[Pages H8323-H8342]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

{time} 1730
FED OVERSIGHT REFORM AND MODERNIZATION ACT OF 2015

General Leave

Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and submit extraneous materials on the bill, H.R. 3189, to amend the
Federal Reserve Act to establish requirements for policy rules and
blackout periods of the Federal Open Market Committee, to establish
requirements for certain activities of the Board of Governors of the
Federal Reserve System, and to amend title 31, United States Code, to
reform the manner in which the Board of Governors of the Federal
Reserve System is audited, and for other purposes.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
The SPEAKER pro tempore. Pursuant to House Resolution 529 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the state of the Union for the consideration of the bill, H.R. 3189.
The Chair appoints the gentleman from Kansas (Mr. Yoder) to preside
over the Committee of the Whole.

{time} 1730

In the Committee of the Whole

Accordingly, the House resolved itself into the Committee of the
Whole House on the state of the Union for the consideration of the bill
(H.R. 3189) to amend the Federal Reserve Act to establish requirements
for policy rules and blackout periods of the Federal Open Market
Committee, to establish requirements for certain activities of the
Board of Governors of the Federal Reserve System, and to amend title
31, United States Code, to reform the manner in which the Board of
Governors of the Federal Reserve System is audited, and for other
purposes, with Mr. Yoder in the chair.
The Clerk read the title of the bill.
The CHAIR. Pursuant to the rule, the bill is considered read the
first time.
The gentleman from Texas (Mr. Hensarling) and the gentlewoman from
California (Ms. Waters) each will control 30 minutes.
The Chair recognizes the gentleman from Texas.
Mr. HENSARLING. Mr. Chairman, I yield myself such time as I may
consume.
Mr. Chairman, I rise in strong support of H.R. 3189, the FORM Act, to
reform the Federal Reserve. It is sponsored by the gentleman from
Michigan (Mr. Huizenga).
To paraphrase an old automobile advertising campaign, Mr. Chairman,
this is not your father's Fed.
Since the financial crisis, the Federal Reserve has morphed into a
government institution whose unconventional activities and vastly
expanded powers would hardly be recognized by those who drafted the
original act. Regrettably, commensurate transparency and accountability
have not followed.
Since the financial meltdown of 2008, the Fed has carried out
unprecedented rounds of asset purchases, known as quantitative easing;
and its balance sheet has swollen to almost $5 trillion, equal to one-
fourth of the U.S. economy and almost five times its pre-crisis level.
We have had almost 7 years of near-zero interest rates, and the Fed's
so-called forward guidance provides almost no guidance to investors on
when rates might finally be normalized.
This ongoing uncertainty is a significant cause of businesses
hoarding cash and postponing capital investments and community banks
conserving capital and reducing lending.
Adding to the economic uncertainty, the Dodd-Frank Act granted the
Fed sweeping new regulatory powers to directly intervene in the
operations of large financial institutions. This is totally separate
and apart from its monetary policy responsibilities, Mr. Chairman.
The Fed now stands at the center of Dodd-Frank's codification of too
big to fail. With respect to these firms, the Fed is authorized to
impose heightened prudential standards, including capital and liquidity
requirements, risk management requirements, resolution planning, credit
exposure report requirements, and concentration limits.
The Fed is even authorized on a vague, faint finding that if a
financial institution poses a grave threat to financial stability, to
actually break up the firm.
In other words, Mr. Chairman, the Fed can now literally occupy the
boardrooms of the largest financial institutions in America and
influence how they deploy capital.
The Fed's monetary policy must be made clear and credible, and its
regulatory activities must comport with the rule of law and bear public
scrutiny. To accomplish this, the Fed Oversight Reform and
Modernization Act, again, the FORM Act, authored by Congressman
Huizenga, should be enacted into law.
Reform accountability and transparency, on the one hand, and
independence in the conduct of monetary policy, on the other, are not
mutually exclusive concepts.
The main reforms of the FORM Act are as follows: Number one, on
monetary policy, the Fed must publish and explain with specificity the
strategy it is following.
The FORM Act allows the Fed to chose any monetary policy, strategy,
or rule it prefers, and it has the power to amend or depart from that
rule whenever the Fed decides economic circumstances so warrant.
Whether the Fed chooses to conduct monetary policy based upon the
Taylor rule developed by Stanford Economist John Taylor or whether they
choose to conduct monetary policy based on a rousing game of rock-
paper-scissors or any other rule or method, the Fed will retain the
unfettered discretion to do that.
The FORM Act simply requires the Fed to report and explain its rule
and its deviations from the standard benchmark to the rest of us.
Economic history clearly shows that, when the Fed employs a more
predictable, rules-based monetary policy, more positive economic
results will occur.
Some have opined that such a provision will compromise the Fed's
monetary policy independence. It does not. The Fed again will retain
unfettered discretion in the exercise of monetary policy.
Given that members of the Fed Board of Governors enjoy 14-year terms,
second only to lifetime judicial appointments, and the Fed's budget is
independent of congressional appropriations, it is almost inconceivable
that

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Congress could impose upon the Fed's monetary policy independence.
On regulatory policy, as distinct from monetary policy, the format
compels the Fed to conduct cost-benefit analysis for all its
regulations. This is also known as common sense.
Under Dodd-Frank, the Fed is directed to publish upwards of 60 new
regulations, some in conjunction with other agencies, but a cost-
benefit analysis is not required. The Fed's failure to carry out these
studies results in excessive regulatory burdens on our small banks and
businesses, which harms the economy.
Furthermore, under the FORM Act, the Fed will be required to issue
formal regulations after providing for notice and comment for Dodd-
Frank stress test scenarios and disclose resubmitted stress tests.
The Fed's authority to use stress tests to direct operations of
financial institutions it deems systemically important puts government
bureaucrats in a position of essentially dictating business models and
operational objectives of private businesses. Yet, the Fed's
implementation of stress testing is marked by a lack of transparency
and a total disregard for the rule of law.

