Transcripts For CSPAN2 Financial 20240703

[background noises] clicks the committee will come to order without objection shares authorized to declare recess for the committee any time. The hearing todays entitled oversight of regulators. Without objection all members of five legislative days in which to submit extraneous materials to the chair for inclusion in the record. Just one additional comment members about the schedule. This has a hard stop at 2 00 p. M. And accommodation of the three regulars before us. We will not go past 2 00 p. M. Arachnids must sell for four minutes to give an Opening Statement we here to conduct oversight regulators there is plenty to discuss put forward a proposal that require robust debate and explanation. You are first up. We all know why you failed your employees your agency the fact have not yet resigned approves no responsibility for your actions showing up today is not an act of courage is an act of hubris. You are confronted with a report outlining appalling and abhorrent behavior at the federal Deposit Insurance Corporation. This includes your verbally abusive behavior. This is beyond partisanship. It is clear from this report deepens additional changes at the fdic are necessary. You are not the right person to lead those changes. President biden once said and i quote i am not joking when i say this if you ever working with me and i hear you treat another colleague with disrespect, talk down to someone i promise i will fire you on the spot. So, i ask my colleagues democrat and republican the president as well. If that behavior outlined in this report does not rise to that level what does . Unfortunately some of my colleagues indefensible today to republican fdics shares let me remind my colleagues chair has led this agencies for 10 of the last 13 years. You may hear about confederate employees of the federal agency. There is a decline in satisfaction in the 2018 survey which only include a couple months of former chair williams. That was the status the satisfaction of chair grunberg then 2020 during the core mcwilliams leadership fdics Employee Satisfaction went to its highest level since 2012. That was before mr. Grunbergs first stands as chair. When he returned to lead the agency again Employee Satisfaction plummeted. I employed my colleagues to be consistent when judging behavior of our regulators. This is not just about miss it mismanagement it is clear misconduct. Its a shame we have to spend this much time talking about your conduct and failed leadership. There are very real issues facing our Financial System that deserve this committees full attention. By demonstration banking regulars are busy pursuing serious agendas. Some of you as their focus on policies that dont support the economy the Financial System the safety and soundness of the Financial System or the needs of american families. But first we have to focus on the conduct the fdics chair and ensure this very Important Agency returns to a safe and sound manner and practice it is our Financial System needs it. So we have significant proposals at the fdics yes and at the fed. And just earlier this year the endgame proposal would undergo significant changes i viewed that is quite promising. I hope my colleagues will ask mr. Barr about that as well. So with that i will yield back and recognize the Ranking Member for four minutes for an Opening Statement. Thank you very much mr. Chairman. Good morning. I like to thank our witnesses from the Federal Reserve, the fdics for coming. Dont just start by addressing fdics report workplace cultural Sexual Harassment that was released last week. Deeply troubling and makes clear under both republican and democratic chairs the fdic has not done its job properly. Too properly address the deep rooted Work Environment where they feel safe its a chair grunbergs responsibility to make sweeping changes properly for the benefit of every fdics worker. While the reports scrutinize chair i am disappointed the reports seem to downplay workplace concerns and complaints of harassment that occurred under prior republican Agency Leadership. Regardless fdics as an institution has a lot of work to do. The agency can start by expediting the implementation of the action plan i requested last year. Along with the recommendations laid out in the most recent report. As the report states tone does start at the top i am concerned that republicans have been quick to call to resign are selectively applying that standard. After all the Top Republicans and nominee to be president is currently on trial regarding the first of a series of criminal indictments has been found liable for sexual abuse. Hopefully this concerns them to they will call on the former president to step down and withdraw his nomination now. I look forward to hearing from chair who has committed to making the necessary changes to turn the tide on the culture at the fdics. Under the leadership the fdics has done a lot of important work to combat modern day redlining the reinvestment act not to mention the quick action taken to prevent last years Regional Bank failures from spiraling into a full on financial crisis it. As important as this work is it will be permanently tainted if the working environment of the people doing the work remains marred in toxicity. It is crucial that we have a regulator who works every day to not only promote stability and ensures that Banking System serves all of our constituents also treats i want to applaud fdics and fhfa after the Bank Failures to implement section 956 to hold Bank Executives accountable. Its a past time for the fed and other regulars to file suit and implement this congressional mandate without further delay in addition i look forward to it our regulators are doing to build on Committee Democrat record of protecting consumers in light of the proposed capitol one and discover merger to create the largest in the country i want to hear what regulators are doing the rubber stamp and strength merger reviews i am glad they announced to hold a public hearing in july. I hope regulators listen to the feedback and block at this thisy flawed version. Crisis works and im also eager to hear about the efforts to ensure climate risk is taken seriously as a risk to our Banking System. Diversity and inclusion is front and center. Especially in the light of misguided republican attack ever look forward to today and i yield back in. Would not recommend the chair of the finance solicitation Monetary Policy subcommittee of mr. Barr for one minute. The cleary report on harassment issues at the fdics outline your temperaments and inability to lead chosen agency and crisis. As a report made clear stubborn lack of selfawareness and mismanagement mean that you are not the person to respond to the fdics crisis and you do not have the moral authority to lead the needed transformation of the fdics. That the report and your prior participation and operation chokepoints that leadership to the fdics that you engaged in makes it clear the agency of the safety and soundness of our Financial System and therefore it is time for you to resign. You think for one minute the misconduct outline of the report was uncovered at fdics ray guided bank chair any kind of grace to the management of that bank. The question answers itself part how its made by ongoing position clear the fundamentally flawed proposal must be scrapped and at most there should be a re proposal if justifiable. I yield back. Of the Ranking Member the Financial Institution of Monetary Policy committee will be recognized for one minute. Mr. Frost at right. Think it mr. Chairman. Last week, like many of my colleagues i was appalled by the findings of the independent review any allegations of Sexual Harassment and interpersonal misconduct for far too long. The report paints a picture of an agency plagued by toxic culture that has allowed ledinappropriate workplace condt to persist without accountability. Despite the purported efforts under both democratic and Republican Administration to address this ongoing issues for more than a decade. The authors of the report is someone who has less organizations starts at the top we need Agency Leaders who comprehend make sure retract and retain staff. They have important work to do. Much of it will be highlighting today. It is essential to the success of that work meaningful action is taken to address these longterm personnel issues. I encourage my colleagues to take the time to fully review the facts of the situation. The honorable Michael S Barr of the Federal Reserve board of governors. The honorable martin j grunberg, chairman of the board of directors of the federal Deposit Insurance Corporation mr. Michael sue acting comptroller the office of comptroller of the currency. Youll be recognize her five minutes to give an oral presentation you all are accustomed to this, testify before this can without objection be made part of the record. Without objection the statements of the honorable todd harper will be included in the record as well. He is not here today because of the circumstances. Made well aware of the committee well beforehand. We will include his testimony without objection. Finally, before we begin i will swear the witness is in. If you raise your right hand. I will ask each of you to respond individually do solemnly swear or affirm the testimony you will give it before this committee the matters under consideration will be the truth, the whole truth, and nothing but the truth so help you god . Again mr. Barr, mr. Grinberg, mr. Sue thank you. You may be seated. Reflect each witness answered in the affirmative. We will know or recognize advice at chair bar for five minutes to give an oral presentation of your remarks. Chairman, Ranking Member and other members of the committee. Thank you for the opportunity to testify the Federal Reserve supervisory regulatory activities. Accompanying my test minute Federal Reserve semi annual supervision and regulation report. Today i will discuss Current Conditions the Banking Sector. Supervisory activities, and some of our recent regulatory proposals. Overall the Banking System remains sound and resilient. Thanks to continue to report capitol and ratios above minimum capitol regulatory levels. Overall quality remains generally sound. Capitol ratios increase throughout 2023 leaving the system better position to weather potential losses liquiditys conditions overall are stable notably liquid assets on Balance Sheets remain above their 10 year average throughout 2023. Additionally theres been a decrease in the share of uninsured deposits in the system. However both supervisors and banks must remain vigilant for expected and unexpected stresses presently there are several risks we are monitoring. Delinquency rates are rising among certain commercial real estate loans such as those backed by offices some Consumer Loan sectors. Delinquencies are now at a five year high. Credit card auto loan delinquencies have been rising. Response to rising delinquencies banks have increased provisions. Both are capitol positions the Banking Sector as a whole should be prepared to absorb loan losses that may materialize and continue its vital role providing credit to households and businesses. The Federal Reserve continues to monitor these conditions closely. It is been a little over years r since the sudden failure and the ensuing stress in the Banking System. Events which highlighted the need to improve the speed, force, supervision make progress on these goals as a banker grows in size and complexity. Second, we are modified sing supervisor processes once issues are identified they are addressed more quickly by both the banks and supervisors. Third we are finding ways to better incorporate forwardlooking risk analysis into supervision. The Lessons Learned are not only applicable to our supervisory framework, certain aspects show enhancements to art Regulatory Framework would benefit the safety and the soundness of the Banking System. One of these enhancements was in process several months before the failure. Advance notice of proposed rulemaking expanding application of longterm debt requirements to additional large banks subsequently the fdic and the occ followed up with a proposed rule that increase the options available within the resolution process and enhance Financial Stability we are going through comments were received on this proposal carefully. Another important areas Liquidity Risk management a striking feature of lesters and bank stress Signature Bank and First Republic struggled to cope with unprecedented outputs. Banks found difficult to monetize through transactions under severe stress were not adequately prepared to utilize the discount window. We are exploring targeted adjustments to our predatory framework that would address each of these concerns. Deposit outflows, maturity monetization discount window preparedness. Federal reserve lending to banks through the discount window plays an Important Role in the quiddity and stability of the Banking System and the effective implementation of Monetary Policy. We are reaching out to a wide range of depository institutions of all sizes to learn from their experiences with the discount window in order to improve our operations. Turn to capitol safe and sound Banking System is critical to healthy economy and capitol is foundational to safety and soundness. Wellcapitalized Banking System reduce the probability stressful conditions result in financial crises which inflicted devastating Economic Cost and suffering for families and businesses all across the country. Since my last testimony we have received numerous and meaningful comments on our proposal. We receive Additional Data we are closely analyzing this information i expect we have a set of broad material changes to the proposal that allows us to have a broad consensus and moving the proposal forward. The changes will enable us to have a safer Financial System better it serves american households and businesses, thank you. In general you are recognize her five minutes. Chairman mchenry, Ranking Member waters and members of the committee, thank you for the opportunity to appear before you today. My written statement reports on chairman mckenna, Ranking Member waters and members of the committee, thank you for the opportunity to appear before you today. My written statement reports on the Banking Industry and the condition the fdics deposit insurance fund. The written testimony also provides an update on fdics resolution activities discusses proposed and regulation and supervision. However i would like to focus my remarks today on the fdics ongoing effort to transform Workplace Culture. Let me begin by saying i am deeply committed to the fdic and its mission as well as to the people on whom that mission depends. That thats why it would reports of Sexual Harassment, discrimination and other misconduct surfaced last year it was essential as a starting point to gain a deeper understanding of the agencys Workplace Culture. That my direction fdics and fdd an independent thirdparty review to determine the depth and extent of these issues. Last week the results of that review which was conducted by the law firm were released. The review found for an extended period of time the ftse is failed to provide a workplace safe from Sexual Harassment. Other personal misconduct. I accept the findings of the report and as chairman i take full responsibility to anyone who has experienced Sexual Harassment, discrimination or other misconduct at the fdics i again personally want to apologize express how deeply sorry i am. I also acknowledge my own failures as chairman both in failing to recognize how my temperament in meetings impacted others. And not having identified the deeper cultural issues at the fdics sooner. I am personally committed to addressing these issues. We accept all of the recommendations of the report and are incorporating them into our existing action plan for a safe, fair, and inclusive Work Environment. To restore credibility to our workforce must act swiftly on the reports recommendations and demonstrate a commitment to making fundamental change. For this reason we are already implementing several key recommendations of the report. The report recommends we identify a point of transportation monitor. Will monitor, audit and report implementation of the recommendations. We have already begun this process and will issue a request for proposals for this purpose as early as this week. The report also recommends we engage in independent thirdparty expert to support our efforts it. We have begun that process will issue proposals for that purpose as early as this week. The report recommends a fundamental change to the Agency Structure and procedures for receiving and investigating complaints and taking disciplinary action against misconduct and light of the failures of the existing offices delegating those duties. Will do it by proposing establishment professional conduct directly to the fdics board of directors. Will be charged with fulfilling these responsibilities to conduct investigations for the transportation monitor independent thirdparty expert will advise us on this proposal. Since december fdics focus on implementing its action plan to address all aspects of the issues raised in these reports last year represents an agencywide effort with participation by employees at all levels. Many recommendations outlined in the report are already encompassed by the Agency Action plan. The action plan is focused on three core elements providing more support and resources to victims, strengthening our process for reporting and investigating complaints and approving accountability for anyone who is found to engage in misconduct. Including their separation from the agency. The office of professional conduct will address these core its my privilege to lead and work alongside the fdics people are dedicated to the agency and its mission. Deserve a workplace where we all feel safe, valued and respected as no higher priority for me then delivering on that commitment. Thank you for the additional time mr. Chairman. Youre wrecking us for five minutes. Think it mr. Chairman. Ranking members of the committee and pleased appear to provide an update on the activities and priorities. Overall condition federal Banking System is sound. As a seat supervise a bank and aggregate continue to have strong levels of regulatory capitol sufficient liquidity buffers the risk for commercial real estate the Interest Rate warrant attention. Supervisors need to remain on guard against complacency. One of my Top Priorities for the agency. Occ Bank Supervision operating plan for 2024 highlights asset liability management, credit risk allowance for credit losses, cybersecurity, Operational Risk and consumer