The Washington Examiner
Sen. Rick Scott
July 20, 2023
Right now, the Fed has very little real oversight. Not even the inspector general at the Fed is truly independent. Worse still, the Fed isn’t required to comply with standard banking practices like nearly every other financial institution in America. The lack of accountability and guardrails has allowed the Federal Reserve to make bad decisions with no consequences, growing its balance sheet to an unsustainable $8.3 trillion and losing $1.3 trillion of your money just last year. It’s time for this insanity to stop.
I recently introduced a bill to require a presidentially appointed and Senate-confirmed inspector general to the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau. When I announced this bill, the Fed inspector general wrote me an unsolicited letter complaining that his current salary (a cushy $377,800) would be cut to $200,000 if my bill became law. Clearly, changes are needed.
Now, I’m introducing three other bills to rein in this out-of-control agency before even more of your hard-earned dollars are wasted.
Jerome Powell, the current chairman of the Federal Reserve Board, might be the only man in American history who has managed to lose more than $1 trillion of taxpayer money. It’s even more shocking that he managed to do it in a single year. My Regular Order for Investments, ROI, of the Federal Reserve Act would end these bad practices and force the Fed to consider the impact of its decisions on hard-working families so this never happens again.
As I mentioned before, the Fed does not comply with standard banking practices. It is insane to think that one of the largest financial institutions in the world would be allowed to exempt itself from Generally Accepted Accounting Practices and mark-to-market valuations. My bill would mandate that the Fed comply with both of these standards. We cannot allow federal bureaucrats to create their own rules when managing your money. Federal agencies should be held to the same standards as every other bank in this country. If these rules are needed for major banks, then the Fed should follow them too.
In addition to holding the Fed accountable to the same standards as other major financial institutions, my ROI of the Federal Reserve Act takes aim at the agency’s massive balance sheet. Since 2009, the Fed has grown its balance sheet from less than $1 trillion to $8.3 trillion today. That’s an 822% jump, and it makes the Fed the largest federal agency in American history. It became this reckless monstrosity by purchasing hundreds of millions of dollars of mortgage-backed securities and intervening massively in capital markets. These investments aren’t just risky — they make it easier for the Fed to lose your taxpayer money and pull the institution farther from its traditional practice of purchasing short-term U.S. Treasuries.
Working in conjunction with the ROI of the Federal Reserve Act, my Rightsize the Federal Reserve Act would ensure an unwinding of this massive balance sheet by mandating that the Fed’s balance sheet remain at or below 10% of U.S. gross domestic product, which lowers risk and better protects your taxpayer money. Right now, the Fed’s balance sheet is equivalent to 30% of GDP. The Fed shouldn’t be this big, and it shouldn’t be in the business of making risky investment decisions when the economy and taxpayer dollars are at risk.
While these reforms are desperately needed, they aren’t enough without real oversight that holds the Fed accountable to Congress and the public. My Rein in the Federal Reserve Act would interject much-needed scrutiny and accountability of the Fed’s actions by establishing a statutory process for actual oversight by Congress.
Like too many government agencies, the Fed has been able to bypass scrutiny by taking actions under its emergency authority. This has let the Fed operate recklessly. My bill would mandate quarterly reports to Congress from the Fed that detail any projected debts or losses as a result of its actions and explain the rationale and timeline for any emergency actions. If the Fed believes that emergency action is truly necessary, it should be able to explain this to Congress easily.
And to make sure that the Fed doesn’t drag out these emergencies indefinitely, my bill would require that Congress votes to reauthorize any emergency spending programs after one calendar year. The Rein in the Federal Reserve Act also gives Congress the power to vote on ending any of the Fed’s emergency programs.
The Federal Reserve has gotten far too big, unaccountable, and reckless. There is no internal scrutiny. Again, the Fed’s current Inspector General reports to the Fed’s board and is not independent like so many of his colleagues. All of this needs to be fixed so we can better protect taxpayer money and make sure the Fed is truly accountable to Congress and the taxpayers.
We can’t wait any longer for big change at the Fed. Powell and his board have overseen the loss of more than $1 trillion of your money while growing their balance sheet to $8.3 trillion and risking even more losses. Families must not be forced to endure continued failures at the Federal Reserve. It’s time for Congress to stand up and demand accountability.