March 31, 2023

Senators Warren, Tillis Lead Bipartisan Group of Senators to Advance Federal Reserve Accountability

Legislation would subject regional Federal Reserve Banks to FOIA, require financial regulators to provide ethics-related information to Congress, and make the Fed IG a Senate-confirmed position.

Bill Text (PDF)

Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.) and Thom Tillis (R-N.C.) led a group of Senators to introduce the Financial Regulators Transparency Act – bipartisan legislation that would subject regional Federal Reserve Banks to the Freedom of Information Act (FOIA) and ensure their responsiveness to congressional and public information requests. It would additionally align the Fed with other large agencies by making its Inspector General a presidential appointee and prohibit all financial regulatory agencies from denying congressional requests for ethics-related information. 

The legislation would also provide select members of the Senate Committee on Banking, Housing, and Urban Affairs (BHUA) and the House Financial Services Committee with the right to request supervisory information from the Federal Reserve. Together, these reforms would strengthen congressional oversight of the Fed and other financial regulatory agencies, while still explicitly maintaining the Federal Reserve’s independence on monetary policy issues.

“More and more lawmakers are troubled by the Fed's key role in the recent bank failures, and this bipartisan bill underscores the momentum in Congress for enhanced transparency measures to hold Fed officials accountable for their actions,” said Senator Warren. “After the largest ethics scandal in the history of the Federal Reserve System and now a failed multibillion dollar bank under its watch, the Fed cannot ignore congressional oversight and stonewall the American people.”

“Congress must have a clear understanding of what regulatory and supervisory failures occurred to allow the collapse of both Silicon Valley Bank (SVB) and Signature Bank,” said Senator Tillis. “It is clear to me the Fed made mistakes and greater transparency is needed to determine what went wrong so we can ensure that it doesn’t happen again. I’m proud to introduce this bipartisan legislation, which advances Federal Reserve transparency and accountability, while still maintaining crucial Fed independence over monetary policy decisions.”

Senators Warren and Tillis were joined by Senators Mike Rounds (R-S.D.), Kyrsten Sinema (I-Ariz.), Bill Hagerty (R-Tenn.), Richard Blumenthal (D-Conn.), Cynthis Lummis (R-Wyo.), Ted Cruz (R-Texas), and J.D. Vance (R-Ohio).

Specifically, the Financial Regulators Transparency Act would strengthen transparency and accountability at the Fed and other financial regulatory agencies through three categories of reforms: 

Federal Reserve Regional Bank Reforms

  1. Subjects the regional Federal Reserve Banks to FOIA and Federal Records Act (recordkeeping law), as they are not currently subject to these laws.
  2. Provides all members of Congress the same ability to obtain information from the Fed regional banks that congressional committee chairs currently have to obtain info from other federal agencies, with some exceptions.
  3. Forbids Fed regional banks from withholding info requested by a member of Congress under FOIA on the grounds that the info is privileged pursuant to a common law privilege.
  4. Provides that Fed regional banks must prioritize FOIA requests made by a member of Congress.
  5. Prevents Fed regional banks from charging a member of Congress fees to process their FOIA request.
  6. Gives a member of Congress who has filed a FOIA request standing to bring a federal lawsuit against Fed regional banks to petition the court to order them to produce any record improperly withheld.

Financial Regulator Reforms

  1. Provides all members of Congress the same ability to obtain ethics-related information from financial regulators that congressional committee chairs currently have to obtain information from the financial regulators: the Fed Board and Reserve Banks, CFPB, SEC, FDIC, OCC, NCUA, and FHFA.
  2. Forbids financial regulators from withholding info requested by a member of Congress under FOIA on the grounds that the info is privileged pursuant to a common law privilege.
  3. Provides that financial regulators must prioritize FOIA requests made by a member of Congress.
  4. Prevents financial regulators from charging a member of Congress fees to process their FOIA request.
  5. Gives a member of Congress who has filed a FOIA request standing to bring a federal lawsuit against financial regulators to petition the court to order them to produce any record improperly withheld.

Federal Reserve Inspector General (IG) Reforms

  1. Makes the Fed IG a presidentially appointed and Senate-confirmed position.
  2. Clarifies that the Fed IG does not need the permission of a Fed regional bank in order to conduct oversight of a Fed regional bank.

Senator Warren has long championed stronger ethics rules that prohibit government officials from holding or trading stock that may be influenced by their agency, department, or actions:

  • In December 2022, Senator Warren and then-Senator Pat Toomey (R-Pa.) previously introduced the bipartisan Financial Regulators Transparency Act, legislation that would strengthen Federal Reserve accountability and ensure that no financial regulator can withhold critical ethics-related information from Congress.
  • Senator Warren has previously sent letters to Chair Powell on November 7, 2022, August 11, 2022, January 10, 2022, December 7, 2021, and October 21, 2021, and requested that the Fed publicly release additional information about its trading scandal, but the Fed has failed to adequately respond. 
  • In October 2022, Senator Warren called out Atlanta Fed President Raphael Bostic for his “alarming failure” to disclose financial transactions, which speaks to “further evidence of the depth of the ethics problem at the Fed.”
  • In May 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs (BHUA) Committee, Senator Warren announced that she had secured strong ethics commitments from Michael Barr, President Biden’s nominee to be Federal Reserve Vice Chair for Supervision. Barr confirmed that he would not seek employment or compensation – including as a result of board service – from any company that has a matter before the Fed, or any financial services company, for four years after he leaves government service.
  • In March of this year, she also submitted three questions for the record (QFR) to Chair Powell following up on her previous requests. She submitted an additional QFR in June of this year asking that Chair Powell comment on a report that the Fed had not released updated financial disclosures for the former Reserve Bank presidents whose trading activity triggered the ethics scandal.
  • In February 2022, Senator Warren secured significant ethics commitments from several Fed Board nominees, including: Dr. Lael Brainard, nominee to serve as Vice Chair on the Federal Reserve Board, Sarah Bloom Raskin, nominee to serve as Vice Chair for Supervision on the Federal Reserve Board of Governors, and Drs. Lisa Cook and Philip Jefferson, nominees to serve as members of the Board of Governors. Bloom Raskin, Cook, and Jefferson agreed to a four year recusal period from matters which they oversee on the Board of Governors, not to seek a waiver from these recusals, and not to seek employment or compensation from financial services companies for four years after leaving government service. In May 2022, Senator Warren also secured these commitments from Michael Barr, who was ultimately confirmed as Fed Vice Chair for Supervision.
  • As the ethics scandals involving top level Fed officials unfolded in September and October of 2021, Senator Warren called out the culture of corruption at the Fed and raised deep concerns over conflicts of interests that have undermined public confidence in the Federal Reserve System. 
  • In October 2021, she called on the SEC to investigate the extent of trading activity by high-level Federal Reserve officials and possible ethics violations. 
  • In September 2021, Senator Warren urged Regional Fed leaders to follow the robust and comprehensive ethics guidelines in her Anti-Corruption and Public Integrity Act. 

###