compliance risk. Another priority has been promoting fairness in banking. This april mark the oneyear anniversary occ guidance to assist banks and managing risks associate with overdraft Protection Program since the occ heighten tension on overdraft began the fees charged by it regulatory banks and aggregate over 40 . Digitalization has been a third party for the agency. We recognize the Community Banks may face hurdles and Risk Management thirdparty relationships including earlier this month occ Federal Reserve fdic published a third party Risk Management guide for Community Banks with innovative approaches to Due Diligence in assessing new relationships. Occ supports bank merger analytical frameworks. We remain committed to work their inter agency appears including the department of justice on this effort. To increase the transparency generate 29 we released a proposed policy statement on bank mergers week recently extended the Comment Period to june 15. Written testimony has greater detail on these and other activities of the occ. As cochair of the special review committee i like to address briefly recently released independent report on harassment and misconduct. The top priority for us all must be protecting the staff of the fdics and putting people first. The harassment and misconduct detailed in the report are totally unacceptable. The number and scope of allegations in the patterns of misconduct the longstanding culture revealed by the review are highly disturbing and need to be fixed. The root causes and or recommendations cited in the report provided clear roadmap of what needs to be done and why. Thats why our attention must be focused to ensure the fdics a safe workplace for all of its employees. As a matter of the fdics board i am committed to the transformation called for in the report. Im especially supportive of the reports recommendation to engage external expert and establish independent monitor to engage to assure the Agency Efforts are tracked and that accountability is enforced. I also believe german gruenberg has expected responsibility for his and the past feelings and he is fully committed to lead the agency and taking actions necessary to make it a safe place for everyone to work. Thank you, i will be happy to answer any questions. Correct thank you. I will not recognize myself for five minutes. If there are significant changes to your capitol proposal, what you commit to repurposing the rule for notice and comment . If not my decision on process were focused on getting substance right. Quick slipping opportunity for notice and comment what the next proposal is. Have not focused on the process we really are still trying to work out with the substance and make sure you get it right. We have not made a decision yet picnics we intend for you to comply with the a law. s chairman, we take the time line on the last 15 months. Signature bank in april your own chief risk officer reviewed at the icy actions leading up to Signature Bank failure including staffing, weatherby shortages or communication issues later and november revelations about the Workplace Environment started to appear. You testified before the committee of the wall street journal reported on the toxicity of the fdics workplace. Ripe with harassment independent law Firm Commitment at the i see released a report not only confirming your Inappropriate Conduct, but confirming the toxicity of fdics culture and Workplace Environment by expanding on above. No need to go into the details a of report at this time. But looking back, i can say with confidence fdics workplace issues played a role in Signature Banks failures. Would you . Think it mr. Chairman. I appreciate the question but as you indicated our chief risk officer did a review of the failures. No, i am asking you, do you believe the workplace issues impacted the Signature Bank failure in the response to it . Im indicating, mr. Chairman, the report did not identify that as an issue. I am asking you, do you think that is the case . You dont need to cover the this stuff to use time. As far as i am aware it was not a significant Contribution Program okay lets of the snow this report do you accept the report . Including the claims of your actions to your direct reports and folks in the agency . I do. You accept that . Like i do for. A Workplace Environment presented with bad news first reaction is to yell, scream, or berate to the person presenting the Bad Information. Do you think a bank failure is Bad Information . It is. Did you remember responding to that bank failure weekend with any level of anger . And no. No anger . No. The report indicates you are predisposed to pure anger and rage when presented with that information. Do you accept that as part of the findings of the report . We are to believe in the weekend three major Bank Failures that you are not angry at you did not get angry when presented with that information . I did not. Youve led the agency for 10 of the last 13 years but we hadd significant Bank Failures it. Do you think the fact that you respond to Bad Information by attacking or yelling at the person presenting that information makes those people less willing to present Bad Information to you . I treat every employee with courtesy and respect precooked that is out with the report indicates. That is why mask a specific question if you berates it the people, you asked the question of . The report indicates even in circumstances in which i treat employees harshly in the conversation, employees still bring bad news to me too. The report indicates one Senior Executive put it there is a great reluctance to deliver bad news to Marty Gruenberg a number of employees including Senior Executives in his behavior hampers free flow of communication you led the agency for 10 at the last 13 years. Your behavior is such that you apologize for folks in the agency experiencing harassment and Sexual Harassment. You never have apologize in your written statements, press reports are here before this committee for your actions in this report. There is no apology to the people you berated of the last 13 years of the Agency Actions last 20 years of the agency. But you leading every 10 years. Do you apologize to the people that you affected question consistently to mr. Chairman. You certainly do picnics or take responsibility for it. You take responsibility but you do not apologize . No, i do apologize. Okay, alright. I dont recognize the Ranking Member for five minutes. Chair, in a hearing last november after the wall street Journal Articles were published i asked you to provide an action plan outlining the steps to the fdics plan to take to address workplace issues related to Sexual Harassment and misconduct. And to ensure all employers are have a safe Work Environment on december 1, 2023 you provided that plan addressed eight major areas and contained over 30 specific tasks to be completed under those general areas. Approximately half were to be completed at this time. The other half were to be completed before the end of 2024. Which tasks have been completed and what improvements have come from them . Thank you congresswoman. As i indicated we initiated that plan in the immediate aftermath upon learning about these matters. I directed a thirdparty review. That review has now been completed in addition the action plan has a number of specific action items we are in the process of implementing including increased protection for victims. Post checks and regard to Workplace Culture in the range of other action items we have been in the process of implementing we will complete by the end of this year. The report that was released last week we have begun to implement core recommendations of that report including action to retain an independent monitor to audit implementations to retain an expert third party to advise us on our culture change efforts. I have indicated the core objectives that we are trying to address for the agency are to strengthen the ability of employees to report misconduct. To provide independent investigations of misconduct including by third parties. And to strengthen our disciplinary process so that there is swift and certain justice for victims appropriate to the misconduct that has occurred. Including separating individuals from the agency. I might also indicate this year for individuals have been separated from the agency. We have made Management Changes in key positions relating to this issue. The implementation of a new independent office of professional conduct will result in significant additional Management Changes by the agency. We are committed to transformational change. To the structural change i believe is the core recommendation of the report we have already begun to implement that. So what you are saying here in committee today is you have implemented the plan. Some have been completed theres more to be done. You can see the results of that plan already, is that correct . We can see strength and resources for anybody who was victimized. A hotline for anyone to report or seek assistance. We have instituted a Training Program for all 6000 employees which is already well underway and is already trained a significant number of our employees. We are following through on all the action items in the plan. I believe clients must feel free to engage in discussions and give complaints and have their concerns dealt with. Do you sense and what you are doing your opening up the opportunity for employees . I believe we are. We have enlisted employees across the agency and participating in the implementation of the action plan. We offer expressions of interest to employees and washington as well as the Regional Offices to participate. Many are. I think the agency across the board is deeply committed to addressing these issues and following through on implementing the action items for. Thank you very much and i yield back. A gentle lady yields a back will not wreck a nice device or the full committee sorry or the vice chair of the fed will recognize the vice chair of the full committee mr. Hill for five minutes per group. I think the chairman thank you for calling this hearing with our prudential regulators. Chairman greenberg, before i get into the more substantive part of my discussion you and i had a discussion on the phone i said since the 1990s the federal supervisory agencies have failed Financial Services country to an incredibly High Standard about workforce practices, Human Resource practices, diversity training. The review of a Bank Regulators of regulated institutions. As i said to you on the phone i think this is a horrible double standard here at 35 years later or 30 years later we having this kind of discussion about a federal agency thats at the epitome of leadership and the financial oversight and supervision. I feel that really disappointing and thats why i joined my colleagues and suggest in the best interest of banks and the agency itself in your employees that you stepped down as chair. You answered a question to chairman mchenry somehow you did not get angry. I am looking at the report itself around the time of Silicon Valley failure may 2020 theres a meeting intended to regulations with the chairman. He switched topics to talk about Bank Failures and according to one of the participants, chairman gruenberg went on a rant protecting his ire at an individual threatening he could fire or reassign anybody he wanted. That meeting was so uncomfortable the person who felt targeted by the chairman sent a teams message out to everyone who was on the telephone. I want to say im not sure you answer that question truthfully do you want to respond on that to the chairman . Yes congressman. The question directed to meet with on that initial weekend of the failures i was responding to that i think the point you raise in regard which is well after that as you know. I dont think we should parse words here. I do not consider that response. That rule making the final rule was not a logical outgrowth of the proposed rule a case like that also brokerages the sec in 1993. Tim pinero versus sec in 2013 Investment Company institute versus. The agency final rule deviated so much of the proposal the court concluded commoners were not given adequate opportunity to have feedback. In other words if you want to try to fix a bad proposal the public must have a meaningful opportunity to comment on this unanticipated change. Bloomberg and other outlets have reported the agencies all three of you represent today have already decided to address the original proposal rather than start over. Let me start with you vice chairman have the agencies already agreed to tweak and not start over . We have not made any decision at all with respect to the processes. I indicated to the chair when the bloomberg article came out the Federal Reserve issued a statement indicating as such. We are very much focus on the process. Approximate asked chairman gruenberg of the agencies among themselves decided in fact theyre going to tweak this rule and make it final and not re propose yes or no question. Note center. There are substantial changes need to be made of this rule many believes this rule should be re proposed. All three if you are a member as you probably heard secretary yellens call last week that we need to establish a federal bailout fund and shoot here and thatcomment vice chair . Im not sure i wouldve characterize the comment in that way. I did issue a report on non bank youve got a risk associated progress it should wt call for a federal bond to support them in case they got into financial trouble . The report had a set of recommendations. One was for congress to think about industry funded liquidity facility. Omit reclaim my time on that. Let me remind all of you why are we in this boat . Because it dodd frank pushing a Mortgage Servicing business out of the depository institutions that were regulated had regular supervision and shifted it to the non bank sector would you say that was a primary cause the dodd frank act did create that incentive . There were a set of factors that gave rise too. Is one of the factors would you agree that . One of the factors was the way in which Technology Change and the economy. Cosell yelled back mr. Chairman will questions for the record on that topic. Agenda from california mr. Sherman. Exclusively to the revelation the fdic. What we have here is the hobsons choice of using our time to focus on how 6600 employees at the fdic been treated and how we are going to dramatically affect the entire economy. I am going to focus on the latter but i hope we have a hearing where we can focus on the former im happy happy to comment the Ranking Member. My concern is this overall approach versus being sold as if it is conformant with european or International Standard but we are going to have a much higher standard than europe. That means less lending. Of Higher Standards but that we will have lower standards and we should have for money going to wall street. For example we ignore the Interest Rate risk on a long term bonds that are in the hold to maturity account. I want to commend you for at least dealing with the available for sale accounts. Wall Street Investments as we learned is the Interest Rate risk that is the big risk that risk is undercounted. Only 65 rate for loans to publicly traded companies were an equivalent company that is not publicly traded one 100 rate. There are many ways to raise money on wall street the local pizzeria could only raise money from the bank and anything that makes it long less likely to happen concerns me. I want to focus there are rumors or reports you are going to change the rules for discount window. I would hope youd make that window more available to small and mediumsize bank the proposal is the amount of capitol that would have to be pledged would relate not just to the amount being borrowed but whatever the bank had an uninsured deposits. You would end up with the absurd circumstance of a bank wanted to borrow a Million Dollars but happen to have an uninsured deposits it would have to pledged 400 million in capitol to make a Million Dollar loan to borrow a Million Dollars but can you assure me the amount of capitol that you have to pledged a bar from the discount window will relate to the amount your ordering from the discount window and not based on the total uninsured deposits of the bank . Think you represented sherborn. You touched on quite a number of topics. As in the credit site for us all with respect to capitol if you could just focus on the question i asked. The question related to disc out preparedness we are working to the substance of that now. We are looking for a range of measures to make sure banks are ready to use the discount window. Can you assure me the amount of capitol you pledged will relate to the amount you borrow from the discount window and this will not relate to the general Balance Sheet of the bank . Yes or no questions are. We are looking at a range of ways for. Okay that is not an assurance the absurd example i just gave you could come under your answer be the new rule. Im not sure i fully understood the nature of the example. We are looking at a range of ways. I would hope we would make it possible for midsize banks to accommodate charities and businesses that have to have a count of over two and 50000 for operations. I am concerned about the effect these new rules are going to have on our capital markets. I do want to focus on the 65 rule you applied it to publicly traded borrowers. What about mutual funds, and Pension Plans are the reasons they would get the 65 rate . Will get comments on these issues with respect to the proposal. We received helpful comments on respect to pension fund and mutual funds frequency measurement you will treat Clean Energy Tax credits as we treat low Income Housing credits . On the tax credit provision appointing out for example the return to the investor is not based on the equity investment. But really on the tax credit return. That is that useful piece of information for us. I would hope you would design these rules so that banks wont lend money to Small Businesses rather than simply put their money in highly risky longterm bonds sold on wall street. I yield back. Are judgment yields back will go to the gentleman from oklahoma for five minutes. Thank you, mr. Chairman. There are certainly many issues that deserve our attention today. It has been concerning to hear that the report on the severity of the cultural issue at the fdic and workplace problems at the chair level. From the report it appears repairing the situation will be an allconsuming task. If the same activity had occurred at a Financial Institution by Bank Executive, i can only imagine how the response would be dramatically and very different. Confidence in our