Accountability At The Federal Reserve And Banks Should Be Strengthened

Last week, I had the honor of appearing before Chair Elizabeth Warren, Ranking Member John Kennedy, and distinguished members of the Subcommittee on Economic Policy of the Senate Banking, Housing, and Urban Affairs Committee. My testimony at the hearing in a hearing ”Strengthening Accountability at the Federal Reserve: Lessons and Opportunities for Reform” was based on my professional experience of three decades, consulting and training professionals at banks and financial regulatory agencies in over thirty countries on a wide range of risks that can threaten financial institutions’ safety and soundness. My fellow panelists were Dr. Peter Conti-Brown and Dr. Paul Kupiec; their written testimonies are here.

Lessons Learned

Laws about banks are incredibly important. They lead bank regulators to define the type of rules they write, promote supervisory culture at the top, and design examination processes. The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 greatly influenced Former Vice Chair of the Federal Reserve Randal Quarles to propose the Tailoring Rules. Speaking before the American Bankers Association, he said, “the Congress wants to see action and has, to a certain degree, specified some of the steps we need to take.” He also stated that “in conjunction with changing regulations, we also need to consider how such changes would be reflected in supervisory programs, guidance, and regulatory reporting.”