In Senate Banking hearing, Senator questioned Vice Chair Barr about his pledge to change culture and operations at the Federal Reserve to strengthen oversight and protect Arizonans’ savings
WASHINGTON – Arizona senior Senator Kyrsten Sinema demanded detailed answers and a plan from Michael Barr, Vice Chair for Supervision at the Federal Reserve, on how he plans to change the slow-moving, slow-acting culture in the organization. Inaction from the Federal Reserve, who was responsible for regulating and overseeing the now-defunct Silicon Valley Bank (SVB), contributed to SVB’s failure.
In a Senate Banking Committee hearing earlier this week, Sinema pressed Gregory Becker, CEO of SVB, about his role in SVB’s collapse and how to prevent future banking failures. Sinema took Becker to task for misleading statements in his written testimony that implied Goldman Sachs was serving as their financial advisor on certain securities transactions leading up to the bank’s failure. Goldman Sachs has clearly and publicly denied serving as SVB’s financial advisor on the transactions in question.
“Arizonans trust that their hard-earned savings are protected at the bank, but recent bank failures have rocked their confidence in our banking system. To fix what’s broken, we must conduct robust oversight of federal banking regulators and ensure operational and cultural changes are actually made,” said Sinema, a member of the Senate Banking Committee.
Sinema expressed that the Federal Reserve’s recent review of Silicon Valley Bank (SVB) proved what she and other lawmakers had previously asserted: the Federal Reserve knew SVB was in trouble, had the tools to fix it, and failed to respond in time.
During the hearing, Sinema questioned Vice Chair Barr about how the Federal Reserve plans to implement cultural and operational changes to avoid future bank failures and restore Arizonans’ confidence in the American banking system. Sinema repeatedly asked for concrete staffing commitments, goals, timelines, and budgets but did not receive clear, specific answers from Barr in the hearing. Under questioning from Sinema, Barr pledged to be transparent and accountable about his promised cultural and operational changes at the Federal Reserve, and to return with more specific plans on how he intends to transform the agency.
In the wake of SVB’s collapse, Sinema and Republican Senator Thom Tillis (N.C.) led a bipartisan group of Senators questioning the Federal Reserve about clear warning signs – including bank leadership’s clear failure to appropriately manage customer deposits – it missed as part of its responsibilities to conduct oversight and examinations ahead of Silicon Valley Bank’s collapse.
Sinema also introduced the bipartisan Financial Regulators Transparency Act – alongside Republican Senator Thom Tillis (N.C.) and Democratic Senator Elizabeth Warren (Mass.) – that increases transparency and allows congressional oversight of the Federal Reserve and other banking regulators’ activities around bank supervision, examination, and regulation. This bill will allow Senators to conduct much-needed oversight of cultural and operational changes that have been recommended and are urgently needed at the Federal Reserve. The Senators’ bill follows federal regulators’ apparent failure to identify clear mismanagement ahead of the SVB and Signature Bank collapses.
Sinema also sent a letter urging the U.S. Government Accountability Office to conduct an independent investigation into federal regulators’ failure to conduct proper oversight of Silicon Valley Bank (SVB). Prior to sending the letter, Sinema uncovered in a Banking Committee hearing that there was a substantial lag between when Silicon Valley Bank’s problems were first raised in 2021 and insufficient action was taken before its collapse earlier this month.
In addition to her oversight actions, Sinema cosponsored the DEPOSIT Act – legislation that would claw back bank executives’ salaries and stock sales if their bank fails on their watch.