On February 18, two groups of senators, both led by Sen. Elizabeth Warren (D-MA), issued letters to the Fed’s vice chair for supervision requesting information on recent reported actions that the senators contend may weaken federal oversight of the banking sector. Both letters requested responses to specified questions by February 25.

In the first letter, six Democratic senators serving on the Committee on Banking, Housing, and Urban Affairs raised concerns over reports that the vice chair may have removed bank examiners from their roles following complaints from banks. The senators cited a news report alleging that some examiners were sidelined in response to complaints from banks and therefore were discouraged from being “tough on” banks under current policies implemented by the vice chair. The senators also noted that these reported actions follow recent public actions including a 30 percent reduction in supervision staff alongside revisions to the supervision process which they alleged limited examiners’ tools for addressing risks and misconduct. The letter inquired about the validity of the reporting and, if valid, requested supplemental information regarding the reported actions at issue.

The second letter requested information regarding reporting that the Fed hired an external consulting firm to conduct a new review of the 2023 failure of a California-based regional bank, despite prior comprehensive reviews by the Fed and by the OIG for the Fed and CFPB. The lawmakers claimed these prior reviews found that deregulation during the first Trump administration was a key contributor to several large bank failures. The senators expressed concern that the new review might be a publicly funded attempt to “shift blame” from policy decisions that purportedly weakened bank oversight and contributed to high-profile bank failures. The letter sought detailed information on why a new review of the bank failure was necessary, how the consulting firm was selected, the agreement with the consulting firm, applicable costs, and potential conflicts of interest involving the vice chair and individuals at the consulting firm.