Senators Introduce Legislation Aimed at FRB Accountability (with Lofchie Comment)

U.S. Senators Elizabeth Warren (D-MA) and David Vitter (R-LA) introduced the Fed Accountability Act (S. 1248), which is intended to increase independence of individual Governors on the Board of Governors of the Federal Reserve System ("FRB"). The Act is designed to increase transparency by requiring a public vote on all enforcement actions resulting in fines over $1 million.

According to the sponsors, the bill would allow each member of the FRB to maintain his or her own staff.

The bill was introduced on May 7, 2015, and referred to the Committee on Banking, Housing, and Urban Affairs.

Lofchie Comment: This bill appears at odds with the underlying design of the Consumer Financial Protection Board ("CFPB") which was established, largely at the direction of not-yet-Senator Warren. That is, the CFPB was put under the FRB, with the CFPB's budget and powers insulated from Congressional oversight. Because the CFPB was to be run by a single director, and not by a commission, it was designed with little opportunity for dissent within the organization, and consequently, without the transparency of a public vote. (Here is a link to a Huffington Post news story in which Senator Warren argues for keeping the CFPB outside of Congressional control. Here is a link to a Cadwalader Clients Friends memo raising policy questions as to the structure of the CFPB, particularly concerning the fact that it seemed to be structured as to be largely outside of the control of the three established branches of the government.)

The decision-making process at the CFPB should be aligned with Senator Warren's Federal Accountability bill. Does it not follow that one should favor multi-member commissions (like those at the SEC and CFTC), rather than the single-director structure of the CFPB?

See: Senator Vitter's Press Release; S. 1248 Legislation Information.