimistic about it, is just how much anger there is at the Fed, how obvious it is that the Fed is a disaster.

00;19;22;10 - 00;19;50;05
Matt Stoller
And a lot of people that are pretty cautious are starting to say we need to take authority away from the Fed. Because if you think about what happened in 2008 and you think about the last ten years of economic policymaking and you think about policymaking in general in our democratic society, it's really the province of central bankers and judges, and that is issue that is a pretty dangerous way to run a culture.

00;19;50;24 - 00;20;25;18
Matt Stoller
And so having people notice that the small group of technocrats at the Fed are institutionally conflicted, and I go into that if you want, but they don't basically they can make a mess and don't have to clean it up. The FDIC has to clean it up. They are highly deferential to people with capital and they effectively like the fact of four government agencies called Jp morgan, Bank of America, Wells Fargo and Citigroup that we can ask to do things for them.

00;20;25;18 - 00;20;47;13
Matt Stoller
That is who they are. That is how they've structured our society. And there is now criticism of that. So I'm very happy about it. But we have to recognize that we have this rogue institution that has bankers on the board. I mean, the head of the Silicon Valley Bank, the CEO, was on the board of the San Francisco Fed that regulated him, which is which is totally crazy.

00;20;48;19 - 00;21;34;24
Matt Stoller
And they call themselves independent of political control, which is also crazy because this is this is who sets monetary policy and employment policy and bank supervised has bank supervisory authority over the largest and most powerful institutions in our culture. And somehow we have this kind of they have so much such mystique that that we all say, oh, they should be allowed to make decisions over our lives without our ability to influence them through elections, which is also crazy and so I'm glad that now that there's all of this exposure about just how bad they are at their jobs on an essentially a competence level debt that they're getting exposed, and we can maybe start to

00;21;34;24 - 00;21;40;14
Matt Stoller
have the deeper conversation that we started to have during the 2008 crisis, but never finished.

00;21;41;01 - 00;22;11;04
Julia Rock
So pivoting a little bit from that, Professor Umarov, I wanted to ask you about something that sort of made my jaw drop that I saw you tweeting about, which is that in the wake of the FDIC takeover of Silicon Valley Bank, the the sort of new bank that's in existence bragged this action by FDIC effectively means that deposits held with Silicon Valley bank are among the safest of any bank or institution in the country.

00;22;11;12 - 00;22;33;17
Julia Rock
We are actively opening new accounts of all sizes and making new loans. The bank is now marketing itself as the safest, safest place for transfer. Your deposits fully insured with no limits or caps. What do you make of this? What does it say about proposals like universal deposit insurance? Sort of a how did we end up in this situation?

00;22;34;08 - 00;23;10;05
Saule Omarova
So I the reason I tweeted out this or retweeted that that piece of information was that I just thought that that was just so indicative of like getting to the very core of the problem here. Look, the reason why it's possible to turn a dying bank suddenly into the safest bank on the planet is because there is this explicit putting forward all of our power, public power, to back up private institutions, liabilities explicitly put behind this particular bank.

00;23;10;05 - 00;23;37;28
Saule Omarova
Right. And this is this is where a lot of these proposals that currently are circulating about universal deposit insurance, basically, they're playing up on that, on the notion, look, we do it anyway when a particular bank is about to fail and it didn't systemic risk, it would just go ahead and basically show the world that what we pretend to be a private bank created deposit mine, in fact really is sovereign money, the money of the public.

00;23;38;06 - 00;24;11;17
Saule Omarova
And so it becomes that way when there is a difficulty right. So removing that fiction, on the one hand, I'm sympathetic to that idea to the extent that it would actually just allow us cool things as they are, rather than pretending that there is some kind of a market discipline or whatever. But I worry about that precisely because of what happened with the ECB and its claim immediately turning around and trying to turn this public backup explicit back up to its own benefit somehow.

00;24;12;00 - 00;24;53;12
Saule Omarova
And the the reason I'm worried about this is that there are risks, there are is removing that ambiguity, even if it's fiction, even if we all know that ultimately the FDIC and the Fed and the Treasury will come in and bailout banks, there is still there is still some notion that, you know, look, once we admit to it, then we really need to figure out a way of really regulating this banking institutions, not as some kind of private companies that are, you know, living according to market discipline, but as really purveyors of a fundamental public good, a form of public utility.

00;24;53;21 - 00;25;28;16
Saule Omarova
And we stop looking at banks this way a long time ago, certainly in the last 25, 30 years. And so if we extend a deposit insurance to all deposits, no matter what what banks, no matter what, then we have to really think about what kind of activity limitations we will impose on those banks, how we're going to really keep them, you know, basically tethered to that kind of public utility role and not allow them to incur or create risks out there because there's a risk of new forms of regulatory arbitrage.

