Tim Scott Questions Fed Nominee Michelle Bowman on SVB Failure Accountability

Accountability for SVB Failure

• ❓ Senator Tim Scott questioned Fed Nominee Michelle Bowman regarding the lack of accountability within the Federal Reserve following the failures of Silicon Valley Bank (SVB) and other large banks.
• ⚠️ Scott highlighted that no Federal Reserve staff, including those from the San Francisco Fed, were reportedly fired, suspended, or faced significant consequences.
• ✅ Bowman committed to fully investigating the supervisory failures and holding those accountable, emphasizing it's the Fed's responsibility.

Interest Rate Risk vs. Other Risks

• 📉 Scott pointed out that while some blame S2155 (Dodd-Frank reform) for SVB's failure, the primary cause was interest rate risk, which regulators seemingly missed.
• 🎯 Regulators appeared more focused on climate risk than the evident interest rate risk that caught them off guard.
• 🗓️ Former Vice Chair Bar was reportedly unaware of potential interest rate risk until mid-February 2023, just weeks before SVB's collapse.

Bowman's Subcommittee Work on Interest Rate Risk

• 📊 As chair of the board subcommittee on smaller regional and community banking, Bowman explained her proactive approach to understanding the impact of rising interest rates on banks with under $50 billion in assets.
• 📈 Her subcommittee began shocking the portfolios of state member banks to assess the implications of rate increases.
• 🤝 Bowman engaged in conversations with state bank commissioners, banks, and industry members (ABA, ICBA) regarding supervision of interest rate risk.
• ✍️ She also published an article in January 2023 discussing how the Fed would supervise interest rate risk in these portfolios, indicating she took the risk seriously.

Lessons from HUD Experience

• 🧑‍💼 Nominee Michelle Bowman also addressed insights gained from her operational experience at HUD, serving as chief of staff.
• 🧠 Key lessons included presenting all points for informed decision-making, listening compassionately, and assembling a strong team of personnel.