Washington legislation comes in the wake of failures by Silicon Valley Bank and Signature Bank
(The Center Square) – Bipartisan legislation introduced by Republican North Carolina Sen. Thom Tillis aims to increase transparency in the Federal Reserve System as lawmakers probe recent bank failures.
Tillis partnered with Democratic Massachusetts Sen. Elizabeth Warren to introduce the Financial Regulators Transparency Act. If enacted, the legislation would subject regional Federal Reserve banks to the Freedom of Information Act and ensure their responsiveness to congressional and public information requests.
Numerous lawmakers have raised concerns about how top bank regulators handled the collapse of California-based Silicon Valley Bank, noting that Federal Reserve supervisors first raised questions about the bank’s risky practices in 2021, when they warned bank management about the issues.
“Congress must have a clear understanding of what regulatory and supervisory failures occurred to allow the collapse of both Silicon Valley Bank and Signature Bank,” Tillis said. “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.”
The Financial Regulators Transparency Act would align the Fed with other large agencies by making its inspector general a presidential appointee, while also prohibiting all financial regulatory agencies from denying congressional requests for ethics-related information.
The bill would also provide certain members of the Senate Committee on Banking, Housing, and Urban Affairs and House Financial Services Committee with the ability to request supervisory information from the Federal Reserve.
Only committee chairmen have the ability to obtain ethics-related information from financial regulators, who can cite common law privilege to withhold information from other members of Congress.
In addition to expanding the availability of ethics-related information, the bill would require Fed regional banks to prioritize FOIA requests from members of Congress, and prevent the banks from charging fees to process a request.
Other changes would allow members of Congress to file a federal lawsuit against Fed regional banks to petition the court to order them to produce any record improperly held.
Originally published by Campus Reform. Republished with permission.
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