To The Moon

Federal Reserve Vice Chair for Supervision Michelle Bowman is once again facing political scrutiny.

Democratic Senator Elizabeth Warren has sent a letter to the Fed's Inspector General, calling for a formal investigation into Bowman's commissioning of a new review into the collapse of Silicon Valley Bank (SVB).

In her letter to Inspector General Michael Horowitz, Warren noted that two prior independent investigations had already concluded that the deregulatory policies Bowman herself voted for were a significant factor in SVB's failure.

She questioned whether this newly commissioned review constitutes a "fourth rehash of the SVB collapse that wastes government resources," warning that if its purpose is to circumvent or overturn existing conclusions unfavorable to her, it could amount to an abuse of government resources.

The Connection Between Bowman's Policy Stance and SVB Findings

Warren's central allegation in the letter points to the direct link between Bowman's personal policy record and the conclusions of the SVB investigations.

The two prior reviews into SVB's collapse noted that the relevant deregulatory measures weakened oversight of mid-sized banks, allowed risks to build, and ultimately contributed to SVB's sudden collapse in March 2023. Bowman, in her role as a Fed Governor, had voted in favor of those very deregulatory policies.

Warren argues that Bowman may have initiated this new review precisely because her own policy actions were cited in the prior investigations, in an attempt to rewrite the official narrative that is unfavorable to her. She characterizes this as a potential misuse of government resources and calls on the Inspector General to investigate.

Contract Award Process Questioned, Linked to Predecessor

The commissioning of the review has also raised procedural concerns on another front. Warren's letter points out that the advisory contract in question was awarded without a competitive bidding process, raising questions about procedural compliance.

Adding sensitivity to this concern is the fact that the firm awarded the contract has ties to Bowman's predecessor, former Fed Vice Chair for Supervision Randal Quarles. Warren contends that this connection heightens concerns about the fairness and transparency of the contract award and casts doubt on the independence of the entire commissioning process.

In her letter, Warren requests that Inspector General Horowitz launch a comprehensive investigation into both issues: the legitimacy of the review's purpose and the compliance of the contracting procedures.