Policies limiting when examiners can issue warnings and enforcement actions leave banks more vulnerable to escalations in AI and cybersecurity threats, the senator said.

Sen. Elizabeth Warren, D-MA, asked three federal regulators Friday to rescind a pair of updated policies she argues curb bank examiners’ power to issue supervisory warnings and enforcement actions as artificial intelligence tools grow more sophisticated.

Warren, the top Democrat on the Senate Banking Committee, took issue with a September update to the Federal Reserve’s statement of supervisory operating principles. The guidance limits examiners from taking action against a threat unless there is “an abnormal probability of abnormal harm,” Warren asserted, adding that regulators’ hands would be tied if “harm is merely ‘possible,’ if the harm is only ‘material’ but not quite ‘significant,’ or if the severity of the harm is uncertain.”

The senator cited a June survey from the Texas Bankers Association, which found that 76% of surveyed banks saw an increase in cybersecurity attacks over the past year, and that 84% are increasing investments into cybersecurity to address risks associated with AI.

“As advancements in frontier AI increasingly enable bad actors to conduct cyberattacks, the Fed should be strengthening bank examiners’ supervisory tools and their ability to enforce strong cybersecurity standards, not gutting them,” Warren wrote to Michelle Bowman, the central bank’s vice chair for supervision.

, urging the agencies to reconsider an August change to the definition of unsafe and unsound practices, as they relate to the enforcement category known as matters requiring attention.

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