Banking and Finance Law Daily Wrap Up, FINANCIAL STABILITY—Warren warns on economy, says ‘short-sighted’ policies pose risks, (Jul 17, 2025)

By Nora Macaluso

“I’m ringing the bell again,” said the Senate Democrat, evoking the 2008 financial crisis.

While headline numbers on inflation, employment, and the stock market look good, “a deeper dive uncovers cracks that should worry us all,” said Sen. Elizabeth Warren (D-Mass.). The U.S. in recent decades has outsourced manufacturing of semiconductors, drugs, and more, at the expense of supply-chain security and good-paying jobs, Warren, ranking Democrat on the Senate Banking Committee, said in remarks prepared for delivery at the Exchequer Club.

The Trump administration has exacerbated those trends, Warren said. With tariffs, “Trump has put the squeeze on American families on a whim,” and the squeeze is showing up in the consumer price index, she said. “Prices are climbing in electronics and household appliances,” she said. “And because Trump is slapping tariffs on things that can’t easily be produced in the U.S., grocery inflation is again on the rise.”

“If Trump were serious about lowering interest rates, he would rein in his chaotic tariffs” instead of threatening to fire Fed Chairman Jerome Powell, who has said the Fed would have moved to lower rates in February if not for Trump’s policy changes, Warren said.

The Republican budget bill, she said, “is the largest upward transfer of wealth in a single law in American history.”

“Trump and congressional Republicans are running up debt to pay for a $4 trillion tax giveaway,” even though “every independent economist who has studied the data says these giveaways to the rich do not pay for themselves.”

Financial deregulation is poised to deliver “another economic blow” to the country, Warren said. Weakening safeguards put in place after the 2008 financial crisis has made banking agencies “toothless lapdogs,” she said.

“The big banks understand which way the wind is blowing,” responding to “newly watered-down 2005 stress tests” by increasing buybacks and dividends, “pushing more money out the door.”

“Next year the Fed will give big banks another boost by providing the answers to the test in advance so the banks can adjust their balance sheets to hide the weak spots,” she said.

The Trump administration is also weakening the Consumer Financial Protection Bureau to “allow more consumer fraud,” and “jamming through” cryptocurrency legislation that lacks protection for consumers, the financial system, or financial security, she said.

“The GENIUS Act, legislation to bring stablecoins into the traditional financial system, passed the Senate despite warnings from many experts,” Warren said. “And now Congress is considering crypto market structure legislation that could sideline the SEC in overseeing the stock market, effectively destroying the $120 trillion golden egg that is America’s capital markets.”

“Over time, a system that permits companies to profit from fraud and false bookkeeping and getting people signed up for loans they cannot possibly afford will weaken until, like we saw in 2008, the whole structure collapses—and takes millions of families with it,” Warren said.

“Trump is cutting a new, destructive path through America’s middle class, but undercutting working people is a long, bipartisan tradition,” she said. Both Republican and Democrat administrations "offered corporate America bailouts while good jobs disappeared overseas and family budgets totally blew apart.”

Warren urged an “affordability agenda” including “careful use of targeted tariffs” along with investment in U.S. production, strengthening bank oversight and capital standards and enforcing laws against scammers, and promoting “robust, competitive markets” with rules against cheating consumers and small businesses.

“We also need to make real investments that bring down costs for families,” such as building housing, supporting childcare, and investing in education and health, she said.

“The problem is pretty straightforward,” Warren said. “Too many economic policies in Washington are short-sighted, shaped by the rich and powerful.”

“Before the 2008 financial crash, I rang the alarm bell as loud as I could about the risks bubbling up in our economy," Warren said. "I'm ringing the bell again."

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