December 09, 2022

Warren, Toomey Unveil Bipartisan Legislation to Advance Federal Reserve Accountability, Ensure Financial Regulators Provide Ethics Information to Congress

The Financial Regulators Transparency Act 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) | One Pager (PDF)

Washington, D.C. — United States Senators Elizabeth Warren (D-Mass.) and Pat Toomey (R-Pa.), ranking member of the Senate Banking Committee, announced 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. The bill would subject the regional Federal Reserve Banks to the Freedom of Information Act (FOIA) and ensure their responsiveness to congressional information requests; 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. Together, these reforms would strengthen congressional oversight of the Fed and other financial regulatory agencies.

“During the largest ethics scandal in the history of the Federal Reserve system, Fed officials have stonewalled the American people and slow-walked their representatives in Congress," said Senator Elizabeth Warren. "This bipartisan bill is a necessary response to ensure that no financial regulators can ignore congressional oversight into ethics failures, and finally deliver more transparency and accountability for any wrongdoing.” 

“The Fed and regional Fed banks, despite being creatures of Congress, obstruct congressional oversight inquiries all too often,” said Senator Pat Toomey. “In light of this persistent refusal to comply with reasonable requests for information from both Republicans and Democrats, I’m glad to join with Senator Warren in pursuing reforms that will compel these public institutions to be more transparent and accountable to the American people.”

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 

  • Subjects the regional Federal Reserve Banks to FOIA and Federal Records Act (recordkeeping law), as they are not currently subject to these laws.
  • 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. 
  • 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.
  • Provides that Fed regional banks must prioritize FOIA requests made by a member of Congress.
  • Prevents Fed regional banks from charging a member of Congress fees to process their FOIA request.
  • 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 

  • 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.
  • 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.
  • Provides that financial regulators must prioritize FOIA requests made by a member of Congress.
  • Prevents financial regulators from charging a member of Congress fees to process their FOIA request.
  • 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

  • Makes the Fed IG a presidentially appointed and Senate-confirmed position.
  • 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:

  • 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. 

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