Banking and Finance Law Daily Wrap Up, OVERSIGHT AND INVESTIGATION—Warren seeks answers on Fed data outage and examiner workforce cuts, (Sep 16, 2026)

By Shashi Kant, B.A. LL.B., LL.M.

The senator asked the Federal Reserve about a reported data outage and pressed bank regulators on examiner cuts.

Senate Banking Committee Ranking Member Elizabeth Warren (D-Mass.) is asking Federal Reserve Board Vice Chair for Supervision Michelle Bowman to explain a reported outage at the Fed’s National Information Center (NIC), questioning whether staffing cuts in the Fed’s Division of Supervision and Regulation affected the ability of information technology (IT) staff to maintain the platform. In a separate letter to Bowman, Comptroller of the Currency Jonathan Gould of the Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation Chairman Travis Hill, Warren requested data on how bank examiner workforce cuts have affected the agencies’ oversight of banks’ technology-focused third-party service providers, including artificial intelligence (AI) vendors. Both letters are dated Sept. 11, 2026, and request answers by Sept, 25, 2026.

Reported NIC outage. Warren wrote that her office received reports of a recent NIC outage. According to the letter, the outage began around Aug. 5, 2026, and lasted at least 48 hours. Warren described the NIC as a critical data platform maintained by the Fed. The letter states that the NIC hosts bank supervisory and financial data, applications that examiners use to carry out supervisory work, and a portal for real-time secure information sharing across regulatory agencies.

Outage response. Warren asked Bowman to confirm whether the outage occurred, when it began, and when it was resolved. She asked what caused the outage and whether it was a previously known IT issue. The letter asks how the Fed became aware of the outage and how much time passed before troubleshooting began. Warren asked whether the Fed has a Recovery Time Objective (RTO) for the NIC. If so, she requested a list of outages in the past two years that exceeded it. The letter also asks how the outage affected the Fed’s bank supervision, discount window, and other functions.

Fed staffing cuts. The letter asks how many IT staff have left the Division of Supervision and Regulation under the 30 percent reduction Bowman announced last year. Warren asked whether any of those employees were responsible for maintaining the NIC. She asked whether the division’s IT office has been reorganized since June 9, 2025, and whether any reorganization played a role in the outage. Warren also asked whether the Fed plans to rehire IT staff. The letter requests organizational charts and employee counts for the division as of Jan. 20, 2025, and Aug. 31, 2026. Warren also requested Bowman’s internal and external communications on the division’s staffing levels from June 9, 2025, to Aug. 31, 2026, including those with former Fed Chair Powell and Chair Warsh.

Third-party service providers. In the second letter, Warren noted that the Bank Service Company Act allows federal banking regulators to examine third-party service providers, such as cloud service providers and AI vendors. Warren wrote that she seeks to understand whether Americans’ sensitive financial data and the operational resilience of the banking system may be at risk because of reductions in the examiner workforce. The letter states that banks rely heavily on third-party vendors for functions such as payment processing, identity verification, fraud detection, and risk management. Warren cited a 2026 survey finding that only 9 percent of financial organizations have fully identified and documented which of their vendors use AI. The letter states that an attack on the vendor SitusAMC exposed the personal data of more than 660,000 banking customers.

Examiner workforce. Warren cited a March 2025 report by the FDIC Office of Inspector General (OIG). According to the letter, that report followed a 9 percent reduction in FDIC examiner headcount. The letter states that the OIG report warned the FDIC may find it difficult to complete statutorily required examinations by the end of 2025. The letter states that an OCC report shows a 12 percent drop in bank examiners from September 2024 to September 2025. Warren also noted that the Fed announced a 30 percent staff reduction in the Division of Supervision and Regulation in 2025. She wrote that examiner cuts across the agencies raise concerns about regulators’ capacity to detect and address emerging risks.

Information requested. Warren asked each agency to report how many examiners were available to conduct IT examinations of banks and third-party service providers as of January 20, 2025, and as of August 31, 2026. She requested a description of each eliminated IT-related examiner position and how its responsibilities are being redistributed. Warren also asked how many providers each agency examined in 2024, from Jan. 20 to Dec. 31, 2025, and from Jan. 1 to Aug. 31, 2026. She requested summaries of key findings and hours spent on those examinations. Warren asked whether each agency’s examiner workforce is sufficient to examine AI vendors and cloud service providers under the Bank Service Company Act. The letter further asks whether each agency has sufficient authority under the act to hold third-party service providers accountable for unsafe and unsound practices or other violations.

Companies: SitusAMC

LegislativeActivity: AINews BankingOperations FederalReserveSystem FinancialIntermediaries OversightInvestigations PrudentialRegulation