Sens. Scott, Warren Unveil US Fed Oversight Bill

Facts

• Following the collapses of Silicon Valley Bank and Signature Bank, US Sens. Rick Scott (R-Fla.) and Elizabeth Warren (D-Mass.) proposed a bill Wednesday to replace the US Federal Reserve's (Fed) internal watchdog with one appointed by the president.¹
• The bill would require an independent inspector general (IG) — appointed by the president and confirmed by the Senate — to oversee both the Federal Reserve Board of Governors and the Consumer Financial Protection Bureau (CFPB).²
• Though the CFPB, which Sen. Warren helped set up during the Obama admin., operates entirely on its own within the Fed system, it's funded by transfers from the Fed.³
• The bipartisan duo says that while the Fed currently does have an IG, it reports to the agency's board, compared to other agencies' IGs who report to an independent auditor.⁴
• Warren, who sits on both the Senate Banking Committee and the Senate Finance Committee, said the bank upheavals "have underscored the urgent need for a truly independent inspector general to hold Fed officials accountable for any lapses or wrongdoing."¹
• This comes as House Financial Services Committee Chairman Rep. Patrick McHenry (R-NC) and the committee's top Democrat, Rep. Maxine Waters of California, have jointly scheduled a March 29 hearing on the banking system.³

Sources: ¹Reuters, ²The Hill, ³Colorado Springs Gazette, and ⁴Washington Examiner.

Narratives

• Narrative A, as provided by Coin Telegraph. The Fed, under both Democrat and Republican leadership, seems to have turned a blind eye to the failures of the banks it's supposed to keep in check. Since March 2020, it has not required these banks to hold depositors' cash, which is a key factor in why the two institutions failed so miserably. This is a bipartisan issue that should be fixed by all elected representatives who care about maintaining a safe and ethical financial system that prioritizes consumer protection. Appointing an independent watchdog is a step in the right direction.
• Narrative B, as provided by CNN. While the Fed isn't faultless in this crisis, there needs to be a focus on the banking executives who carelessly caused panic among investors and depositors, resulting in the subsequent run on the two banks. These executives, who knew they would get bailed out, abruptly told the world that they were short on cash without securing a plan to solve it first. Those responsible for such negligence are the ones who should be held to account.