On Thursday, the Financial Services Committee held a hearing to examine H.R. 5018, the Federal Reserve Accountability and Transparency Act. The proposal is the first piece of legislation to arise from the Committee’s Federal Reserve Centennial Oversight Project.
"We do not suggest for a moment that Congress, much less the White House or Treasury, should conduct monetary policy operations. We continue to respect the Federal Reserve’s independence in monetary policy. But that independence and discretion must be paired with appropriate transparency and accountability. What we require today in this legislation is that the Fed use a clear map of its own choosing to set the course for monetary policy and share that map with the rest of us," Chairman Hensarling (R-TX) said.
Other members of the committee also stressed that the Fed’s independence needs to be paired with transparency and accountability, for "an independent Fed shouldn't equal an opaque Fed," said Rep. Randy Hultgren (R-IL).
Rep. Bill Huizenga (R-MI), the sponsor of H.R. 5018, said the bill “lifts this veil of secrecy by increasing accountability and transparency by limiting Fed officials ‘blackout periods’ to discuss policy with Congress, opening the rulemaking process, and requiring the Fed to provide a cost-benefit analysis for every regulation it issues. Additionally, this legislation urges the Fed to adopt a ‘rules-based’ approach to monetary policy instead of the continued improvisation strategy currently being employed. Should the Fed fail to adopt a ‘rules-based’ approach, it would trigger an audit of the Fed’s books.”
Rep. Scott Garrett (R-NJ) said, “Despite setting regulatory policies that impact millions of Americans, the Federal Reserve – by and large – operates in secret. Congress is all that stands between the central bank’s exercise of power over the financial system and the American people. So it is vital to ensure that the Fed is accountable to the people’s representatives.”
MEMBER SPOTLIGHT
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"We may have competing interests," said Duffy, a member of the House Financial Services Committee. "We want to make sure we have sound, stable lending. The chairman comes from a little different perspective after going through the crisis and all the stress that has been put on him and the FDIC team. Maybe they're a little more cautious than we'd like them to be right now."
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Oversight and Investigations Subcommittee Hearing
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Full Committee Hearing
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In the News
Wall Street Journal | House Republicans Want Fed to Adopt Policy-Making Rules
Financial Times | Lew challenged over Volcker rule impact
Reuters| Lawmaker questions NY Fed role in U.S. regulatory risk panel
Holland Sentinel | Reps. Huizenga, Garrett release major fed reform legislation
New York Times: | House Republicans Resume Efforts to Reduce Fed’s Power
Politico Pro: | GOP to Fed: More to come
Bloomberg: | Lew Confronted Over Volcker Rule Effect on Bond Liquidity