During three and half hour hearing. [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 inc