Republican US senator doubles down on call for tighter Fed scrutiny

[March 22, 2023]  By David Morgan

WASHINGTON (Reuters) - Republican U.S. Senator Rick Scott doubled down on his call to replace the Federal Reserve's current inspector general with a new, more independent office, following the collapses of Silicon Valley Bank and Signature Bank.

In an opinion column posted on the Fox News website, the Florida Republican also pledged to support legislation to claw back bonuses that media reports say were handed out to Silicon Valley Bank employees hours before the federal government seized the operation.

"The Federal Reserve, the world's largest and most powerful central bank, does not have a truly independent IG to investigate it. I'm fighting to fix that and will be introducing a bill soon - that I believe will have bipartisan support," Scott wrote.

The Federal Reserve was not immediately available for comment.

The legislation, which an aide said Scott is expected to introduce on Wednesday, would create a new Federal Reserve inspector general who would be appointed by the president and confirmed by the Senate.

The online column marked the second time in two days that Scott has vowed to push for an independent Fed IG. He also informed Federal Reserve Chairman Jerome Powell of his plans in a letter on Monday.

Republicans and Democrats in Congress have pledged tighter oversight of banking regulators following the collapse of Silicon Valley Bank and Signature Bank, which has been followed by billions of dollars in losses for financial stocks.

The Fed's current inspector general office was created in the 1970s and reports directly to the Fed board, rather than functioning as a completely independent auditor, as is the case at the Pentagon and other big agencies.

U.S. Senator Rick Scott (R-FL) calls for the rescinding of the COVID-19 mandate for U.S. military during a news conference about the National Defense Authorization Act, on Capitol Hill in Washington, U.S., December 7, 2022. REUTERS/Evelyn Hockstein

Scott's action coincides with a two-day meeting of the Federal Open Market Committee, a key panel that makes important decisions about interest rates and U.S. money supply.

Scott included a message for Powell, saying the Fed chief should do three things at this week's meeting: support the creation of an independent IG; "tell us who at the Fed is being fired for its lack of bank oversight, and tell us what changes have been made so this never happens again."

Scott, who has been seen as a possible presidential contender, does not sit on any Senate committees that oversee the banking industry or monetary policy.

But the former Florida governor has emerged in the Senate as a leading hardline conservative, who former President Donald Trump has repeatedly nominated as a replacement for Senate Republican leader Mitch McConnell.

Scott also authored a plan during the 2022 campaign that called for ending all federal programs after five years. But he had to revise it last month to exclude the popular Social Security and Medicare programs, after weeks of mounting criticism from Democrats and his fellow Republicans alike.

"We need to recognize that there are moments in life when you work with a scalpel and others when you use a hammer. This moment calls for a hammer," Scott said in the column.

(Reporting by David Morgan; Editing by Scott Malone and Alison Williams)

[© 2023 Thomson Reuters. All rights reserved.]This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.