Warren questions Bowman on oversights in Evolve's supervision
Four Democratic senators have sent a letter to Federal Reserve Governor Michelle Bowman demanding an explanation of her role in overseeing Evolve Bank & Trust, following the bankruptcy of Synapse Financial Technologies in April 2024.
The bankruptcy of Synapse, a fintech middleware firm partnered with Evolve Bank & Trust, led to the freezing of about $265 million in customer deposits. Ongoing difficulties in untangling ownership due to poor record-keeping by Synapse, Evolve Bank, and associated fintechs have made it challenging to resolve the issue.
The Consumer Financial Protection Bureau (CFPB) is actively pursuing claims to hold Synapse accountable and potentially provide restitution to affected users through its civil penalty fund, independent of the bankruptcy case itself.
Michelle Bowman serves as the Federal Reserve Vice Chair for Supervision, advocating for regulatory reforms aiming to ease burdens on smaller lenders and improve supervisory ratings. However, there are no current reports of her being implicated or under investigation connected to Synapse or Evolve Bank’s issues.
The senators asked Bowman about the frequency of her meetings with Fed staff to receive information on consumer compliance issues at individual banks and when she was alerted about third-party risk at Evolve or that the lender had "severe recordkeeping issues." They also pressed Bowman on whether she would commission a third-party review to better understand the Fed’s supervisory lapses related to Evolve Bank & Trust.
In addition, the senators asked Bowman how her views on bank-fintech partnerships, including the importance of strong regulatory safeguards and concerns about 'burden', have changed following the Evolve-Synapse catastrophe.
Evolve Bank & Trust underwent a significant transformation following its 2005 acquisition, shifting to a banking-as-a-service model supporting fintech companies.
Recent Federal Reserve discussions and news predominantly focus on Federal Open Market Committee (FOMC) decisions on interest rates, with Bowman notable as a dissenting voice in monetary policy decisions. However, no mention of her involvement in regulatory failings related to Synapse or Evolve Bank has been made.
In other related developments, Evolve notified Synapse of its intent to terminate their partnership in August 2022, noting balance discrepancies of "a couple hundred million" daily by November 2022. Within a week, another fintech that worked with Synapse, Fund That Flip, filed a motion for an examination of Evolve Bank & Trust. A federal grand jury investigation is reportedly underway regarding Evolve's handling of the situation with Synapse.
It is worth noting that Evolve Bank & Trust faced an enforcement action from the Federal Reserve last June over shortcomings in the bank's anti-money laundering, risk management, and consumer compliance programs.
Moreover, two other fintech partners of Evolve Bank & Trust, SoLo Funds and Branch, were sued by the Consumer Financial Protection Bureau for "predatory lending and unlawful deposit account practices," respectively. Staff at both companies were aware of missing funds by early 2023 but didn’t alert customers.
The Chapter 11 trustee in the Synapse bankruptcy case filed the sixteenth Chapter 11 status report seeking dismissal of the case or conversion to Chapter 7. As of August 2025, there is currently no publicly reported investigation specifically targeting Federal Reserve Governor Michelle Bowman regarding her oversight role of Evolve Bank & Trust or Synapse's bankruptcy.
- The senators are inquiring about Michelle Bowman's interactions with Federal Reserve staff regarding consumer compliance issues at Evolve Bank & Trust, specifically concerning third-party risk and severe record-keeping issues at the bank.
- After the Evolve-Synapse catastrophe, Michelle Bowman may have reconsidered her views on bank-fintech partnerships, considering the importance of strong regulatory safeguards and concerns about potential burdens on the industry and fintech businesses.
