During the Senate Banking Committee’s oversight hearing on prudential regulation, called “Rightsizing Regulation to Promote American Opportunity,” Sen. John Kennedy (R-LA) delivered a characteristically blunt and rhetorical grilling of Federal Reserve Vice Chair for Supervision Michelle Bowman.
Kennedy demanded to know why the Fed and other agencies had permitted banks to close customer accounts based on “reputational risk,” essentially debanking people or businesses over their politics, religious beliefs, or lawful but politically disfavored industries.
Starting off his amazing rhetoric, Senator Kennedy began, “What in God’s name were the Fed and some of your other agencies thinking when you allowed banks to debank customers for reputational risk? Are you kidding me?”
“Why did you allow that to happen?” he asked, “Because you didn’t like their politics, or you didn’t like the products they made. I mean, do you think it would be fair? Senator Warren’s not here, so I hesitate to talk about Senator Warren, who was a distinguished professor at Harvard University.”
He pointed out, “Some people don’t like Harvard. Some people don’t like their politics. How could you possibly allow a bank to have the option, I’m not saying they did it, but to de-bank someone like Senator Warren? ”
Still not done, he added, “I’m using her as a hypothetical example because you didn’t like her politics. And you can say the same thing about gun manufacturers and oil and gas and anybody you don’t like, and you let the banks do it. What in God’s name were y’all thanking Madam Vice Chair?”
Michelle Bowman sheepishly answered, “Well, Senator, I appreciate your concerns, and I share them. I was not the vice chair at the time. I know that decisions were made, but your institution went along with it. The banks proposed it, and your institution sucked it up like a Hoover Deluxe.”
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Wrapping up her comments, she said, “In my view, debanking is never an appropriate activity. It is every American in this country should have access to financial services, and they should not be limited from access to those services based on their political, religious beliefs or their engagement in a particular business that may be disfavored but is legal.”
Watch the clip here:
However, some progressive groups such as the Independent Community Bankers of America (ICBA) applauded her noncommittal response. “ICBA and the nation’s community bankers welcome the confirmation of Federal Reserve Vice Chair Bowman and strongly support her calls for a fresh look at the agency’s regulation and supervision,” ICBA President and CEO Rebeca Romero Rainey said.
“Vice Chair Bowman’s community banking experience and pragmatic approach to banking regulation are essential to promoting the safety and soundness of the banking industry,” the leader of the NGO added in her disorganized letter.
Wrapping up her lengthy comments, Rainey claimed, “We look forward to continuing to work closely with Vice Chair Bowman to support tailored regulations that ensure community banks can continue meeting the needs of local communities.”
Featured image from embedded video