WASHINGTON — A Senate banking subcommittee led by Sen. Elizabeth Warren, D-Mass., is inviting the inspector general of the Federal Reserve Board of Governors to testify at a hearing next week, according to a letter obtained by American Banker.
The hearing, held after three bank failures: respectively the second, third and fourth largest bank failures in US history. – will examine the role of the Fed in supervising Silicon Valley Bank before its collapse in March.
Sen. Elizabeth Warren, D-Mass., and Sen. John Kennedy, R-La., chair and ranking member of the Senate Banking Subcommittee on Economic Policy, invited Mark Bialek, Inspector General of the Federal Reserve and Bureau of Consumer Financial Protection. , to testify at a hearing on May 10. The Fed and CFPB Office of Inspector General did not respond to a request for comment.
Bialek has not confirmed his appearance before the committee.
The hearing is one of a long-awaited panel list to take place after bank failures.
The former CEOs of Silicon Valley Bank and Signature Bank, as well as the former president of Signature Bank, will appear before the committee on May 16, the Senate Banking Committee said Tuesday night.
Federal Deposit Insurance Corp. Chairman Martin Gruenberg, Fed Vice President of Supervision Michael Barr, Acting Comptroller of the Currency Michael Hsu, New York State Department of Financial Services Superintendent Adrienne Harris, and California Department of Financial Protection Commissioner Clotilde Hewlett will testify before the Senate. Committee May 18.
In addition to discussing the Fed’s role in this year’s banking crisis, Warren and Kennedy said they will discuss proposals that would designate the inspector general as a Senate-confirmed presidential designee, and subject the Fed’s regional banks to the Freedom of Information.
“We have long expressed concerns about insufficient transparency around Federal Reserve policies and programs, a failure to respond to congressional information requests, and a general lack of accountability on the Federal Reserve Board and Banks. Regional Feds,” Warren and Kennedy said in their letter. “The Fed’s continued inability or unwillingness to meaningfully address these concerns threatens to undermine public confidence in the Fed and the credibility of Fed policymaking.”
Warren and Sen. Rick Scott, a Florida Republican, introduced bipartisan legislation in March that would require the inspector general to be appointed by the president and confirmed by the Senate. Warren also worked with Sen. Thom Tillis, RN.C., on a bipartisan bill that would subject regional Fed banks to the Freedom of Information Act.
The failure of Silicon Valley Bank, in particular, highlights the opacity of the San Francisco Federal Reserve, which oversaw the institution whose failure preceded the other two.
“The recent bank collapses furthermore highlight the consequences of the Fed’s failures and the need for structural reforms,” the lawmakers said.
Bialek, if he appears at the hearing, will likely also answer questions about the inspector general’s recent report on the stock transactions of certain members of the Fed’s rate-setting committee. The report found that the Fed may further restrict stock transactions from some senior Fed officials, a response to the finding that some officials participated in certain trades while privy to internal Fed discussions about its coronavirus response.