00;25;28;16 - 00;26;11;08
Saule Omarova
I don't know if we can anticipate all those shifts in the incentives that what happened was we declare all deposits out there fully and explicitly protected by the public. Will that necessarily kill too big to fail like Morgan, or will it actually allow Jp morgan to start using that explicit guarantee to create yet more riskier financial products and offer those products to a variety of its potential clients and say, look, you know, it's expensive now to have this fully protected, exclusive protected deposits because if this is charging us more so instead of keeping your money in those expensive, expensive deposits, how about you do X, Y or Z?

00;26;11;28 - 00;26;36;26
Saule Omarova
So this is the concern that I have, and I'm not sure that it's really the only solution that we should pursue. But having said that, I think what we really need to think about this public option for deposit money, and that is where I think we need to kind of look at technology and look at how we can recreate via the postal banking with some kind of a C, BDC kind of a thing or whatever it is.

00;26;37;01 - 00;26;42;20
Saule Omarova
But we need to start thinking seriously about public option for the safe liquid transactional deposits.

00;26;43;05 - 00;26;52;27
David Sirota
Let me turn back to Matt Stoller. I'll just piggyback off that this question of universal deposit insurance and the potential downsides of it. Just tell us your thoughts on that.

00;26;53;08 - 00;27;23;23
Matt Stoller
Yeah. So I in many ways, I agree with Sally on that. I am I would be very nervous about it because banks, you know, what we call banks are not banks. They are they there's like a core of banking service which is managing and facilitating payments, a place for self keeping, some some basic lending and then there's they built on that core a huge amount of other stuff, which is essentially forms of risk keeping, taking and gambling.

00;27;24;16 - 00;27;53;00
Matt Stoller
And if you just have the business of banking, you had a bunch of very simple banks, which is kind of what we had in the middle of the 20th century. You could only do if you're commercial banks, you could only do certain things if you're a thrift, you can only do certain things. You can't take demand deposits. You know, if you have very prescriptive rules that say in your charter, you are only allowed to do X and not outside of that, then I think you can do universal deposits without too much risk.

00;27;53;00 - 00;28;11;05
Matt Stoller
But but you can't regulate what we have. These are these giant monstrosities that are just far too complex for even the people running them to know what's going on. So like Silicon Valley Bank was a hedge fund attached to a government guarantee. Right. And that's like that's not what a bank should be. A bank should be a place for safekeeping.

00;28;11;05 - 00;28;32;09
Matt Stoller
It should be a place that if you have a business, you need like a payroll account or you need a transaction account, you can just use that. Like you get service and you can just it's a place for transactions. What I would say, you know, if you if you do a universal deposit insurance, then what will happen is a bunch of deposits will flood into the system from the shadow banking system.

00;28;32;19 - 00;28;52;15
Matt Stoller
And then bankers will have to put those deposits to work and they will put that in in riskier assets. They'll they'll bet on commercial loans or whatever it is that they bet on. And our regulators, I don't know if anybody's noticed, they're not up to snuff on this. And I don't even know if you could regulate this system, even if you have aggressive regulators.

00;28;52;26 - 00;29;22;19
Matt Stoller
But that that would be my worry. I think there are a couple of options that we could go we could go with, which is, one is to try to kind of take out the only insurer, the kind of public utility aspects of the banks. So you would just put the FDIC had this program for 2008 to 2010 where they they were like, okay, if you have a business account and you're not getting interest on it, so you're not looking for a return, but it's used for payroll or it's used for escrow or it's used for lots of transactions.

00;29;22;26 - 00;29;44;15
Matt Stoller
Will back that, you know, that's that's backstopped right. So a bank a bankruptcy for light for Silicon Valley bank wouldn't transmit to the the larger economy because those bank accounts where there's payroll or transactions would be backstopped. But everything else, if you're just a rich guy and you want to put a bunch of money into the regulated banking system and get a return that's not backstopped.

00;29;44;21 - 00;30;00;07
Matt Stoller
So that's one I think one thing that I, I would be I think might might make sense. I think another thing that might make sense, just because we have these you know, we fundamentally Dodd-Frank was a failure. We have too big to fail banks. We have government agencies called JPMorgan and Bank of America and so on, so forth.

00;30;00;15 - 00;30;21;06
Matt Stoller
And we have to take those apart. But until we do, you're going to see depositors just run away from smaller banks, not even the regionals. Now, the ones that $100 billion in up everyone like people kind of implicitly understand that those deposits are backed. But if you're a community bank, there are 4000 community banks in this country are three 3500, something like that, you know.