banking regulators matters. Leadership matters. In addition to the top down cultural overhaul there are many important policy issues the at the i see must be focused on that impact all sectors of the economy. The actions of the Banking Agency have a profound effect on the folks back home. One particular area of concern i focused on is a boswell proposal impact on egg and energy producers. Which our constituents depend on to keep food and power both affordable and reliable. The proposal that is generate and uncompress in a response from all sectors in the economy. Mr. Chairman, i like to enter a few letters into the regular joint agricultural trade Association Letter but a joint energy trade Association Letter and lastly a letter from the American Public Power Association the National Rule elective cooperative. Of that objective. I hope you have the all have the opportunity to review these comments and others from sectors and the economy it typically would not be compelled to weigh in on these issues. Which speaks to the breath and consequences of the current proposal. Another thought along those lines, like to further underscore a consequence from the endgame proposal that stems from the increased capitol requirements to engage in client clearing activities. And Dodd Frank Congress mandated Central Clearing as a way to reduce risk in the system. However, the number banks that clear for endusers has reduced over time. Making it more difficult to find a bank to offer the service. I have a real concern the basel requirements will significantly constrain the capacity of banks to offer Central Clearing. Proposal actively penalizing that activity. How do you reconcile this contradiction . Thank you, congressman. That is one of the key issues in the report. Clearing that are derivatives during the 2008 financial crisis and its been a focus of attention in the capital accord. We have received a lot of comments on this issue and i acknowledge the points you are raising it is still a work in progress. We are taking careful attention to all of the comments we have received in regards to this. We are taking it very seriously i agree with you that it is an important way that we reduce risk in this essential system and we have received comments on the derivatives in a number of areas of the proposal, and we are taking this quite seriously. I believe your agencies have a responsibility to ensure that the bank capital standards do not unnecessarily discourage Central Clearing Market Participants on the clearing side and end user side of warning whats to come. I urge a completed proposal make the changes necessary and allow congress and the public to weigh in. The consequences of getting this wrong armor to severe. In my remaining time an issue ive heard concerns about is the Corporate Governance proposal. The guidelines would be a significant departure from existing practices and its its aimdatabanks with lower and satisfies them the government regimes at fed and occ are far more pre scripted. The board of directors play an essential leadership role for the bank and should be held to a High Standard. Could you elaborate on this and clarify if it is a high priority to ensure the proposal is in line with of the occ . Thank you, congressman. About 50 billiondollar standard we are receiving comment on that and that is something we are paying attention to. My time is expired. The gentleman from new york is recognized for five minutes. Thank you mr. Chairman. I agree with mr. Sherman. I wish i had another opportunity to have two phases of this. I would love to talk about some of the substance of the economy, but as i sit here right now if im going to be honest, i am just off. That is my language where i come from. Now im pissed off because the very idea that employees suffer from racial and gender discrimination, mistreatment and harassment at the fdic three years and as i see in the report, not a single one resulted in a removal, reductions didnt take or any discipline more serious than a mere suspension. Ive advocated for diversity, equity and inclusion my entire career. So i cant set up. To say that im all right with it, because im not. It concerns me greatly. In my office [inaudible] i dont understand. Maybe you can tell me how can trust and credibility come back to that agency for all of the workers that were denied and people who may want to work at the fdic how can i trust and credibility be returned under the current leadership . Thank you, congressman. We are devoting all the resources of the agency and engaging employees across the agency in addressing this issue. There is no higher priority. When did you find out about the special committees report that was revealed on november 201st, 2023 . You are referring to news articles last year. The special report was just released a week ago. The news articles different, when . The first time we heard about harassment or anything of that nature. The workplace issues identified there were in those news reports we immediately, i am immediately directed a thirdparty review to get an agencywide assessment from an independent source to understand the nature of the challenge we were facing and what we needed to do and that report was released last week and it has given us, if i may say, a line of sight to the nature of the issue. What i dont understand is number one how it could take place for all the years that it took place and admittedly you would not determine the whole time, but youve been there forever and i would think if someone were to see that type of harassment or activities taking place, somebody stand up especially if you are in a leadership position and Say Something. And i believe i do the responsibility of holding everybody that comes before us to accountability. Let me ask now you and i believe mr. Johnson was cochair of the special committee; thats correct . Correct. And i heard you say in that report, there is a report about some of the specific emotions i will say that allowed this conduct of the chairman. Is that correct . The report cites the ten root causes of all of the issues that are deeply disturbing. The chairman wasnt cited as one of those root causes. There are a lot of causes and they all require work and an enormous amount of cultural into structural transformation. Do you think that the current leadership can restore trust and credibility at the fdic . I do. And let me ask you this question. Do you think that the three women added onto this committee were added into the committee enough times that they have meaningful participation in the committees works . I do. I yield back the balance of my time. The gentleman from texas mr. Sessions is recognized. Gentlemen, i have on my door in texas, our district headquarters, when leaders sell ambiguity, it discusses the role of leadership. I think you sell ambiguity. I think all three of you sell ambiguity. Were you aware that in july, 2020, a report found that the fdic had not established an adequate Sexual Harassment prevention policy . If you are referring to the fdic oig report im. Yes. So why did you try to parse the words about which month this was and whether it was just the other day or not . Just in the conversation you had, referred to 2024. You didnt say 2024, you eat eluded to it just the other day. You didnt say just the other day. It became apparent that you are talking about recent times. Do any of these employees presented here, do they report to your organization . Im sorry, can you repeat the question . In your line of management did any of these employees that are mentioned here in this report so, that is a yes or no. I want to make sure that i am complying with privacy laws. Did they report within your organization . Im sorry. I cant answer the question. You cant answer that . Let me go back and tell you in ambiguity when leaders sell ambiguity to the Business World leadership, i will expect for you to write as an answer that yes or no i will hold a private and i would like the chair and the Ranking Member to get that also. Did any of the people that are mentioned here report within your organization . My understanding is that the report focuses on the fdic. I dont have any information. So were you aware of a july 2020 report from the office of Inspector General that specifically said that the fdic had not established adequate Sexual Harassment programs . I learned of that great work not in 2020, but i am aware there was. What year do you think you learned about this is a problem by the Inspector General . At the fdic. Well, yes. I dont know. I learned about it at some point after joining the Federal Reserve board in 2022, but i couldnt tell you exactly when. Its about the fdic on the Federal Reserve. Have you looked at it and context of your organization . The Federal Reserve has a very strict zerotolerance policy for Sexual Harassment and discrimination. This is what im getting at. So your organization had this is a very strict policy. Why do you think mr. Chairman, mr. Greenberg, why did your organization not have a strict policy . We had a policy at the time strict policy mr. Greenberg. The report found shortcomings in our policy and had 15 recommendations that i believe the agency addressed. If i may say that was back in 2020. Yes, thats what im referring to, the ig report from 2020. So why did you have to hire an outside firm to tell you what the ig had told you . Did you not want to accept what they had to said . I believe the agency at the time did accept the findings of the report and in 2020, if i may just, congressman, the 2020 report did not identify the type of deepseated cultural issues that the recent trip would. Is that right . End of the news stories last year identified. So these were things that came as a result of your leadership then. They were brandnew. I think the report thats what youre suggesting to me. That wasnt old this is all new. If i may say, congressman, the report indicates that its longstanding challenges through the agency simply indicating that the 2020 report did not identify the nature of the cultural nature of the issues and that came along later. I find this very disturbing. I find that there is a lot of ambiguity and a lack of acceptance of this and yet i find that they openly say we will take responsibility. I see very little responsibility and yield back the balance of my time. The gentlewoman from georgia, mr. Scott for five minutes. Thank you, chairman. Mr. Barr, i want to talk to you about this complex and complicated issue and especially the impact that its going to have on two groups, the lower income people into the Banking System. This business of lowering the caps on debit card interchange fees would definitely hinder the banks ability to offer lowcost and nocost Bank Accounts to low and moderate income americans. Are you aware of this, and what do we do about it . You raise an excellent point and i spent a good deal of my career trying to improve access to credit and Financial Services for low and moderate income people. The regulation requirement is a requirement that congress set out for the Federal Reserve to determine if the fees are reasonable and proportionate to the costs incurred that are specified under the statute and the Federal Reserve has maybe made aproposal to update that r. We have received lots of comments on that proposal including the kind of comment that you i think very appropriately laid out and we are in the process of thinking about those comments and deciding what to do next. And im also concerned about our Small Business owners and their incurring costs from debit card swipes on a regular basis. Now, as i said this is a complex problem. Its something that does not need to be rushed into. I dont agree with it, but my question to you is if the allowable fees on the debit card swipes are lower, does the fed to share the banks concerns . Our banks have big concerns on this about the availability of the low or no cost Bank Accounts for consumers or are the concerns overstated . We just finished the Comment Period so we are in the process of receiving those comments. We take them very seriously. We are reviewing them now. I dont have an answer to your question yet but those are the kind of comments we will take very seriously in the stage of the proposal that we are. Mr. Chairman, i would hope that before we move on anything dealing with this that we get a total understanding of the impact on low income and on our Small Businesses because it is clearly complex and complicated. You rush into these things unprepared and cause great havoc. We did that with dodd frank and when we move, we wanted it to to bailout the big banks first until i raised the objection to the president. I said president obama, im not voting on this and he said why. I said because you cant solve this problem bailing out the big banks and looking at it haphazardly. Weve got to do something about the homeowners who are having mortgages combined with these high rates of unemployment. Those were the consequences of it and luckily he told me go to work and do something and we came back hardest hit. I think we probably knew to do the same thing with this approach. I yield back. The gentlewoman from florida for five minutes. Thank you, mr. Chairman. I would like to yield to the gentleman. Thank you. Im sure you have seen the report on the toxic workplace at the fbis the end of the temperament of the colleague keeping in mind you have the duty to be truthful to congress. Can you testify whether thereve been any occasions in which he is directed anger and ill temperament towards you including discussion on the 2021 effort related to the bank merger act. No, not anger. Passion, yes, but not anger. So you would describe the heated conversation that you had in 2021 related as passionate, he did, but not ill tempered . Correct. You have said you think that he is capable of resolving the issues despite what you have witnessed. One of the factors the Bank Supervisory used to rate the Financial Institutions as the quality of management. If the occ were to uncover the kind of misconduct identified at the fdic in the report at one of your own regulated banks, what rating what they give to that banks management on a one to five scale with one indicating the strongest performance and five indicating the weakest . So it was a function of a lot of the parts of the assessment so it depends on the safety and soundness. You know what im getting at mr. Acting comptroller. A toxic workplace, harassment, Sexual Harassment, discrimination, interpersonal misconduct, replete in the report at the fdic. If you found that, if one of your examiners found that at a national bank, how would you rate the Main Management of that bank . We would read it accordingly. Does that mean requiring attention . It depends on the severity. Im talking about this kind of severity. This is a severe i would agree. 97 of the almost 400 comments on the proposal were to express concerns with 86 of the negative comments coming from outside the Banking Sector. You stated publicly and privately that the public will be able to comment on the qis. Given the overwhelmingly negative comments from the proposal from various ideological, various parts of the spectrum from across the country and various industries, why is there even a question on whether or not the proposal should be withdrawn and full . We are looking right now at the substance of what we think about the comment as ive suggested to you on numerous occasions. Weve got a good, deep, substantive comments and i expect we will make material changes across all three areas in the proposal, Operational Risk, credit risk and once we decide on what we think the appropriate substance is, we will turn to the question of what the appropriate process is. Weve not gotten there yet. And i appreciate that and the fact that the fed is open to those broad material changes, but to follow on the excellent line of questioning, the case law is pretty clear. So again, why is there any question whether or not there would be a withdrawal and proposal giving commenters the ability to comment on the new proposal . As i said, we will follow the law and we will follow the administrative procedures act. Theres no question about that. We just havent returned to the procedural question yet. We are focused right now on the substance. Thank you for your commitment to allowing for comment on the cube i asked. What is the timeline on the release . Staff are working diligently on that in the process of Quality Control and review. It will be relative. One final question, and i know youve worked hard on this and we go back and forth, but one thing im concerned about is the proposal will likely raise Capital Requirements for the institutions by more than 20 , and theres evidence that in the eu in the uk, implementation of the endgame proposal would be at a much lower calibration closer to five to 7 increase. Are you concerned about the gold plating here in the United States putting our institutions at a competitive disadvantage . We are looking at all the comments including the question of gold plating. I would say at a much higher level, congressman, its been my experience having very strong Capital Requirements in the United States has been to a competitive advantage to the firms who are thriving in the marketplace. My time is expired but remember the objective of the endgame was harmonization. With that i will yield back. The gentleman from connecticut is recognized for five minutes. Thank you, mr. Chairman. And thank you to the witnesses for being here. I despise these congressional pylons for a couple of reasons. Number one, ive always very much enjoyed the working relationship we had in crafting regulation. And number two, the high budget and moral outrage suggests we are great managers and excellent at taking responsibility or dont have feet of clay and theres no evidence for any of that, but we are charged with oversight. And ive read the report and i have a particularly difficult time with the Sexual Harassment part of it. I grew up with a single mom and two sisters and i have two daughters and i see every day the challenges women face in the industry and around, so i have a really hard time with some of what we see. My question for you is your Opening Statement hear you say that when news reports of harassment first surfaced last year, were you completely unaware ask. I was aware of those under the normal processes into the deepseated cultural issues identified in the news reports last year and in the report that was recently released. If i indicated it was a failure on my part i simply did not identify the deepseated cultural issues that were revealed in the news reports and in this recent report. And i will say once the reports came forward, we have devoted all