Scott, Colleagues to Introduce Bill to Preserve FDIC Independence
WASHINGTON – U.S. Senators Tim Scott (R-S.C.), Ted Cruz (R-Texas), and Pat Toomey (R-Penn.) will introduce legislation to reform the governance of the Federal Deposit Insurance Corporation (FDIC). The bill is designed to better insulate the agency from political interference and preserve its independence.
The FDIC Board Governance Reform Act removes the director of the Consumer Financial Protection Bureau (CFPB) and Comptroller of the Currency as permanent members of the FDIC board of directors and replaces those seats with two presidentially-appointed, Senate-confirmed board members. The bill also establishes lifetime service limits for FDIC board members and places clear boundaries on how long a board member may continue to serve after their Senate-confirmed term has expired.
“Any threat to the independence of the FDIC is a direct threat to the agency’s ability to carry out its nonpartisan mission of maintaining stability and public confidence in our nation’s financial system,” said Senator Scott. “This bill will prevent a repeat of recent attempts to politicize the independent and historically apolitical practice of federal bank regulation. By protecting the independent status of the FDIC, we will preserve the unbiased oversight of the banking industry.”
“The Federal Deposit Insurance Corporation is an independent agency created to maintain stability and confidence in the American financial system,” said Senator Cruz. “The recent hostile takeover attempt of the FDIC by members of the Board of Directors, CFPB Director Rohit Chopra, Acting Comptroller Michael Hsu and Director Martin Gruenberg, whose term has been expired three years, perfectly demonstrates the immediate need for Congress to reform the FDIC board in order to depoliticize and restore public confidence in the agency. I am proud to partner with Senator Scott in introduction of the FDIC Board Governance Reform Act to ensure the FDIC can fulfill its Congressional mandate without political takeovers that threaten the independence the agency was built upon.”
“The recent hostile takeover at the FDIC has done lasting damage to the longstanding principle that financial regulators should operate free from partisan politics,” said Ranking Member Toomey. “By removing the Comptroller of the Currency and CFPB Director from the FDIC board and imposing term limits on all board members, our legislation will restore the independence and integrity of the FDIC.”
Co-sponsors of the FDIC Board Governance Reform Act include Senators Cynthia Lummis (R-Wyo.), Bill Hagerty (R-Tenn.), Mike Crapo (R-Idaho), Thom Tillis (R-N.C.), Kevin Cramer (R-N.D.), Jerry Moran (R-Kan.), Steve Daines (R-Mont.), Richard Shelby (R-Ala.), and John Kennedy (R-La.).
- The FDIC Board Governance Reform Act amends the Federal Deposit Insurance Act to remove the Comptroller of the Currency and CFPB Director as ex officio members of the FDIC Board of Directors.
- Under the new legislation, the President would appoint all five Board members, with the advice and consent of the Senate. The Comptroller of the Currency and CFPB are explicitly ineligible to be appointed by the president as Board members.
- The bill also limits Board members from serving more than 12 years total, not including in holdover status following the expiration of the appointed term.
- Further, it limits the period a Board member may serve in holdover status to the earlier of:
- the appointment of a successor on the Board; or
- the end of the next session of Congress following the expiration of the Board member’s appointed term.