00;30;21;06 - 00;30;38;10
Matt Stoller
Yeah, you'll get wiped. I mean, they don't Janet Yellen, the regulators, they have no problem, you know, wiping you out and hurting your on insured deposits. So I would might be in favor of uninsured deposits for banks that have less than 5 billion or $10 billion of assets. I wouldn't love it. I don't think it's the ideal solution.

00;30;38;10 - 00;31;00;07
Matt Stoller
I think the ideal solution is to get rid of the too big to fail problem, simplify the banking system radically, have much more aggressive asset side regulation. And then you can you can deal with some you can essentially give the full faith and credit of the United States to a bunch of bankers. But that's the so that's how I would think about the problem.

00;31;00;07 - 00;31;06;02
Matt Stoller
But I agree with this most pretty much everything that the that's all I said.

00;31;06;09 - 00;31;33;05
David Sirota
Professor ROMER. Well, let me let me follow on that and ask you a question about this idea of like moving forward. So if you were let's say you were in the job that you were nominated for and Republicans and corporate aligned Democrats had not blocked your nomination, what would you be doing right now? Now, granted, you'd be in a regulatory position, not a legislative position, but even in a regulatory position.

00;31;33;05 - 00;31;39;29
David Sirota
What would you be doing? Regulatory what would you be telling Congress to do right now, whether it's on deposit insurance or anything else?

00;31;40;14 - 00;31;53;03
Saule Omarova
Well, that is a very difficult question to answer, David, because it's a counterfactual. I'm a lawyer. I'm a lawyer. I usually try to shy away from, you know, making these big promises. Oh, if I were there, none of this would have happened.

00;31;53;07 - 00;32;01;09
David Sirota
Well, you were going to be you were going to be there until the you know, the corruption caucus blocked your blocked your nomination. So I want to live in the counterfactual world where.

00;32;01;17 - 00;32;04;21
Matt Stoller
You all the way. If Solly were there, none of this would have happened.

00;32;05;21 - 00;32;06;13
Julia Rock
So I think.

00;32;07;17 - 00;32;12;01
Matt Stoller
You know that, like, you want to stop it, but you don't have to.

00;32;12;01 - 00;33;01;21
Saule Omarova
And I don't know why. Of course, the Aussie was not in charge of SVB or Silvergate Bank or whatnot, but if I were the controller then my first set of actions would have been really to focus on the supervisory court at those and to really try to kind of strengthen the supervision process and make sure that our supervisors are watching out for this risks and that they are not afraid to ask tough questions, both of the bank's management managers, but also of their own superiors up the chain, including me, because I think what is missing often from the policymakers and I guess discussions and again, this is just I'm an outsider to all of that.

00;33;02;02 - 00;33;24;11
Saule Omarova
But when the regulators and legislators get together, I worry that there's too much of that group think of some sort or at least shared assumptions and at least the sort of reluctance to really be a difficult person in the room and keep pressing, asking difficult questions. Why not? Why not this? Why don't we have a different way of approaching the issue or what not?

00;33;24;11 - 00;33;42;06
Saule Omarova
And that's what I would have brought to the table. How it would have played out in the particular situation. Would it would depend, of course, on Chuck on the circumstances. But one thing I could have I could have promised the people was that, you know, I'd be the one fighting Julia.

00;33;42;06 - 00;34;06;01
Julia Rock
You have? Yeah. Yeah. I wanted you to throw a question at you, Matt, because it's been really eye opening for me reading about the Fed this week. Obviously, Jerome Powell has been a huge story of the Biden administration because as listeners probably remember, he's initially a Trump appointee, he's a private equity multimillionaire. He's been on one of the most or the most aggressive rate hiking cycles in American history.

00;34;06;07 - 00;34;30;24
Julia Rock
And you've been writing, Matt, very critically about the Fed, its role, as well as sort of the lack of a role in some cases in Silicon Valley banks collapse. I'm wondering what what exactly sort of a realistic way of moving forward is in terms of, you know, what what Congress should do to change the Fed, what how Biden's relationship to the Fed had changed should change.

00;34;30;24 - 00;34;34;17
Julia Rock
Should Powell lose his job? What what should happen with the Fed?

00;34;35;20 - 00;35;01;02
Matt Stoller
Well, the one thing the Fed cares about is their independence. Right. So they the Fed does historically. So I've read a book and about a guy, a congressman named Right Pappin, who spent he was in Congress for 46 years from 1929 all the way to 1976. And for many of them, he spent his time torturing the Fed as the chair of the Banking Committee.

00;35;01;02 - 00;35;24;29
Matt Stoller
And what the Fed cares about is, is their ability to have discretion to make decisions which they call independence. So if you want to get the Fed to do things, you have to threaten it. Take that. You have to tell them to do something, and then you have to threaten to take that away. And and what you can do that many ways you can say we're going to have more transparency at the Fed and audit.

