Senators Demand Independent Oversight of the Fed

Senators Rick Scott and Elizabeth Warren have renewed their push to establish an independent oversight body for the Federal Reserve, aiming to hold top central bank officials strictly accountable. Both lawmakers urged Fed Chair Jerome Powell to support their bipartisan bill.

Proposal: Presidential Appointment of the Inspector General

The proposed legislation would require that the Fed’s inspector general be appointed by the president and confirmed by the Senate, replacing the current system of internal appointment. “The current framework allows the IG to oversee those who hired him, creating an obvious conflict of interest,” the senators noted.

Criticism of the Fed’s Ethical Management

Scott and Warren consistently criticized former Inspector General Mark Bialek for failing to address corruption and ethical lapses. The legislative proposal, introduced in 2023, aimed to prevent similar regulatory oversights after the collapses of Silicon Valley Bank and Signature Bank.

Allegations Against Powell’s Leadership

“For years, the Federal Reserve has lacked proper accountability under Jay Powell, who ignored questionable practices and ethical conflicts,” Scott stated. Warren, in turn, called for greater transparency after senior central bank officials were revealed to have engaged in stock trading.

Political Tensions with Trump and Fear of Repercussions

The legislative push comes as Powell faces mounting pressure from former President Donald Trump to lower interest rates. While Trump has not explicitly threatened to fire him, such a move could destabilize financial markets and provoke a legal battle.

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Republicans Target Fed’s Lack of Transparency

Criticism of the Fed’s opacity has spread. Republican senators Cynthia Lummis and Rand Paul accused the institution of withholding information from both Congress and the public. They even suggested the possibility of issuing subpoenas to compel the Fed to release key data.

Next Step: Formal Response from the Central Bank

A Federal Reserve spokesperson confirmed receipt of the senators’ letter and said an official response is forthcoming. The future of the reform will depend on legislative backing and the broader political climate surrounding the Fed’s leadership.