Things were starting to look up for Fed Chair Jerome Powell only a few months ago. After hitting 40-year highs last summer, inflation lost considerable steam towards the end of 2022. The economy was still running smoothly too, with the job market historically strong and consumer spending high despite inflated prices, a promising sign that the Fed was succeeding in its dual mandate of maximum employment and stable prices.

It started to seem like Powell might be able to prove his critics wrong and engineer a soft landing to avoid a recession. Fast-forward a few months, and the collapses of Silicon Valley Bank and Signature—the second and third-largest bank failures in U.S. history respectively—have forced analysts to downgrade their economic outlooks and given the Fed the impossible task of simultaneously dealing with inflation and a potential banking crisis. The turn of events has emboldened Powell’s critics, including Dem. Senator Elizabeth Warren, who has been critical of the Fed’s chairman’s lax stance on regulation since the beginning of his term.

“Look, my views on Jay Powell are well-known at this point. He has had two jobs. One is to deal with monetary policy, one is to deal with regulation. He has failed at both,” Warren said in an interview with NBC’s “Meet the Press” aired Sunday.

Powell was first appointed to Fed Chair in 2018 by former president Donald Trump, replacing current Treasury Secretary Janet Yellen after a single term. Powell was reappointed by President Joe Biden last year, a renomination Warren opposed. 

Warren has been critical of Powell throughout his second term as the Fed’s interest rate hikes threaten to increase unemployment in the U.S., but the bank closures may give the Massachusetts senator even more ammunition to use against the current chair. Smaller and regional banks are still reeling from the recent failures and more collapses could have big consequences for lending, as small banks account for almost 40% of outstanding loans and 67% of commercial real estate lending. Small businesses, which Warren has called the “heart and soul of our economy,” might also be the hardest hit as banks tighten lending conditions and become more reluctant to issue loans at all.

When asked whether she would advise Biden to replace Powell with someone else at the helm of the central bank, Warren took the opportunity to criticize the current chair once again:

“Look, I don’t think he should be Chairman of the Federal Reserve. I have said it as publicly as I know how to say it. I’ve said it to everyone,” she said.

Warren takes aim at the Fed

Powell and Fed officials will convene this week to discuss the next interest rate hike to reduce inflation. The central bank is expected to hike rates by a quarter of a percentage point, despite the recent bank closures raising questions over the country’s underlying economic stability.

Rate hikes, and specifically the abrupt shift from a near-zero-rate environment to a high one over the past year, were one of the indirect root causes behind SVB’s collapse. The bank’s customer base was largely made up of tech companies and venture capital firms. High rates meant two things for the bank: First, the long-term bonds it had invested in were suddenly worth much less, and second, the funding rounds its clients relied on were now much harder to come by. The stage was set for a shaky balance sheet vulnerable to a sudden surge in withdrawal requests.

Warren has long called for stricter oversight and regulation of banks to avoid crises like those that befell SVB and Signature. Last week, she wrote that “leaders in Washington weakening the financial rules” were chiefly responsible for the bank failures in a New York Times op-ed, referring to her own objections to a 2018 proposal to roll back federal regulations on small and regional banks that had been in place since after the 2008 financial crash.

That proposal eventually passed with the help of lobbying from SVB executives, and Warren has criticized Powell for his role in helping deregulate the U.S. banking sector since he was first nominated as Fed chair in 2018.

Powell “stepped up and took a flamethrower to the regulations, saying: ‘I’m doing this because Congress let me do it,’” Warren said in a separate interview with ABC also aired Sunday. 

Warren said in her interview with NBC that she did not support Powell’s appointment to a second term last year because of his lax stance on regulation. “His renomination—I opposed him because of his views on regulation and what he was already doing to weaken regulation,” she said. “I think he’s failing in both jobs, both as the oversight and manager of these big banks, which is his job, and also what he’s doing with inflation.”

During a renomination hearing in Congress in 2021, Warren announced her opposition to Powell’s reappointment, citing his history of supporting deregulation in banking: “Your record gives me great concern. Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed,” she said.