Senate Banking Committee Hears Testimony from Financial Regulators

The Senate Banking Committee heard testimony from heads of financial regulatory agencies including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, as well as the Vice Chair for Supervision at the Federal Reserve, Michael Barr. In his opening remarks, Committee Chairman Sherrod Brown noted “[w]orkers and small businesses who are already struggling under the weight of inflation shouldn’t get hit with exorbitant bank fees, lose their money to a crypto scam, or worry that their savings will disappear overnight if a mismanaged bank or credit union fails. And none of us want a scenario where risky bets on Wall Street crash the economy again.”

The hearing covered a variety of issues mostly related to the banking sector including fees and challenges experienced by certain groups trying to gain access to the banking system. Additionally, the hearing touched on risk in the financial system, digital assets, and cybersecurity. In his written testimony, Vice Chair for Supervision Barr stated “[u]ncertainty has led to increased financial market volatility and may also reveal pockets of excess leverage and liquidity risk in the non-bank financial sector, which risks spillovers to the banking system and the real economy.” Regarding volatility in cryptocurrency markets, Barr commented the space requires “effective oversight that includes safeguards to ensure that crypto companies are subject to similar regulatory safeguards as other financial services providers.” Barr specifically called for legislative action on crypto assets and stablecoins. The hearing also touched on the importance of cyber resiliency. Barr noted that institutions face significant threats each day and they are also vulnerable through their contracts with third party service providers. He stated the Fed is committed to working with the private sector to ensure they are aware of the risk and have ways to manage the risk presented by cyber threats.