WASHINGTON — Sen. Elizabeth Warren (D-Mass.) grilled Federal Reserve Chair Janet Yellen on Tuesday over public advocacy of deregulation by the central bank’s top lawyer, Scott Alvarez.
“The Fed’s general counsel — or anyone at the Fed’s staff — should not be picking and choosing which rules to enforce based on their personal views,” Warren said during a Senate Banking Committee hearing. “So I urge you to carefully review this issue and to assess whether the leadership of the Fed’s staff is on the same page as the Federal Reserve Board [of Governors].”
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The swaps push-out provision that Alvarez criticized in November would have eliminated taxpayer subsidies for trading in risky derivatives, the complex financial contracts at the heart of the 2008 meltdown. A repeal of the measure was inserted into a must-pass bill to fund the federal government this past December, reinstating the subsidies and sparking a bitter feud within the Democratic Party. About a week later, the Fed announced that it would delay implementing key sections of the Volcker Rule, which bans banks from speculating in securities markets for their own accounts. The delay was widely seen as an internal institutional victory for Alvarez, particularly in light of his November comments.
