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Sen. Elizabeth Warren questions Treasury Secretary Steven Mnuchin about why he made extraordinary calls to bank executives and regulators

Key Points
  • Sen. Elizabeth Warren questions why Treasury Secretary Steven Mnuchin made extraordinary calls to bank CEOs and regulators during a market downturn in December.
  • Warren also asks six major banks for information about them calls.
  • The calls came as stock markets were tumbling, but there were no widespread concerns about bank liquidity or market stability.
Sen. Elizabeth Warren, D-Mass., questions Treasury Secretary Steve Mnuchin during a Senate Banking Committee hearing in Dirksen Building titled Domestic and International Policy Update, on May 18, 2017.
Tom Williams | CQ-Roll Call Group | Getty Images

Sen. Elizabeth Warren asked Treasury Secretary Steven Mnuchin for more information Friday about what prompted his extraordinary calls to bank executives and regulators during a stock market tumble in December.

The Treasury secretary called the CEOs of the six largest U.S. banks to check on their liquidity on Dec. 23, after the worst week for the Dow Jones industrial average since the financial crisis in 2008. A day later on Christmas Eve — when the S&P 500 fell nearly 3 percent in part due to concerns about Mnuchin's talks with bank executives — the Treasury secretary also spoke to top U.S. regulators about maintaining normal market operations.

An administration would normally only take those steps when faced with the real possibility of an economic downturn or stock market collapse. In a letter to Mnuchin dated Monday, Warren questioned why the secretary carried out those calls when market participants had not raised major concerns about stability or financial institution liquidity.

"The public announcement of these calls was a rare step for a Treasury Secretary to take. Moreover, your calls sought to assuage a concern — the liquidity of banks — that neither banking regulators nor executives had publicly indicated was a problem," the Massachusetts Democrat and Wall Street watchdog wrote.

Why did Secretary Mnuchin call bank CEOs?

Warren asked Mnuchin what he saw in financial markets that sparked the calls. She asked for summaries of the conversations and notes taken about them, as well as any information the Treasury has that indicate risks to markets and the economy.

In separate letters to CEOs of six major banks — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — Warren also requested information. She asked for summaries of the calls, notes taken about them, who participated and whether the firms took any action in response to the conversations.

Warren, a second-term senator and fierce critic of financial industry overreach, has repeatedly grilled the Trump administration and banks about their practices. On Wednesday, the lawmaker — who was the driving force behind the Consumer Financial Protection Bureau — asked major banks what they are doing to help the 800,000 federal workers missing paychecks because of the partial government shutdown.

Her pressure on Mnuchin also comes as she leans heavily toward challenging President Donald Trump for the White House in 2020. She formed an exploratory committee late last month.

The Treasury Department did not immediately respond to a request to comment on the letter.

Read the full Warren letter to Mnuchin here.