Two senators have proposed creating an independent watchdog to monitor the Federal Reserve.
Senators
Rick Scott (R-FL) and Elizabeth Warren (D-MA) argue that the recent
collapse of Silicon Valley Bank (SVB) and Signature Bank was caused by
regulatory failures at the Fed, and claim that establishing an
independent inspector general would help to prevent future bank
failures.
- Under the bill, the current
Fed inspector general — who is only accountable to the Federal Reserve
Board — would be replaced by an independent inspector general who would
oversee the Fed and the Consumer Financial Protection Bureau (CFPB).
- The president would nominate the inspector general but the senate would have to endorse the nominee.
- Scott said that "every other major federal agency" has a similar independent watchdog.
- Warren
said that the collapse of SVB and Signature Bank showed the "urgent
need" for a watchdog that can "hold Fed officials accountable for any
lapses or wrongdoing."
- The
unlikely alliance between Scott, an avowed conservative and fiscal hawk,
and Warren was likely spurred by the recent bank failures.
- Banking
lobbyist and former House Financial Services Committee staffer Chris
Brown said: "We may end up in one of those strange-bedfellows
situations."
- Warren played a key role in the creation of the CFPB during the Obama administration following the 2007-2008 financial crisis.
