Sen. Elizabeth Warren couldn’t contain her laughter when she was told on CNBC’s Squawk in the Street that banks and their handsomely-compensated CEOs “do their own stress testing.” In fact, numerous bank CEOs, Warren was told, had appeared recently on the show and explained that they stress-tested their own organizations.
“Not everyone was behaving in a risk profile, a risk manner, that Silicon Valley Bank was,” the host asserted.
Warren gathered herself after the laugh, apologized and explained. “I’m sorry. I taught school for many many years, and I did not let my students do their own testing. The testing that is meaningful,” Warren said, “is the testing that comes from the outside. And it’s also the testing where you don’t give the answers in advance.”
Congress and the Fed weakened stress tests and other rules to prevent big banks from taking on too much risk and crashing the economy — all so banks could make bigger profits. Banks can't be trusted to regulate themselves. Congress and our regulators need to step up. https://t.co/AVcFr7g3GB— Elizabeth Warren (@SenWarren) March 21, 2023
Warren then went into teacher mode: “The whole point of stress testing is for someone on the outside of the bank to say, hmmm, what could go wrong here? And to make sure that the bank could withstand those kinds of problems, like a sudden increase in interest rates. That’s the point behind the stress testing.”
For the banks to say “not to worry, we’re doing this ourselves,” Warren says,” is truly laughable.” An opinion the Senator had already made clear — by truly laughing.