The Federal Reserve should revise enforcement policy to require board-member votes on penalties exceeding $1 million or force changes in banks’ management, two lawmakers wrote in a letter to Fed Chairman Janet Yellen, Bloomberg News reported today. Sen. Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.) urged Yellen to make the change to bolster the Fed’s accountability and to protect taxpayers against the kind of financial-industry risk-taking that helped fuel the 2008 credit crisis. “We have learned the hard way that the task of monetary policy making is made significantly more difficult when prudential regulators fail to ensure the safety and soundness of all facets of the banking system,” Warren and Cummings wrote in the letter dated yesterday. “Increasing the Board’s direct role in overseeing enforcement and supervision would strengthen the Fed’s efforts to reduce systemic risk in our financial system.”
