Two powerful members of the Senate Committee on Banking, Housing and Urban Affairs are urging President Obama to fill vacancies on the Federal Reserve's Board of Governors with Wall Street outsiders who will keep a sharp investigative eye on the nation's banks.
Sen. Joe Manchin, D-WV, and Sen. Elizabeth Warren, D-Mass.,
writing their plea in an op-ed piece in The Wall Street Journal, noted that the Fed often has been too reluctant to investigate banks caught with their hands inappropriately in the till.
"If regulators had been more willing to protect Main Street over Wall Street before 2008, they might have averted the financial crisis and the Great Recession that hurt millions of American families. So long as the Fed and other regulators are unwilling or unable to dig deeply into dangerous bank practices and hold the banks accountable, our economy — and our country — remains at risk," the pair wrote in the Journal.
Warren and Manchin note that the Fed is "responsible for supervising Wall Street banks, but after the 2008 crisis and the regulatory lapses it revealed, Congress gave the Fed even more oversight authority."
Now, they want the Fed to start using that power to keep banks in check.
"We’re concerned that the Federal Reserve — our first line of defense against another financial crisis — seems more worried about protecting Wall Street than protecting Main Street," the pair wrote in the Journal.
"Fortunately, this is one problem the Obama administration can start fixing today by nominating the right people to fill the two vacancies on the Fed’s Board of Governors."
Currently, two of the seven seats on the Fed's board are vacant and The Hill notes that the Obama administration has been dragging its feet on filling them.
"The window for getting nominees preferred by Warren and Manchin could be closing as Democrats will lose control of the chamber in just a few weeks. Senate Democrats will be scrambling in those final days to clear as many presidential nominees as possible of those that have already been made,"
The Hill wrote.
"The Fed is too cozy with big banks to provide the kind of tough oversight that’s needed," Warren and Manchin wrote in the Journal. "We’re all counting on the Fed to monitor the big banks and stop them from taking on too much risk, but evidence is mounting that this faith in the Fed is misplaced."
Of the Fed's board members, Warren and Manchin wrote "not one came to the Fed with a meaningful background in overseeing or investigating big banks or any experience distinguishing between the greater risks posed by the biggest banks relative to community banks. By nominating people who have a strong track record in these areas and who have a demonstrated commitment to not backing down when they find problems, the administration can show that it is taking the Fed’s supervision problem seriously.
"Nominating Wall Street insiders for the Board of Governors would send the opposite message."
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