Banking and Finance Law Daily Wrap Up, FEDERAL RESERVE SYSTEM—Senate Democrats raise concerns over Fed’s Division of Supervision and Regulation, (Feb 20, 2026)
Organizations Mentioned:Silicon Valley Bank | Starling Trust Sciences
The senators sent two letters to the Fed’s Vice Chair for Supervision seeking information regarding reports on the removal of bank examiners and a new external examination of the SVB collapse.
Senate Democrats, led by Sen. Elizabeth Warren (D-Mass.), have written to Federal Reserve Board Vice Chair for Supervision Michelle Bowman requesting information regarding a report that bank examiners were removed after complaints were lodged by bank executives. The senators additionally questioned Bowman on the reported hiring of an external consulting firm to review the Silicon Valley Bank (SVB) failure.
Bank examination and supervision. In a letter to Bowman, the senators cited a Jan. 25, 2026, Wall Street Journal article reporting that Bowman “may have removed some of the Federal Reserve’s bank examiners from their roles after bank executives lodged complaints with [her] directly.” The senators characterized the report as “troubling” stating that “[i]f the reporting is accurate, your decision to remove bank examiners at the request of banks themselves would be highly inappropriate and would create a chilling effect across the entire bank examiner workforce.”
The letter also highlighted previously reported plans by the Fed to reduce its bank supervision staff by 30 percent (see Banking and Finance Law Daily, Oct. 31, 2025) as well as revisions to the bank supervision process. “This is a toxic mix of actions that leaves our banking system vulnerable to more bailouts and financial crashes,” the senators warned.
The letter requested Bowman provide information as to whether she ever removed a bank examiner based on a bank submitted complaint as well as her working relationship with staff. Senators Ruben Gallego (D-Ariz.), Chris Van Hollen (D-Md.), Jack Reed (D-R.I.), Andy Kim (D-N.J.), and Angela Alsobrooks (D-Md.) joined Warren and Abrego in the letter.
SVB. A separate letter likewise referenced a Wall Street Journal report that Bowman “recently hired Starling Trust Sciences (STS) to ‘conduct a fresh review of the 2023 failure of Silicon Valley Bank.’” The senators cited a 2023 Fed review of SVB’s supervision and regulation that, among other things, found the Fed’s “tailoring approach in response to the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) and a shift in the stance of supervisory policy impeded effective supervision by reducing standards, increasing complexity, and promoting a less assertive supervisory approach” (see Banking and Finance Law Daily, Apr. 28, 2023). According to the senators, “[t]he review concluded that the deregulatory changes during the first Trump Administration ‘combined to create a weaker regulatory framework for a firm like SVBFG.” The letter added that a Material Loss Review conducted by the Fed’s Office of Inspector General (see Banking and Finance Law Daily, Sept. 29, 2023) “similarly found that the Fed’s 2019 deregulatory tailoring rule was one of the key reasons why the Fed’s ‘supervisory approach for SVB did not keep pace with SVB’s growth and complexity.’”
Emphasizing Bowman’s support of the Fed’s tailoring rule and the SVB review finding that “deregulation was a key contributing factor” to SVB’s demise, the senators claimed Bowman “appear[s] to want a do-over on the investigation.” The letter requested Bowman to provide answers to several questions and documentation regarding the need for a new SVB review and STS’ engagement. Senators Bernie Sanders (I-Vt.) and Richard Blumenthal (D-Conn.) joined Warren in the letter.
Companies: Silicon Valley Bank; Starling Trust Sciences
LegislativeActivity: BankingOperations FederalReserveSystem FinancialStability PrudentialRegulation OversightInvestigations Receiverships