WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, joined Senator Tim Scott (R-SC) and seven colleagues in introducing 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 would remove the director of the Consumer Financial Protection Bureau (CFPB) and Comptroller of the Currency as permanent members of the FDIC Board of Directors and replace those seats with two presidentially-appointed, Senate-confirmed board members. The bill would also establish lifetime service limits for FDIC board members and place clear boundaries on how long a board member may continue to serve after their Senate-confirmed term has expired.
“The FDIC is imperative to the stability and security of our financial system, and recent endeavors to undermine the independence and integrity of the FDIC Board were unwarranted and unacceptable,” said Senator Hagerty. “This commonsense legislation will be a bulwark against political interference and uphold the public’s confidence in the FDIC as an independent agency.”
At a Banking Committee hearing last month, Hagerty sought Federal Reserve Chairman Jay Powell’s assurance that the Fed is not vulnerable to “politically-motivated hijacking” like what the FDIC has experienced. Responding to Hagerty, Chair Powell said, “we do have a history at the Fed of working collaboratively and coming together and, and getting consensus on issues. That certainly is my intention, that is my nature, and I will work hard to make sure that things stay that way.”
Read the full text of the bill here.
- 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 director 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.