of the resources in the agency since that time to addressing this issue. So, i want to move on because i have other topics. You said you take full responsibility if you were to skip ship in the navy i have very little doubt what would happen in those instances. But forget about us and forget about the lawyers. I want you to take a minute because im stumbling over this. Im the right guy to fix this kind of thing. So forget about us and the lawyers. I want you to imagine that instead of us, youre looking at the young woman who was in private, she should be a surrogate for her bosses child, the man that felt he had to hide his preferences because he was called a little girl, the women who got photos, i want you to imagine that we are those people and just take a minute and tell us, not us but those people why you are the rightful leader to lead to these critical reforms. Thank you, congressman. Ive indicated that some of the people you are describing. I understand keenly the hurt they feel, the impact these kind of experiences have, and its why im totally committed and i believe the agency is totally committed. We have been working on this now for several months. I believe we are making progress. I think we are going to be informed and we have been informed about the new report we are already implementing the recommendations of the new report. We can address this issue and i think it is critical to move forward and address the issues that have been identified, and we have an opportunity to do that. I dont know how that works for them. I would just ask you to do that, sit with them and persuade them that you are the right leader i look forward to the moment. When are we going to finalize the process . Thank you very much, congressman. Right now as mentioned, we have a lot of comments. They were deeply substantive and we are working our way through that. We have made Good Progress and you heard me say and youve heard the chair say we are expecting we will make broad material changes. I expect those to occur across all three areas, operational, market and credit risk we need to work through the substance, finish working to the substance and turned to the question of what the right process is, but we are not on a timetable that is dictated by anything other than getting it right. I will make the point we talked about this a lot i desperately want to be on your side. I came here in the First Quarter of zero nine and spent a lot of time worrying. I want to be on your side for this and set a whole bunch of times i need to understand the analysis, underlining the call for Additional Capital standards. If i get that and its persuasive i will be there but i just need to get that and with that i will yield back. From missouri, recognized for five minutes. Thank you, mr. Chairman. This is a very deeply disturbing moment to me from the standpoint as a former in the state of misery for a couple of years and having gone to the fdics school when i was examiner because i didnt go there when it was the fdics hotel as was reported by this report this morning. Ive birthed with examiners with those in examiner and banker but this report, along with the long tenure is very concerning. 10 of the people roughly complained. Things like gender and race discrimination are documented and as indicated this morning, theres anger Management Issues for the agency. We have field offices in fear of reporting, fear of retaliation. How in the world can people do their work if they are fearful of being able to report whats actually going on . It can happen. There is a motion within the agency based on the club that they are in, which is nepotism that cannot be tolerated. Of the report has indicated that the fdics Appointment Center and wall street journal article the fdics hotel theres 24 instances. Now this morning we hear from your testimony that you indicated surfaced a little while back and you just learned of it then of the depth of this. There were 92 harassment claims according to the report. You have to be either totally competent or not caring and allowed to go on and work for all of this activity. As you know resulted in the removal and the reduction and notice the more areas such, unbelievable. That is the facilitation in the purest forms. One of the things that will happen, we want to make sure that mr. Williams who was in tournament between the two terms, is also in the report and it says nothing about that. In fact it speaks pretty about her. I will quote within three months of your departure, your successor built enough trust that they felt they could share their stories into she began to work on the fdics culture problems. They are supportive of what she was doing so the report talks about discrimination, nepotism and your anger Management Issues but we know more. Ive been here a long while. Its my 14th year of the committee which is a long time. Also, you lied to me. You lied to the chairman, you lied to the committee about the operation chokepoint, and it took an email we found you involved before we considered you and you admitted it in my office that you were involved in this and it stopped. Since then, since the new term, youve been involved in it again. Remember the atm operation . You or your individual person was along with your three representatives and also admitted wrongdoing there. Also there speak management from the standpoint of regulation and that is what your job really is as evidenced by the banks last year. As a bank examiner, there is no way in the world i would have allowed the banks to exist 80 to 95 im sure deposits. Are you kidding me . No way. You knew about it for a year and did nothing add doing that for the viability of the banks and the system because what happened, they went down, one around the country i got a phone calls from everybody, all sorts of bankers wondered about whats going to happen all because of the management and lack of regulation. And you were part of the problem as well. You are the three that went in and tried to do something that managed to ouster. Shame on you guys. You have become the Michael Cohen of the fdic you need to go. If you have the decency, please step down and if not i would urge the president of the United States to replace you asap and with that i will yield back. The gentleman yields back end of the gentleman from illinois from the Financial Institution subcommittee is recognized for five minutes. Thank you, mr. Charan. Last friday they issued a report on nonbank Mortgage Servicing and the statement following the vote to approve the report you said the report identifies the important Financial Stability concerns that need to be addressed by congress. The press release notes that in 1922 nonbank Mortgage Companies originated approximately two thirds of mortgages in the United States and going to servicing rates on 54 . I came in and march of 2008 and so i spent a lot of the first years cleaning up the mess of the under regulated mortgage industry and looking at the damage that did to families in america. This report notes the benefits such as supporting lending to historically underserved communities and also the risks that are associated with it. Could you speak a little bit about some of the risks associated with concentration in this space and other dangers . Thank you for the question, congressman. So, as the report noted, theyve concentrated in a relatively small number of Mortgage Servicers and there are certain fragilitys that come with it. So if theres a disruption, that would have an impact on many, many people. Could you be a little more specific . What is the scale of the concern, what did have implications for fannie, freddie . What would the contagion look like in this area that would be a source . It depends on the nature of the problem. There are strong connections with regards to the Mortgage Servicers and of course they are then connected to the Banking System so the potential for the widespread contagion from issues or problems that the companies could be severe. A couple examples. While, at the very extreme there could be massive disruption that would impact a significant portion of the Mortgage Markets in which billions and trillions would be disrupted due to that could have effects on the gses and banks. Several recommendations for congress including providing additional authorities to help firms manage the risks to promote information sharing between the state and federal regulators that share the burden. Can you speak a little bit about how the recommendations are followed through by congress would promote Financial Stability . Sure. The primary recommendation is for congress to strengthen the supervision and framework around the Mortgage Service companies so they are held to a standard that enables safety and soundness in that market. That is the court of it and that envisions what i think was discussed earlier, having an industry funded that provides liquidity as necessary in case theres liquidity issues with of the servicers. So this would be like is it liquidity in the sense that you would never to take a loss on the fund or something where the industry says it would be responsible. Its more of the ladder and the details for that would still need to be worked out obviously but the industry itself would fund it. Im led back to the representatives comment. There is already a threat and understanding the market moving the way it has. We want to make sure for any given activities, especially with mortgages, the risk has to be managed. We want to make sure the standards are applied equally and appropriately wherever they take place whether its in the Banking System or outside the Banking System and they really get at that. We want to level up and make sure the Playing Field is level and has leveled up. Are they doing the job that we hoped to look around the corner and Nicole Stickley at the system and say are there things we are going to be having hearings about next year after things blow up to the extent youre able to foresee and prevent those. Thank you and my time is up. I will yield back. The chair is recognized for five minutes. Thank you mr. Chairman. I want to clarify something that seems to be a wellworn path for some of the committee about this report, they simply didnt look anywhere else. It was mentioned twice in the report once the cultural change after a 2008 altercation that you had. Chair mcwilliams was recognized four times to improve the culture including creating team fdic that stands for transparency Accountability Mission to implement an opportunity for fdic employees to get involved cleaning up your mess once again. They had said in the briefing to the committee if there was any negative or derogatory information on any they would have included. They were silent because those two women were cleaning up your mess, sir. We all know the fdic plays a Critical Role in our Financial System, your job as chair is to maintain that stability in the system. You earlier said to the chairman that your staff regularly briefs nonbank policy or issues related to banks and that sometimes that bad news is regarding banks, Bank Failures. What weve learned in our own investigation as a committee, we did the dozens of transcribed interviews and had a dozens of whistleblowers that came forward outside of the clearing and we learned in our own investigation senior advisers prepared and coached their staff before briefing you warning them about your behavior. Did you know that yes or no . Dont think me for the question. Yes or no. No, congressman. They also shared stories about the fdics staff known to cry after leaving meetings with you and that others described having to convert colleagues after interacting with you. No such stories were documented about either chair. They found the staffers and from delivering news they feared would upset you and your reactions and did have a Chilling Effect on the open communications. So let me be very clear. If your staff are so upgraded to give you bad news and they delay telling you that news, it simply makes a bad situation even worse. Youre the wrong person for the job to clean up this mess. The mission of the fdic is far too important and you are unwilling or unable to accept negative information. Any delay of information getting to the chairman is a recipe for disaster. You cant deal with bad news, you are the wrong person for this job. One other important point. Last time you were asked directly if youd ever been the subject of an investigation and you said no then after some self reflection after a break for boats and i believe a call from a reporter, you admitted you actually had just like today you were pursing your words. The report explained that the 2008 incident where you made a Senior Executive feel personally attacked alleges they felt embarrassed, humiliated, and you created a hostile environment. I would like to include a redacted copy of the management inquiry into the record. Without objection. That person was updated key while you were vice chairman at the time and its recently you just name dan fdic chairmans award for Operational Excellence after. So you named an award after the same woman you screamed out and the same woman that accused you of withholding information for being mess loyal to you. I hope this isnt a sick bruised by her silence. And im going to use your own Opening Statement to close mine. On page two oh, well, page two you said that the misconduct for service last year, that is simply not true. This had been out there as innuendo and many other complaints but you also say you regret not having identified a deeper cultural issues that at c sooner. You created the culture. You created the culture they are and you are the wrong person for the job. You finish on page three, going on to page four, the core elements of your action plan outline provide one more support for victims is the first point, strengthen the process for the reporting and investigating complaints, number three, improving accountability for anyone who is found to engage in misconduct including through separation from the agency. How can this not being you . You are the wrong person for the job, and i yield back. The gentlewoman from ojai was recognized. Thank you mr. Chairman and Ranking Member, to the witnesses here today. I am not sure where to begin. I have sat here and listened to my colleagues on both sides of the aisle and i agree with a lot that has been set on both sides of the aisle. As a black woman, i when congressman asked you to reflect on talking to those individuals and especially women, i was sitting here thinking how i would feel and then i reviewed again the massive report and of the executive summary of the fdic. Im not going to go through it. It is sad and rightfully so. Its troubling, a longstanding culture of Sexual Harassment and misconduct. I dont know where to start with the lame, but this didnt just happen now. If you go to the middle of the report, which i spent many hours. Whether it was william or a bar cleaning it up i think all of you are at fault. I think everybody that sat in that seat, i dont know what they tried to clean up, nor are you but i dont make it. Im the survivor that three of you 97 individuals reported 145 separate incidents of Sexual Harassment, unwelcome sexual advancements, 91 individuals reported 141 separate occasions of gender and sexualitybased discrimination, 187 individuals reported 320 separate incidents of bullying, threat and verbal abuse. Now i do welcome the fact that. Will people go back to the scene to be terminated and while that wont repair what has happened to some of these individuals or anyone before a female employee to be touched or to have to watch videos be asked. Not just you as the leader with of this administration that should be admonished, everybody should be. And i guess what i want to hear is lets open up pandoras box. Lets go look at all those managers. It is from the top down. Theres a hold of people that are getting in the path today while we are beating the heck out of you. A whole lot of people should be sitting with you or behind you. The checks also carry in this. I dont want anyone to think, because im all about putting people over politics, people over politics, and thats what i. I just wanted to end the record. I dont think i have a question, but i want you and all those that report under you, you shouldnt carry this burden alone. You should lead it and everything thats been said on both sides of the aisle, youre going to have to weather because we have it here before us. Im suggesting you go back and a whole lot of other folks need to be. We care about all of these individuals that have had to have been exposed and i yield back. Thank you, mr. Chairman. You have been at the fbi for 19 years leaving it mostly for ten of those years. During that time, you apparently never once took it upon yourself to look into this toxic until he published articles detailing your ill temper and inappropriate behavior towards fdic employees. After your reputation was put at risk, then and only then did you decide to work on getting your house in order. North of 500 employees came forward with complaints of Sexual Harassment, discrimination and other workplace misconduct. This is a massive number and its only scratching the surface. Do you have over 5,000 employees the fdic today . The quick answer, how often do you visit the field offices . I try to visit each week. We have six offices around. And the field officer . Generally 76. Once a year to go to the six regionals. Do you meet with the employees. Did it ever occur to you that something highly inappropriate was going on at these offices . The kind of deepseated Workplace Culture youre kidding me, why . How could you not know . Youve been on the board 19 years and youre telling me that youve never heard and i remind you, you are under oath. Congresswoman, i understand the question and why youre asking. I met with employees, rankandfile employees. It definitely didnt come forward. Of this report has some of the most horrific. We can talk about the personal management problems and that the complete ignorance and the wellbeing of the employees that are entrusted with leading and the fact you dont even visit once a year to visit the field offices, never to one of the 70 field offices . Your employees have lost confidence in you. I have lost confidence in you and congress has lost confidence in you. Use should be fired. The voice requesting butchers resignation. Without objection. Youre a report identified, quote, and these are all quotes, article, insular Toxic Boys Club culture where there was, quote, widespread fear of retaliation and, quote, managements response and the cultural and structural changes were necessary. On the fdic board for 19 years theyve been the patriarch