00;35;24;29 - 00;36;00;23
Matt Stoller
We're going to like, you know, we're going to put you on congressional appropriations. We're going to you know, we're because they print our own budget. It's kind of amazing that so many dirty things about the Fed. It's hilarious. But there are lots of ways that you can you can get the Fed to behave. But I think you know, what Congress should really start doing is and members of Congress should just explicitly start talking about how the Fed is not independent and needs needs to be it needs to be subject to more strict guidance from Congress and the executive branch.

00;36;01;10 - 00;36;20;27
Matt Stoller
And I think if I were the Biden administration, you know, whenever I watch CNBC every morning and, you know, whenever the Biden administration spokespeople come on and talk, they get asked about what the Fed is doing. And they say, well, of course, I wouldn't comment on interest rate levels or monetary policy or what the Fed is doing because, you know, we think the Fed is independent, but blah, blah, blah.

00;36;20;27 - 00;36;56;25
Matt Stoller
And then they say whatever they're going to say, but I think they should just drop that charade. And I think they should just like Trump, the right idea when he was he was publicly complaining about Jay Powell and interest rates. The president should really be running our monetary policy or Congress should someone who's in elected office. So I think that it's important to just drop the charade about the Fed being independent and just start saying the Fed is not independent and we need to figure out how to how to structure our monetary policy and our supervisory policy so that they do what Congress wants and not and not what and not what they feel like.

00;36;57;07 - 00;37;20;15
Matt Stoller
I mean, there's lots of specifics you could do like you could get rid of the there you know, the reserve banks, they have bankers on their boards, which is insane. And we should get rid of that because that's just a political kickback machine, an influence peddling machine. You could just say, we're going to remove your authority failed. So we're going to move that over to the FDIC, which has an incentive to not allow these messes to be made.

00;37;21;24 - 00;37;33;29
Matt Stoller
You know, the most the most aggressive. You could just you could just say when you make a monetary policy change, you're going to raise interest rates. We need to have the president approve it or, you know.

00;37;34;29 - 00;38;03;18
David Sirota
Just jump in and just just challenge you on one thing. I'm not I'm not challenging you this challenging you. But but you sort of devil's advocate, what you always hear whenever this idea is brought up is that that that the Fed chairman or the Fed as an institution needs to be independent so it can make tough decisions without fear of or consideration of politics, political pressures and the like.

00;38;04;00 - 00;38;06;25
Matt Stoller
Right. Leave the one specter alone so he can do it.

00;38;07;16 - 00;38;20;23
David Sirota
Yeah. So. So what's the risk? I mean, what's your answer to that? There's sort of this fear that, you know, some Fed chairman will be too responsive to, like what the public wants. What's your response to that?

00;38;21;02 - 00;38;42;14
Matt Stoller
Well, you know, from 1935 to 1950, we dropped the charade. And the the the chair was a guy named Mario Eccles, who was a Scottish Mormon. His family was Scottish, and then he was Mormon, was a Utah banker. And he became the the the Fed chair. And FDR would tell him what to do and Truman would tell him what to do on interest rates.

00;38;42;14 - 00;39;07;26
Matt Stoller
And he did it. And we had 1% unemployment finance. The World War Two got us out of the Great Depression, and there really wasn't an inflationary problem. I mean, it was a phenomenally successful, probably the most successful period that the Fed has ever had was when it was explicitly under the control of the elected leader of this country.

00;39;08;04 - 00;39;35;11
Matt Stoller
So and that's what the Fed doesn't like, people remembering that that era and then they and then really until the 19, late 1970s, the Fed kind of was in this nether region where they kind of took direction, but they could make their own choices if they wanted to. And then it wasn't really it was with Volcker when this kind of notion of the Fed as an independent agency and it was just wildly inappropriate for anyone to even comment in politics, that's when that emerged.

00;39;36;18 - 00;40;00;15
Matt Stoller
I mean, I think you hear this a lot like do you want Ron DeSantis setting monetary policy? Do you want Kevin McCarthy setting monetary policy? Or if you're Republican, do you want Joe Biden setting monetary policy like that's outrageous. And I generally like, you know, a lot of Democrats, I think we're very happy that the Fed did what they did in 2010 because for 11, because they were like, oh, my gosh, the Tea Party Republican are crazy.

00;40;00;15 - 00;40;29;15
Matt Stoller
Some at least there's an adult in the room in Ben Bernanke or the Republicans at the same you know, they have the same reaction. And I think what all of that really is, is it's a is it's a distrust of democracy at its core. And one of the things that happens when your Democratic leaders don't have anything to do is it's like any academic you know, when you have a place with a bunch of academics, like they fight in really bitter, petty ways because there's no stakes.

