Magazine article American Banker

Warren, Vitter Press Yellen on Bank Supervision

Magazine article American Banker

Warren, Vitter Press Yellen on Bank Supervision

Article excerpt

Byline: Donna Borak

WASHINGTON -- Two key senators are seeking further details from Janet Yellen, President Obama's nominee to head the Federal Reserve Board, on her approach to a number of supervisory issues, including plans to hire more staff.

Responding to written questions in separate letters by Sens. Elizabeth Warren, D-Mass., and David Vitter, R-La., Yellen answered questions pertaining to plans by the Fed to limit its emergency lending authority, supervise insurance companies, and beef up staff to improve the agency's oversight of the six largest U.S. financial institutions.

Yellen, the current No. 2 at the Fed, said the agency already has hundreds of experts across the Federal Reserve System, but it intends to grow its supervisory personnel.

"We are still adding more personnel that will be devoted to supervision of systemically important firms," Yellen wrote in response to a question posed by Warren.

She said staffing needs are being driven by improved supervision of the largest U.S. banking firms, non-bank financial firms designated as systemically important, and foreign banking organizations operating in the U.S.

Warren asked Yellen, who has previously served as president of the San Francisco Fed and a member of President Clinton's economic team, how many members of the Fed staff were assigned full-time to supervising those six largest financial institutions, which include JPMorgan Chase, Bank of America, and Citigroup.

"Given that a bank holding company like Citigroup dedicates several thousand of its employees to risk management and internal auditing, do you think the Federal Reserve needs to significantly increase the number of staff dedicated to supervising the largest financial institutions in order to carry out its supervisory responsibilities?" Warren asked.

In her written response, Yellen said the Fed currently has roughly 200 experts that are involved in assessing the agency's risk measurement, stress testing and capital planning processes, which it applies to the eight largest U.S. firms. Additionally, she said, there are roughly 100 economists, supervisors, and other specialists that help to carry out the annual supervisory test of the 30 largest bank holding companies.

She also noted supervisory efforts also included additional monitoring by staff at the Office of the Comptroller of the Currency, which supervises national banks. …

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