Senators Call for Independent Oversight of Fed

Federal Reserve Chairman Jerome Powell speaks at lectern

Alex Wong / Getty Images

Key Takeaways

  • Republican Sen. Rick Scott joined with Democratic Sen. Elizabeth Warren to introduce legislation that would step up oversight of the Fed following recent bank failures.
  • The bill would require presidential appointment and Senate confirmation for the inspector general of the Fed's Board of Governors.
  • Under present rules, the board itself fills this position, and current Inspector General Mark Bialek has been in the role for nearly 12 years.

Two U.S. Senators called for a shakeup in the oversight of the Federal Reserve following the failure of Silicon Valley Bank and Signature Bank, and Fed Chair Jerome Powell promised to find out what the central bank did wrong leading up to their collapse.

Republican Sen. Rick Scott of Florida and Democratic Sen. Elizabeth Warren of Massachusetts introduced legislation that would have the president appoint and the Senate confirm the Inspector General of the Fed’s Board of Governors. Currently, the person holding that position is selected by the board. The current Inspector General is Mark Bialek, who has held the post for almost 12 years. 

Scott argued that after the Fed's "failure to properly identify and prevent" the collapse of the two banks, "we can't wait any longer for a big change" at the central bank. Warren said that the "regulatory failures" by the Fed have underscored the need for an independent Inspector General "to hold Fed officials accountable for any lapses in wrongdoing."

Powell Comments

Last week, Powell announced the Fed would be conducting an internal review of its supervision and regulation of Silicon Valley Bank, to be led by Vice Chair for Supervision Michael Barr. Powell explained today that he “realized right away” that there would be a need for a review. He added that the first question everyone was asking after that weekend was, "How did this happen?"

He added his goal was to find out what went wrong, and "then make an assessment of what are the right policies to put in place so it doesn’t happen again, and then implement those policies." The findings of Barr's investigation are to be released to the public on May 1.

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  1. Rick Scott. "Unnumbered Senate Bill."

  2. Rick Scott. "Sens. Rick Scott and Elizabeth Warren Lead Legislation to Establish Independent IG Oversight at the Federal Reserve."

  3. Board of Governors of the Federal Reserve System. "Federal Reserve Board Announces That Vice Chair for Supervision Michael S. Barr Is Leading a Review of the Supervision and Regulation of Silicon Valley Bank, in Light of Its Failure."

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