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Bipartisan Bill Would Create Independent Inspector General For Federal Reserve

 |  March 22, 2023

A bipartisan bill aims to create an independent inspector general to oversee the Federal Reserve.

Introduced Wednesday (March 22) by Sens. Rick Scott and Elizabeth Warren, the bill would require an inspector general appointed by the president and confirmed by the Senate, according to a Wednesday press release.

“After the Federal Reserve’s failure to properly identify and prevent the shocking failures of Silicon Valley Bank and Signature Bank, it’s clear we can’t wait any longer for big change at the Fed,” Scott said in the release. “It’s outrageous that the Federal Reserve, the world’s largest and most powerful central bank, does not have a truly independent inspector general to investigate it — an independent authority to fight for the transparency and accountability our citizens need.”

Scott added in the release that more than 30 federal agencies have such an inspector general.

Reached by PYMNTS, a spokesperson for the Federal Reserve said the agency had no comment on the proposed bill.

Read more: FTC Urges Federal Reserve Board To Require Debit Card Gatekeepers To Compete

Bloomberg reported Wednesday that the Fed has an inspector general appointed by the chair of the Board of Governors and that a spokesperson for the inspector general’s office said that role provides robust oversight.

Warren said in the release: “The recent bank collapses and regulatory failures by the Fed have underscored the urgent need for a truly independent inspector general to hold Fed officials accountable for any lapses or wrongdoing. Last year, during the largest ethics scandal in the history of the Federal Reserve system, I led a bipartisan bill to bolster accountability at the Fed, and I appreciate Senator Scott’s work to advance this effort.”

After the recent collapse of two banks and one self-liquidation, calls are growing both for a tightening of bank regulations, and investigations into executives at the helm of the failed institutions: Silicon Valley Bank and Signature Bank.

In the House of Representatives, a bipartisan hearing on the failures of the banks is on the calendar.

Rep. Patrick McHenry, who chairs the House Financial Services Committee, and Rep. Maxine Waters, the committee’s ranking Democrat, said in a Friday (March 17) press release: “This hearing will allow us to begin to understand why and how these banks failed.”