for ten of those years. With these conditions what makes you believe he remains qualified to implement the necessary cultural and structural changes outlined in the report . What is needed for the effective leadership of the agency at this time is leadership that emphasizes and recognizes your own report states the reputation raises questions about the credibility of the leadership response to the crisis and the moral authority to lead a cultural transformation. Do you know how we find i accepted those findings. How on earth do you believe that he can lead this agency into a new and better culture . I believe hes taken full responsibility. He doesnt even visit the agency. One a single harassment report. My time is expired. I come out of the Building Trades and it is a rough and tumble workplace. We work hard and play hard. I get that, but this report makes the ironworkers look like boy scouts compared to whats going on at the fdic. Rather than using all of my time to recount the. Of horribles here and outrageous conduct on the part of the fdic employees, im going to ask you, people would spend their time railing at you and youre not getting the time to tell us whats the plan here, this cannot continue. As a form and i would have fired a whole bunch of people at the fdic. You dont treat women like this, you dont treat, you know, you dont treat humans like this, whether they are women or people of color or lgbtq i saw an interchange where they were handled very poorly. What is your plan Going Forward what are you going to do to strengthen this out . You say you have a guy to do it, tell me about that. Weve got the network that is at the core of the report protecting each other and providing an obstacle to employees coming forward to report these experiences. We have to break that. The report says are you going to fire anybody or have you fired anybody . For employees this year. Before the action takes place. How many people have you fired . For this year. For people didnt do all this. A lot of people did this. I agree with that. Go ahead. What else . As the report recommends fundamental structural change which is why we are proposing setting up a new independent office outside of the structure of the agency where we would consolidate all of the misconduct responsibilities for the reporting of complaints and for the investigation of complaints utilizing independent third parties to do the investigations into for the disciplining misconduct when it occurs. We need to be informed. We need reports every couple of weeks on who you are firing and what the changes are that are made. Youre on a short leash. Maybe you can prove that to us. I dont know. It will take some doing. But things have to change. I would like to talk about Financial Services at some point. I know you just had a symposium. Im the ranking democrat on the Digital Currencies and im just concerned about i have a question. Is it possible to tokenized any security . It depends on how the term is being used and i think that we have to be very tokenization or security . Some people are using that term very loosely and i would caution against that because to solve the underlying problem of settlement, it has to be fully aligned in the Legal Systems would not just the technological problem of the underlining who owns it, how do you transfer the ownership and Risk Management and that is the right way to approach it and how we tackle all of those questions. Recognizer five minutes. Quicks thank you chairman. Before because my questions i would like to state for the record i strongly condemn your actions expose the recent report treatment and my colleagues or testified on this today for the two and 34 page investigation detailed and very toxic environment in your agency im a Small Business owner in your actions the actions of the individuals involved i will not be we dont talk to lloyd that. Next you like to followup a little bit with what ms. Wagoner said how are we supposed to believe you are willing or even able to implement a culture change if you cannot accept responsibility for your own actions . We heard you took a detour to Regional Office for listing sessions is safe to say that did not go well either. Ive been told one of these listing sections in a play asked you directly who their allies are and asked you directly who is my ally question ricky respond ive got to get back to you. If that answers to complicated for you you are the wrong person to lead this change. He will get back to them the answer is pretty easy, its me, i am your ally in the chairman of the agency with a total workforce over thousand employees at the very least these employees should feel like you are there ally. That being said, let me move on to chairman barr. I would like to begin by discussing longterm debt proposal. The proposal would require banks to hold debt equal to at least 6 of its assets. This 6 as part of our joy for Regional Banks given the risk profile. This will increase the bank cost and these increased costs will be passed on to consumers like me a Small Business owner without strengthening Financial Stability. Only stifles their ability to lend a Small Business and local economies, also undermines fundamental principles freemarket capitalism which hinders competition, innovation and Financial Sector. So vice chair, how do you see the standardized 6 impacting Smaller Banks . Do you think theres a value entailing the percentage required based on the size of the Financial Institution . Quick to thank you congressman williamson. Its a critically important question paid we are looking very much of the question of what the right calibration is for different size of institution. We received a lot of comments on that question were taking those very seriously. Want to have a requirement that improves the resiliency of the Financial System. Also respect the diversity of our Financial System which is really a critical goal. Thank you for that period of serious concerns about how the basel three and gay proposals going to negatively impact Small Businesses in the institutions that serve them and provide for Small Businesses individual needs. I still do not see but we cannot do with the american way were they cannot follow america . This proposal was severely reduced financially access to capitol for Small Businesses making it harder to secure fighting terror workdays, maintain operations expand operations. This could result in a domino effect stifling Economic Growth to local communities were these banks are often a driver of entrepreneurship businesses like mine we go to community and local banks. Consequents can bring innovation and job creation businesses across this country are struggling to navigate this regulatory landscape. Quite frankly handle the increase in burden requirements. Comptroller, sue, has the occ held discussions regarding the proposal Small Businesses . And, how if you take and taken s concerns into account . X thank you for the question. We received quite a few comments from Small Businesses and those interested in expressing the interest of Small Businesses. Those comments weve taken the soul into account. Thats part of the process of my college supported outreach taken very seriously we are looking closely at this. Very good. That in mind i yield my time back. Cooks a gentleman yields this time but will not recognize a gentleman from california for five minutes. Thank you very much mr. Chairman. I do apologize at the outset for my voice. Starting to lose it. Thats a bad thing for a politician, but it happens. I was excited today, some time ago to talk about oversight of the prudential regulations and i should say i was very anxious to talk about basel three the endgame. I was a signatory letter that was sent to you. I have some great concerns. I also want to talk about something very aware of those climate related risks the Financial Risks that the system faces i wanted to talk about that. I think its very important. Obviously we have delved into whats happening in the at the i see and it is important. I would associate myself with everything my good friend jim defined member from connecticut. Ive two daughters two. I love them more than life itself. To think they would be in an organization where they would be harassed and that they would have no recourse and there would be a little care for them it outrages me just outrageous me as a father, as a human being. I think it is outrageous. What went wrong . Your department seems to be an outlier, what went wrong . I think this is a longterm issue, congressman. As the report indicates it was particularly challenging in our field offices around the country. Supervises nearly 3000 banks. We have 70 field offices often in remote locations. That presents opportunities for misconduct and challenges for oversight and supervision. Thats the focus of our attention for. To be fair as a Vice President at Liberty Mutual a lot of offices all over the place. There is a culture did not put up with this crab. You just didnt. You have an avenue to talk to people who ultimately get to all and is on the Corporate Legal side. We would do something about it. I dont understand how this could have happened for so long. That is the issue we have to address. This report has come out not given us a deep line of sight into it. We are going to work to address it and to fix it. That is the commitment we have made. I do also have some serious and doubt of your ability to do it. You have been tangled up in this. Your temperament and other things came out in the report. Youre going to Say Something im going to allow you to Say Something. Knelt only to say or take responsibility for that. I have committed to address it and to accept the recommendations of the report in regard to it. We have been working on this for a number of months now. We are making progress for this new report gives us additional information. And we will address this. I still have some doubts but i will give you some time. You have been dragged into this a bit. In fact at one point you pointed to a judgment in the audience i believe is probably your attorney. You point your attorney . I believe at one point he asked you not to answer question because of some reason is that correct . I want to be as open and honest with congress as possible but i also want to follow the law there are laws related to privacy act and others. I just want to make sure i follow that rate that is way consulted with him. I knew that and that is why i asked you because i am attorney myself that is what i do not want to get dragged in unnecessarily. There is responsibility on youtube. I want to make sure you take that very, very seriously. Especially Sexual Harassment discrimination should not happen. I look over their vice chair bar. And i have to say i have full confidence in him for i know we have issues here and other things. I feel competent, i know has a background i expect he had this in his organization he would do something about it. I hope you have the same attitude as him mr. Barr i do not have any questions for you other than again i doing to talk later on about the endgame it makes it more difficult for people who are firsttime home buyers to build a qualify for a mortgage. Thats a big deal for me. Well talk later about the risks of Climate Change. Its a big deal to me and i did want to talk about it im a imt to you and this is an issue that has to be resolved. Thank you. The gentleman from georgia is not recognize for five minutes for. Think it mr. Chairman. Thank you all for being here today. And representing their respective agencies. Its difficult to have this conversation today. But one thing i have noticed that isnt troubling to me beyond just this report too. We will get into the report. One of the things our local banks especially Smaller Banks tell me is that at one time they felt at the i see and other agencies were partners with them. To help them navigate make sure they are compliant with the regulation. Regulation. The regulations made sense. In both the parties worked in the best interest of their customers. They no longer feel that way. They see the fdic as an adversary they are hesitant to ask for advice because, this is across the board with a lot of agencies is that they see it as a gotcha organization. Looking for a reason to come after them. Especially with smaller Financial Institutions. And so i think that is a broader issue that we have to address. Our agency it should not be viewed as adversarial but in a partner with institutions. I believe ive been honest in the assessment of the at the i see over the years. Both positive and negative. In the previous earrings appraised some of the informative reports that have come out of the fdic. However, i read a report i am disturbed by the evidence it presents. You you are quoted as having said you did not recall specific instances you were accused of raising her voice, losing her temper or throwing objects. In your interviews with Committee Staff you went up for a step further and said you have never yelled an employee or lost her temper. In fact to place the blame on others for misinterpreting your tone and body language. The report also noted youve been unwilling to accept that others have experienced difficult interactions with you. The report draws on examples of Inappropriate Conduct dating back to 2007 nearly 20 years ago. You felt failed to accept responsibility for your behavior for nearly 20 years and only did so reluctantly after public scrutiny. From my perspective it seems like you have had no fear of being held accountable until you were. With these revelations why should congress, the public and staff trust you will do better in the future . Thank you congressman. As i indicated earlier, i accept the findings of the report. I am committed personally to addressing them. I am committed to implementing the recommendations made specifically and regards to me and our executives in the report. Including having 360 reviews done each year. I understand that employees have experienced my temperament and a weight that was disturbing to them. I accept that. That is all that matters it does not matter what my perception is. At matters with their perception is. And i am committed to address it. I appreciate that it seems that maybe that commitment is about 20 years past due. That is the concern we are having here. The report also noted in a nine year. Come 92 complaints were filed in knowing two of those complaints resulted in a suspension from the agency. So how can fdic employees expect the harassers to be held accountable when their leader is not held accountable for his own appropriate behavior . If i may add context to that, congressman. Im not challenging the information in the report. Just to add context. During that period is cited there in 2015 23 their 18 employees separated from the agency. Which means they receive notices of ditch of termination or other disciplinary action for the either left the agency because of termination or in anticipation of disciplinary action, they left to retire which they have the ability to do. There were actually 18 individuals separated from the agency during that time. I believe, based on this report the hostile Work Environment at the at the i see is directly related to an inability to take responsibility as a leader. He failed to uphold the integrity of your office by doing the right thing even when no one was watching. Not everyone is watching and a portion of no choice but to join in with some of my colleagues and asking for your resignation. With that i yield back. Click the gentleman from illinois is recognized for five minutes. Thank you, thank you 12 are witnesses here for a long day. I want to talk about climate finance. Before i do that i do not want to pile on theres little theres not much that is not been said and i havent said it. I sure the deep concern of all of my colleagues with what happened at the fdic the culture that allow that to happen. I was a guy spent 16 years as a ceo have sympathy for the loneliness of the Corner Office and how heavy that crown and responsibility. I just want to caution all of us on the Panel Corporate america would never allow this they would terminate the leader. This is not corporate america. Those of us on the side of the dais do not have hiring or Firing Authority with respect to this decision we do have the ability to change the culture of the organization for with weserd have the ability to make it politically impossible for you to continue. We will not be held to account thats the wrong decision. I dont read your the agent of the proms i did not see anything there that you personally harassed or assaulted anybody. Certainly not been convicted of such assaults. Its an open question whether your removal would solve the problem. I would hope we would all keep in mind that if we are concerned with the culture lets not confuse a political scalpel with change in culture. Finding a new person in that seat is not our job. That is the senates. No one ever accuse the senate for being a rapid and effective hiring and recruiting manager. [laughter] just makes a vacancy. I want to talk about. The lesson we hurt you and i talked about the concern i had about 40 increase in equity i think at the time you said irregulars may not fully appreciated the effect that fact that wouldhave on clean en. Given the comments, the discussion since fries think those down for equity . Thank you for the comp question, congressman. This is a proposal to do so up for comments. We have not finalized it. So i cannot speak to what we are going to do wes let me simply say we have received a lot of comment. Its an issue that has received a lot of attention by the agencies. I think we understand the question that i have been raised. Mr. Bar there was reporting in bloomberg last week final rules might be as soon as august. You want to comment on that would can we anticipate some sense of timing of when we will get clarity on these issues . Looks appreciate the question. As indicated earlier the bloomberg article did not reflect the reality is a note on the ground too. We have not made any decisions about the substance. We are still working our way through that. We have made Good Progress on them. After were done with that will figure out process and timing. Looks i want to move on but the sooner of the better. I continue to remain concerned their pockets of capitol into play in the spacer sitting on the sidelines longer than they need to write on the sooner we can that the better. Vice chair want to talk a little bit more in the report you mentioned some of the date it challenges that banks add that modeling physical risk. Can you talk about with those challenges or and what if anything we need to do to help that data . The banks are