Republican Rick Scott and Democrat Elizabeth Warren blamed the collapse of the two banks on regulatory missteps by the US central bank, which has so far been working with an internal inspector general reporting to the Fed’s board of directors.
Our bill will address this by creating a Senate-appointed, Senate-appointed Inspector General and an Inspector General at the Federal Reserve, like any other major government agency.”
– he said in a joint statement with Scott Warren.
Warren said this month’s banking turmoil underscores the urgent need for a truly independent inspector general to hold Fed officials accountable for any loopholes or wrongdoing.
The Federal Reserve has no comment on the filing.
The legislation introduced Wednesday would replace the Federal Reserve’s Inspector General with an independent supervisory commissioner who oversees the Federal Reserve and Consumer Financial Protection Bureau (CFPB).
The CFPB, responsible for consumer protection in the financial sector, technically operates within the Federal Reserve System, but is completely independent except for one major factor: It is funded by transfers from the Federal Reserve.
Warren played a major role in founding the CFPB in the aftermath of the 2007-2008 financial crisis under Democratic President Barack Obama. The US Supreme Court agreed last month to hear a case challenging CFPB’s funding structure, which some conservatives say violates the US Constitution.
The collaboration between Scott and Warren, who are usually on opposite ends of the political spectrum, could be the start of a new bipartisan initiative on banking, Reuters reports.
Warren, who is on the left wing of the Democrats, regularly speaks out on financial issues. He sits on both the Senate Banking and Senate Finance Committees and chairs subcommittees for both bodies. Scott, the former Florida governor, is a hardline conservative known for his tough stance on fiscal policy.
The show of bipartisanship stands in stark contrast to the partisan deadlock over the debt ceiling between Republicans and Democratic President Joe Biden, which has stoked concerns in financial markets.
Both Republicans and Democrats have raised the possibility of tighter oversight of banking regulators after the collapse of Silicon Valley Bank and Signature Bank, which was followed by billions of dollars in losses for financial stocks.
House Financial Services Committee Chairman Patrick McHenry, R-North Carolina, and the committee’s top Democrat, Maxine Waters, scheduled a hearing on the banking system for March 29, which officials from the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) will attend. ) will vouch.
Federal Reserve Chairman Jerome Powell said at today’s central bank interest rate meeting that the central bank will also take the initiative to tighten banking supervision rules. According to the central bank governor, the bank’s managers made several mistakes, but he did not explain what happened, as the Federal Reserve is currently conducting an investigation in this regard.
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