00;40;29;15 - 00;40;53;15
Matt Stoller
And I think that's one of the things that's happened in Congress and happened with our elected leaders is if if the judges and central bankers make all the decisions and they get to just, you know, fight with each other about meaningless stuff. But like when the pandemic hit and they crafted the CARES Act, there was a lot of stuff in the CARES Act they didn't like, but they did a careful job trying to figure out what to do because the world was on their shoulders.

00;40;53;15 - 00;41;12;21
Matt Stoller
And I think part of what we have to do is say elected leaders when they you know, when when people when they when you know, who is in charge and the voters know it's that guy making the decision that caused a recession or that guy that's making a decision that caused inflation or brought down inflation or whatever. And I can vote for him or not or against him.

00;41;13;03 - 00;41;36;22
Matt Stoller
That's a healthy system, right? So like back in the 1920s, Andrew Mellon, you know, was, was, was the ex-officio chair of the Fed. He was also Treasury secretary and he was a bad guy. He was also a much better participant on the Fed Board of Governors than lots of the other people, because lots of the other people were appointed by banks.

00;41;36;22 - 00;42;04;03
Matt Stoller
It was a slightly different arrangement. The the people who were put there by democratic institutions and had some democratic accountability were much more responsive to the public interest, not because they were better people, but because they were institutionally required to be that way. So I think this is more of an institutional question, and every time I hear I say the same, I'm always like, let's replace the Federal Open Market Committee with a congressional committee or let's have the president set rates.

00;42;04;03 - 00;42;22;11
Matt Stoller
And I always get the same response, which is, Oh my gosh, person X, you know, but it would that would be terrible. But it is basically like we have to decide that we want a democracy. And I think that what we see with the Fed is we don't live in a democratic society when these people like Jay Powell are making these decisions.

00;42;22;29 - 00;42;43;27
Matt Stoller
And and that's our choice. We're too afraid to let our own people that we elect make those decisions. So we have to just make the choice to want a democracy and say, yes, we want the people we elect to make these choices so we don't like them. We can fire them. And if we do like them, we can rehire those people or, you know, give them another term.

00;42;43;27 - 00;42;45;00
Matt Stoller
So that's the way I think about it.

00;42;45;09 - 00;42;48;11
David Sirota
Julia You have one last question for Professor Romero. Yeah, I.

00;42;48;11 - 00;43;12;12
Julia Rock
Want to I want to piggyback off that point you're making, actually, David, which is you know there's there's a lot of finger pointing happening right now. I think, David, you've actually pointed out on Twitter a few times, you know, lawmakers who voted for that, there's 2018 deregulatory measures saying like, oh, well, you can't really say, you know, is this exact thing that would have prevented the bank collapse.

00;43;12;19 - 00;43;15;07
Julia Rock
There are all these efforts to sort of evade.

00;43;15;07 - 00;43;17;04
David Sirota
That's the standard. That's the standard.

00;43;17;05 - 00;43;18;18
Julia Rock
Type of standard. Yeah.

00;43;18;26 - 00;43;41;08
David Sirota
The Senate playbook is the standard playbook is to something happens and then you you about the context for decisions that were made in the lead up to what happens then. It's like, well, those things didn't wouldn't directly have stopped this particular they make it extremely specific to try to make make it seem like everyone's to blame so nobody's to blame it.

00;43;41;10 - 00;44;04;14
Julia Rock
Well, exactly. And so that that's that's sort of the question I wanted to throw throw at you, Professor Romer, of like point some fingers here for us. Who is to blame, you know, who should be held accountable in terms of, you know, moving forward, holding both politicians and, you know, banking executives or venture capitalists accountable, like who should be held accountable here?

00;44;04;14 - 00;44;28;28
Saule Omarova
Well, Julia, I think we still need some more time to have more information with respect to what exactly happened, because it's easy, for example, definitely the managers of SVB or a SILVERGATE and signature. Absolutely. Were they should they be held accountable for? What they've done and you know, how many mistakes they've committed? Absolutely. Will they be held accountable?

00;44;28;28 - 00;44;55;06
Saule Omarova
I don't think so. It's easier to hold accountable. For example, the San Francisco Fed and its supervisory department say, you know, the supervisors missed obvious mismatches in the interest rate exposures and so on, so forth. And that would also be correct. But again, chances are that mostly people down the chain, right. Will will bear their the burden of being accountable here.

00;44;56;16 - 00;45;37;00
Saule Omarova
I do not know what we can do with respect to those senators or those members of Congress who voted for that 2018 bill, other than vote them up, but again, voting them out, unfortunately, in our dysfunctional political system requires a lot of money, which we don't have. So when I am completely sympathetic to all these calls for making finance more democratic, by making democratically elected representatives make more decisions more transparently at the same time, you know, we should be realistic about the kind of electoral system that we have.