Given the secrecy surrounding the stress test, it is difficult for
Congress and the public to assess either the effectiveness of the Fed's
regulatory oversight or the integrity of their findings.
Again, under Dodd-Frank, vast powers have been expanded of the Fed.
The Fed is not using a transparent monetary policy. Because of this,
greater transparency, greater accountability is necessary. Otherwise,
we may soon awake to discover that our central bankers have morphed
into our central planners.
Mr. Chairman, I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself 6
minutes.
Mr. Chairman, I rise today in strong opposition to H.R. 3189, a bill
that would undermine the Federal Reserve's monetary policy
independence, politicize its decisionmaking, curtail its ability to
respond to a wide range of dynamic economic data, and weaken its
ability to effectively carry out its regulatory responsibilities to
promote the safety and soundness of our financial system.
Mr. Chairman, H.R. 3189, the Fed Oversight Reform and Modernization
Act, should more appropriately be called the Eliminate the Federal
Reserve's Ability to Support the American Economy and Promote Full
Employment Act.
While no Federal agency is perfect and should be reflectively
shielded from reform, this bill does not reflect a good faith effort to
strengthen the Federal Reserve or hold it accountable to its mission,
to keep inflation low and stable, and to promote full employment.
Rather, this bill is designed to put monetary policy on autopilot
under a strict, rules-based approach subject to reviews and audits by
the GAO.
This approach seeks to discourage monetary policymakers from
considering the wide range of ever-changing economic data that is
relevant to effective decisionmaking and would discourage the Fed from
engaging in the types of bold and forceful actions that have been so
critical to our economy's recovery over the past 6 years.
As the largest economy in the world that is increasingly
interconnected to a vast and complex global economy, the notion that we
should be putting blinders on our central bank strikes me as a recipe
for disaster. In fact, had the Federal Reserve taken the approach
called for in the underlying bill during and in response to the recent
financial crisis, economic performance would have been substantially
worse.
As Federal Reserve Chair Janet Yellen put it in a letter to
congressional leadership earlier this week, had the FOMC been compelled
to operate under a simple policy rule for the past 6 years, the
unemployment experience of that period would have been substantially
more painful than it already was and inflation would have been even
further below the FOMC's 2 percent objective.
But the straitjacket approach to monetary policy isn't the only
reason to oppose this bill. H.R. 3189 includes a host of provisions
that represent the latest Republican effort to block financial
regulators from fulfilling their responsibility to promote the safety
and soundness of our financial system as part of the Dodd-Frank Act.
In particular, this bill would impose unworkable cost-benefit
analysis requirements that are designed to slow new rulemaking to a
screeching halt and ensure the few that do get issued are tied up in
court.
The bill also requires the Federal Reserve to make public and solicit
comments on its stress test scenarios, a move that, while popular with
the biggest banks, would undermine the effectiveness of the test,
turning this valuable regulatory tool for assessing the health of the
financial system into a useless exercise.
Finally, the Rules Committee print adds to the end of H.R. 3189 the
text of H.R. 2912, a bill that would establish a partisan commission,
with twice as many Republicans as Democrats, to review the Federal
Reserve's conduct of monetary policy and recommend changes to its
mandate as well as the specific instruments and operational regime to
be used in achieving it.
The fact is, the Federal Reserve's current dual mandate and
operational monetary policy independence have served the economy well.
Such independence ensures that policy decisions are empirically driven
rather than motivated by short-term political pressures while its clear
objectives allow Congress to hold it accountable.
Operating under the current model, the Federal Reserve played a major
role in ending the panic that gripped the financial sector in 2008 and,
through its sustained efforts, has supported the creation of more than
13.3 million private sector jobs and cut the unemployment rate in half
since the height of the crisis, all while keeping inflation well below
the target.
Frankly, I think it is a terrible idea to put those who thought
shutting down the government was a good idea and who thought fiscal
austerity would grow the economy in a position to micromanage our
monetary policy, also.
Finally, I would be remiss if I failed to note that the Congressional
Budget Office estimates that this bill will cost $109 million over 10
years by forcing the Federal Reserve to jump through new rulemaking and
administrative hoops.
To pay for this cost, the Rules Committee adopted an amendment that
would raid $60 billion from the Federal Reserve's surplus account, a
buffer that inspires confidence in the central bank itself. Ironically,
this is the very same fund that Republicans voted to eliminate just 2
weeks ago.

{time} 1745

For all of these reasons, I would urge Members to join me in opposing
this terrible legislation that would do enormous damage to our economy
and the American people. I can't believe this bill is before us.
Mr. Chairman, I reserve the balance of my time.
Mr. HENSARLING. Mr. Chairman, I yield such time as he may consume to
the gentleman from Michigan (Mr. Huizenga), the author of the FORM Act
and chairman of the Monetary Policy and Trade Subcommittee of the
Financial Services Committee.
Mr. HUIZENGA of Michigan. Mr. Chairman, I rise today in support of
H.R. 3189, a wonderful bill called the Fed Oversight Reform and
Modernization Act, the FORM Act.
Mr. Chairman, Marriner Eccles, Chairman of the Federal Reserve under
President Franklin Roosevelt, once began testimony to Congress by
stating: ``I am speaking for the Board of Governors of the Federal
Reserve System, an agency of Congress.''
Chairman Eccles recognized what many seem to have forgotten over the
Federal Reserve's 100-plus-year history, that the Fed was created by
Congress; the Board of Governors are all appointed for terms of 14
years by the President and confirmed by Congress; and it operates per
its charter and laws set out by, yes, Congress. Therefore, the Federal
Reserve is actually or, theoretically, is supposed to be accountable to
Congress.
Today, the Federal Reserve is one of the most powerful institutions
in the world. It is past time to restore transparency at the Fed and
hold it accountable to the American taxpayers.

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The U.S. Federal Reserve System, or the Fed, as it is known, was
created in 1913 in response to a series of economic crises early in the
20th century. Although the Fed was created as an independent agency
deriving its power from Congress, over the past 100 years, the Fed's
power has significantly expanded.
While originally created to provide stability to the banking
business, the Federal Reserve has gained unprecedented power,
influence, and control over the financial system while remaining
shrouded in mystery to the American people. At the same time, the
American people have continued to suffer through a financial crisis, at
least once per generation. With such a poor record, the Fed should not
be free to carry on without accountability to the institution that
created it.
Mr. Chairman, we will not fully realize robust economic growth until
the Fed changes the conduct of its monetary policy. Six years have
passed since the recession officially ended, but the U.S. economic
opportunity remains well short of its potential.
The Fed must be accountable to the people's Representatives as well
as to the hardworking taxpayers themselves. We need to modernize the
Federal Reserve, restore accountability, and bring it into the 21st
century. That is why I introduced H.R. 3189, the FORM Act of 2015. The
FORM Act makes two fundamental changes to improve how the Federal
Reserve conducts monetary policy.
Now, I know my colleagues on the other side of the aisle tend to kind
of like to pass bills before they know what is in those bills. That is
one of the ways that they discover what is in those bills. But if they
actually read this bill, they would see that it protects the Fed's
ability to develop what it believes is the best course of action on
monetary policy--the exact opposite of what my colleague was saying. It
requires them to then give the American people a greater accounting of
its actions.
My bill directs the Federal Reserve to transparently communicate its
monetary policy decisions to the American taxpayers--not what it must
do, as is being asserted. Rather, they must simply explain what they
are doing and why they are doing it. By requiring the Fed to regularly
communicate how its policy choices compare to a benchmark guideline
instead of continuing the ad hoc strategy currently being employed, the
FORM Act will help consumers and investors make better decisions in
both the present and create more sound expectations about the future.
Even Chair Yellen once championed the merits of this approach,
stating that ``the framework of a Taylor-type rule could help the
Federal Reserve communicate to the public the rationale behind policy
moves.'' The FORM Act does not dictate any particular monetary policy
course; it simply ensures that the Fed transparently communicates its
monetary policy decisions. I can't agree more with Chair Yellen.
Second, the FORM Act reforms the Federal Reserve's emergency lending
powers under section 13(3) of the Federal Reserve Act, closing a
glaring loophole and preventing the likelihood of future bailouts, as
we have seen in the past. During the last financial crisis, the Fed
used extraordinarily broad powers to provide trillions of dollars in
low-cost loans to a handful of massive financial institutions.
The FORM Act raises the bar from the current trigger, permitting the
Fed to invoke its emergency lending powers only upon finding that--and
this is from the text of the bill--``unusual and exigent circumstances
exist that pose a threat to the financial stability of the United
States.''
Responsibly limiting the Federal Reserve's lending authority has
support from across the ideological spectrum, ranging from
conservatives to liberals, such as Senator Elizabeth Warren.
The FORM Act also does the following: It requires the Fed to conduct
cost-benefit analysis for all regulations it promulgates. Failure to
conduct cost-benefit analysis results in excessive regulatory burdens
on small banks and businesses, which harm the economy and I believe
have slowed our recovery.
It also requires transparency about the Federal Reserve's bank stress
tests as well as the international financial regulatory negotiations
conducted by the Federal Reserve, the Treasury Department, the Office
of the Comptroller of the Currency, the Securities and Exchange
Commission, and the Federal Deposit Insurance Corporation.
Mr. Chairman, I am afraid that we are sliding into a much broader
area of regulation that is not U.S. regulation but is actually European
and world regulation. It requires the Federal Reserve to review the
salaries of highly paid employees. It provides for at least two staff
positions to advise each member of the Board of Governors independent
from the Chair, and it requires Fed employees to abide by the same
ethical requirements as other Federal financial regulators.
That sounds like an excellent idea in my mind.
It clarifies the blackout period governing when Federal Reserve
governors and employees may publicly speak to Congress as well as to
the public on certain matters, and it ends automatic seats at the
Federal Open Market Committee table, which provides a more balanced
representation of votes on Federal policy at the FOMC.
It requires the full FOMC to decide policy rates on excess balances
maintained at a Federal Reserve Bank by a depository institution. It
removes restrictions placed on the Government Accountability Office's
ability to audit the Fed, and it directs the GAO to conduct an audit of
the Fed within 12 months of enactment and report back to Congress.
Finally, the FORM Act establishes a bipartisan monetary commission,
as proposed by Chairman Brady, to identify other opportunities for
improvement.

