FSC Majority | Week in ReviewPosted by Staff on July 18, 2014
Full Committee Receives Semi-Annual Testimony on Monetary Policy and the State of the Economy
On Wednesday, the full committee held a hearing to receive the semi-annual testimony from Federal Reserve Chair Janet Yellen on the conduct of monetary policy and the state of the economy.
Members of the committee called attention to the Federal Reserve Accountability and Transparency Act introduced by Rep. Bill Huizenga (R-MI) and Rep. Scott Garrett (R-NJ), which the committee held a hearing on last week.
"The overwhelming weight of evidence is that monetary policy is at its best in maintaining stable prices and maximum employment when it follows a clear, predictable monetary policy rule. I believe the period of the Great Moderation between 1987 and 2002 attests to this proposition. Had a clear, predictable monetary policy rule like the Taylor Rule been in place throughout the last decade, it is likely the financial crisis would have been avoided in the first place, or at least downgraded to a garden variety recession," said Chairman Jeb Hensarling (R-TX).
The Federal Reserve Accountability and Transparency Act “in no way, shape or form dictates monetary policy. Anybody who maintains otherwise either hasn’t read the act, doesn’t understand the act or regrettably they are trying to mislead others," said Chairman Hensarling. "The Fed can set any rule it wishes. It can change the rule anytime it wishes. It can deviate from the rule anytime it wishes. Under the FRAT Act, it simply has to report and explain this to the rest of us. That’s what transparency and accountability are all about."
Subcommittee Examines Justice Department's "Operation Choke Point"
On Tuesday, the Oversight and Investigations Subcommittee held a hearing to review the Justice Department's actions regarding Operation Choke Point. Members of the subcommittee voiced concerns that lawfully-operating businesses are being denied access to banking services.
"Our concern is, we have a federal government that's out of control. And we have bureaucrats who think they can get a swift idea and impose the heavy hand of government on legitimate businesses that have had no adjudication of fraud. But you come in here and you say, 'fraudulent, fraudulent, fraudulent,' and you haven't proved it at all," said Rep. Sean Duffy (R-WI).
Subcommittee Chairman Patrick McHenry (R-NC) said, "equally important to the federal prosecution of alleged fraudsters are lawful methods by which the government and regulators identify and investigate those in question. For any division of government to seemingly circumvent lawful, judicious means of conducting federal investigations, it not only subjects itself to rigorous congressional oversight, but it also betrays those who it seeks to protect. And that's the American people."
Subcommittee Discusses Proposals to Reduce Excessive Red Tape
On Tuesday, the Financial Institutions and Consumer Credit Subcommittee held its second hearing to examine legislation designed to reduce the regulatory burden and streamline regulatory compliance for community financial institutions. Members of the subcommittee sought to ensure that consumers would have greater access to the financial products that they want and need.
Subcommittee Chairman Shelley Moore Capito (R-WV) discussed ways to ensure that community banks were able to maintain mortgage-servicing rights so that consumers were "able to go to the institution which they know is carrying these servicing rights" and "know exactly when and how and who is servicing their mortgage."
"A bank's board and the bank's management is in a much better position to ascertain the reputational risk of that bank than an unaccountable, unelected federal regulator in Washington, D.C.," said Rep. Andy Barr (R-KY).
Subcommittee Discusses the Bank Account Seizure of Terrorist Assets (BASTA) Act
On Thursday, the Monetary Policy and Trade Subcommittee held a hearing to discuss matters related to the execution of court judgments against assets of the Fuerzas Armadas Revolucionarias de Colombia (FARC) for actions taken against Americans captured in Columbia by the group in 2003.
"Today we'll be discussing those difficult topics and some matters of extraordinary complexity involving ways to fairly compensate victims of these heinous acts," said Rep. Bill Huizenga (R-MI).
Rep. Bill Huizenga | Video: Rep. Huizenga: The Fed Is Due for a Tune-Up
Rep. Bill Huizenga (R-MI) discusses the legislation to curb Federal Reserve powers with Peter Cook on "Street Smart."
Weekend Must Reads
Investor's Business Daily | Fed's Failed Monetary Experiment About To End
It'll be years before all the damage to our economy is fully known. But it should be clear by now if it wasn't before: The Fed's radical intervention has not been a success, and the costs are only now becoming apparent.
CNBC | Looks like the Fed wants to have even more power
"The whole financial system and economy of the United States is now a laboratory experiment as macroprudential policies are put in place by those very people who failed to understand or correct the excesses that developed in the last financial crisis," Bove said in a note to clients. "More problematic is the fact that macroprudential policy requires regulators to control the growth and direction of the U.S. economy. It denies the right of the private sector to grow in any direction it chooses without the explicit control of the government. It is anti-capitalistic."
Committee on Financial Services | The Six Biggest Inaccuracies in the July 10 Bloomberg Businessweek Article Regarding the CFPB’s Building Renovations
The Financial Services Committee will continue to investigate why CFPB leadership decided to commit the Bureau to a quarter billion dollars in long-term lease payments without performing any due diligence, and why it has decided to spend an additional $215.8 million to renovate a building it doesn’t own, an amount that is more than $70 million higher than the building’s appraised value.
In the News
Wall Street Journal | How to Spark Another 'Great Moderation'
The Hill | Republicans start small on Fed reforms
Wall Street Journal | Boeing Will Survive an Ex-Im Defeat
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