This week U.S. Senator Ted Cruz (R-TX) along with Sens. Tim Scott (R-SC) and Pat Toomey (R-Penn) officially introduced the FDIC Board Governance Reform Act, which would enhance the protection of the Federal Deposit Insurance Corporation (FDIC) from political meddling. The Scott-Cruz bill removes the Director of the Consumer Financial Protection Bureau (CFPB) and the Comptroller of the Currency as permanent members of the FDIC Board of Directors. All five seats on the board will then be subject to presidential appointment with the advice and consent of the U.S. Senate, with no more than three of the five board members allowed from the same political party. Additionally, explicit restrictions are established regarding the limits of service by members of the board, and prohibitions of any appointees being members of the CFPB and the OCC.

Upon introducing the bill, Senator Cruz stated:

“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.”

“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 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.”

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.) also co-sponsored the bill.

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