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Senator Warren wants crypto bankers to bring back fat paychecks

US Senator Elizabeth Warren wants to recover bonuses paid to bank executives who are being mismanaged by their poor management. yengedly caused the recent banking crisis.

Warren asked bank executives if they would give back the $60 million they got after implementing weaker controls.

Senator Warren says executives ignored the glaring risks of earning $60 million

She said it was wrong for others to pay for risky activities that executives used to enrich themselves.

Silicon Valley bank CEO Gregory W. Baker reportedly got $40 million after Congress authorized the bank to take more risks.

In addition, the bank ignored 17 warnings from the Federal Reserve (Fed) addressing liquidity risk management, poor governance, and capital planning, where Baker allegedly enriched himself. Baker confirmed that he has earned $40 million since 2019.

Warren too Requested Scott Shay, former chairman of crypto-friendly Signature Bank, if he returned the $20 million he earned while ignoring liquidity issues resulted in a $2.5 billion FDIC bailout. Shay said he has no plans to return the money.

Senator Loomis, too Accused Shay blamed regulators and depositors of digital assets for the bank’s liquidity crunch in March.

Depositors withdrew funds from Silicon Valley Bank and Signature Bank after leading cryptocurrency bank Silvergate closed its doors. Both banks sold securities at huge losses to provide liquidity for withdrawals.

Bank losses from securities | source: Wall Street Journal

The FDIC later stepped in to insure the deposits.

The crashes have shaken confidence in the US banking system and sent anxiety across US crypto platforms. Circle’s USDC stablecoin lost its peg after it revealed frozen deposits in SVB. Investment platforms MaiCapital and Digital Asset Capital Management have been forced to bring in offshore banking partners.

Politicians set bills to impose stricter banking rules

Many politicians, including Warren, blame the failures on the lax capital and liquidity requirements of smaller banks.

In 2019, 50 Republicans and 17 Democrats in the Senate voted to repeal some aspects of the Dodd-Frank Act, allowing smaller banks to take more risks.

According to Warren, Baker strongly pressure Congress to repeal elements of the Dodd-Frank Act to allow the Silicon Valley bank to take more risks.

As a result, Massachusetts Senator and US Representative Katie Porter did so foot New bill to restore stricter regulations.

The new Safe Banking Act would force banks with assets of $50 billion or more to come under Federal Reserve supervision and comply with Dodd-Frank stress tests.

Warren confirmed that she and three other lawmakers had introduced a bill to curb “crazy paychecks.”

US Representative Andy Barr argues that long-term low interest rates and excessive government spending encouraged inflation, which led to the crash.

bar Tell Fox Business on March 14, 2023:

β€œThe underlying reasons were the fundamental mistakes in fiscal and monetary policy and failure β€” not lack of regulation β€” but insufficient bank supervision. Regulators need to do some self-searching about the extracurricular political missions they are doing rather than basic nuts and discourage bank supervision.”

Warren’s bill is likely to face opposition from Republicans in the House of Representatives and Republicans in the Senate to prolong debate on the bill.

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Adhering to the Trust Project’s guidelines, BeInCrypto is committed to providing unbiased and transparent reporting. This news article aims to provide accurate and timely information. However, readers are advised to independently check the facts and consult with a professional before making any decisions based on this content.

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