- Senators questioned Kevin Warsh over ethics concerns involving Fed Vice Chair Michelle Bowman’s June meeting.
- Warsh declined to comment on the ongoing ethics investigation, citing the Fed inspector general’s review.
- Lawmakers also examined Fed policy, inflation outlook, and supervisory records tied to failed banks.
Federal Reserve Chair Kevin Warsh faced sharp questioning before the Senate Banking Committee on Wednesday as lawmakers examined ethics concerns, monetary policy and supervisory oversight. The hearing focused on Fed Vice Chair Michelle Bowman’s June dinner with Bank of America executives, comments on interest rates, and questions about records tied to Silicon Valley Bank and Signature Bank.
Warren Presses Warsh On Ethics Review
According to journalist Colby Smith, Senator Elizabeth Warren challenged Warsh over Michelle Bowman’s attendance at a private Bank of America dinner on June 17. The event occurred hours after the Federal Reserve concluded its June policy meeting.
Warren said Bowman reportedly discussed monetary and regulatory matters despite the Federal Open Market Committee blackout period. She asked whether Warsh had personally questioned Bowman about the dinner.
However, Warsh declined to discuss the matter directly. He said he would not interfere with an independent investigation by the Federal Reserve’s inspector general.
Warsh said he would not “micromanage” the investigation or prejudge facts before investigators completed their review. Warren responded by questioning why he had not asked Bowman about the allegations.
Meanwhile, Bowman denied discussing monetary policy during the dinner. She said she had consistently followed all Federal Open Market Committee and ethics rules.
Officials Discuss Policy And Bank Records
Attention then shifted to monetary policy. Speaking with reporters on Wednesday, New York Fed President John Williams defended the central bank’s forward-looking approach.
Williams said monetary policy usually takes one to two years to produce its full effects. Therefore, policymakers must evaluate where inflation may stand well into the future.
He added that current inflation partly reflects supply shocks, which the Fed generally views as temporary. However, Williams said policymakers would respond differently if inflation remained persistently elevated.
Lummis Raises Supervisory Record Questions
Later, according to journalist Eleanor Terrett, Senator Cynthia Lummis questioned Warsh about reports involving supervisory records linked to Silicon Valley Bank and Signature Bank.
Lummis referenced rumors that Federal Reserve staff may have deleted records before Warsh assumed office. The issue relates to an ongoing independent review of the Fed’s supervision of both failed banks.
Warsh said he had no reason to believe criminal activity occurred. However, he added the Federal Reserve would cooperate fully with investigators and provide records if they request them.
Warsh’s Senate appearance followed his testimony before the House Financial Services Committee a day earlier, continuing his mandatory semiannual appearances before Congress.
