Federal Reserve Board Chair Janet Yellen on Thursday pledged to ramp up the board's participation in major bank enforcement policy decisions, such as voting to approve critical settlement deals.
"I do think it is appropriate for us to make changes and I fully expect that we will," Yellen told the Senate Banking Committee, in response to questions from Democratic Senator Elizabeth Warren of Massachusetts.
"It is completely appropriate for the board to be fully involved in important decisions."
Earlier this month, Warren and Representative Elijah Cummings of Maryland wrote a letter to Yellen which raised concerns about a hands-off approach from the Fed board when it came to enforcement actions.
According to the letter, which cited statistics provided by Yellen's predecessor Ben Bernanke, the Fed board only voted on 11 of about 1,000 enforcement actions over the last 10 years.
Some of those decisions were made without even needing approval from senior staff, let alone board members, the letter said.
The two lawmakers said they were particularly upset that top Fed officials did not scrutinize a settlement with big mortgage servicers over foreclosure abuses committed in 2009 and 2010.
Warren and Cummings have said they believe the settlement was too lenient.
Initially, regulators had ordered banks including Bank of America and JPMorgan Chase to conduct case-by-case reviews of loan files for borrowers whose homes were seized.
But after that process proved time-consuming and expensive, regulators called off the reviews and instead settled with the banks.
The Federal Reserve's policy for enforcement actions differs from some other federal financial regulators.
At the U.S. Securities and Exchange Commission, enforcement actions must always be approved by a majority of the five-member panel.
(Reporting by Sarah N. Lynch; Editing by Meredith Mazzilli)