Federal Reserve watchdog calls for stronger measures on confidential information sharing

The Federal Reserve’s internal watchdog is pushing the central bank to shore up how it handles confidential supervisory information, warning that current safeguards aren’t robust enough to prevent sensitive data from reaching the wrong people. The target of concern: the 12 regional reserve bank boards, which are populated by private-sector bankers and business leaders who, by design, should never see that information. The information firewall problem Federal Reserve policy already explicitly prohibits Reserve Banks from sharing confidential supervisory information, known as CSI, with any member of their boards of directors. The rule exists for an obvious reason: those boards include Class A directors who are actual bankers, Class B directors representing business interests, and Class C directors drawn from the public. Giving any of them access to nonpublic supervisory data would create textbook conflicts of interest. The OIG has been flagging related vulnerabilities across multiple reports. A June 2023 report zeroed in on Supervision Central, a technical platform used in bank examinations, and found that examiners had excessive access to sensitive personally identifiable informatio...