Senate Democrats have requested that Federal Reserve Governor Michelle Bowman answer to allegations she sidelined Fed banking examiners after executives at banks under their purview lodged complaints with her directly.
Bowman, who has served as governor since 2018, was nominated last summer by President Donald Trump to serve as vice chair of supervision on the Fed’s board. Among a range of duties, the position entails developing and implementing regulatory priorities for the U.S. banking sector in cooperation with other federal banking regulators.
In a letter first reported by The Wall Street Journal and subsequently reviewed by Scotsman Guide, Sen. Elizabeth Warren, D-Mass. and ranking member of the Senate Committee on Banking, Housing, and Urban Affairs, described Bowman’s reported actions — amid efforts taken to reduce Fed staffing in its regulatory division — as a threat to the banking system.
The Senators’ concerns arise from the Journal’s revelations in late January that some examiners at the Fed were “taken off the job” after bank executives complained, while still other examiners “have interpreted her policies to mean they should refrain from being tough on the banks they oversee.”
“If the reporting is accurate, your decision to remove bank examiners at the request of banks themselves would be highly inappropriate and would create a chilling effect across the entire bank examiner workforce,” Wednesday’s letter said, which was signed by six of the 11 Democrats on the Senate Banking Committee.
The Federal Reserve did not respond to a request for comment by the time of publication. A Fed spokesperson subsequently confirmed receipt of the letter.
The Trump administration has made deregulating the banking sector a top priority, citing perverse incentives and market distortions born of overregulation.
As vice chair for supervision, Bowman spearheads that effort at the Federal Reserve Board, a federal banking regulator alongside the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC). Bowman has discussed a priority of “better focusing and allocating resources on areas that are most likely to cause material financial risk.”
Sen. Warren’s letter also cited an announcement made by Bowman in October that 30% of staff had been let go in the Fed’s Division of Supervision and Regulation.
The letter asks that Bowman confirm whether she has removed any examiners based on complaints from supervised banks, and if so, provide the names of removed individuals, the nature of complaints made against hose examiners and the method by which those complaints were transmitted to her.
Bowman, along with the chairman of the FDIC, the comptroller of the OCC and the chairman of the National Credit Union Association, is scheduled to testify next Thursday, Feb. 26, before the Senate Banking Committee.
“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 letter said, requesting Bowman’s answers by Feb. 25.