in some ways an early stage of trying to understand measure and manage those risks. One important area for example is in data about insurance coverage. Some of the institutions had some data on insurance coverage. But not full data on the coverage across their portfolios there is a lot of variation across the Financial Institutions. And of course that losses a bank would suffer are related to the availability of that advance coverage. Given that insurance issue entries of the story in the New York Times this week about insurers pulling out not just on the coast but in my own state of illinois because of hail risk coming through. An issue go through and look at where climate risk is getting into the Financial System, i am presuming the banks, once they see the risk will find a way to offload it. In your view do you have the Statutory Authority to chase and follow that risks of the system or is your stack is Statutory Limited to the banks of the author to look at the risk is gone we dont have to watch it anymore . We have Supervisory Authority over the Banking System. We do monitor risk throughout the Financial System. The concern i have an ac that i am out of time. I want to make sure if insurers go away and slept till the equity falls to property taxes going to come back on and if we need more authority one direction what lets work with you i yield a backup. Genre from tennessee is Rick Ricketts for five minutes for. Thank you chairman mckendry and a Ranking Member waters for holding this hearing. Thank you to our witnesses are being with us today. Chair gruenberg i know this is not a fun day pretty want to focus on your leadership at the federal Deposit Insurance Corporation. As the vice chairman of the oversight investigation subcommittee it is important we appropriately understand the damaging implications of the report and your conduct. Yes or no comment when fdic employee has a legitimate complaint about a colleague miss treating them, is there a formal process for them to file a complaint . Yes that is right yes pickwick servant greenberg its my understanding the complaint process is that Human Resources work with the fdics legal to investigate hold individuals who are accused of being a harasser or bully accountable, is that correct . Yes congressman. What happens when you are the bully or the harasser . I have not read the checked. Your victims are too afraid to complain to hr. Some are even too afraid to speak to this committee or query investigators. And, with all who have perjured heardyour testimony watch this hearing today, we have heard how you berated a Senior Executive and made her feel like she was working in a hostile environment. We have heard how your senior staff of fear and giving you bad news because you scream at employees. Chairwoman Mikel Williams immediately became aware of the cultural issues you created when she started. But in the 20 years you have spent, 20 years at the at the icu have failed to address any of these issues effectively. Your reign of fear and miss treatment at the at the i see must come to an end, sir. I hope all of the members of this committee joined me in saying that correcting, harassment, bullying behavior and act toxic workplace cannot be successfully carried out, frankly, by the person responsible for creating these issues in the first place. Like you have. It has become clear to me based on todays hearing my reading of the query report and how you plan to address these issues fight frankly a hand that pickingyour own socalled thirdy monitor it is clearly time, sir, for you to resign. Chair gruenberg in terms i hope you can understand that i am sure you can understand, i conclude your chairmanship is insolvent. Thank you mr. Chairman yield back. A judgment yields pickwick for sale to the chair. Mr. Gruenberg e repeatedly say you have a process a clancy agency. Why dont you outline that and some answers. Youve not outlined how you intend to clean up your actions. That is subject to this report. Can you speak to that . Yes, mr. Chairman. As i indicated i accept the findings of the report in regard to me. I am personally committed to addressing the issues identified how you can address those issues . It is a personal effort on my part to address these issues. Describe your effort on your part, the personal peace. Describe that. And think it is incumbent on me to be more sensitive to help might conduct may be received by employees. And to understand the only thing that matters is not my perception, but their perception for. How long have you been at the agency . Once august of 2005. And how long have you been the leader of the agency . Oh well, i became acting chairman july of 2011. Became chairman in 2012. 10 years roughly . Roughly. How are you going to convince the people are reporting your behavior, the problems to your behavior how are you going to convince them youre not going to treat them like you have treated them for the last decade . As to the report indicates pickwick snow, asking you not the report. Read the report. Im giving you an opportunity to say youre going to seek anger management counseling. Do you intend to do that . Grix im happy too. And no im asking you what you intend to im not trying to convince you in the hearing they want to hear a plane youve given us no plan i will use the head of the agency are going to do to change your treatment of your direct reports. Youve said nothing about that. The report specifically recommends a 360 review on annual basis. I know you are talking but to the agency employees. Youve said nothing about you intend to do about your treatment which is the subject of most of these questions today i understand youre going to refer to the report again. I do not need to hear that i wanted to hear a better answer and this is a very disappointing answer. I yield back to the gentleman a gentleman time has expired. I will now recognize a gentle lady from massachusetts ms. Presley for five minutes. Thank you mr. Chair. That work of the at the i see is of paramount in supervising our banks, our Financial System are important regulations reinvestment act and in times of economic crisis, fcic is even more important but just last year folks in my district or consulate refreshing the agency or webpages if their money it was safe after the failure of Silicon Valley bank. Agency mission is critical there is much work to do. I initially planned to spend this time discussing regulation and requesting updates on the timeline for finalizing rules that stabilize our Financial System. However after reading the recent report into ftse workplace public needs answers on the toxic culture of Racial Discrimination and misogyny taking route and festered at the at the i see. Chair gruenberg you have filled your staff, people of every walk of life especially women employees have brought their knowledge, their skills to serve at the at the icu have failed the American Public who rely on the agency to work productively to put forth policies that protect consumers from bank malfeasance. Now i have to consider the source here when it comes from the outrage for my colleagues across the aisle. To defend diversity equity and inclusion. Who deny and undermine the meat to movement. Who voted against the violence against women reauthorization. And who do not want to support finally passing the equal rights amendment. That is why im truly disgusted by the fact that you have created an opportunity for republicans who did all of those things to advance her and site regulation agenda and use survivors which i am one of abuse as a political pons more over theres not one woman on this panel and i almost walked out on the strength of that. The reason i didnt is because that is a systemic issue here in congress and often for people come before this committee. You do have one women of leadership and authority that should be there that is also a problem. Hundreds of women their part details hundreds of women who experience harassment with no recourse. For over a decade at the i see under your leadership and your predecessors ignored them. Chair in november and in fact, not that long ago you stated at the i see already has appropriate policies and procedures in place unquote. Do you and now a great this is a yes or no question, i am serious. Do you now agree policies and procedures in place have a cataclysmic failure and affront to many women have been harassed, pushed on the at the i see forced to change the career goal and life trajectory . I have failed, yes congresswoman. Small, ashamed, traumatized, humiliated, alone these are a few words to describe the intense feelings of Sexual Harassment. What survivors endure to go into at the ico and reported more than 80 of replant resulted in zero discipline. When there were repercussions on a single one resulted in removal, reductions in grade or pay our discipline more serious than a temporary suspension. I am so tired of all white men veiling up this lack of accountability is a shameful adequate deeply unsatisfactory as traumatizing. Can you guarantee right now noteto face any form of intimidn or retaliation for reporting an incident of Sexual Harassment regardless of confidentiality agreements . Thats our goal at congressmanthe answer to that i. It is shameful to your inadequate leadership at the helm of this agency hip calls from the political opportunists across this aisle jeopardizing critical regulation pending finalization at your agency. Personally i do not have confidence you can continue to lead in this role but there is a deficit of trust in your credibility has been undermined to lead the fdics of the changes it needs to make or affirm the dignity of the survivors of harassment, discrimination and abuse at your agency. Thank you and i yield. A gentleman from ohio mr. Davidson is wrecking us for five minutes because i think the chairman i like to ask unanimous consent judgment you have sent a the letter from africanamerican ftse employees alerted the Ranking Member also received in 2018 into the record pickwick set without objection. Yes or no are you aware of september 2018 letter chairman received from a group of anonymous africanamerican employees describing discrimination and a toxic workplace they had experience at the fcic . Yes pickwick this letter described africanamerican employees as being afraid to speak about issues they face up infear of repercussions the fdis culture claim discrimination persisted since 2001. How long into your chairmanship did you become aware of this . It letter you reference was not shared with me until 2022. What actions have you taken to try to address that culture . Culture has been bad there. Presumably that was part of what you were considered the right person for the job. Errors in judgment aside, what have you done to positively influence the culture there . Much has been made of the things you failed to do and simply errors of omission in the past. What could you say youve actually done to try to address these concerns are a part of the culture you are brought into shape . That let it raise a number of issues in regards to the opportunity for africanamerican employees at the at the i see. In terms of a hiring, retention, promotion. Without a Strategic Plan it is been a core priority of the fcic. The plan is not worked well. I think i joined my colleagues and saying we need new leadership at the at the i see and in our agency is incredibly discipline is the culture and frankly a culture that is not to make or the right person for a lot of people find excuses leaders find what you have not found a way to positively influence the culture of anything it is gone the opposite direction. I think is a real problem for the fcic. The work of the fcic is important look of the court mission the at the i see has not done well as a regulator. When i look broadly at the three regulators that are here today, thereve been a lot of problems in the regulatory space if you look at Silicon Valley bank we had a failure of the San Francisco bank we had failure at the i see. Clearly a failure of fiduciary by the board and the leadership of Silicon Valley bank. So when i look at the role of congress in this, maybe the biggest void is with the fed. At least we can say the fcic and very clearly the occ have more control of appropriations. A lot of you have autonomy to the point we see things Like Operation chokepoints i dont 2. 0 or 6. 0 the idea the fag federal regulators are not going after things illegal things that are just disfavored. So a vice chairman bar one of the actions recently as this idea will designate new things systemically important Financial Institutions nonbank mortgage lenders. We are part of those discussions with secretary yellen . A congressman the oversight report did not recommend an designation as an answer to the problems raised in the report. So chair yellen who is a woman ill point out to my College Leader of the treasury and sheet free range on this question is that something you support that you believe we should expand is that supported or is that she kind it out there on her own on that . I have a practice of not commenting on other public officials. The report itself is a focus on a set of measures that are designed to improve the resilience of the non bank Mortgage Service sector. Did not suggest that designation was one of those measures at this time thank you for that clarification. Director i am considerate of the occ role in approving bank mergers. One of the things we tried to do with tailoring was to be able to go after appropriate size, fit for size regulation. Part of the challenge is you look at the biggest banks there is a wide range between the very biggest banks and the next tier how do you see a merger and acquisitions are probably proceeding in that environment . We have essentially cast the ability for the market to function for these banks. Theres no artificial cap. The merger application fulfills all the statutory factors and procompetitive pro in the community will be approved. The question is, what kind of merger comes in and how are those issues being analyze and stack up . Was that the results favorably look forward to work with you thank you for your time and testament yelled back. A gentlewoman ms. Garcias wrecking us for five minutes. Think it mr. Chairman and thank you for the witnesses. Their time and attention today is always good to see you all. Let me begin with you chair gruenberg recommendations included in the 2020 Inspector General report on Sexual Harassment. Its a 2020 report for a year later in 2021 Inspector General reported the same recommendations were closed and addressed it. Now and that Inspector General report some of those recommendations were about this very topic of Sexual Harassment and a workplace where they not . Was a subject of the report per. I was a subject of the report. We went to all that in up to 2021 are you chair then . No congresswoman. No whos who chair then . Mick yellen and mick williams. So presumably if there is a culture there was a recommendations made Inspector General sounds like theyd been taking care of it and it got close is that an assumption that can be made . Quickly found the Agency Response was satisfactory. Am trying to reconcile that with the fact and page 88 of the report says allegations cover the period 1980s. That is the way before 2020 Inspector General report and way before today. Is that true . Yes congresswoman this culture has been going on for a long time. Apparently the steps taken under the leadership are either inadequate for the review was adequate. Im just trying to reconcile i did not get any detail when the incidents occurred. The talk about Sexual Assault, gender, sexual discrimination, threats, it goes into a a lot of detail over a lot of allegations. It stuns me something couldve been going on since the 1980s but the Inspector General may have close the file in 2021 but now we have all these things. When i look at the history you all have had probably since the 80s, maybe 12 or 15 different chairman. Give an acting charm and a couple of times. Your chairman now. When did you first really hurt and i dont mean news reports for i do not mean Inspector Generals but you personally here, see or even feel anything that was inappropriate . A congresswoman, in terms of the deepseated Workplace Culture issues it was the news reports that came out last year. Identified them anyway pickwick 2021 Inspector Generals report to last year you heard zero . Yes. The 2020 ig report identified shortcomings in policies and procedures and training by the agency. Main generalizations about Workplace Culture but did not make the kind of findings you sought in the news reports last year. Is your board have a committee that dealt with this at all during the time. Question rick im not talking to the new and you are creating. But the board itself that you have the committee that dealt with Human Resources, personal conduct . Not a committee devoted to that. That wouldve been a board responsibility and management responsibility for the chairman. I am trying to make sense. Its totally disappointed, totally unacceptable. I am just not even sure sometime so Something Like this couldve existed for so long under so many administrations. We are talking about since the 1980s and through so many chairmanships. But the bottom line is you are there now. You take full responsibility for. I do pickwick to implement all these programs . Works i will bravely enter into some type of Self Improvement Program is a charm has suggested question. Yes. What might that include . Something i would have to develop. Certainly coaching or counseling as well as 360 review identify a recommended. Now im talking you your self, sir. A fundamentally an issue for me to address in terms of my personal interactions with staff. Be more sensitive to have staff receive interactions with me and ensure they are appropriate. Will you take an anger Management Course a question or. Yes agenda time is expired. I recognize myself for five minutes. Mr. Gruenberg june who eric lander is . No im not familiar progress former director of the office of science and technology policy. June who martin stickman is . And no servitude Inspector General for nine states Railroad Retirement board. If you do not know who either of these art you may not know what they have in common. Both were either fired or resigned for mistreating their staff. Mr. Lander resigned in february 2022 after reports reportsurface he bullied and mistreated subordinates. Mr. Stickman was subject to investigation like the one the fcic just underwent it. That investigation found he create a quote toxic Work Environment and engaged and inabusive treatments. Mr. Biden fired him two months ago. You probably remember on the day before his inauguration