Sens. Rick Scott, R-Fla., and Elizabeth Warren, D-Mass., introduced legislation that would require the Federal Reserve's inspector general to be appointed by the president and confirmed by the Senate, following the recent collapse of Silicon Valley Bank and Signature Bank.
"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," Ms. Warren said in a news release Wednesday.
Mr. Scott also blamed the Fed for recent bank failures in the news release, stating, "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."
Currently, the Fed's inspector general is appointed by the chair of the Federal Reserve Board of Governors. According to the Office of the Inspector General website, the inspector general reports to the Fed Board, the director of the Consumer Financial Protection Bureau and "has an independent reporting responsibility to Congress." The office performs "independent oversight of two federal agencies: the (Fed) Board and the CFPB," the website states.
"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," Mr. Scott said in the news release. "Our legislation fixes that by establishing a presidentially-appointed, Senate-confirmed inspector general at the Fed, like every other major government agency."
Mr. Scott also sent a letter to Federal Reserve Chair Jerome Powell on Monday, blaming the Fed for the recent bank failures and calling for significant reforms.
The senators are not the only ones placing blame on federal regulators for the collapse of SVB and Signature Bank as many members of the Senate Finance Committee did the same at a hearing last week, in which U.S. Treasury Secretary Janet Yellen testified.
Sen. Tim Scott, R-S.C., who also serves as ranking member of the Senate Banking Committee, said at the hearing, "I believe that the state and federal regulators failed to appropriately use the tools they have to supervise and regulate the failed institutions."
The Federal Reserve declined to comment.