Patrick McHenryChairman

Washington, November 4, 2015 - The Financial Services Committee held a hearing today to conduct oversight of the Federal Reserve in its role as a prudential regulator under the Dodd-Frank Act. Federal Reserve Chair Janet Yellen was the witness.

The Dodd-Frank Act, signed into law by President Obama five years ago, greatly expanded the Federal Reserve’s regulation and supervision authority. In recognition of these added responsibilities, Dodd-Frank also created the new position of Vice Chairman for Supervision at the Federal Reserve, to be filled by a person appointed by the President and confirmed by the Senate, and required that person to testify twice a year before the Financial Services Committee and the Senate Banking Committee. To date, the position has not been filled.

“As we know, Dodd-Frank rewarded the Federal Reserve with vast, new sweeping, regulatory powers despite its contributions to the last financial crisis. Under Dodd-Frank, the Fed can now functionally control virtually every major corner of the financial services sector of our economy, separate and apart from its traditional monetary policy authority,” said Chairman Jeb Hensarling (R-TX)

“Simply put, the Fed must not be allowed to shield its vast regulatory activities from the American people and congressional oversight by improperly cloaking them behind its traditional monetary policy independence,” Hensarling added.

Key Takeaways:

• President Obama’s failure to fulfill a requirement of Dodd-Frank and appoint the Federal Reserve’s Vice Chairman for Supervision deprives Congress of an important opportunity to conduct oversight and to hold the Fed accountable.
  

• Congressional Democrats, who treat Dodd-Frank as if it was handed down from Mount Sinai, are strangely silent about the President’s failure to follow the law and appoint a Vice Chair for Supervision.
  

• Dodd-Frank confers sweeping new regulatory powers on the Fed, completely separate and apart from its traditional monetary policy role. The Fed cannot shield these activities from congressional oversight by improperly cloaking them behind monetary policy independence.

• Instead of ending “Too Big to Fail” and taxpayer-funded Wall Street bailouts, Dodd-Frank enshrines them into law, resulting in an expansion of the federal safety net and increasing the likelihood of another financial crisis.