Patrick McHenryChairman

Washington, February 27, 2015 - Committee Pushes for Accountability and Transparency Reforms at the Federal Reserve

Republicans at this week’s hearing with Federal Reserve Chair Janet Yellen raised questions about how much influence the executive branch holds over the central bank and argued in favor of accountability reforms to both protect the Fed’s independence in its conduct of monetary policy and to help give the economy greater certainty.

In its coverage of the hearing, the Associated Press reported that Republicans on the committee “challenged the central bank’s lack of accountability”

Members “seized on Ms. Yellen’s official calendar records and an October speech on inequality, just before the midterm elections, as evidence she was leaning towards the Obama administration and Democrats,” reported the Wall Street Journal in its coverage of the hearing.

While Chair Yellen and Democrats argued reforms would open the Fed to political influence, “Republicans at the hearing countered that Ms. Yellen’s calendars show the executive branch has far more access, and potentially more influence, than Congress,” the Journal reported.    

“Opponents argue any reforms threaten the Fed’s monetary policy independence, but the greatest threat to that independence comes from the executive branch, not the legislative branch,” said Chairman Jeb Hensarling (R-TX).  “While the Federal Reserve Chair testifies publicly before this committee twice a year, she meets weekly with the Treasury Secretary in private.  And for decades there has been a revolving door between Treasury officials and Fed officials which continues even today…Fed reforms are needed and I for one believe Fed reforms are coming.”

“The Federal Reserve has proven time and time again that its government knows best approach doesn't hold the cure for what ails the economy," said Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI). "It's time we restore certainty as well as fiscal responsibility, and we must lift the veil of secrecy to ensure that the Fed is accountable to the people's representatives, the same people that created the Federal Reserve in the first place."

Capital Markets and Government-Sponsored Enterprises Subcommittee Chair Scott Garrett (R-NJ) said, "In theory, having a technocrat like the Fed to simply implement monetary changes based on basic facts, it sounds appealing. But in practice, that is not anywhere close to what happens at the Fed." 

The Housing and Insurance Subcommittee held a hearing Thursday on the Federal Housing Administration (FHA), the second in a series that began earlier this month with the full committee’s hearing with HUD Secretary Julian Castro.

“House Republicans have argued that the FHA was wrong to make a cut to its annual mortgage insurance premium before its reserve fund reached a statutory minimum – and witnesses agreed,” reported the American Banker in its coverage of the hearing.  Witnesses told the subcommittee that the FHA’s premium reduction “is undercutting the private sector and expanding the government’s role in the housing market.”