00;45;37;11 - 00;46;08;22
Saule Omarova
So should we then start with the campaign finance before we get to fixing the finance? Finance probably so. And I also wanted to just say that I am not quite adamant about abolishing the Fed or making the Fed directly accountable or directly under it, under that under the system of an individual president. I think that institution is you know, it's performing well.

00;46;08;22 - 00;46;30;05
Saule Omarova
It's supposed to perform a very important systemic function. In other words, the reason why we do have safe and liquid money bank created money, deposit money moving in the system is because of that institutional structure that sits on top of sort of the Fed's balance sheet. Is it doing the job for the sake of all of us that we wanted to do?

00;46;30;14 - 00;46;54;13
Saule Omarova
Obviously not. Why is it that when we have monetary policy, the interest rate policy is the only tool that would basically combat the inflation and depression and address all of these economic problems that we have. We shouldn't just rely on that. Right? Nevertheless, that's what constantly happens every time some problem arises. And, you know, everybody's looking to the Fed start lobbying the Fed, start pressuring the Fed.

00;46;54;13 - 00;47;19;06
Saule Omarova
And the Fed obliges one interest group or another. It's because the Fed is the only institution in our political economy that has an independent balance sheet. And this is this is where the crux of the problem is. It's a hybrid institution in the sense that it is a political institution, but it's also a market actor. And we haven't figured out how to really manage the balance between these two different nationalities.

00;47;19;15 - 00;47;38;09
Saule Omarova
And this is where I think I agree with you, David, and that is we really need to put all of those fundamental questions on the table. We need to start redesigning the institutions of public finance and institutions of our democracy to make sure that we don't just throw, you know, along this path into nowhere.

00;47;39;07 - 00;47;57;22
David Sirota
So, listen, we're going to leave it there. I want to thank Matt Stoller, Saul Omero, a thank you to you both. Okay. Now for our bonus segment, just for our paid subscribers, just a quick thanks. Thank you for being a supporting subscriber and funding the work we do here at the lever. We couldn't do that work without you.

00;47;57;25 - 00;48;26;17
David Sirota
Okay, now here's that bonus segment. All right. On our bonus segment today, I want to dove a little bit more deeply into Jerome Powell. Jay Powell, the Fed chairman, Donald Trump's Fed chairman, who Joe, nothing would fundamentally change. Biden reappointed to the Federal Reserve chairmanship. And I want to talk to the levers, julie iraq about what to do about Jay Powell.

00;48;26;17 - 00;48;58;22
David Sirota
Now I want to set the stage for this conversation by reviewing for a second what Jay Powell has done beyond just jacking up interest rates, which have crushed workers, which have destabilized the bank situation. The interest rate hikes are part of what was behind Silicon Valley Bank's collapse. And I want to go even beyond Jay Powell saying that it's his priority to, quote, get wages.

00;48;58;22 - 00;49;19;26
David Sirota
I mean, that was a direct quote from him. I want to go to Jay Powell, Will's role at the Federal Reserve as the top bank regulator and here's what we know. In 2021, as we reported at the leverage, Jay Powell backed a Federal Reserve merger authorization for Silicon Valley Bank. Silicon Valley Bank wanted to merge with another bank.

00;49;20;08 - 00;49;44;27
David Sirota
And in backing that, Jay Powell voted for a report that promised the public that the new, larger Silicon Valley Bank would not, quote, pose significant risk to the financial system in the event of financial distress. A year later, his own Federal Reserve examiners began sounding the alarm about Silicon Valley Bank. But as far as we can tell, Powell did nothing.

00;49;45;18 - 00;50;14;29
David Sirota
Then when the bank collapsed, Powell authorized a federal bailout under the premise that Silicon Valley bank, the bank that his Fed had just said, did not pose a significant risk to the financial system. He then bailed them out, saying that it did pose a systemic risk to the financial system. And in making that announcement, we now know that he reportedly used his influence to block any mention of the regulatory failures leading up to the disaster.

00;50;15;23 - 00;50;42;07
David Sirota
So I think the first question is about what to do about Jay Powell. The first question for Julia Rock is what can Joe Biden do about Jay Powell? And maybe I should say even beyond that, Joe Biden or Congress, what can they do about the recently reappointed Donald Trump Federal Reserve chairman? What can be done about him?