Mr. Chairman, we can no longer afford to have an entity with so much
power as the Federal Reserve by operating on a whim with ad hoc policy.
The reforms in this legislation strike the right balance between
holding the Fed accountable to Congress and the American people while
still affording it its independence to make monetary policy decisions
free from political pressure of all stripes.
Mr. Chairman, the Federal Reserve System is an agency of Congress. As
such, it is not infallible, and its independence should not be
unlimited. Let's restore proper congressional supervision and provide
the American people with transparency. I urge my colleagues to vote in
support of H.R. 3189, the Fed Oversight Reform and Modernization Act of
2015.
Ms. MAXINE WATERS of California. Mr. Chairman, despite what my
colleague on the opposite side of the aisle, Mr. Huizenga, has said
about our not knowing what is in the bill, we know what is in the bill,
and this Congress should be frightened about what you are attempting to
do with establishing this simple monetary policy rule that is
unworkable. This is dangerous.
Mr. Chairman, I yield 4 minutes to the gentlewoman from New York
(Mrs. Carolyn B. Maloney). She is the ranking member of the
subcommittee on Capital Markets and Government Sponsored Enterprises of
the Financial Services Committee.
Mrs. CAROLYN B. MALONEY of New York. I thank the gentlewoman for
yielding and for her leadership.
Mr. Chairman, I rise today in opposition to H.R. 3189.
Mr. Chairman, I include in the Record an article from The Wall Street
Journal written by Alan Blinder, a former Vice Chair of the Federal
Reserve, a professor at Princeton, and the author of a book on the
financial crisis, the response, and the work ahead. This is his strong
article in opposition to this bill which he feels is extremely
disruptive, problematic, and just plain wrong.

[From the Wall Street Journal, July 17, 2014]

An Unnecessary Fix for the Fed

(By Alan S. Blinder)

The House Financial Services Committee held a hearing on
Federal Reserve reform on July 10. The hearing didn't get
much press attention. But it was remarkable. While the House
can't manage to engage on important issues like tax reform,
immigration reform and the minimum wage, it's more than
willing to propose radical ``reform'' of one of the few
national policies that is working well.
The bill under consideration is called the Federal Reserve
Accountability and Transparency Act. (That's right: FRAT.) To
be fair to an otherwise dreadful bill, accountability and
transparency are worthy objectives, and FRAT does include
some reasonable ideas, such as trimming the news blackouts
before and after meetings of the Federal Open Market
Committee. But it also includes some

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corkers, such as requiring public disclosures--in advance--
before entering into international negotiations, disclosures
that could make such negotiations next to impossible. How
would you like to play your poker hand open?
But the meat-and-potatoes of the House bill has little to
do with either transparency or accountability. Instead, it
seeks to intrude on the Fed's ability to conduct an
independent monetary policy, free of political interference.
As the title of Section 2 puts it, FRAT would impose
``Requirements for Policy Rules of the Federal Open Market
Committee.'' A ``rule'' in this context means a precise set
of instructions--often a mathematical formula--that tells the
Fed how to set monetary policy. Strictly speaking, with such
a rule in place, you don't need a committee to make
decisions--or even a human being. A handheld calculator will
do.
In the debate over such rules, two have attracted the most
attention. More than 50 years ago, Milton Friedman famously
urged the Fed to keep the money supply growing at a constant
rate--say, 4% or 5% per year--rather than varying money
growth to influence inflation or unemployment.
About two decades ago, Stanford economist John Taylor began
plumping for a different sort of rule, one which forces
monetary policy to respond to changes in the economy--but
mechanically, in ways that can be programmed into a computer.
While hundreds of ``Taylor rules'' have been considered over
the years, FRAT would inscribe Mr. Taylor's original 1993
version into law as the ``Reference Policy Rule.'' The law
would require the Fed to pick a rule, and if their choice
differed substantially from the Reference Policy Rule, it
would have to explain why. All this would be subject to audit
by the Government Accountability Office (GAO), with prompt
reporting to Congress.
In a town like Washington, the message to the Fed would be
clear: Depart from the original Taylor rule at your peril.
Federal Reserve Chair Janet Yellen understands this and, as
she made clear in her semiannual testimony to the House
Financial Services Committee on Wednesday, opposes the bill.
So what is this rule that FRAT would turn into holy writ?
It's a simple equation, which starts by establishing a
baseline federal-funds rate that is two percentage points
higher than inflation; that's about 3.5% now. It then adds to
that baseline one-half of the amount by which inflation
exceeds its 2% target (that ``excess'' is now roughly minus
0.5%). Next, it adds one-half the percentage amount by which
gross domestic product exceeds an estimate of potential GDP
(that gap is controversial but is perhaps minus 4% today).
Thus Taylor's mechanical rule wants the current fed-funds
rate to be about 3.5 - 0.25 - 2.0 = 1.25%--which is vastly
higher than the actual near-zero rate.
Fed staff could no doubt concoct an alternative rule that
instructed the FOMC to set the fed-funds rate close to zero
today, and the committee could pretend it was using that
rule. That's transparency?
But there is a deeper problem. The Fed has not used the
fed-funds rate as its principal monetary policy instrument
since it hit (almost) zero in December 2008. Instead, its two
main policy instruments have been ``quantitative easing,''
which is now ending, and ``forward guidance,'' which means
guiding markets by using words to describe future policy
intentions. If words are the Fed's main policy instrument,
how is the FOMC supposed to set them according to a rule? And
how can the GAO determine whether that rule resembles the
``Reference Policy Rule''?
The Taylor rule probably would give the Fed sensible
instructions in normal times. But what about when the world
is far from normal? The Fed claimed to be using Friedman's
money growth rule during the tumultuous disinflation of 1979-
82--with miserable results. Luckily for all of us, the Taylor
rule wasn't tried during the 2008-09 financial crisis. That
could have been disastrous, effectively tying the Fed's hands
just when extraordinary monetary stimulus was most needed.
Should we now bet the ranch that the world will remain placid
forever?
Conservatives distrust concentrated government power--an
idea embraced by our Constitution. They worry that human
beings, who are fallible and maybe not even trustworthy, will
make poor policy choices. Yes, to err is human. But humans
can often recognize extraordinary events and try to adapt.
Mechanical rules can't.
There is another conservative principle in which I've
always believed: If it ain't broke, don't fix it. Monetary
policy is one of the few things in today's Washington that
``ain't broke.'' The mischievous FRAT wouldn't fix it.

Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, this bill would
significantly undermine the Federal Reserve's independence by requiring
the Fed to adopt a rules-based approach to monetary policy. While it is
true that this bill doesn't force, by law, the Fed to follow a
particular formula for interest rates, it does attempt to bully the Fed
into following the Republicans' preferred monetary policy by hauling
the Fed Chair up to testify in front of Congress every time the Fed
deviates from the monetary policy rule dictated by this statute. This
would have a significant chilling and killing effect on the Fed's
deliberations over interest rates and inappropriately interferes with
the Federal Reserve's independence.
Let's also remember that the Taylor rule, which this bill would
codify, would have performed disastrously in the financial crisis that
we are still suffering from. Federal Reserve Chair Yellen testified
that, during the crisis, the Taylor rule ``would have performed just
miserably'' and would have led to a ``dreadful'' economic recovery.
But this is not the only troubling provision in this bill. Section 4
of the bill also needlessly overhauls the membership of the Federal
Open Market Committee, or FOMC. The current makeup of the FOMC, which
is responsible for setting monetary policy, has served this country
well for the past 100 years. So if it isn't broken, don't try to fix
it, and in this case, don't make it worse.
The New York Fed is responsible for implementing monetary policy; and
this special role gives the New York Fed a unique understanding of
monetary policy, of how markets will react to changes, and what actions
are both feasible and effective.
I think that it is important to remember why the regional Fed
president, with responsibility for implementing monetary policy, serves
as the Vice Chairman of the FOMC.
Mr. Chairman, monetary policy does not end when the FOMC announces a
target interest rate. Short-term interest rates do not magically move
to the FOMC's desired level. It is not that easy. Someone has to
implement monetary policy by pushing short-term interest rates toward
the official target rate, and that someone is the New York Fed.
As Richmond Fed President Jeff Lacker said just last week, raising
interest rates is ``pretty clear. You just write the statement and you
must send it to'' the New York Fed in New York. The New York Fed does
this primarily by buying and selling Treasury securities in the
markets, which influences the supply of money in the system. Because
the interest rate is a function of the supply and demand for money, the
New York Fed controls short-term interest rates by influencing the
supply of money in the system. This is an incredibly important job.
The CHAIR. The time of the gentlewoman has expired.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield the
gentlewoman an additional 30 seconds.
Mrs. CAROLYN B. MALONEY of New York. The Fed's ability to control
short-term interest rates is what allows the Fed to set monetary
policy. If the markets didn't believe that the Fed had the ability to
control short-term interest rates, then the FOMC's statement about
raising or lowering interest rates would be viewed as merely wishful
thinking rather than an actual monetary policy.
Mr. Chairman, this is why the New York Fed president serves as the
Vice Chair of the FOMC, and I see no reason why this should change. So
it is unclear what this problem is trying to fix, and I urge my
colleagues to vote against this bill.
Mr. HENSARLING. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman
from New Jersey (Mr. Garrett), the chairman of our Capital Markets and
Government Sponsored Enterprises Subcommittee.
Mr. GARRETT. I thank the chairman and I thank the gentleman from
Michigan (Mr. Huizenga) for all of their hard work to bring greater
transparency to one of the most secretive agencies in the government,
the Federal Reserve.
Mr. Chairman, earlier this year, Fed Chair Janet Yellen said: ``The
Federal Reserve is already one of the most transparent central banks
around the globe.''
Really? If that were the case, why is it we have seen the following
headlines in the last few years: March of last year, Forbes, ``Fed on
Target to Raise Interest Rates in Spring of 2015''; then in October,
``Two Fed Officials Say Interest Rates to Rise in Mid-2015''; then in
The Wall Street Journal just last month, ``Fed Doubts Grow on 2015 Rate
Hike''; and then just 2 weeks later in The Wall Street Journal, ``Fed
Keeps December Rate Hike in Play.''
So which is it? Mr. Chairman, a simple Google search on the subject
pulls up a range of headlines on this topic all pointing to one fact:
There is a great deal of confusion and uncertainty as to

[[Page H8327]]

how the Federal Reserve actually conducts its own monetary policy.
So the bottom line is the Fed needs to follow a rule when conducting
monetary policy, and this bill, H.R. 3189, gives the Fed that
flexibility to develop and implement its own rule as it sees fit and
then simply to report to Congress and the public, should it find the
need to deviate from it.

{time} 1800

And this will then do what? It will give us greater economic
certainty and moves us away from what we have seen, a Fed guessing game
that we have all become too used to.
More troubling than all this, more troubling than the monetary
policy, however, is the lack of transparency and accountability and
openness surrounding their regulatory function. Despite the Fed's
failure to prevent the crisis in 2008, despite their failure to even
see it coming, the Dodd-Frank Act bestowed upon the Fed tremendous new
regulatory authority, authority that it is now using to try and
regulate huge swaths of the financial system, and what they are really
trying to do is to stamp out all risk taking, if you will, in our
capital markets.
The Fed fails to conduct any cost-benefit analysis of the rulemaking
in that, and it has conspired, if you will, with various secretive
international bodies, like the FSB, the Financial Stability Board, in
so doing to try to rewrite the rules, if you will, to the detriment of
who? Well, the American capital markets.
So before us today is the FORM Act, which would do what? It would
shine the light of day, if you will, on the Fed's regulatory
operations, so that all of us, the American public, can see actually
what the powers are up to. So now more than ever we need transparency
and accountability in the Federal Reserve.
I thank the chairman, and I thank the sponsor of the bill for moving
the underlying bill.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield 2 minutes to
the gentlewoman from Wisconsin (Ms. Moore), the ranking member of the
Subcommittee on Monetary Policy and Trade on the Financial Services
Committee.
Ms. MOORE. Mr. Chairman, as the ranking member of the Monetary Policy
and Trade Subcommittee, I rise in strong opposition to H.R. 3189.
Sometimes you can disagree on a bill, and it doesn't really make much
difference. But this bill is extremely dangerous for many reasons. I
want to focus on just two provisions--my time is limited--that would be
absolutely disastrous for the U.S. economy:
One is the political audits of the Federal Reserve.
And, second, the computer model monetary policy, so-called Taylor
rule.
Now, people think, well, what is wrong with auditing the Fed? The Fed
is already audited, including an external audit, which all Americans
can review online. This bill creates a mechanism for political audits
of the Fed. Injecting politics into monetary policy and undermining the
independence of the Central Bank would be an absolute disaster.
I am thinking just recently of the transportation bill that we passed
out of here--and I voted for it, hoping that it can be fixed in
conference--where the Fed is required to provide $60 billion--that is
billion with a B, Mr. Chairman--and then is not being allowed to
replenish its money supply. This is more than just tinkering in our
economy.
There is overwhelming evidence and academic research that
demonstrated an independent central bank anywhere in the world making
economic decisions and not political decisions delivers lower
inflation, higher employment, and better economic results.
Currently, the U.S. enjoys low borrowing costs, and our debt is
considered the gold standard. The U.S. dollar is literally the reserve
currency of countries around the world.
If adopted, this bill would potentially undermine the exalted status
of U.S. debt.
The Acting CHAIR (Mr. Hardy). The time of the gentlewoman has
expired.
Ms. MAXINE WATERS of California. I yield the gentlewoman from
Wisconsin an additional 1 minute.
Ms. MOORE. Does anyone in America think that Congress is going to be
more confident at conducting monetary policy than an independent
central bank?
Let me remind you, under the stewardship of the Republican leadership
of this House, we have seen government shutdowns, U.S. debt default
threats, and fiscal austerity measures that hamper the economic
recovery.
As to this Taylor rule, I doubt that anybody over there can explain
the Taylor rule to you. But I tell you, had we had the Taylor rule in
place in the 1980s when Volcker was here, he would not have been able
to stop the rampant inflation that we experienced. The assumptions that
it is based on have not accounted for Volcker's inflation fighting or
Bernanke's aggressive recovery status. They couldn't have done it under
this Taylor rule.
And, furthermore, banks, Wall Street, all the investors, would set
their models to the Fed commuter model, and then it would set up all
kinds of economic disruptions if the Fed would ever deviate from the
model. It would take the discretion away from the Fed.
I strongly oppose the bill, and I urge my colleagues to reject this
dangerous legislation.
Mr. HENSARLING. Mr. Chairman, I yield myself 10 seconds to, once
again, encourage my colleagues to actually read the bill.
The Taylor rule is not mandated for the Federal Reserve. But had the
Federal Reserve followed the Taylor rule in the first place, we would
not have had a financial crisis because the real estate bubble would
not have been inflated by the Fed keeping money too loose, too long.
I yield 2 minutes to the gentleman from Wisconsin (Mr. Duffy), the
chairman of our Oversight and Investigations Subcommittee.
Mr. DUFFY. Mr. Chairman, I appreciate the chairman yielding.
I want to thank Chairman Huizenga for his good work on the FORM Act.
I think this is a commonsense set of reforms that make the Federal
Reserve more accountable to the American people, which means they are
more accountable to the United States Congress.
I would ask my colleagues across the aisle and my good friend from
Wisconsin (Ms. Moore), who says that the FORM Act is one that would
provide for the Congress to set monetary policy, where in the FORM Act
does it say that? Just because we ask for oversight, just because we
want to have the Federal Reserve accountable to the Congress and to the
American people, doesn't mean that Congress is taking the role of
setting monetary policy. Again, that is just setting up a straw man and
trying to knock it down in the argument.
This is important stuff. There is a distinct difference between the
two sides of the aisle. We do think there should be accountability and
transparency. But my friends across the aisle will continue to advocate
for very powerful government institutions empowering bureaucrats that
are not elected and that are not accountable to the American people to
make decisions that have huge impacts on the American people.
What we say on our side of the aisle is, in our form of government,
the people have a right to have a say in their government, which means
you need to empower the Congress and the Senate to have oversight over
these very powerful organizations.
That is the great debate that we are having here. We want oversight
and transparency. We don't want to set monetary policy.
I chair the Committee on Oversight, and we have asked the Federal
Reserve for documents that we are entitled to in regard to an FOMC
leak. The Federal Reserve has basically said:
Yes, you are entitled to these documents. But, guess what, we are not
going to give them to you.
What is the reason, Madam Chair?
I don't have a really good reason. Some people asked me not to give
them to you. I know you are entitled, but I am not going to send them
over to you.
The Acting CHAIR. The time of the gentleman has expired.
Mr. HENSARLING. I yield the gentleman from Wisconsin 30 seconds.
Mr. DUFFY. We had to go to extreme measures to get the Federal
Reserve to comply with our subpoenas to provide

