As the Federal Reserve Bank of New York faced criticism for missing a multibillion-dollar trading loss at JPMorgan Chase, the regulator convened a town hall meeting in May to bolster employee morale.
Two months later, the New York Fed staff huddled again, after lawmakers questioned why the regulator had failed to rein in banks that manipulated key interest rates.
“We were told to keep our heads down and stay focused,” said one person present at the July meeting who requested anonymity because the gathering was not public.
The New York Fed, whose weaknesses were first exposed when the financial crisis hit, is undergoing a new trial by fire as it grapples with how to police Wall Street. While the regulator has revamped its approach to overseeing the nation’s biggest banks since the crisis, recent black eyes suggest that fundamental problems persist.
Lawmakers will most likely focus on the record of the New York Fed when Timothy F. Geithner, the regulator’s former president, testifies on Wednesday before the House Financial Services Committee. Mr. Geithner, now the Treasury secretary, will appear before a Senate panel on Thursday.