House Financial Services Committee bank regulator oversight: Live coverage

Fed Vice Chair for Supervision Michael Barr said he would be open to more formal transparency requirements related to the Federal Reserve's involvement in international regulatory bodies, such as the Basel Committee on Banking Supervision.

Barr was pressed on the issue by Rep. Andy Barr, R-Ky., who has put forth a bill that would make the Fed, Treasury and other agencies subject to formal oversight by Congress. Vice Chair Barr said he had not done a full read of the proposal but committed to doing so, noting his strong commitment to congressional oversight.

"I'm happy to look at the legislation in more detail and you and I can chat about it and see if we can find common ground or not find common ground," Vice Chair Barr said.

Rep. Barr, who visited the Basel Committee in Switzerland earlier this year, said he raised concerns about the proposed U.S. implementation of the body's latest capital rule — known as the Basel III endgame.

"They acknowledged that that original proposal was inconsistent with the capital neutrality of the Basel agreement and they acknowledged that what you originally proposed was actually gold plating of capital standards on U.S. institutions," Rep. Barr said.

The congressman pressed the regulator on whether he would commit to making the U.S. implementation of the Basel standards capital neutral.

"I haven't made any determination about the right set of tradeoffs going forward," Vice Chair Barr said. "I look forward to getting input from others and having the comments. I can't commit to a particular thing until I understand the full range of public comments and the right way to address them."

Rep. Barr urged the regulators to put a greater emphasis on U.S. competitiveness and economic growth when negotiating future international agreements.

Rep. Sean Casten, D-Ill., who also visited the Basel committee, noted that, internationally, there are different views of the so-called gold-plated capital standards being considered in the U.S.

"It was refreshing and educational to hear all the European banks tell us that Basel III tips the scales too far in favor of big U.S. banks," Casten said.

Rep. Joyce Beatty, D-Ohio, made a broad critique of selective Republican outrage regarding accountability and leadership standards at the FDIC while president-elect Trump has nominated people against whom credible sexual misconduct allegations have been levied for cabinet posts.

"Mr. Gruenberg, have you had anyone — male or female — on your staff accuse you of rape?" Beatty asked.

Gruenberg unequivocally replied, "No."

Beatty pressed further, asking whether he had ever lured staff into a hotel room or office for inappropriate purposes or made sexual harassment comments. Gruenberg said he hadn't.

Gruenberg presided over the agency during many allegations detailed in a report by outside law firm Cleary Gottlieb, but was not himself implicated in sexual misconduct.

Beatty used this exchange to contrast Gruenberg's leadership with current Republican-supported nominees accused of misconduct.

"I have no tolerance for any type of harassment or sexual harassment to any person," she stated.

Beatty noted the inconsistency in GOP criticisms of Gruenberg while overlooking allegations against individuals from their own ranks. Specifically, she referenced President Trump's Defense Secretary nominee Pete Hegseth, who is accused of rape. She criticized the lack of accountability, highlighting that the case had been "tabled" and ignored by Republican colleagues. 

"I have a real problem with my colleagues' hypocrisy," she continued. "What's good for one side is good for both."

The Federal Reserve's top regulator said regulators still need to iron out some specifics on the Consumer Financial Protection Bureau's so-called open banking rule.

Fed Vice Chair for Supervision Michael Barr said his agency is working with the CFPB on establishing data sharing limitations related to the 1033 rule, which was finalized last month.

"It would be useful for the prudential regulators to help provide clarity regarding the circumstances under which a bank, for safety and soundness reasons, for [anti-money laundering] reasons, protecting the financial system can choose to not share that information," Barr said. "That would be a useful thing for us to do and we are working on that kind of issue now."

The rule requires banks to make customer data available to third party groups upon customer request. It also establishes data protection requirements for banks.

Rep. Emanuel Cleaver, D-Mo., raised concerns about credit unions exemption from fair lending laws banks face, highlighting a recent landmark redlining case involving Citadel Federal Credit Union.

"Last month, the Department of Justice announced its first-ever redlining resolution involving a credit union," Cleaver said. "This included a settlement with one that has over 250,000 members."

He questioned whether credit unions, given their growing scale and influence, should be subject to the CRA, which requires banks to meet the credit needs of the communities they serve. National Credit Union Administration Chair Todd Harper acknowledged the concern, emphasizing the importance of fairness in financial services.

"I appreciate and share your concern about having a financial system that works for all Americans, regardless of race, ethnicity, orientation, or disability," Harper said, pointing out that credit unions, including large ones like Navy Federal Credit Union — ranked as the 25th largest financial institution in the country — are currently exempt from the CRA under federal law. However, he added, some states, such as Illinois and New York, have enacted their own CRA-like requirements for credit unions. 

"If Congress were to move forward on applying the CRA to credit unions, I would ask for flexibility, given the diversity of federal credit union charters," Harper said.

Harper stressed that while the decision ultimately rests with Congress, the NCUA is working within its existing authority to enforce fair lending laws.

"We've increased resources dedicated to fair lending and are conducting more examinations to ensure compliance," Harper explained.