Senator Elizabeth Warren, the Ranking Member of the U.S. Senate Committee on Banking, Housing and Urban Affairs, published a Wall Street Journal op-ed urging Congress to pursue Federal Reserve reforms focused on transparency, ethics, and oversight, while arguing that attempts to intimidate or fire Federal Reserve Chair Jerome Powell or other Board members would undermine central bank independence without delivering meaningful reform. Her proposals include making the Federal Reserve’s inspector general independent by shifting to a model where the inspector general is nominated by the President and confirmed by the Senate, and directing Congress to write stronger ethics rules and enforcement mechanisms for senior Federal Reserve officials. She also calls for rethinking governance of the 12 regional Reserve Banks, including ending practices she describes as insulating them from congressional oversight, addressing conflicts from large bank executives serving on Reserve Bank boards, and increasing transparency and public input in the selection of Reserve Bank presidents. Warren points to bipartisan bills with Senators Rick Scott and Thom Tillis that she says would implement these changes and more. The op-ed further urges scrutiny of the Federal Reserve’s role in what she characterises as subsidising Wall Street, including market backstops and paying interest on bank reserves and similar payments to shadow banks, and questions the effectiveness of bank supervision and monetary policy based on past episodes cited in the piece. Warren calls on the administration and Congress to pursue legislative action on these reforms this fall.

Original source View in tracker