[[Page H8328]]

us the documents that this institution is entitled to. That shows how
arrogant this institution--the Fed--really is.
A rules-based approach makes sense. An audit of the Fed taking a look
back that is not political, but a retrospective look at the Fed's
monetary policy, makes absolute sense.
And to think that we are going to talk about the blackout period at
the Fed that, yes, you can have a blackout for monetary policy, but you
can't use that blackout when we are talking about the supervisory and
prudential functions of the Federal Reserve.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself such
time as I may consume.
I cringe at the thought that the documents from the FOMC meeting of
2012 would be released to the Members of Congress. They would cause
some volatility in the markets and shake up this country and cause such
harm that everybody ought to be alarmed at the thought.
I yield 3 minutes to the gentleman from Illinois (Mr. Foster), a
member of the Committee on Financial Services.
Mr. FOSTER. Mr. Chairman, I thank the ranking member for yielding.
Mr. Chairman, I rise today in opposition to the legislation designed
to chip away at the independence of the Federal Reserve. The Federal
Reserve's objectives of maximum employment and stable prices have and
will remain moving targets. The legislation attacks the independent
judgment of the Fed in a number of ways by intrusive and dangerous
meddling in the guise of Congressional oversight.
This legislation also suggests that this complex task could somehow
be reduced to a function of two variables. Now, I am a physicist and,
as Albert Einstein said: ``Everything should be made as simple as
possible but not simpler.'' In reality, economics is a field of study
that is constrained by numbers, but within those constraints, there lie
large psychological variables and many external, often international,
and often random variables.
It is obvious that any two-variable rule is far too simple to guide
the monetary policy of a $17 trillion national economy interconnected
with the economies in every part of the world.
It is also clear from the incoherent and counterfactual tirades that
we listen to in our committee after the Republican financial collapse
of 2007, that we want to keep politics as far away as possible from
Federal Reserve monetary policy.
The truth is that Federal monetary policy is already guided, but not
determined, by a number of complex, macroeconomic models. It is very
far from ad hoc. In fact, at the heart of many of these models lies a
variance of what is called the Cobb-Douglas production function. And
the Douglas in that name is Senator Paul Douglas, an economist from the
University of Chicago before he became a Senator and the author of some
of the most influential papers in economics. My mother worked for
Senator Paul Douglas when he was a Senator back in the 1950s, and when
I see the level to which economic debate has fallen in this country
from Senator Paul Douglas to what we see today, it breaks my heart.
Now, I agree that our markets and economies have changed since the
Federal Reserve was formed. And the system deserves study, but this
bill is not about studying the Federal Reserve. It is about subjecting
it to the politics and the backseat driving that it often needs to
overcome to meet its dual mandate.
Mr. Chairman, this bill chips away at the independence of the Federal
Reserve, and I urge my colleagues to join me in opposing it.
Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from
Pennsylvania (Mr. Rothfus).
Mr. ROTHFUS. Mr. Chairman, over the last 6 years, Americans have
watched as the Federal Reserve has embarked on an interventionist
monetary policy to an unprecedented degree.
The Fed's quantitative easing marked a dramatic departure from
traditional monetary policy in the United States, and it resulted in a
massive expansion of the Fed's balance sheet to some $4.5 trillion. To
put this number in perspective, that is almost five times the size of
the Fed's balance sheet before the financial crisis when it stood at
$800 billion. It also represents one-quarter of the total size of the
U.S. economy.
Unfortunately, despite this enormous expansion and influence over the
economy, the Fed has persistently failed to implement measures to
increase transparency as to its decisionmaking.
Americans continue to face a sluggish economy that has fallen far
short of its potential, and they want to know the reasoning behind the
Fed's actions or lack thereof. This is particularly important for those
who have saved money for their retirement, especially grandparents on
fixed incomes, who are being directly harmed by the Fed's decision to
keep rates at near zero. They want transparency and answers from their
government.
I suggest also our citizens should understand why the Federal Reserve
would take an unprecedented action to explode its balance sheet by more
than 400 percent over 5 years. No one--no one--knows how this
experiment will end up turning out.
The legislation that we are considering today would implement
important reforms to address these issues. To start, by requiring the
Fed to explain the differences between its monetary policy decisions
and a rigorously studied reference rule, the legislation would go far
to improve the American public's understanding of monetary policy and
how it impacts their lives.
Similarly, by requiring a cost-benefit analysis for any regulation
that the Fed chooses to promulgate, it will ensure that all relevant
costs are properly taken into account and that the Fed considers the
full consequences of its actions in an open and understandable fashion.
To be clear, these reforms are about increasing transparency and
improving how the Fed communicates its policy decisions to the American
public. Contrary to what some claim, the legislation does not--does
not--mandate any particular policy decisions, nor does it impact or
threaten the Fed's independence in setting monetary policy. In fact,
few have made a better case for these sorts of reforms than Chair
Yellen herself, who stated: ``Transparency concerning Federal Reserve's
conduct of monetary policy is desirable because better public
understanding enhances the effectiveness of policy.''
Mr. Chairman, transparency and openness serve to strengthen a
democratic republic like ours. That is what this legislation is all
about.
I urge my colleagues to support this bill.

{time} 1815

Ms. MAXINE WATERS of California. Mr. Chairman, I inquire as to
whether or not the chairman has more speakers.
Mr. HENSARLING. Mr. Chairman, we have at least three to four more
speakers.
Ms. MAXINE WATERS of California. Mr. Chairman, I reserve the balance
of my time.
Mr. HENSARLING. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman
from Indiana (Mr. Messer).
Mr. MESSER. Mr. Chairman, I rise today in support of H.R. 3189, the
Fed Oversight Reform and Modernization Act.
We all recognize the importance of the Federal Reserve's independence
when making monetary policy decisions. However, the American people
rightly expect the Federal Reserve to be held accountable, too. They
deserve to know exactly what the Federal Reserve does and to know that
its rulemaking process is transparent and subjected to appropriate
congressional oversight.
As a Member who represents 19 rural and suburban Indiana counties, I
know middle America is still struggling to get back on its feet after
the 2008 financial crisis. Hardworking Hoosiers know they didn't cause
the financial collapse, but they are frustrated because the folks who
did cause the crisis--bad actors in private industry and ineffective
Federal banking regulators--haven't been held accountable at all.
The status quo is unacceptable. The Fed should be accountable and
transparent in its decisionmaking, and H.R. 3189 is an important step
towards that goal.
I urge my colleagues to support the bill.
Ms. MAXINE WATERS of California. Mr. Chairman, I reserve the balance
of my time.

