A group of six Senate Democrats is demanding that the Federal Reserve turn over information about the ongoing overhaul of its bank supervision division following reports of internal tension linked to staff cuts and the alleged sidelining of examiners, The Wall Street Journal reported.
The lawmakers, led by Sen. Elizabeth Warren (D-MA), are also seeking details on the Fed’s plan to commission a new review of the 2023 collapse of Silicon Valley Bank, according to the newspaper. In a letter sent to the Fed, the legislators specifically called on the agency’s vice chair for supervision, Michelle Bowman, to answer the query, the Journal said.
Since last year, Bowman has led the Fed’s internal efforts to revamp how it supervises banks—a process that has involved staffing cuts and new guardrails that critics say favor financial institutions over the agency officials supervising them. Complaints from banks have resulted in some Fed examiners being pulled off the job or otherwise sidelined, the Journal said.
In the letter, the Senate Democrats make clear that it would be “highly inappropriate” for the Fed to remove its own examiners on the basis of bank complaints.
“It is critical that examiners be allowed to evaluate banks’ safety and soundness and their compliance with applicable laws and regulations without fear or favor,” the lawmakers said in the letter cited by the Journal.
In an internal memo sent last year, Bowman said she intended to reduce the staff size of the Fed’s Supervision & Regulation (S&R) division from approximately 500 to roughly 350 employees. Earlier this month, the Fed told banks it plans to review and potentially drop open “matters requiring attention” and “matters requiring immediate attention” in instances when they do not involve pressing, material risks to an institution’s safety and soundness.
Bowman is expected to appear next Thursday alongside the Trump-appointed heads of the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the National Credit Union Administration, the Journal said.
Read more at The Wall Street Journal