At Nomination Hearing, Warren Presses Acting FDIC Chairman Hill for Answers on Workplace Culture, Slams Cuts to Bank Examiners and Wall Street Giveaways

At Nomination Hearing, Warren Presses Acting FDIC Chairman Hill for Answers on Workplace Culture, Slams Cuts to Bank Examiners and Wall Street Giveaways

"The FDIC has yet to respond to my requests for information (on workplace culture). I expect answers to these important questions before we vote on your nomination."

"You're not just cutting exam staff. That's bad enough. But you're also weakening the regulatory safeguards"

Watch Hearing Here

Washington, D.C. - Today, U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, gave opening remarks at a nomination hearing for four Trump Administration nominees: Paul Hollis, to be Director of the Mint, Department of the Treasury; Joseph Gormley, to be President of the Government National Mortgage Association, Department of Housing and Urban Development (HUD); Francis Cassidy, to be Federal Housing Administration (FHA) Commissioner, HUD; and Travis Hill, to be Chairperson of the Board of Directors, Federal Deposit Insurance Corporation (FDIC).

At the hearing, Ranking Member Warren pressed Hill for answers on how he is working to improve the FDIC's workplace culture and questioned him on cuts to bank examiners and weakened regulatory safeguards.

Below is the transcript of Ranking Member Warren's opening remarks and questioning:

Opening Remarks

Ranking Member Warren: Thank you, Mr. Chairman. So, let's take stock of where we are today:

The federal government has been shut down for 30 days because of President Trump's refusal to negotiate so that millions of families do not lose their health care.

As a candidate for President, Donald Trump promised to lower costs for American families "On Day One." It is now Day 283. The price of groceries is up. The price of utilities is up. The price of housing is up. And Republicans are pushing the price of health care through the stratosphere.

We should be focusing on rising costs for American families, but instead we're meeting today to consider another slate of President Trump's nominees, who I fear will do nothing more than rubber stamp Trump's agenda.

My concerns are not political. My concerns are substantive. Mr. Gormley and Mr. Cassidy have been nominated to lead critical parts of the nation's housing finance system. At a time when the Trump Administration is proposing to upend the housing finance market, we need mortgage regulators who are committed to the best interests of America's homebuyers. But in their current positions at these agencies, these two nominees have advanced policies that increase costs and dismantle protections for American families.

Mr. Hollis has been nominated to lead the Mint at a time when the President is cosplaying king and seeking to put his face on a $1 coin.

I have questions about these nominees' willingness to follow the law, and I will have extensive questions for the record for each of them.

I also have a very serious concern about Mr. Hill. Mr. Hill, who has served as Acting Chairman of the FDIC since January, has now been nominated to a full term. The job of the FDIC chair is to ensure the safety and soundness of the banking system - and Mr. Hill has done nothing, nothing, but relax oversight of the giant banks - and we all know where that leads. It puts taxpayers, the economy, and the financial system at risk.

I also have questions about Mr. Hill's commitment to improving the FDIC workplace culture. In 2023, public reporting shed light on serious allegations of long-standing sexual harassment, discrimination, and other misconduct at the FDIC spanning decades. An outside review validated many of these problems.

When the former FDIC Chair Marty Gruenberg appeared in front of this Committee last year, I was clear that it was his responsibility to fix this and called on him to implement all of the independent review's recommendations.

Now, that is the responsibility of Mr. Hill.

Mr. Hill was a senior FDIC executive from 2019 to 2022, serving under Chairman Jelena McWilliams, prior to her sudden resignation amidst a Department of Justice inquiry. According to public records, this was a time when the toxic culture flourished, but there is no record - none at all - of Mr. Hill or Chairman McWilliams addressing these pervasive issues before they came to light in 2023.

Now in 2024, under the Biden Administration, the FDIC Board initiated a series of efforts to improve the agency's culture, including establishing a new Office of Professional Conduct. The Board, including Mr. Hill, was very active in monitoring the transformation efforts. Mr. Hill at that time called it a top priority of the Board.

But Mr. Hill has said little on this issue after becoming Acting Chair of the FDIC. And the FDIC has yet to respond to my requests for information. I expect answers to these important questions before we vote on your nomination. The public deserves to know what progress has been made to improve FDIC's culture - and whether your interest in doing so is genuine or only exists as part of an effort to stymie the agency's work when there's a Democrat as president.

Now, there was supposed to be a fifth nominee in front of us today. Mr. Bryce McFerran, President Trump's nominee to be EXIM's First Vice President and the Vice Chair of its board, withdrew his nomination to be EXIM's First Vice President and the Vice Chair of its board after I raised concerns about his ties to a U.K.-sanctioned Russian company. But let me be very clear - withdrawing the nomination is not enough. Mr. McFerran should resign from his current position at EXIM. He simply should not be there.

