US Sen Scott pushes for new Fed inspector general, criticizes Fed over bank regulation
by David Morgan
WASHINGTON (Reuters) – Republican U.S. Senator Rick Scott said on Monday he would introduce legislation to create an independent inspector general to oversee the Federal Reserve, as he called on the U.S. central bank to be “properly regulated” in a letter to the Fed. unable or unwilling”. Chair Jerome Powell.
Scott, a Republican known for his staunchly conservative positions, informed Powell of his plans in a March 20 letter, following the collapse of Silicon Valley Bank and Signature Bank earlier this month by the US central bank. The bank’s ability to oversee the banking system was questioned.
“I am proposing legislation for the Federal Reserve to establish an Inspector General to be appointed by the President and confirmed by the Senate,” Scott told Powell in the letter. “Would you support adding this much-needed level of accountability?”
Scott wrote, “For too long, the Federal Reserve has used its claim of independence to fail Congress and the American people, while being unable or unwilling to properly regulate and supervise large financial institutions.”
There was no immediate reaction from the Fed.
Scott is expected to introduce the legislation later this week, according to an aide.
Republicans and Democrats in Congress have pledged tighter oversight of banking regulators after the collapses of Silicon Valley Bank and Signature Bank, which caused billions of dollars in losses for financial stocks.
The Federal Reserve is responsible for supervising – monitoring, inspecting and investigating – certain financial institutions to ensure that they comply with rules and regulations, and that they operate safely and soundly.
Some lawmakers have singled out the San Francisco Federal Reserve Bank for criticism, including Democratic Senator Elizabeth Warren, who told an interviewer on Sunday that she does not have confidence in the bank’s president, Mary Daley.
The San Francisco Fed was responsible for oversight of Silicon Valley Bank.
Scott’s law stems from concerns in Congress that the current Inspector General of the Federal Reserve is not independent enough to serve as a check on the central bank.
Andrew Levin, an economics professor at Dartmouth and a former Fed official, said that when Congress created the inspector general in the 1970s, the Federal Reserve was a much smaller and less complex entity.
The Fed was assigned an internal IG who reports directly to the Fed board, rather than a completely independent auditor like the Pentagon or other large agencies.
Scott also urged the Fed chief to use the central bank’s policy meeting this week to investigate bank failures and identify Fed personnel accountable.
“The failures and malfeasance of not just these banks, but their regulators, should be at the top of the agenda,” Scott said.
“Before the meeting ends, it is my expectation that you will name the individuals being fired for these failures, and make clear your support for significant accountability measures at both the Federal Reserve and our banks.”
(Reporting by David Morgan and Heather Timmons; Editing by Leslie Adler)