[[Page H8329]]

Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from
Minnesota (Mr. Emmer).
Mr. EMMER of Minnesota. Mr. Chairman, I rise today in support of the
much-needed Fed Oversight Reform and Modernization Act.
Minnesotans, like Robert from Becker and Kevin from Elk River, are
correct in that the Fed is an ineffective and isolated government
bureaucracy that is out of touch with the common man and the long-term
needs of the American people.
Yes, quantitative easing may have been a boon for a few. However,
three rounds of this reckless tactic have inflated the Fed's balance
sheet to more than $4.5 trillion, threatening the economic stability of
our Nation and the American Dream for many.
Equally problematic is the secrecy surrounding the Fed's discount
window operations, open market operations, and agreements with foreign
governments, which prevent market actors from knowing the information
they need in order to prudently invest in the future.
In the past, Congressman Ron Paul led the charge against the Fed with
his Audit the Fed bill. Today we are building upon his legacy
legislation. I would like to thank my colleague, Congressman Huizenga,
for introducing the Fed Oversight Reform and Modernization Act.
Not only does this new legislation include Audit the Fed, but it also
requires the Fed establish a monetary policy rule that will enable us
to have a better idea of where the Fed is likely to move monetary
policy. Additionally, the bill limits taxpayers' exposure to bailouts
by responsibly tightening the Fed's emergency lending authority.
Furthermore, this bill requires the Fed, before implementing any
rule, to conduct a cost-benefit analysis. This will give the American
people a true sense of the economic impact any Fed proposal will have.
It would also mandate the Fed, Federal Deposit Insurance Corporation,
and Treasury to disclose any positions they plan to take at
international regulatory negotiations, enabling the American people and
Congress to weigh in on international regulations that often adversely
impact American business.
Finally, this legislation would clarify the Federal Open Market
Committee blackout period, mandate the Fed to disclose employees'
salaries, require the Chair of the Fed to participate in congressional
hearings quarterly, and give more power to local district Fed Bank
presidents over open market operations.
I understand that many of my colleagues on the other side of the
aisle may be skeptical about reforming the Fed. However, it is
important to remember that this legislation only enhances oversight,
communication, and transparency. This legislation will in no way take
away the Federal Reserve's control of monetary policy, but it will
provide us the tools to ensure that sound policies are enacted.
Mr. Chairman, again I thank Mr. Huizenga and Chairman Hensarling for
their work on this bill. I encourage my colleagues to vote in favor of
the Fed Oversight Reform and Modernization Act.
Ms. MAXINE WATERS of California. Mr. Chairman, I reserve the balance
of my time.
Mr. HENSARLING. Mr. Chairman, may I inquire as to how much time is
remaining on both sides?
The Acting CHAIR. The gentleman from Texas has 4\1/2\ minutes
remaining. The gentlewoman from California has 13 minutes remaining.
Mr. HENSARLING. Mr. Chairman, I yield 2 minutes to the gentleman from
Michigan (Mr. Huizenga), the author of the FORM Act.
Mr. HUIZENGA of Michigan. Mr. Chairman, I am taking this second
opportunity to rise because I think we have heard a lot of
misinformation out there, and there is a lot of fog that has been
getting thrown up into the air.
This is about transparency. This is about accountability. This is not
about Congress' coming in and dictating to the Fed how to do business.
They, the Fed, will set a benchmark that they will then be measured
against. It is not we. It is not Congress saying what they will or will
not do. It is they, themselves. That seems pretty reasonable.
It also seems very reasonable to me that, if we are ever finding
ourselves in a position in which there are these massive bank bailouts
that some would claim need to be done again, we would have a belt and
suspenders way to approach it in that we would say not just two or
three or four people are going to decide whether that is going to
happen, but that we would actually get the regional Fed Bank Governors
involved in that as well. We would say that 9 of the 12 of them have to
agree with the decisions that are being made.
We make sure that there is a redundancy, that we are not just rushing
and plunging headlong. Ultimately, the goal is to make sure that we
never have that situation happen again so that we never find ourselves
in that situation of having to even have the discussion about whether
we would have massive bank bailouts, which is what happened in 2009
under this administration.
Again, I appreciate the effort that has been put into this. There are
a lot of small details to it, but there are a lot of broad themes to
it. At the end of the day, we know that this is the best thing not only
for Congress, not only for the Fed, but, ultimately, for the American
people as they are demanding us to hold an organization accountable
that we in Congress created not in an unreasonable fashion, but in a
way that is balanced, transparent, and that ultimately helps the
stability of the U.S. economy.
Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself the
balance of my time.

I am going to take the unusual step of reading a letter from Janet
Yellen, the Chair of the Board of Governors of the Federal Reserve
Bank. I take this unusual step because the letter is so well written
and explains in such a profound way why the bill that is before us is
dangerous and problematic.
``Dear Mr. Speaker and Madam Leader: I am writing regarding the House
of Representatives' consideration of H.R. 3189, the Fed Oversight
Reform and Modernization Act''--known as the FORM Act--``The FORM Act
would severely impair the Federal Reserve's ability to carry out its
congressional mandate to foster maximum employment and stable prices
and would undermine our ability to implement policies that are in the
best interest of American businesses and consumers. This legislation
would severely damage the U.S. economy were it to become law.
``There are a number of harmful provisions in the FORM Act, but the
provisions concerning the conduct of monetary policy are especially
troubling. Section 2 of the bill would require the Federal Reserve to
establish a mathematical formula or `directive policy rule' that would
dictate how the Federal Open Market Committee adjusts the stance of
monetary policy at every FOMC meeting. The Government Accountability
Office (GAO) would be responsible for determining whether the rule
adopted by the FOMC met all the criteria in the legislation. Any time
the FOMC was judged not to be in compliance with the GAO-approved rule,
the GAO would be required to conduct a full review of monetary policy
and submit a report to the Congress. Moreover, the GAO would also be
required to conduct a full review of monetary policy and report to the
Congress any time the FOMC changed its policy rule.
``These provisions are significantly flawed for a number of reasons.
Most importantly, the provisions effectively cast aside the bipartisan
approach toward monetary policy oversight developed by the Congress in
the late 1970s. Under that approach, the Congress establishes the long-
run objectives for monetary policy but affords the Federal Reserve a
considerable degree of independence in how it goes about achieving
those statutory goals, thus ensuring that the conduct of monetary
policy is insulated from political influence. This framework is now
recognized as a fundamental principle of central banking around the
world. The provisions of the FORM Act, in contrast, would effectively
put the Congress and the GAO squarely in the role of reviewing short-
run monetary policy decisions and in a position to, in real time,
influence the monetary policy deliberations leading to those decisions.
``Conducting monetary policy by strictly adhering to the
prescriptions of a simple rule would lead to poor economic outcomes.
There is no consensus among economists or policymakers

[[Page H8330]]

about a simple policy rule that is best suited to cover a wide range of
scenarios. For example, even during the period known as the Great
Moderation, in the 1980s and 1990s, when a simple rule might have been
expected to work well, the actual level of the Federal funds rate often
diverged substantially from the level prescribed by the reference rule
included in the FORM Act. Indeed, for much of this period, monetary
policy was actually tighter than what would have been the case under
that rule.
``Even more tellingly, no simple policy rule has yet been devised
that would adequately address the effective lower bound on the policy
rate--a constraint that has been binding in the United States since
late 2008. Had the FOMC been compelled to operate under a simple policy
rule for the past six and a half years, the unemployment experience of
that period would have been substantially more painful than it already
was, and inflation would be even further below the FOMC's 2 percent
objective. Indeed, a recent study by the Federal Reserve economists
suggests that the current unemployment rate would still be above 6
percent and inflation would now be running somewhat below zero, if the
FOMC had not taken the actions it did but rather had followed the
reference rule and made it clear that it would do so in the future. In
other words, millions of Americans would have suffered unnecessary
spells of joblessness over this period, generating enormous amounts of
personal and collective damage that could have been avoided--and, in
fact, was avoided because we had the latitude to use our available
tools responsibly and forcefully.
``In addition to allowing the GAO to conduct a review specifically
related to the `directive policy rule,' Section 13 of the FORM Act also
allows GAO to more broadly review and analyze the monetary policy
decisions of the Federal Reserve at any time. This provision would
politicize monetary policy and bring short-term political pressures
into the deliberations of the FOMC by putting into place real-time
second guessing of policy decisions. Such action would undermine the
independence of the Federal Reserve and likely lead to an increase in
inflation fears and market interest rates, a diminished status of the
dollar in global financial markets, and reduced economic and financial
stability.
``The provision is based on a false premise--that the Federal Reserve
is not subject to an audit. To the contrary, under existing law, the
financial statements of the Federal Reserve System are audited annually
by an independent accounting firm under the supervision of the
Inspector General for the Board.