Thank you, Mr. Chairman. I yield back.

Transcript of Ranking Member Warren's questioning

Ranking Member Warren: Thank you, Mr. Chairman. So, Mr. Chairman, I'm going to take up exactly what you said - and that is what has changed since Mr. Hill was unanimously approved by the Banking Committee. So, I want to talk about what's happened during the time that he has been at the FDIC.

So, Acting Chairman Hill, you served as the FDIC's Policy Director from 2019-2022. During your tenure, the FDIC weakened key big bank safeguards, which led to the 2nd, 3rd, and 4th largest bank failures in American history.

Now in addition to deregulation, another clear cause of these failures was weak supervision, including an understaffed bank examiner workforce at the FDIC. After Signature Bank's failure, the FDIC's Chief Risk Officer found "frequent vacancies and continuous turnover" on the FDIC's exam team for Signature and, more broadly, that an average of 40% of big bank exam positions in the FDIC's New York office had been vacant or filled by temporary staff in the years prior. The FDIC Inspector General cited similar staffing challenges in its review as one direct cause of the bank's collapse.

So, Acting Chairman Hill, since you became Acting Chairman in January, have you increased or decreased the number of bank examiners at the FDIC?

Acting Chairman Hill: Senator, I would disagree with a number of the comments that you made there. I don't think it's true that-

Warren: Well I'm not, look, I'm just quoting the FDIC's own Inspector General that makes an independent evaluation here. So, have you increased or decreased the number of bank examiners?

Hill: So, as part of our workforce reduction plan that we did earlier this year, we went through a very thoughtful process, and we evaluated what the proper number-

Warren: I'm not asking you for your process. Have you increased it or decreased it?

Hill: So, with respect to safety and soundness examiners, that was an area where we generally preserved. So, we did not make any affirmative cuts to the-

Warren: Did you increase or decrease the number of exam officers?

Hill: Yeah. So, the total number of examiners, we made small decreases on the safety and soundness side. And that was essentially eliminating certain-

Warren: Okay. So, the answer is decreased. In addition to that, in January, you rescinded at least 200 job offers to bank examiners. Then, you reportedly cut the FDIC workforce by 20%, roughly 1,250 positions, in response to DOGE. Now, you refused to provide this Committee with a breakdown of the staff reductions when my office requested them last April.

So, you don't get to come in here now and say, "Oh, I didn't cut any of the people you would care about." If you weren't cutting any of the people I cared about, you should have told me that last April.

Look, you're not just cutting exam staff. That's bad enough. But you're also weakening the regulatory safeguards - again. You recently supported a proposal that would reduce the capital cushions at megabanks by 27%, or $200 billion, and reduce their capacity to lend to businesses and households by over $2.5 trillion.

Don't take my word for it. Former FDIC Chair Sheila Bair and Vice Chair Tom Hoenig - both Republicans - said this rule would "make bank failures and risk of bailouts more likely, increasing risks to the Deposit Insurance Fund as well as the banks and US taxpayers who back it."

Acting Chairman Hill, do you agree with the former Republican Chair and Republican Vice Chair of the FDIC that this Wall Street giveaway would decrease lending to Main Street and increase the risk of bank failures, bailouts, and ultimately losses to the Deposit Insurance Fund?

Hill: I would strongly disagree with that. The capital impact in aggregate at the parent company is less than 2%. The intent behind it is to return the leverage ratio to backstop-

Warren: This is a 27% reduction-

Hill: That's not at the parent company-

Warren: Even if the FDIC admitted that the rule could increase these risks, buried deep in the proposal of the agency, it says, "a reduction in required capital increases the size and likelihood of losses shifting from shareholders to creditors" - that means depositors - "and the Deposit Insurance Fund in the event of a failure. Such losses may lead to additional spillovers and costs." In other words - your own report - more bank failures and more taxpayer bailouts.

I want to hit a third point on this-

Hill: That's one in a long list of considerations-

Warren: You're also making it easier for criminals to exploit the financial system. Recent reporting has revealed how the biggest banks helped enable Jeffrey Epstein's crimes. It wasn't until Epstein was arrested in 2019 that JPMorgan finally reported nearly 5,000 - I'm sorry, I'm over time - suspicious transactions. I will do a question for the record to understand how you are taking away the tool to investigate the other Jeffrey Epsteins out there.

Thank you, Mr. Chairman. I apologize for going over.

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