Head of New York Fed on defensive as Senate Democrats say regulators too close to big banks

MarketsAssociated Press

The head of the New York Federal Reserve was put on the defensive by Senate Democrats, who accused the Fed of being too close to the big banks it is charged with regulating.

William Dudley, president of the New York Fed, insisted at a Senate hearing Friday that "our eyes are open" and regulators are fair and rigorous in their oversight of the biggest U.S. banks.

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A 2009 report found that the New York Fed's culture stifled dissenting views among its bank supervisors.

"Of course we are not perfect, but we always strive to improve and retain your trust," Dudley said.

Democratic critics say the Fed's lax regulation of Wall Street banks could end up putting taxpayers on the hook again to bail them out as in the financial crisis.