{time} 1830

``These audited financial statements are made publicly available and
provided to Congress annually. The GAO may also conduct an audit of the
Board's financial statements and of transactions that the Federal
Reserve conducts in the course of its lending and other activities. In
addition, each week, the Federal Reserve publishes its balance sheet
and charts of recent balance sheet trends as well as every security the
Federal Reserve holds along with each security's CUSIP number.
Moreover, as specified in the Dodd-Frank Wall Street Reform and
Consumer Protection Act, the Federal Reserve now releases detailed
transaction level information for all open market operations and
discount window with a 2-year lag.
``I am concerned about other provisions in the FORM Act as well,
including the debilitating restrictions on the Federal Reserve's
emergency lending authorities. In the face of a future crisis--where
collapse of the financial system is on the scale of the Great
Depression or the recent financial crisis--I believe it is essential
that the Federal Reserve have the emergency lending powers necessary in
those circumstances to support the flow of credit to households and
businesses and mitigate harm to the U.S. economy. The FORM Act would
essentially repeal the Federal Reserve's remaining ability to act in a
crisis. I am also deeply troubled by provisions related to the Federal
Reserve's supervisory responsibilities, particularly those that would
undermine the strength and effectiveness our stress tests and impede
our ability to advocate internationally for standards that are in the
best interest of U.S. businesses and consumers.
``Throughout my career and certainly during my many years working
with the Federal Reserve System, I have been an advocate for greater
openness and transparency. As Chair, I remain committed to these
important issues. Accountability and transparency of public
institutions are critical in a democratic society. Unfortunately, the
FORM Act attempts to increase transparency and accountability through
misguided provisions that would expose the Federal Reserve to short-
term political pressures. For these reasons, I urge the House not to
adopt the FORM Act. The bill would severely impair the Federal
Reserve's ability to carry out its congressional mandate and would be a
grave mistake, detrimental to the economy and the American people.''
I don't think it could be better stated. I think the letter that I
just read from Janet Yellen tells it all. It simply warns us about the
danger of this bill. It not only warns us. It does it in such a way
that everybody can understand it and would not want to put this economy
and this country at such a risky position. I am hopeful that the
Members will hear this. We will make copies available to everyone. Vote
against this bill.
Furthermore, there is a Statement of Administration Policy from the
Executive Office of the President, Office of Management and Budget:
``H.R. 3189 would establish requirements for policy rules, codify
blackout periods of the Federal Open Market Committee, establish a
cost-benefit requirement for other rulemakings by the Federal Reserve
Board, and establish numerous, burdensome reporting requirements for
the Federal Reserve Board and its members. The Administration therefore
strongly opposes H.R. 3189.
``The Federal Reserve is an independent entity designed to be free
from political pressures, and its independence is key to its
credibility and its ability to act in the long-term interest of the
Nation's economic health. One of the most problematic provisions in the
bill would require the Comptroller General to audit the conduct of
monetary policy by the Federal Reserve Board and the Federal Open
Market Committee. The operations of the Federal Reserve are already
subject to numerous audit requirements that ensure it is accountable to
the Congress and the American people. The only aspect of the Federal
Reserve's operations not subject to audit is its monetary policy
decisionmaking, and for good reason. Subjecting the Federal Reserve's
exercise of monetary policy authority to audits based on political
whims of Members of the Congress--of either party--threatens one of the
central pillars of the Nation's financial system and economy, and would
almost certainly have negative impacts on the Federal Reserve's work to
promote price stability and full employment.
``H.R. 3189 also would impose numerous, burdensome requirements for
the Federal Reserve Board rulemaking authorities, including the
imposition of a duplicative requirement that the Federal Reserve Board
undertake a proscriptive cost-benefit analysis and a post-adoption
impact assessment when promulgating rules. When a Federal agency,
including an independent agency such as the Federal Reserve,
promulgates a regulation, the agency must adhere to the robust
substantive and procedural requirements of Federal law, including the
Administrative Procedure Act, the Regulatory Flexibility Act, the
Paperwork Reduction Act, and the Congressional Review Act, among other
statutes. Additionally, Executive Order 13579 encourages independent
regulatory agencies to conduct reasoned cost-benefit analysis, engage
in public participation to the extent feasible, and conduct a
systematic retrospective review of regulations.''
I can't read it all, but if the President was presented with H.R.
3189, his senior advisers would recommend that he veto this bill.
I yield back the balance of my time.
Mr. HENSARLING. Mr. Chairman, the ranking member for the last 13
minutes has let us know that the President and his bureaucratic
appointees don't want any more transparency and accountability. I don't
particularly find a news flash in that.

[[Page H8331]]

I have the greatest amount of respect for Chair Yellen. I both like
and respect her. I have never encountered a bureaucrat who didn't want
more money, more power, less transparency, and less accountability. She
is no different. The Dodd-Frank Act has vastly expanded the powers of
the Federal Reserve.
Mr. Chairman, for all intents and purposes, they have the ability to
actually come in and de facto manage any large financial institution in
America. The government has that power. It is a frightening power that
has been given by Dodd-Frank, and transparency and accountability is
demanded.
In addition, we have a Federal Reserve taking monetary policy and
tools to a place it has never been before. At a bare minimum, it owes
the people's elected Representatives, the Congress, some transparency
on why it is doing what it is doing.
I would, yet again, encourage all Members to actually read the bill
before they claim to know what is in the bill. The Federal Reserve
maintains its monetary policy independence, as it should. But it must
explain to the rest of us what that is and why they choose to deviate
from it if they believe economic circumstances warrant. Again, if they
want to base monetary policy on the Taylor rule, so be it. If they want
to base it on a rousing game of rock, paper, and scissors, so be it.
The American people demand answers because this economy is still
underperforming. It is not working for working people. This has to
change.
We have had the largest economic monetary policy stimulus in our
Nation's history, but yet it does not work for working people, and the
poor continue to follow behind.
All this bill by the gentleman of Michigan does is bring about needed
transparency and accountability to the most powerful economic agency in
government today. It is demanded by the vast increases in power by the
Dodd-Frank Act. The American people deserve answers. We should enact
it.
I encourage all Members to vote for H.R. 3189, the FORM Act.
I yield back the balance of my time.
The Acting CHAIR. All time for general debate has expired.
In lieu of the amendment in the nature of a substitute recommended by
the Committee on Financial Services, printed in the bill, an amendment
in the nature of a substitute consisting of the text of Rules Committee
Print 114-35, modified by the amendment printed in the part B of House
Report 114-341, is adopted. The bill, as amended, shall be considered
as the original bill for the purpose of further amendment under the 5-
minute rule and shall be considered as read.
The text of the bill, as amended, is as follows:

H.R. 3189

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Fed
Oversight Reform and Modernization Act of 2015'' or the
``FORM Act of 2015''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Requirements for policy rules of the Federal Open
Market Committee.
Sec. 3. Federal Open Market Committee blackout period.
Sec. 4. Membership of Federal Open Market Committee.
Sec. 5. Requirements for stress tests and supervisory
letters for the Board of Governors of the Federal
Reserve System.
Sec. 6. Frequency of testimony of the Chairman of the Board
of Governors of the Federal Reserve System to Congress.
Sec. 7. Vice Chairman for Supervision report requirement.
Sec. 8. Economic analysis of regulations of the Board of
Governors of the Federal Reserve System.
Sec. 9. Salaries, financial disclosures, and office staff
of the Board of Governors of the Federal Reserve
System.
Sec. 10. Requirements for international processes.
Sec. 11. Amendments to powers of the Board of Governors of
the Federal Reserve System.
Sec. 12. Interest rates on balances maintained at a Federal
Reserve bank by depository institutions established by
Federal Open Market Committee.
Sec. 13. Audit reform and transparency for the Board of
Governors of the Federal Reserve System.
Sec. 14. Reporting requirement for Export-Import Bank.
Sec. 15. Membership of Board of Directors of the Federal
reserve banks.
Sec. 16. Establishment of a Centennial Monetary Commission.