present biden they have zero tolerance policy for this kind of behavior. You ever work with me and i hear you treat another colleague with disrespect or talk down to someone, i will fire you on the spot. Note if, and, or butts. So these two men lost their jobs for crossing the line set up by president biden. But you are still here even though a thorough review is valued on some of the same things. To be honest i think its transparent what is happening here. The administration cannot afford to lose you come in particular your vote on the board which is key to in the bottle three endgame done an engaging and aggressive political agenda. Lets me shift gears and dig into the report briefly here. In the report it found that you are aggressive. Do you dispute the findings . Accept the findings, congressmen who. You except you are aggressive to your staff . Accept the findings of the report, i do. You also accept your horse to your staff . Accept the findings of the report yesterday. You accept that you are vitriolic to your staff . Accept the findings of the report per. You except youre your disrel to your staff . Accept the finds of the report as you indicate. Is important some of the language ive heard you use is that people observe you in this way. The report actually finds that you are those terms. There is a big distinction here because its not in the eye of the beholder as sometimes your terminology is indicated. The report found that you have been aggressive, harsh, vitriolic and disrespectful to your staff. I think that is why i and others have zero faith in your ability to be an effective leader of the agency and of call for her resignation. Let me shift gears and talk about what the agency is doing the fcic under your worker. I want to talk specifically about the role the fcic should be playing an and it is playing an innovation part of the last three years innovative businesses have begun to change the way we bank and for the better. Yet i have continued to receive complaints about seemingly arbitrary Enforcement Actions and preferred stories from fdics staff refusing to provide feedback to syntax on regulatory questions. It has gotten so bent vice chair travis hill has said publicly the perception you created is the fcic is quote closed for business. So, what are you going to counter this perception . What we have seen as an aggressive enforcement action you have gone from one enforcement in 2021, to 14 and 2023, is that correct . I would have to check the record on that congressman i do not know offhand. I would say that it is. You think of aggressive enforcement action preventing innovation in the base . I dont think so, congressmen. You think but is there reason for the dramatic increase in the number of enforcements . I would look into the record. I say most banks banks have thirdparty relationships effectively and well. They offer useful Business Opportunities for both. We have had some instances in which those relationships were not managed well they overreach and have significant Risk Management and Consumer Protection issues. And so what are you doing with the third parties partnering with Financial Institutions and meeting compliance obligations before an enforcement action is brought against the bank . We engage with both parties as i say it in most instances banks manage those relationships a while. You disagree with those who say you have a hostile stance toward centrix partner banks . Yes. Very nice. I yielded back and out recognize mr. Torres for five minutes of the purpose of answering questions. Thank you chair. Mr. Gruenberg, i appreciated your leadership during signature parade their 80000 units of Affordable Housing that were at risk of using their portability but i feel like youre instrumental in preserving the affordability of those units. But, i am deeply troubled by the findings of Sexual Harassment, Racial Discrimination, at the fcic. I have been struggling to figure out how i should respond. Im curious. Imagine for a moment that our roles were reversed imagine if you were a congressman on house the Financial Services committee as a chair of the fcic under the cloud of the scandal. Would you call on me too resign . No, congressmen. So imagine if you are a congressman from the bronx one of your constituents approached you. You in the bronx well, you were an organizer in the bronx. One of your bronx residents approached you and said congressman, why are you not calling for the resignation of an fdic chair whose agency has been found to have a pattern of Sexual Harassment or Racial Discrimination . What do i tell that constituent . I would tell them this is a serious problem. The chairman has recognized it, taken responsibility for its and is working hard and has been working hard since last year to address it. I think it is important to give them a chance to do that. And interrupting leadership at this point would not advance that objective. The problem that issue predates you . It does come a congressman for. Is either a democratic or republican issue because i think that is true for quite so systemic it transcends Party Affiliation for. I think that is true. I want to ask about basil three on march 6, 2024 i asked then chair Jerome Powell the following quote how do you reconcile and repeat assurances about a wellcapitalized Banking System with basil three assumption of an undercapitalized Banking System . The fed chair were part of the calling answer i have said for years in this room i thought that level of capitol and u. S. Banking system vice chair do you agree with chair powell that level of capitol in the Banking System is about right . Think i very much appreciate the question. As you have heard me say before you heard chair powell state before i am not in the business of commenting on other public official comments. I will say it from my perspective over all the Banking System is sound and resiliency. The capitol proposal we put forward is designed to correct particular weaknesses in the approach that we have right now. Croissants interrupt for a moment. Do you agree with the assessment is about right . Set aside source of the quote for. Im not going to comment on them. With respect to capitol in the system i think the system overall is sound. I am not worried about risks identified by think we will do better the basil three approach is about doing better for that. Quick setting capitol requirements is a tradeoff between safety and soundness on the one hand and capitol formation on the other. Maximizing safety and soundness of the exclusion of capitol formation. Capitol formation at the exclusion of safety and soundness. Best outcome lies in striking optimal balance between the two. If you, as a banking a regular get that balancing act wrong which it may be doing with basil three becoming less credit for business loss of financing for clean energy and catastrophic Climate Change simply put the loss of credit is no abstraction. Can you state with certainty to the public your basil three proposal the objectively with the. Congress mounting anyone can say that on either side of it. The risk of too little and the space we have another devastating financial crisis that shatters american businesses and harms american households. What we are trying to do is get that balance right. Quick stone disputes the need for safety and soundness. You can increase capitol recurrence by 50 on the basis of safety and soundness in the service of. The question is how do we know with certainty whether we are optimizing the love of safety and soundness and capitol formation . I dont think either of us are in the business of certainty. See my time is about to expire. Think i reckon is my cipher sell for five minutes but thank you, mr. Chairman think of to the witnesses for being here today. Vice chair bar and become increasingly concerned about rising rates of check fraud for chili duplicate presentment fraud which occurs when fraudsters make multiple deposits of the same check. According to recent testimony check fraud is been with the fastestgrowing categories of fraud across the country. Duplicate presentment fraud pose exceptional challenges and receivers comprising 1 quart of all check adjustments and by the Federal Reserve in 2022. I feel Like Technology should solve this problem. But the fed consider operationalizing the duplicate check notifier service or explore other Technological Solutions that can enable realtime fraud detection across all check processing organizations . Eight at anchor for the question. Check fraud is only are quite focused on. We are looking at various technological ways that we can help. But also work with banks as supervisors throughout the system. Its an issue when i travel around the country, Community Bankers offer raised me really banks of every size are concerned about this. Is it something to think technology can play a role in solving . Or at least reducing substantially . Technology might help us of the only answer technologies we are thinking about they could help in this space is some of which are being deployed in the Banking System today. Thank you. Chair, its made clear in the longterm debt proposal specific calibrations were determined is the current capitol framework fossil three endgame seeks to amend. Making accurate assessment of debt proposal impossible. It seems premature to finalize a longterm debt rose up fully understand the impacts of the endgame. Why continue to believe the endgame proposed rule should be withdrawn and reissued, would you agree the agency should not finalize the debt proposal until a better understanding of the capitol requirements hell face . Longterm debt rule was developed independently of the capitol rule. It is designed to create a buffer of longterm debt hundred billion dollars to absorb losses in the event of stress and avoid a failure at the institution or reduce the cost to failure. Its fair to take into account capitol requirements. The debt requirement here separate from that. Is it on a reasonable if you dont with the result is going to be. We have received extensive comments. Think of it understand what the impact that we would not finalize the role we are still considering the comments received. I would not link longterm debt rule. Thank you for that. Ive been in congress are five and half, almost six years now. I have not seen the bipartisan calls for anyones resignation to the extent that ive seen yours. You dont seem to be intending to resign. What are you going to do to change the culture issues that are present at the fdic . The agency has a fundamental challenge. We have been working on them since last year. We have to break the current culture of a Good Old Boys Network that is distracting complaints and the accountability for misconduct. I believe the agency has an ability to do that. As a starting point we would wil implement a new independent office reporting directly to the board that would consolidate all of the functions of reporting, investigating and Holding People accountable for misconduct. Then we have a challenge in addition to her decentralized field Office Around the country. Impose closer oversight and accountability there. If we can do those two things i believe we can significantly impact the deepseated issues that have been identified. Cooks of their sick culture problem im sure their ways of metrics associated with that bigset out service and whatnot. At what point, six months from now, 12 months from now and things are not substantially improved we reconsider calls for you to change leadership . That we intend to do its part of our action plan, is to monitor it carefully the implementation of the recommendations and their impact. Weve already begun the process of identifying an independent monitor. Who would audit the implementation of the recommendations and engage an expert third party to advise us on addressing the culture change issues. These are both recommendations of the recent report provokes my time is expired i yield back. Thank you, mr. Chairman. Vice chair bar, and prm section 956 last week . Thank you congresswoman. We are committed to finalizing a joint rule by board colleagues we decided it will be appropriate to have additional analysis done within the fed. We are conducting that analysis at this time. Complete do you support the need for this rulemaking . I am committed to it. When do you expect for this rule, for the fed to join . Im. As you explain the problem we are trying to solve on section 956 . Designed to address problems with respect to executive compensation that can lead to risktaking that ends up causing serious harms parks in Silicon Valley . Silicon valley was in part a problem that is not well aligned. This rulemaking wasnt was rd to be done in april 2011. X yes, that is correct. Thank you. Todays hearing should be an opportunity to discuss the very pressing challenges that provincial regulators on the economy as a whole. But unfortunately the working environment describes in the report paints a disturbing picture. This includes allegation of Sexual Assault and harassment, gender discrimination, work place and a Racial Discrimination. These are not isolated incidents. The report makes clear these were widespread and longrunning. Mr. Gruenberg i have spent my entire career fighting against these practices in the workplace. And in all areas of life. In an environment like this. Yet the reality for more than 500 stoppers they attempted to serve their country through their work. Simply put the issues outlined in this report must be addressed and they must be addressed now. I am not satisfied by the answers. About how you plan to ensure fdic employees have to go through something similar. The culture of any organization starts at the top. I do not tolerate this in my office. Yet the sword working environment has persisted at the fdics work you served as head for 10 of the last 13 years. Thank all of you for appearing here today. Michael, would you comment on the fact that september of 2022 activists lobbied the International Organization for standardization to adopt code to try to sell firearms and ammunition with the stated goal of facilitating and monitoring and reporting of constitutionally protected activities. The goal was to enable Government Entities to discriminate against both these lawful businesses and their customers despite the fact that individuals had passed a background check. I was very troubled to learn that the Financial Crimes Enforcement Network was pressuring the Financial Sector to utilize this category code to flag supposed suspicious transactions. Has the office of the control in any way has been involved in the effort to to my knowledge, no. Not to me knowledge, do you think its an appropriate role to weponize the Financial Statement against the firearm business. Do you agree that pressuring the Financial Sector to reveal the purchasing history of gun owners raises privacy concerns . So there are concerns that our role is safety, soundness of the Banking System. Thats our focus. We do not believe that the Banking Industry should target. Okay. Glad to hear that. Im in the real estate business. The coming tsunami is in the office space, the default on loans thats going to affect the whole country not just from covid but other things as well. The republicans have been sounding the alarm about the regulatory tsunami thats going to overwhelm the Banking Industry and theyve been asked to implement the new capital 1071, the late fee issue, the cra rules as well as other guidance documents issued by cfpb, they are vague and mandatory where they used to be, had shall as been the word used instead of option, i guess. Are your agencies considering impact on banks, this is for any of you, particularly Community Banks implementing regulations and guidance documents that have been published over the last 12 months . Like you we have seen issues, commercial real estate, we are quite focus and making sure that the banks have the appropriate Risk Management practices in place to address those issues. I agree with what chairman vice said, generally impact the larger institutions, over a hundred billion dollars either for broader Financial Stability concerns or also responding to the vulnerabilities identified in the Bank Failures last year and i would say in regard to cra rule we were particularly sensitive and likening reckulatory burden for the majority of Community Banks in the United States. Any comment . So i agree with what my colleague said. Do you agree that resources like the fdic believe that it should be origin to profitability and stimulating activity. Is it appropriate for banks to discriminate against lawful commerce such as energy development, mineral extraction and the firearm industry. They should not, no, congressman. Okay, you agree with that. We already know this wasnt a suggestion or recommendation but it was required by law but vice chair, did the Silicon Valley banks former president and ceo, did he sat on San Francisco board before his own base sale . Yes, congresswoman. Most people, of course, familiar with the id of regulatory capture in terms of corruption or the revolving door. These are real issues, do you agree . I have not seen issues of corruption in the regular in the regulatorystructure. Hold significance in status . The president s sorry, the board member it was Regional Reserve banks play no role whatsoever in supervision, they are prohibited by law from doing that and under the under the Federal Reserve act banks are elected to the board by statute. Its not something that we just decide to do. On the Federal Reserve banks. Senior staff at the Federal Reserve do receive comment from the Banking Sector at staff of all different kinds of levels. Usually the more senior staff or executives in organization would im just trying to figure out why it took 13 years. In terms of Federal Reserve board of governors, to what extent, do you remember social networks overlap with the Bank Executive . I dont know the answer to that question. Are financial executives commonly part of members social circles . I dont know. Okay, so how often do members of board of governors and Federal Reserve interact at how often do members of the board of governors of the Federal Reserve system interact can Bank Executives at their workplace . I often meet with Bank Executives. Its part of my job. I engaging with them as supervisory and also receivements from them on our regulatory process, other members of the board this is really me trying to figure out what is going on. 13 years. Im just trying to figure out if its in the ile and folks are making decisions based on social networks and not based on what is required by law . My experience at the board over the last nearly two years ha Board Members are trying to reach a substantive judgment based on their own understanding. Its going to takes 3 years every single time to enforce the law. I cant speak to the 13 years. Im just describing my experience. I believe that you have intention of implementing. Is it going to be two months, three months, four months before we see implementation of section 596. I cant commit with timing. Im doing the best to resolve the issues in a way that is meeting congressional statutory requirement. Okay. Chair, we have spoken and you know that im a survivor myself. My first job outside of college, you know this, i read and i try not to i needed to see. I saw the numbers, but one fdic employee reported to them that she feared for her own physical safety after more senior colleague who had been stalking her continue today text her even after she made a complaint against him for among other things sending unwelcomed sexualized Text Messages that featured partially naked women engaging in sexual acts. My god like that, theres more. Theres more, chairman. I told you when it happened to me, they werent surprised. I lasted five months because nobody did anything. And chairman, i say this its going to you understand theres no trust right now. Many of the people that have been impacted directly from the lack of action and accountability, well, i didnt know, i didnt get it until then. Thats a long list, we are not talking about 10, 20, 30 people. 