Davis Polk partner and Financial Institutions practice head Margaret Tahyar’s testimony before the House Financial Services Committee was quoted in American Banker, the Bank Policy Institute and the National Law Journal.

On April 29, 2025, Margaret testified before the House Financial Services Committee’s Subcommittee on Financial Institutions at a hearing on “Regulatory Overreach: The Price Tag on American Prosperity,” which explored reforms to increase accountability in bank supervision and enhance interagency coordination.

American Banker highlighted an exchange between House Financial Services Committee Chair French Hill and Margaret. Chairman Hill asked if the FDIC’s appeals process lacked independence and contained inadequate oversight. Margaret responded, “The appeals process is clearly broken.”

She said that while “many examiners do a great job,” the internal appeals process is flawed because it involves senior personnel overseeing disputes rather than a neutral oversight body. “Appeals should be rare but fair,” she added.

The Bank Policy Institute noted another exchange between Chairman Hill and Margaret. He asked, “Would you agree that tailoring regulations for well managed institutions already exists in law, and it’s just not being implemented by our supervisors?” She answered, “Yes, I agree it does exist in the law from the previous act, but we don’t know how it is being implemented by supervisors in practice because of the culture of secrecy, but based on the anecdotal evidence, I think it is being inconsistently implemented.”  

Another moment highlighted by the Bank Policy Institute was a question by Representative Blake Moore, who asked, “Do you think there’s a credible, objective way to measure reputational risk, or is [it] inherently just too subjective to remain part of the supervisory framework?” Margaret said, “It’s inherently too subjective. It’s new. Let’s remember how new it is. It didn’t exist 20 years ago. Doesn’t add anything to existing risks. For example, Bank Secrecy Act, anti-money laundering, terrorist financing, they’re all already covered. And I just think experience has shown that it cannot be objectively supervised or managed.” 

Both the Bank Policy Institute and the National Law Journal highlighted Margaret’s warning about secrecy within the examination process. The National Law Journal quoted her, testifying that a “culture of secrecy” exists among banking agencies that makes it hard to know whether or how the law is being implemented. “In my view, the executive branch and the agencies should not wait for Congress to act but should start their own process of reform now,” she said.

The Bank Policy Institute quoted her testimony, saying, “There are many unknowns in supervision. Is it effective? Does it work? In business as usual or in troubled times? We actually don’t know. That is because it’s not transparent. Why isn’t it more transparent? I’m not suggesting body cams on examiners, but there are some things that could be done that are relatively easy. One is to release very old exam reports, 35 years or more, where nobody was at the bank or at the agencies is still working. Another is to release more consistent anonymized aggregate data that will allow an examination into whether exams are consistent and fair across banks or models and whether tailoring works. Another is to reform the appeals process, which is broken. As Secretary Bessent recently said, it’s more theoretical than real. In a 13-year period at the FDIC, there were 50 appeals to over 100,000 exams, and I don’t think anybody’s that perfect. There were very few wins last year. Banks were one to 17.” 

“GOP lawmakers mull eliminating ‘management’ from CAMELS,” American Banker (April 29, 2025) (subscription required)

“10 Takeaways from the House Hearing on Regulatory Overreach,” Bank Policy Institute (April 29, 2025)

“Republicans Slam ‘One-Size-Fits-All’ Banking Regs, Promote Deregulation,” National Law Journal (April 29, 2025) (subscription required)

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