May 03, 2023

Warren, Kennedy Invite Federal Reserve Inspector General to Testify Before Banking Subcommittee on Recent Bank Failures and Reforms to Strengthen Fed Accountability

Text of Letter (PDF)

Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), Chair of the Senate Banking, Housing, and Urban Affairs Subcommittee on Economic Policy, and John Kennedy (R-La.), Ranking Member of the Economic Policy Subcommittee, sent a letter to Mark Bialek, the Inspector General of the Federal Reserve (Fed), inviting him to testify at their hearing next week on the Fed’s role overseeing Silicon Valley Bank (SVB) before its failure and to consider legislative reforms that strengthen transparency and accountability at the Fed. 

“The Fed’s own report blames itself in part for the failure to effectively regulate and supervise Silicon Valley Bank, and I’m leading a Senate hearing to get a full accounting of what happened. Inspector General Bialek’s testimony before the Banking Subcommittee will provide Congress and the American people the answers they deserve about the Fed’s role in this banking crisis and shed light on the need for structural reforms to bring greater accountability to the Fed. I urge Mr. Bialek to accept this invitation to testify,” said Senator Warren. 

The hearing, entitled “Strengthening Accountability at the Federal Reserve: Lessons and Opportunities for Reform”, scheduled for Wednesday, May 10, 2023, at 2:30 PM ET, will examine the Fed’s oversight of SVB, consider potential legislative reforms that strengthen transparency and accountability at the Fed, including proposals to designate the Fed Inspector General as a Senate-confirmed presidential appointee and to subject the Federal Reserve Banks to the Freedom of Information Act. 

“We have long expressed concerns about insufficient transparency around Fed policies and programs, unresponsiveness to Congressional information requests, and an overall lack of accountability at the Federal Reserve Board and regional Reserve Banks. The Fed’s ongoing inability or unwillingness to meaningfully address these concerns threatens to undermine the public’s confidence in the Fed and the credibility of the Fed’s policymaking. The recent bank collapses, moreover, bring into stark relief the consequences of the Fed’s failures and the need for structural reforms,” wrote the senators. 

Senator Warren has led extensive oversight efforts to hold the Fed and Chair Powell accountable for ethics, supervision, and regulation failures: 

  • On April 28, 2023, following the Fed’s report on SVB’s failure, Senator Warren released a statement calling on the Fed to immediately adopt stricter bank oversight and called out Chair Powell’s failure to supervise and regulate banks that posed a systemic risk to the economy. 
  • On March 31, 2023, Senator Warren and Thom Tillis (R-N.C.) led a bipartisan group of senators to reintroduce the Financial Regulators Transparency Act, bipartisan legislation that would subject regional Federal Reserve Banks to the Freedom of Information Act (FOIA) and ensure their responsiveness to congressional and public information requests.
  • On March 22, 2023, Senators Warren and Rick Scott (R-Fla.) introduced bipartisan legislation to require a presidentially-appointed and Senate-confirmed Inspector General to the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection.
  • On March 22, 2023, Senator Warren led 11 senators in a letter to Fed’s Vice Chair for Supervision, Michael Barr, calling on him to exercise the Fed’s authority to apply stronger regulation and supervision to banks with assets totaling $100 to $250 billion. 
  • On March 16, 2023, Senator Warren sent a letter to Fed Chair Powell, criticizing his leadership failures at the Fed that directly contributed to the failures of SVB and Signature Bank, and the significant risk to the banking system and the economy unleashed by those collapses. 
  • On March 15, 2023, Senator Warren delivered a speech on the Senate Floor about the failures of SVB and Signature, spoke about her new legislation, the Secure Viable Banking Act, which would reverse the mistakes that Congress and President Trump made with rollbacks of Dodd-Frank protections. 
  • On March 14, 2023, Senator Warren called on Chair Powell to recuse himself from the Fed’s review of the SVB failure. 
  • In December 2022, Senator Warren and then-Senator Pat Toomey (R-Pa.) introduced the bipartisan Financial Regulators Transparency Act, legislation that would strengthen Federal Reserve accountability and ensure that no financial regulator can withhold critical ethics-related information from Congress.
  • Senator Warren has previously sent letters to Chair Powell on November 7, 2022, August 11, 2022, January 10, 2022, December 7, 2021, and October 21, 2021, and requested that the Fed publicly release additional information about its trading scandal, but the Fed has failed to adequately respond. 
  • In October 2022, Senator Warren called out Atlanta Fed President Raphael Bostic for his “alarming failure” to disclose financial transactions, which speaks to “further evidence of the depth of the ethics problem at the Fed.”
  • In February 2022, Senator Warren secured significant ethics commitments from several Fed Board nominees, including: Dr. Lael Brainard, nominee to serve as Vice Chair on the Federal Reserve Board, Sarah Bloom Raskin, nominee to serve as Vice Chair for Supervision on the Federal Reserve Board of Governors, and Drs. Lisa Cook and Philip Jefferson, nominees to serve as members of the Board of Governors. Bloom Raskin, Cook, and Jefferson agreed to a four year recusal period from matters which they oversee on the Board of Governors, not to seek a waiver from these recusals, and not to seek employment or compensation from financial services companies for four years after leaving government service. In May 2022, Senator Warren also secured these commitments from Michael Barr, who was ultimately confirmed as Fed Vice Chair for Supervision.
  • In January 2022, Senator Warren called on Chair Powell to immediately release information related to Fed officials' trades and changes to the Fed’s ethics policy after new and troubling revelations about then-Vice Chair Richard Clarida’s trades in March 2020.
  • As the ethics scandals involving top level Fed officials unfolded in September and October of 2021, Senator Warren called out the culture of corruption at the Fed and raised deep concerns over conflicts of interests that have undermined public confidence in the Federal Reserve System. 
  • In an October 2021 speech on the floor of the Senate, Senator Warren called out the culture of corruption among high-ranking Fed after recent reports of ethically questionable financial activity by high-ranking Fed officials, including then-Vice Chair Clarida and two regional Fed presidents.