WASHINGTON, Jan. 18 (Xinhua)-- Democratic Senator Elizabeth Warren on Friday asked U.S. Treasury Secretary Steven Mnuchin to explain why he made unusual calls with executives of six major U.S. banks during a stock market tumble in December.
"Does the Treasury Department have information indicating that the nation's financial institutions are facing liquidity risks, clearance or margin risks, or other risks to market operations that could negatively impact the U.S. economy? " Warren wrote in a letter to Mnuchin.
The letter came after Mnuchin announced on Dec. 23 that he called the CEOs of the six largest U.S. banks about whether they had adequate liquidity during a sustained period of stock market selloff.
On the day after the calls were announced, the S&P 500 declined by 2.7 percent, partly due to concerns about Mnuchin's talks with bank executives.
"The public announcement of these calls was a rare step for a Treasury Secretary to take," Warren said. "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 senator of Massachusetts asked Mnuchin to provide more information about the calls no later than Jan. 28.
"Given the outsized role of liquidity problems in the 2008 financial crisis, we would like to better understand the risks to the U.S. banking system that triggered your concerns and prompted this rare public statement," she said.
In separate letters sent to the CEOs of the six major banks -- Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo, Warren also requested additional information about their calls with the treasury secretary.
Following the 2008 global financial crisis, Warren emerged as a fierce critic of Wall Street, advocating tougher regulation and oversight of the financial industry. She has also formed an exploratory committee to move toward a presidential run in 2020.