00;50;42;19 - 00;51;25;28
Julia Rock
What can buy knew about Jay Powell? He can fire him for cause that is in the Federal Reserve's governing statute. If Jay Powell has not done his job, then he can be removed from the Federal Reserve's Board of Governors. Sort of short of that. Something Stolar was talking about earlier is that Biden and Congress could start talking about Powell sort of as the non independent political actor that he is, which could also sort of go a long way in in removing the facade that the the Federal Reserve and the Federal Reserve chairman are sort of independent of any political influence, independent of industry influence.

00;51;25;28 - 00;51;32;23
Julia Rock
They're just sort of these intelligent technocrats sort of steering the ship of U.S. monetary policy.

00;51;33;03 - 00;52;00;10
David Sirota
The president could fire him for cause. The public could better understand Jay Powell as a not an independent political actor. He's basically a I mean, clearly a a proxy for a representative of the large banks. Clearly, I would ask you, I mean, there hasn't been, as far as I know, a Federal Reserve chairman who has been fired for cause.

00;52;00;18 - 00;52;21;04
David Sirota
But that exists in the law for a reason. I mean, I'm not asking you to put on like a like a legal hat here, but what I've laid out to you and I should I should say I laid out a story from 2021 to 2023, right. Silicon Valley Bank gets a merger approval with Powell Fed saying it does not pose a significant risk to the financial system.

00;52;21;07 - 00;52;53;22
David Sirota
A year later, his own regulators blow the whistle. He does nothing. Then the bank collapses, a bailout comes, and he used his influence to block mention of the regulatory failures. That's just since 2021. I mean, you can rewind the tape even further, as we did at the lever this week and look at how his Federal Reserve also issued a report in 2018 showing that Silicon Valley Bank was at huge risk of a bank run because it had such a high percentage of its deposits being uninsured.

00;52;53;22 - 00;53;16;09
David Sirota
The idea being that uninsured deposits, the depositors know their deposits are uninsured and they are more likely to flee or pull their money out, create a bank, run if they get nervous that their bank is going to fail. So I think one of the questions is, even though the president hasn't used this power, any president has used his power in the past, does this rise to the level of for cause?

00;53;16;09 - 00;53;21;15
David Sirota
And if this doesn't rise to the level of cause, like what does rise to the level of cause?

00;53;22;05 - 00;53;52;12
Julia Rock
There many other parts of the story as well. But one is, of course, that it was, you know, Paul's own interest rate hiking policies, done the fastest rate hikes in the past year in history that that was sort of increasing certain risks at Silicon Valley Bank, that it wasn't going to be solvent. And so it was like the Fed was creating some of the conditions for Silicon Valley being to be at higher risk while at the same time sort of denying its its job in supervising the bank.

00;53;52;12 - 00;54;14;10
Julia Rock
There's no doubt. And this isn't something, of course, you know, we're just saying at the lever. There are lawmakers who have been saying this, too, that our power has failed in a big way here. You know, the reserve is doing an internal investigation into its own activities leading up to the bank's collapse. Elizabeth Warren, of course, has said that power shouldn't be part of that investigation.

00;54;14;10 - 00;54;31;14
Julia Rock
But there are also calls for the inspector general to do its own investigation of the Fed. So there's clearly a lot more to be found here. But, yeah, it's it's sort of hard to imagine what the authors of that statute were looking for, if not something like this.

00;54;31;14 - 00;54;50;14
David Sirota
I mean, I'm laughing only because, like the idea of the Fed investigating itself, like like Jay Powell running around being like who did this? Who did this right? I mean I mean, it really does feel like, you know, the famous OJ Simpson running around saying he's going to go find Nicole's killer. Right. I mean, like who who could possibly have done this, right?

00;54;50;14 - 00;55;16;16
David Sirota
Like, come on. Like you're going to investigate yourself. Like, that's really what what's going to be the situation here? I mean, I have been heartened to see Elizabeth Warren really on top of this. And and and look, I know that there are some listeners who are hearing this right now. They can't get over Elizabeth Warren's behavior during the 2020 presidential election.

00;55;17;03 - 00;55;54;11
David Sirota
The whole political forces that against Bernie Sanders. I understand that I was literally working on the Bernie Sanders campaign. I get those feelings. But when it comes to financial regulation, stuff like the Federal Reserve Bank rules, Elizabeth Warren really is far and away, I would argue far and away, the most knowledgeable and strongest on the details. A lawmaker on the Democratic side in terms of both understanding what's going on and challenging the banks, and even she is out there.

00;55;54;11 - 00;56;23;26
David Sirota
I mean, she's leading the charge against Jay Powell. What do you make of the inherent argument that we would hear that we always hear whenever pressure is put on a Federal Reserve chairman? Oh, listen, the Federal Reserve chairman needs to be independent of politics. Any calls to even fire him is the political branches of the government meddling with a branch of the government that should be independent of politics?

