Massachusetts Sen. Elizabeth Warren on Tuesday grilled a former Federal Reserve official about his role in the subprime mortgage lending crisis that ushered in the 2008 economic crash.
According to Warren’s Facebook page, Senate Republicans held a Banking Committee hearing on Tuesday “to talk about why we should roll back the rules on mortgages and credit cards because they’re just too costly for the banks.” One of their witnesses was Leonard Chanin, former Deputy Director of the Division of Consumer and Community Affairs at the Federal Reserve Board. He also served as the Assistant Director of the Office of Regulations of the Consumer Financial Protection Bureau.
Warren criticized Chanin for his performance while serving as assistant director for the Consumer Financial Protection Bureau’s office of regulations.
According to Warren, he “helped lead the Federal Reserve division that refused to regulate deceptive mortgages — including the subprime lending that helped spark the crisis.”
Chanin said there was a lack of data going into the crisis, which Warren angrily rebutted.
“There was anecdotal evidence to be sure,” Chanin said. “But there was no hard data.”
To this, Warren fired back, “Did you have your eyes stitched closed?”
“No hard data was presented to the Fed until the crisis erupted in 2008,” Chanin responded.
Warren then called his tenure at the Fed a “disaster.”
That division’s failure to act, she said, sparked a crisis that caused $14 trillion in losses to the US economy.
“According to the Dallas Fed, (the) crisis cost the American economy an estimated $14 trillion. It cost millions of families their homes, their jobs, their savings – devastating communities across America. So when you talk now about how certain regulations are too costly or too difficult to comply with, you sound a lot like you did before the 2008 crisis when you failed to act,” she said.
On her Facebook page, Warren called his “hands-off” approach at regulation a key factor that allowed the crisis to unfold.
“Today I asked Mr. Chanin: Given his abysmal track record, why should anyone take him seriously when he says the new rules are too expensive?” Warren wrote.
She wondered why Republicans chose Chanin as their witness, saying, “of all the people who might be called on to advise Congress about how to weigh the costs and benefits of consumer regulations, I am surprised that my Republican colleagues would choose a witness who might have one of the worst track records in history on this issue.”
Watch the video, as posted to YouTube, here: