Republican Sen. Rick Scott of Florida and Democratic Sen. Elizabeth Warren of Massachusetts rolled out a bill on Wednesday that would provide the Federal Reserve with a presidentially appointed and Senate-confirmed inspector general.
“Following this month’s shocking failures of Silicon Valley Bank (SVB)
SIVB,
and Signature Bank
SBNY,
and the Federal Reserve’s gross mismanagement and lack of oversight to prevent the situation, this bill will bring the serious changes and accountability at the Federal Reserve that [are] clearly overdue and necessary to protect American families and workers,” the two senators said in a statement.
The move by Scott and Warren is a fresh sign of how the Fed is drawing flak from both Democrats and Republicans over its handling of a banking crisis, high inflation and other issues.
The U.S. central bank on Wednesday raised interest rates again and signaled at least one more hike this year, but SVB’s failure also forced it to adopt a more cautious strategy despite stubbornly high inflation.
See: Fed hikes interest rates again, pencils in just one more rate rise this year
Also: Fed says inflation won’t fall as quickly as expected
The Fed is facing heightened and legitimate scrutiny at the moment, said a former Obama Treasury Department official, Kim Wallace, during a lMarketWatch interview that was broadcast live on Wednesday.
But there is a “low probability for legislation this year,” according to Wallace, who now is head of Washington policy research and senior managing director at 22V Research.
“Absent legislation, it’s very difficult to imagine that the heat the Fed may be feeling now actually gains traction and is a follow-on to making statutory changes,” he said. “But the process of scrutiny can certainly affect people’s behavior and internal systems, and my expectation is we’ll see a lot of that.”
Read more: Fed is facing ‘heat,’ but Congress won’t deliver an overhaul for central bank, analyst says
DJIA,
closed sharply lower on Wednesday, as traders tracked comments from Fed chief Jerome Powell and Treasury Secretary Janet Yellen got some blame for an afternoon selloff. Testifying before a Senate panel, Yellen said “blanket” deposit insurance isn’t something her department is considering.