00;56;23;26 - 00;56;48;03
David Sirota
I mean, I roll my eyes about that because we've seen the perils of that at the Supreme Court, where these people get appointed to lifetime appointments and never have to answer to the public at all. So what do you make of the argument that. Well, inherently be out there with any pressure on Powell? The argument that will say pressure on him is bad because he shouldn't be thinking about the public.

00;56;48;17 - 00;57;15;12
Julia Rock
I mean, you sort of said it in your last line there, which is like it would be sort of completely remarkable to think that, you know, one of the most powerful people in America shouldn't we shouldn't be thinking about the public in their actions. But it's also a little bit ridiculous, you know, because, of course, the Fed's independence comes from the fact that they're appointed by the president, confirmed by the Senate, and then stay in their job unless they do something egregiously wrong.

00;57;15;12 - 00;57;49;15
Julia Rock
And, you know, if Biden were to fire Powell, Powell could fight back and say that this wasn't for cause. You know, we could expect litigation to come out of this. I mean, it's not the type of thing where, like, the president can just be firing the Fed chair willy nilly. But it does seem to me like if there's sort of no mechanism for ensuring the Fed chairman is doing their job, besides not appointing people like Jay Powell in the first place, which obviously is on Biden, and all of the sudden she voted for his reappointment, then, then this seems like the appropriate step.

00;57;49;28 - 00;58;04;23
David Sirota
We should also mention that Donald Trump floated the idea of firing the Fed Chair. Chairperson How? If you remember, just just to remind folks how that came up and what came of it.

00;58;05;13 - 00;58;33;25
Julia Rock
In 2019, Trump was basically annoyed that Powell was raising interest rates, which, by the way, interest rates had been basically at zero during the 20 tens, which has created all sorts of conditions that are problematic in our economy now. But Powell was raising rates in 2019, and Trump, I think, was publicly saying like, oh, the GDP this year would have been higher if Powell had been doing this.

00;58;33;25 - 00;59;01;09
Julia Rock
And of course, we remember Trump loved to brag about how great his presidency was, was for GDP. And so he was basically annoyed at Powell for raising rates and going around on TV saying he was going to fire him for it. And my understanding is there is pretty broad consensus at the time that Trump couldn't do this under the that that just sort of having a policy disagreement didn't didn't rise to the level of.

00;59;01;12 - 00;59;02;01
Julia Rock
Of course.

00;59;02;05 - 00;59;42;07
David Sirota
Right. See, I think there is a difference between Powell pushing interest rates that maybe a president agrees with or disagrees with. That is a policy difference. That's a policy. I think there's a difference being that and you were warned repeatedly about a set of circumstances that you didn't do anything about. You fell down on the job. You effectively, in my view, if not, if you didn't lie, you misled the public by insisting or at least signing off on a report that insisted that a specific, pretty large $200 billion bank didn't pose any threat to the financial system.

00;59;42;07 - 01;00;09;26
David Sirota
And then 20 months later, bailing it out on the grounds that it did pose a threat to the financial system. Right. Like that is that is incompetence, at least in my view. It could be malfeasance, you know, incompetence plus a bad motive to me that that's not a policy disagreement. That's like you're not doing your job. You're hired to do a job that you have refused to do.

01;00;10;12 - 01;00;41;08
David Sirota
That's different than you're pursuing a policy I don't agree with. And that's why I should mention we have our website fire Powell dot com. I encourage everyone who's listening right now to go to fire Powell dot com. That will take you to our website at the lever to sign your name to the an open letter asking President Biden to use his power to replace Jay Powell at the Fed to get a more competent Federal Reserve chairperson who will actually do the job.

01;00;41;15 - 01;00;44;28
David Sirota
I hope you go sign that. Julia Rock, thanks for your reporting.

01;00;45;17 - 01;00;46;20
Julia Rock
Thanks for having me on, David.

01;00;47;11 - 01;01;09;23
David Sirota
That's it for today's show. Thanks a ton for being a paid subscriber to the lever. As I've always said, you really couldn't do this work without our paying subscribers. If you particularly like this episode, consider pitching in to our tip jar. Tip Jar Link is in the episodes description or over at lever news.com slash tip jar. Every little bit helps us do this journalism.

01;01;09;29 - 01;01;31;18
David Sirota
Oh, and one more thing. Be sure to like subscribe and write a review for Lever Time on your favorite podcast app. Until next time. I'm David Sirota. Keep rocking the boat. The leisure time podcast is a production of The Lever and the Lever Podcast Network. It's hosted by me, David Sirota, our producers, Jared Jicama, and our editor is Dennis Golan.

01;01;32;05 - 01;01;39;10
David Sirota
You can find all of our past episodes at Lever Time podcast or on all of the major podcast players.