500 people called the hotline. Some of it is even on religious discrimination, all these other things but i know as a woman in the workplace, you know, its that power thats they put on you, the way that one of lured her away to rub on her, i mean, chairman, this is incredibly serious. So i just want you to know i dont know how you do it. I dont know how you build trust among people that make sure that it never happens again and i dont know how we address the trauma and the culture thats been created. This is pretty unbelievable. Thank you, mr. Chair. Gentleman from pennsylvania. Thank you, mr. Chairman. Fees chair barr, good afternoon, the qis you stated earlier that would be released i believe you said very soon. We have a better idea when it would be released than that . I dont have a precise timetable. As i indicated staff has gone through process of cleaning the data and doing Quality Control. Six weeks . I dont want to specify, relatively soon. Let me ask you then, in light of the continued inflation increasing unemployment and housing issues and commercial real estate affects on banks, rental prices going through the roof and Credit Card Debt of consumers at the highest levels in recorded histlimit Interest Rates going to stay at higher levels, not going to come down with continued inflation and all, cpi numbers and Everything Else access to capital for Small Businesses is already much of a challenge, minimal capital taking place. The economy is on very thin ice and why would you want to why you want to put more weight on that ice at a time when things havent improved where i guess anyway that you havent estimated they would be at this point we are not trying to decide whether capitals are appropriate three months from now but over the long term whats the right balance of risk and reward tradeoffs in that space. Current affairs they are affecting your discussion making related to bozzle3. We to not think in the shortterm about the economy. We think in the long term whats the right way of judging. Youre going to ignore the state of affairs and just continue ahead based upon other things related to bossle 3. We are not going to ignore the state of affairs. Our job is to take the comments in and assess that would be good. Thats whats very important particularly from Small Business which shows most of the employment. Im happy to follow up with you. Great, thanks. Chairman, i wanted to speak to you today about the business payroll, the deposit insurance but in light of Everything Else here, so was anyone fired in the course of the situation at fdic . We have had four individuals this year, the Agency Issued termination. Lawsuits, there has to be lawsuits. Thats just unacceptable, think about it, right. Rumors or complaints at the Regional Office would that regional director be held responsible by you and throw them out as quickly as you could . We have had changes in Regional Directors since the reports came. Thank you, mr. Chairman. I yield back. We will now go to the gentleman of wisconsin. Mr. Fitzgerald. Thank you, chairman. One fdic employee testified she feared for her safety. If you have employee that is feel that way its far more serious than we could even describe here in the short period of time that we have been given. We have a lot to work to do, congressman. Would you feel comfortable if your daughter worked at fdic . Yes, and we have many employees who do have daughters working at the fdic. Well, i think i join a long line of members of congress that simply wish that you would resign and turn leadership over to someone who maybe more competent than have a better handle on the issues within the fdic. Some of my colleagues are pushing only for the narrow carveout from increase requirements for Green Energy Tax credits. I think you likely will say that this is directed to you. I think you will likely see that theres some tradeoffs necessary to prevent kind of any financial crisis that doesnt help families likely to obtain a mortgage under the proposal which is something ive been personally focused on. While much of it remains intact what message would that send not just on the independence of the Federal Reserve but the families who may have more difficulty getting a mortgage or a Small Business who would see reduce excess to credit. We consider Wealth Builder which is Home Ownership and Small Businesses being able to flourish. Im wondering if you have any comments about that. We take seriously the comments that we got on the proposal. We expect to make material changes, broad changes to it. I would say that the proposal as proposed we have a very, very small effect on the size of credit in the economy including with respect to mortgages and Small Business but we heard those comments very much, we are looking at the prospect of making changes on all three aspects of rule with respect to credit, Operational Risk and we are working through the substance of that. The consequences of the merger delays can be harmful to acquiring institutions and the targets which could cause greater Operational Risk i guess you could say. Well, most mergers that we reviewed at the Federal Reserve, the median merger application approval is under 2 months so most mergers go through quite smoothly and easily. We do have much more complex involving larger institutions where either we need to gather more information or there are difficulties in the application itself that we have to work through and we have to meet the congressional factors for approval or disapproval so again, most mergers are pretty straightforward and some are complicated. How do you guys typically handle you circle back then and readdress these concerns or how is that initially kind of addressed and ultimately with the idea that theres an opportunity to kind of make a change to the initial application. Yes, congressman. Theres a lot of conversation back and forth. Those can sometimes be addressed through process. If theres information lacking, that can sometimes be addressed through process and at the end of the day we can meet the five objectives laid out for us. Very good. I yield back, mr. Chairman. The gentleman yields back, we will recognize the gentleman from new york for five minutes. I would like to follow up on a question that representative timmons asked you about, interaction about longterm and bossle 3 end proposal. To be direct, do you plan to finalize your bossle proposal before you finalize the longterm debt proposal . We havent made any procedural decisions as i indicated earlier. We are focused on the substance. We have substantive and we are working our way through those and interactions across rulemaking and will make a decision on process after we make sure we landed properly on substance. All right. I just given how interrelated these rules are, i dont think the longterm debt should be proposed and required by the administrative procedure act. I know fdic which you sit as board member have looked at changes, agreements, im concerned about the potential negative impacts these changes could have an access to bank capital especially at the time of changing youre proposing on the bossle front. Are you concerned about the negative impact on bank capital and this is something that you have to examine. The issue recently came to the fdic board for a vote and it was a very live discussion of the issues and particularly across the 3 agencies to the extent that banks, all three agencies are often involve and ownership issues. You all discuss the potential negative impact. A range of views with regard to passivity and the liveliness of that discussion highlighted how theres stuff we have to work through. Chairman brumer, do you share your concerns . There was a lively discussion at the board meeting. No conclusion was reached. Theres a variety of views. This is something that the board is going to have to continue to engage on. Vice chair barr i would like to move to proposal, in 2015 when the fed first issued the surcharge the board acknowledged that a Bank Holding Company method to score may be affected by Economic Growth that doesnt represent increase and systematic risk. The fact the board said it would periodically review the coefficient and make adjustments as appropriate but to my knowledge i dont think it has done so yet. Why release proposal that amidst latest proposed rule . We did receive comment on the proposal that went to this question about how to calculate to coefficient we are looking at that comment along with the other comments we received on the proposal, the proposal also addressed narrowing the buckets of the surcharge and avoiding the problem of windowdressing as well as technical adjustments to how we think about calculating the suffer damager. We are taking all that comment on board. We are in the process of thinking through that now. You all discussed whether adjustments would be appropriate . Im certainly aware of the issue. Okay. I appreciate that. Im going to run out of time so im not really just going to make a statement here. Id like to follow up with chairman and im going to ask issue a more detailed question. Hope youll respond to it on what appears to be the fdic hostile aggression towards banks, partner, ive heard from several banks and we are and what theyve shared with me, what we are witnessing is adversarial working environment thats using enforcement action to discourage banks and partnering with vintex. I would say that i find this troubling as im sure our colleagues do as fdic Impact Development of what could be Innovative Products and services that benefit consumers and businesses especially in new york and around the country so i have a more detailed question that i hope to get a response from you all but with that, chairman, i yield back. The gentleman yields back. The general lady from california ms. Kim is recognized for five minutes. Thank you, mr. Chairman. I know its been covered by both sides of the isle but i want to register my serious concerns with the fdic cultural discriminatory and moral issues laid out in the report and having heard several of my colleagues already addressed this and taking into consideration i would like to ask you to reconsider and resign to give the fdic new respective leadership to enact much needed internal reforms. You dont need to respond to that but i want you to reconsider that seriously. According to chamber of commerce letter from february signed by one of the chamber of commerce in my city, one of your surveys found that 68 that increase in bank capital would be damaging to their businesses and given the concerns that businesses have with the bank Capital Increase i was bothered when i read the may first bloomberg article that made a number of claims of the end game proposal. One to have claims is that key officials decided to adjust the proposal rather than start over. Another lame says that you are planning to be done as soon as august. So mr. Barr, would it be fair to assume that it was not someone at the fed leaking it to the reporter i have no idea why the reporter wrote that. We issued our stimied make it hear that we have made no decision about procedure. We are very focused on the substance, making sure we get the substance. Let me ask you, mr. Su, do you have any reason to believe it was someone at the occ leaking the info . No. What about you, mr. Greenberg . It seems to me that whoever was leaking this information was trying to put pressure on other banking agencies . I cant speak to the motivations but im not aware who is the source of the information. Actively considering a reproposal of the bossle game proposal. Just last month chair powell testified in the committee that they are aware of negative impact, fdic, however, is reluctant to consider a reproposal and pushing to be finalized. Where do you stand on the benefits of a reproposal. I think as vice chair barr indicated, the agencies right now are focused on trying to Reach Agreement on the substance of rule making and decision on process Going Forward. I think we all have to decide after we reach closure on the substance. So i think candidly an open question at this point. I want to switch to another topic here. What is the average time for issuing reports of position following the date of the exit meeting and how us the this defer for those banks that are active in cintec space. Question to you . I would be happy to get back to you on that question, congresswoman. Im concerned by the proportionate Enforcement Actions about what that can do to, you know, give the customers opinions, options and access to innovation so i would urge regulatory parit with y for innovators. Mr. Barr, in your testimony, you mentioned that the fed continues to work to improve the discount window tool, so can you give us some thoughts about how you are thinking about improving it . Thank you very much for the question. Liquidity provision by the Federal Reserve has been an absolute bedrock for the Financial System since the founding to have Federal Reserve it did provide the underpinning for the Bank Term Funding program and disco window borrowing last spring but what we have heard from a number of banks is that there are procedural issues working with discount window that could be improved. We are going get more of a systematic impact from banks about those issues. One of the areas that, for example, we are working on is banks that would be good to have an online portal so we started having an online portal thank you, and my time is up. The gentleman from nebraska. Youve spoken a few times in the last year about the separation of banking and commerce. From an activitys perspective the line is, specifically i want sure. So, i think its one way to think about it. Facilitating payments, making loans and taking deposits. When banks are chartered, those activities are bundled within the bank. When payments become unbundled from that on its own that is commerce. Thats not banking. What is happening sometimes is that those payment activities sometimes being rebundled outside of the bank perimeter and this so me start to approximate banking outside of perimeter and warrants monitoring. Can you give me an example of rebundling . Sure, Payment Services that are narrowly defined as Payment Services and over time it would say, we can hold your cash as if its a deposit and offer a loan. That rebundling of services looks awfully similar to banking. Thank you very much. Let me pivot quickly to fin tech partnerships. Ive stated in this committee previously that i feel bank fin tech partnerships are important. I represent a world state. We have mostly all Community Banks, very few regionals, theres connections there but i worry about these banks fin tech partnerships not being available to Community Banks and only the largest banks in the nation. I understand that sometimes a partnership with the fin tech firm can introduce new risks and i appreciate that there needs to be some framework for oversight of that, however, ive heard that in some cases examiners are interpreting the new interagency guidance on this topic as more of a onesize fits all checklist so here is the question, mr. Chairman, the broad application of regulations under the thirdparty risk guidance and novel Activities Program has raised some concerns among stakeholders that regulators might be push to go reduce or fin tech partnerships in favor of traditional banking operations. Is this a misinterpretation of the fdics intentions if it is would you please clarify what your intentions are and whether or not your Agency Support banks partnering with financially sounding Compliant Technology companies . Financial technology companies. Thank you, congressman. Candidly i think it is a misrepresentation. As i indicated in response to a previous question, most banks manage thirdparty relationships including thirdparty relationships and have Risk Management responsibilities, most banks manage those well and we are supportive of them. There are a few instances on which banks have overreached quite frankly and gotten themselves in difficulty as you indicated and then it becomes a matter of supervisory attention. But as a general matter. We are supportive of those relationships as long as they are managed appropriately and take into account that the guidance that you referenced. Thank you. Chairman, on june 6th, 2023 the Federal Reserve, fdic and occ issued final guidance regarding Risk Management expectations for banks partnering with fin techs while prior thirdparty Risk Management guidance included supplemental material close to the finalization date there was an delay issuing aid specifically tailored to Community Banks can 2023 guidance k. You explain the reasons for that delay . I would be glad to get back to you in regards to this. Thank you very much, with that i yield back. I would like to thank the panel for their testimony. I want to thank all of you today. These are important positions. The focus shouldnt just be on cleaning up mismanagement. But it should be about Financial Institutions. Im glad that is that is a bipartisan concern. Without objection all members will have five legislative days in which to submit additional written questions for the witnesses, the questions will be forwarded to the witnesses, ask rewitnesses to respond no later than june 15th. Without objection, the committee is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations]