At Hearing, Warren Highlights Christy Goldsmith Romero’s Decades of Experience As a Financial Regulator, Preventing Bank Crises, and Cleaning Up After Failed Banks
Washington, D.C. – At a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, U.S. Senator Elizabeth Warren (D-Mass.) highlighted Christy Goldsmith Romero, Commissioner of the Commodity Futures Trading Commission and nominee to Chair the Federal Deposit Insurance Corporation (FDIC), and her decades of experience as a financial regulator, crucial for preventing bank crises and cleaning up after failed banks.
Commissioner Goldsmith Romero served for a decade as the Special Inspector General for TARP (SIGTARP). She explained that the bank supervisory privilege she held was identical to the privilege held by a bank examiner—but that the scope of her investigations afforded her more time to determine the cause of a failure and hold bankers accountable when necessary. Commissioner Goldsmith Romero’s work at SIGTARP helped return $29 to the American people for every $1 spent by her office. Throughout her tenure, she worked with over 700 banks to understand the health, condition, and risk faced by those banks.
Ms. Goldsmith Romero also highlighted the need for the FDIC to establish an environment where employees are treated with dignity, professionalism, and respect.
Transcript: Nomination Hearing to Consider the Nominations of Christy Goldsmith Romero, to be Chair of the FDIC; Caroline A. Crenshaw, to the SEC Commission; Kristin N. Johnson, to be Assistant Secretary of the Treasury; and Mr. Gordon I. Ito, to be a Member of the Financial Stability Oversight Council.
U.S. Senate Committee on Banking, Housing, and Urban Affairs
July 11, 2024
Senator Elizabeth Warren: Thank you, Mr. Chairman. And congratulations to all of our nominees today.
So, Commissioner Goldsmith Romero, your job would involve not only preventing bank crises but also cleaning up after them when the banks fail. You have had decades of experience as a financial regulator including getting up close and personal with teetering banks during your tenure as head of SIGTARP. In the fallout from the 2008 financial crisis, Congress created a $700 billion fund called the Troubled Asset Relief Program, or TARP. It was designed to stabilize the financial system and you led the oversight of that huge fund for a decade.
You also managed SIGTARP’s $45 million operating budget and its hundreds of staff. By all accounts you did so with incredible success, recovering over $11 billion to the American people. In fact, I understand that for every dollar your office spent, the American taxpayer got a $29 return. That is pretty good.
Commissioner Goldsmith Romero, your work required you to review the quality of bank assets, confidential examination reports, management processes, and compliance with federal regulations. How does that compare with the kind of work a bank examiner does at the OCC, the FDIC, or the Federal Reserve?
Christy Goldsmith Romero, CFTC Commissioner: It is very similar, Senator. I appreciate that question. We would go in just like a bank examiner goes in. Sometimes we’d grab the operating system and go through the banks. We look at what led up to the call reports. We’d trend out the call reports, and we see changes in CAMELs ratings. We would go deep into these banks. The difference is we often had more time to look at these. We dealt with a lot of failed banks, troubled banks. We would determine the cause of the failure. And then, when we would determine the cause of the failure, if we could hold some bankers accountable for that, we would seek reimbursement to the FDIC for losses to the Deposit Insurance Fund – that’s harder for bank examiners to do this. And we had a higher standard we had to prove in doing our work.
Senator Warren: And that is where your $29 to one dollar invested came from, holding these folks accountable?
Ms. Goldsmith Romero: This is how we got our great return on investment.
Senator Warren: Good. This seems like pretty useful experience for the person named to lead the agency in charge of dealing with failed banks. In fact, I can’t think of better experience. The last Republican who was named to head the FDIC had no experience dealing with failed banks. Ms. Goldsmith Romero, you ran SIGTARP at a time of extraordinary upheaval in the banking industry. Can you estimate how many troubled banks you dealt with?
Ms. Goldsmith Romero: Hundreds. There were more than 700 banks in TARP. We were constantly working with them trying to understand their health and their condition and the risk they faced. And then we investigated and went very deep into triple digits.
Senator Warren: So, you spent years digging through the guts of troubled banks and compliance with banking and securities laws. You kept some open, others you ended up closing. And that experience is pretty much spot on for someone to lead the agency in charge of monitoring the banks and cleaning up the ones that have failed. Commissioner Goldsmith Romero, we know there are issues at the FDIC. During your time at SIGTARP, there were workplace complaints filed. Should that be a red flag that you are not a successful manager?
Ms. Goldsmith Romero: No, Senator.
You want to have a process that people feel safe using and that they actually do use and are not fearful of. That does not exist at the FDIC. You also want to look at the results. In 11 years, we had only one finding against us in my tenure, and I took it seriously and addressed it. Ultimately, what you want is to set up an environment of high dignity, professionalism, respect, where employees feel supported and valued so they will give 110% and that is how we got such great results at SIGTARP.
Senator Warren: I very much appreciate that you've thought through these issues and actually have extensive experience with it. These are critically important economic positions that the nominees before us are eminently qualified to fill. I’m sorry I don’t have time to talk with everyone but I appreciate your work.
Thank you, Mr. Chairman.
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