Vitter, Warren Introduce Fed Accountability Act
Legislation would increase independence and accountability of the Fed Board of Governors
Fact sheet on the bill available here
Washington, D.C. - U.S. Senators David Vitter (R-La.) and Elizabeth Warren (D-Mass.), members of the Senate Banking Committee, today introduced the Fed Accountability Act, legislation to improve the Federal Reserve's decision-making process by increasing independence of individual Governors and bringing transparency to votes on enforcement actions over $1 million. The two Senators are also working on legislation to further halt megabank bailouts during a crisis. Vitter has long championed reforms to end the too big to fail mentality and eliminate bailouts for the megabanks.
"The Fed needs to be independent, transparent and accountable. But under its current structure, the Board of Governors doesn't act with complete autonomy and succumbs to groupthink. If Board members can think for themselves and are held accountable, taxpayers are less likely to be asked to bail out the megabanks," Vitter said. "We recently made huge progress to improve the Federal Reserve by requiring that they have at least one member with Community banking experience. This bill will also help fix the too big to fail groupthink we've seen at the Fed."
"The Fed's Board of Governors is our first line of defense against another financial crisis. Members of the Board should have the resources they need to make their own decisions on important matters, and their decisions on major enforcement matters should be made public. By bringing greater transparency and accountability to the Fed, the bill will improve the Fed's oversight of our biggest financial institutions," Warren said.
The Fed Accountability Act would:
- Create independence for members of the Board of Governors. Members of the Board of Governors currently share a single staff, which operates at the behest of the Fed's Chair. Allowing each member of the Board his or her own staff will give them greater autonomy to conduct their own research and produce their own independent analyses. This reform would put members of the Fed's Board on equal standing with Commissioners of the SEC and FDIC - each of whom has their own independent staff.
- Require a publicly recorded vote by the members of the Board of Governors on the resolution of any enforcement action that includes $1 million or more in payments. Currently, the Board of Governors is not required to vote on whether to enter a settlement or otherwise resolve any enforcement actions - no matter what the size. Requiring a public vote on major enforcement decisions ensures that the politically appointed members of the Board - not their staff - must review enforcement matters carefully before making agreements on behalf of U.S. taxpayers.
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