Committee Approves Legislation to Bring Accountability, Transparency to the Federal Reserve
July 30, 2014 -
Today, as part of its Federal Reserve Centennial Oversight Project, the House Financial Services Committee passed H.R. 5018, the Federal Reserve Accountability and Transparency Act. The bill, sponsored by Rep. Bill Huizenga (R-MI) and Rep. Scott Garrett (R-NJ), passed the committee 32-26.
H.R. 5018 requires the Federal Reserve to adopt a more predictable rules-based policy -- of the Fed’s own choosing -- that leads to a healthier and stronger economy. The bill also requires the Fed to share with the public whatever rules-based approach it adopts. Additionally, H.R. 5018 requires the Fed to conduct a cost-benefit analysis when adopting new regulations in order to ensure that the benefits of proposed regulations outweigh the costs to the economy.
“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,” said Financial Services Committee Chairman Jeb Hensarling (R-TX). “This legislation is about accountability and about transparency. It’s not about theory because history shows that when the Fed lets job creators, entrepreneurs, small business people and everyone else know how monetary policy will be conducted, the economy performs better and more people get to go to work.”
Rep. Garrett, a co-author of the bill, said: “Today, we took important steps toward establishing a more appropriate level of transparency at the Fed. As things stand now, the Fed’s regulatory activities take place behind a fraternity-like veil of secrecy, obstructing openness, and preventing proper accountability. And when it comes to monetary policy, like the Wizard of Oz, it’s time we bring the Fed out from behind the curtain. Now that the Financial Services Committee has acted, I look forward to continuing to work with Chairman Hensarling and House Leadership to ensure that this bill passes both chambers and is quickly advanced to the president's desk.”
Rep. Huizenga, a co-author of the bill, said: The Federal Reserve Accountability and Transparency Act takes important steps toward lifting the veil of secrecy surrounding the Fed by making it more open and transparent. Additionally, this legislation will bring more predictability to how monetary policy is conducted in the United States by urging the adoption of a mathematical rules-based approach, instead of the continuation of the ad hoc approach we've seen implemented over the past several years. I look forward to working with Chairman Hensarling, Rep. Garrett, and House Leadership to get H.R. 5018 a vote on the House floor.”