POLITICS
11/21/2014 10:14 am ET Updated Jan 21, 2015

Sherrod Brown Criticizes Regulators Over Lax Oversight Of Major Banks, 'Business As Usual'

ASSOCIATED PRESS

By Howard Schneider

WASHINGTON, Nov 21 (Reuters) - A top Democratic senator said on Friday he remains concerned about slack oversight of the largest U.S. banks, and that the New York Fed in particular remains too close to the institutions it regulates.

"Troubling reports suggest that it is back to business as usual at the Federal Reserve Bank of New York," Ohio Democrat Sherrod Brown said as he kicked off a hearing of the Senate Banking Committee.

Recent reports that a former New York Fed employee and current Goldman Sachs employee received confidential information from the Fed reinforced his conclusion that "regulatory capture" remained a concern, Brown said.

"It is no wonder that Wall Street always appears to stay one step ahead of the sheriff."

The hearing was called after a critical series of internal and external reports suggested the New York Fed's oversight of major banks was lax and that supervisors had become too close to the industry they are expected to oversee.

The Fed's Board of Governors on Thursday announced a review of its oversight of large banks, including a specific effort to ensure contrary views about a bank's health are not squelched.

New York Fed President William Dudley, who in testimony released on Thursday said that regulation and oversight of large banks had improved markedly since the 2007-2009 financial crisis, is the main witness at the hearing on Friday. (Reporting by Howard Schneider; Editing by Paul Simao)

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