Chairman Hensarling Opening Statement at Today's Hearing with Federal Reserve Chairman Ben Bernanke
July 17, 2013 -
Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today's full committee hearing with Federal Reserve Chairman Ben Bernanke:
“Chairman Bernanke, welcome. We all know that your term as chairman is up at year’s end and to paraphrase Twain, we do not know if the rumors of your departure are greatly exaggerated.
"I will not ask you to comment, but I at least know there is a possibility this could be your last appearance before the committee; I certainly hope it is not. We have other matters to discuss with you and the Fed. But on the off possibility it is, I did not want to let the moment pass without stating clearly for the record that as one who has been in public office for ten years, this chairman considers you to be one of the most able public servants I have met. I suspect that history will record at a very perilous point in our nation’s economic history that you acted boldly and decisively, creatively -- very creatively, I might add -- and kept your head. And under your leadership, the Fed took a number of actions that certainly staved off an even worse economic event. And for that I believe our nation will always, always be grateful.
“Now my words are sincere but they do not negate my concern over the state of the economy today and the role that the Fed is playing in it.
"In today’s semi-annual Humphrey-Hawkins hearing on the state of the economy, we face once again the legacy of the president’s economic policies. A failed experiment in fiscal policy that will be forever remembered for its three central pillars: persistent weak economic growth, higher taxes on working families and unsustainable, record trillion-dollar deficits that one day our children must pay off. Witness the debt clock on either side of the hearing room.
“The Federal Reserve has regrettably, in many ways, enabled this failed economic policy through a program of risky and unprecedented asset purchases that has swollen its balance sheet to more than $3 trillion. Our committee has an obligation to carefully scrutinize the Federal Reserve’s decisions and the way it communicates those decisions to the American people.
“Chairman Bernanke has correctly observed that credible guidance about the future course of monetary policy is a vital tool that the Fed must use to ensure that markets, consumers, and producers can plan their own economic futures.
“My constituents back in Texas are concerned how much they need to save for retirement or their children’s college tuition. They are left to wonder how much longer they will have to endure the paltry, paltry returns on the savings created by the Fed’s current interest rate policy which favors borrowers over savers.
“And yet, recent panicked responses by financial markets to monetary policy communications and observations from a range of economists suggest the Federal Reserve’s forward guidance clearly needs some improvement. The market’s recent extreme volatility resulting from the offhanded comments of one individual, our witness today, is not healthy for an economy. Again, it indicates a monetary policy guidance system that is not working and it begs the question: Are current equity market values based upon the fundamentals or unprecedented quantitative easing?
“Former Fed Chairman William McChesney Martin once observed that the Fed ‘should always be engaged in a ruthless examination of its own record.’ Today we will ask Chairman Bernanke to engage in such a ruthless examination of the Fed’s QE exit strategy which is both untested and clearly not well understood by market participants.
"Based upon the economy’s performance since the Federal Reserve embarked upon its unprecedented campaign of monetary stimulus, many economists have observed, and I would tend to agree, that it is fair to conclude that rarely has so much been spent in pursuit of so little and rarely has so much been risked in return for so little. The extraordinary measures of 2008 have become the ordinary, albeit unsustainable, measures of 2013 and beyond. Again, as recent events demonstrate, it remains very much an open question whether the Fed can orchestrate an orderly withdrawal of monetary stimulus.
“Finally, as the Federal Reserve approaches its 100-year anniversary later this year, it is incumbent upon this committee to engage in an honest assessment of the Fed’s performance, and consider just how do we improve the Federal Reserve for the next century.”