Press Releases

Hensarling Opening Statement at Monetary Policy Hearing


Washington, June 22, 2016 - Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing to receive the Monetary Policy and State of the Economy report from Federal Reserve Chair Janet Yellen:

I have been struck by some of the headlines I’ve reviewed as of recent. For example: “Economy barely grew in first three months of the year” – Associated Press; “U.S. added only 38,000 jobs in May, Weakest performance since September 2010” – Wall Street Journal; “Will we ever get higher wages?”— CNN; and “Labor force shrinks” – Reuters.

What is clear and verifiable is that this weak economy doesn’t work for millions of working Americans. The true unemployment rate stands at almost 10 percent, paychecks are stagnant, and the national debt clock spins out of control.

After almost eight years of the President’s economic policies, he is on track to be the only president in U.S. history not to deliver a single year of at least three percent economic growth. This would give him the fourth worst economic record of any President in U.S. history.

The Fed cannot escape its share of responsibility in being complicit in Obamanomics because it has lost much of its independence from the Administration.

Every member of the Board of Governors has been appointed by this President.

There is a noticeable revolving door between the White House, Treasury and the Fed.

The Fed Chair meets almost weekly with the Secretary of Treasury to discuss policy.

Furthermore, the Fed has been the facilitator and accommodator of the Administration’s disastrous national debt policy and has regrettably lent its shrinking credibility to advancing the Administration’s social agenda.

There is a better way forward which includes re-normalizing monetary policy and reforming key aspects of the Federal Reserve to better comport with its mandate. It is why House Republicans passed the FORM Act last year and are introducing the Financial CHOICE Act this year which offers economic growth for all and bank bailouts for none.

The Fed’s so-called “data dependent” monetary policy strategy says nothing about which data matter, let alone how they matter, and thus severely compromises the kind of policy transparency and predictability that is necessary for households and businesses to grow our economy. The Fed’s so-called “forward guidance” continues to provide little or no guidance to the rest of us.

The FORM Act, which has been endorsed by nationally renowned economists, including three Nobel Laureates, would help to reestablish the Fed’s independence and promote economic growth by ensuring a systematic monetary policy framework that is truly data dependent, consistent and predictable.

Another drag on our economy is the blurring of fiscal and monetary policy by the Fed. By paying interest on excess reserves at above market rates, the Fed has swollen its balance sheet by which it now directs credit to favored markets.

Stanford economics Professor John Taylor rightfully calls this “mondustrial policy” for the combination of monetary and industrial policy it represents.  By inviting distributional interests to crowd out the market discipline of credit, this policy favors a few at the expense of the many, and weakens economic growth for working Americans.

Left unabated, our central banks will soon become our central planners. This cannot be allowed to happen. It is way past time for the Fed to commit to a credible, verifiable monetary policy rule, to systematically shrink its balance sheet and get out of the business of picking winners and losers in credit markets.

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