Fed Reviews Bank Supervision as Senate Panel Begins Hearings

On the eve of a Senate hearing today into whether the Federal Reserve has been “captured” by the institutions it is supposed to regulate, the Fed announced a broad review of its supervision of the largest banks, and a top official acknowledged there’s a danger that examiners could be too easy on them.

“We understand the risks of doing our job poorly and of becoming too close” to banks, New York Fed President William C. Dudley said in testimony to a Senate panel. “We cannot catch or correct every error by a financial institution, and we sometimes make mistakes.”