Chairman Bachus Statement On Federal Reserve Data Disclosure
Washington,
June 1, 2011 -
Financial Services Committee Chairman Spencer Bachus released the following statement regarding the Domestic Monetary Policy Subcommittee hearing on the Federal Reserve data disclosure.
“This is an important hearing on the use of the Federal Reserve’s emergency lending facilities during the financial crisis. This hearing touches on an important issue: balancing the independence of the Federal Reserve with its obligation as part of the U.S. government to be responsive to Congressional inquiry and subject to reasonable oversight.
“It’s important to note that Chairman Paul’s efforts in the last Congress are largely responsible for the release of data that we are discussing today and for information that will be in an audit of the Federal Reserve by the Government Accountability Office that is scheduled to be completed in July. It is a testament to Chairman Paul’s dedication that we are able to have this hearing at all, and I commend his hard work.
“At the same time, I think it is important to note that any audit requirement enacted needs to maintain the independence of the Federal Reserve’s monetary policy deliberations. Chairman Paul took care in his legislation to preserve that independence. The question of transparency is broad and complicated, but as Chairman of the Financial Services Committee I will continue to work to preserve the important balance we must have between disclosure of important information and independence in our central bank.
“As the financial crisis deepened, the Fed relied on its emergency lending powers to inject massive amounts of money into the economy, with loans to banks across the country and to domestic operations of foreign banks. At one point, the Board created a Special Purpose Vehicle to purchase corporate commercial paper, using its authorities to help meet the short-term borrowing needs of all American corporations, not just financial institutions.
“Naturally, both the public and Members of this committee want to know who benefited from these lending programs and on what terms these facilities were made available. Many in Congress believed that some of this lending was conducted in a way that allowed the Fed and the Treasury to pick winners and losers in the marketplace, which was never the intent of Congress. We need to examine whether these measures contribute to a concentration of assets in the largest firms, which would exacerbate the problem of ‘too big to fail.’
“In a democracy, it’s important for institutions like the Federal Reserve to be responsive to Congress on important questions such as these.”