SEC. 2. REQUIREMENTS FOR POLICY RULES OF THE FEDERAL OPEN
MARKET COMMITTEE.

The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended
by inserting after section 2B the following new section:

``SEC. 2C. DIRECTIVE POLICY RULES OF THE FEDERAL OPEN MARKET
COMMITTEE.

``(a) Definitions.--In this section the following
definitions shall apply:
``(1) Appropriate congressional committees.--The term
`appropriate congressional committees' means the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate.
``(2) Directive policy rule.--The term `Directive Policy
Rule' means a policy rule developed by the Federal Open
Market Committee that meets the requirements of subsection
(c) and that provides the basis for the Open Market
Operations Directive.
``(3) GDP.--The term `GDP' means the gross domestic product
of the United States as computed and published by the
Department of Commerce.
``(4) Intermediate policy input.--The term `Intermediate
Policy Input'--
``(A) may include any variable determined by the Federal
Open Market Committee as a necessary input to guide open-
market operations;
``(B) shall include an estimate of, and the method of
calculation for, the current rate of inflation or current
inflation expectations; and
``(C) shall include, specifying whether the variable or
estimate is historical, current, or a forecast and the method
of calculation, at least one of--
``(i) an estimate of real GDP, nominal GDP, or potential
GDP;
``(ii) an estimate of the monetary aggregate compiled by
the Board of Governors of the Federal Reserve System and
Federal reserve banks; or
``(iii) an interactive variable or a net estimate composed
of the estimates described in clauses (i) and (ii).
``(5) Legislative day.--The term `legislative day' means a
day on which either House of Congress is in session.
``(6) Open market operations directive.--The term `Open
Market Operations Directive' means an order to achieve a
specified Policy Instrument Target provided to the Federal
Reserve Bank of New York by the Federal Open Market Committee
pursuant to powers authorized under section 14 of this Act
that guide open-market operations.
``(7) Policy instrument.--The term `Policy Instrument'
means--
``(A) the nominal Federal funds rate;
``(B) the nominal rate of interest paid on nonborrowed
reserves; or
``(C) the discount window primary credit interest rate most
recently published on the Federal Reserve Statistical Release
on selected interest rates (daily or weekly), commonly
referred to as the H.15 release.
``(8) Policy instrument target.--The term `Policy
Instrument Target' means the target for the Policy Instrument
specified in the Open Market Operations Directive.
``(9) Reference policy rule.--The term `Reference Policy
Rule' means a calculation of the nominal Federal funds rate
as equal to the sum of the following:
``(A) The rate of inflation over the previous four
quarters.
``(B) One-half of the percentage deviation of the real GDP
from an estimate of potential GDP.
``(C) One-half of the difference between the rate of
inflation over the previous four quarters and two percent.
``(D) Two percent.
``(b) Submitting a Directive Policy Rule.--Not later than
48 hours after the end of a meeting of the Federal Open
Market Committee, the Chairman of the Federal Open Market
Committee shall submit to the appropriate congressional
committees and the Comptroller General of the United States a
Directive Policy Rule and a statement that identifies the
members of the Federal Open Market Committee who voted in
favor of the Rule.
``(c) Requirements for a Directive Policy Rule.--A
Directive Policy Rule shall--
``(1) identify the Policy Instrument the Directive Policy
Rule is designed to target;
``(2) describe the strategy or rule of the Federal Open
Market Committee for the systematic quantitative adjustment
of the Policy Instrument Target to respond to a change in the
Intermediate Policy Inputs;
``(3) include a function that comprehensively models the
interactive relationship between the Intermediate Policy
Inputs;
``(4) include the coefficients of the Directive Policy Rule
that generate the current Policy Instrument Target and a
range of predicted future values for the Policy Instrument
Target if changes occur in any Intermediate Policy Input;
``(5) describe the procedure for adjusting the supply of
bank reserves to achieve the Policy Instrument Target;
``(6) include a statement as to whether the Directive
Policy Rule substantially conforms to the Reference Policy
Rule and, if applicable--
``(A) an explanation of the extent to which it departs from
the Reference Policy Rule;
``(B) a detailed justification for that departure; and
``(C) a description of the circumstances under which the
Directive Policy Rule may be amended in the future;

[[Page H8332]]

``(7) include a certification that such Rule is expected to
support the economy in achieving stable prices and maximum
natural employment over the long term; and
``(8) include a calculation that describes with
mathematical precision the expected annual inflation rate
over a 5-year period.
``(d) GAO Report.--The Comptroller General of the United
States shall compare the Directive Policy Rule submitted
under subsection (b) with the rule that was most recently
submitted to determine whether the Directive Policy Rule has
materially changed. If the Directive Policy Rule has
materially changed, the Comptroller General shall, not later
than 7 days after each meeting of the Federal Open Market
Committee, prepare and submit a compliance report to the
appropriate congressional committees specifying whether the
Directive Policy Rule submitted after that meeting and the
Federal Open Market Committee are in compliance with this
section.
``(e) Changing Market Conditions.--
``(1) Rule of construction.--Nothing in this Act shall be
construed to require that the plans with respect to the
systematic quantitative adjustment of the Policy Instrument
Target described under subsection (c)(2) be implemented if
the Federal Open Market Committee determines that such plans
cannot or should not be achieved due to changing market
conditions.
``(2) GAO approval of update.--Upon determining that plans
described in paragraph (1) cannot or should not be achieved,
the Federal Open Market Committee shall submit an explanation
for that determination and an updated version of the
Directive Policy Rule to the Comptroller General of the
United States and the appropriate congressional committees
not later than 48 hours after making the determination. The
Comptroller General shall, not later than 48 hours after
receiving such updated version, prepare and submit to the
appropriate congressional committees a compliance report
determining whether such updated version and the Federal Open
Market Committee are in compliance with this section.
``(f) Directive Policy Rule and Federal Open Market
Committee Not in Compliance.--
``(1) In general.--If the Comptroller General of the United
States determines that the Directive Policy Rule and the
Federal Open Market Committee are not in compliance with this
section in the report submitted pursuant to subsection (d),
or that the updated version of the Directive Policy Rule and
the Federal Open Market Committee are not in compliance with
this section in the report submitted pursuant to subsection
(e)(2), the Chairman of the Board of Governors of the Federal
Reserve System shall, if requested by the chairman of either
of the appropriate congressional committees, not later than 7
legislative days after such request, testify before such
committee as to why the Directive Policy Rule, the updated
version, or the Federal Open Market Committee is not in
compliance.
``(2) GAO audit.--Notwithstanding subsection (b) of section
714 of title 31, United States Code, upon submitting a report
of noncompliance pursuant to subsection (d) or subsection
(e)(2) and after the period of 7 legislative days described
in paragraph (1), the Comptroller General shall audit the
conduct of monetary policy by the Board of Governors of the
Federal Reserve System and the Federal Open Market Committee
upon request of the appropriate congressional committee. Such
committee may specify the parameters of such audit.
``(g) Congressional Hearings.--The Chairman of the Board of
Governors of the Federal Reserve System shall, if requested
by the chairman of either of the appropriate congressional
committees and not later than 7 legislative days after such
request, appear before such committee to explain any change
to the Directive Policy Rule.''.

SEC. 3. FEDERAL OPEN MARKET COMMITTEE BLACKOUT PERIOD.

Section 12A of the Federal Reserve Act (12 U.S.C. 263) is
amended by adding at the end the following new subsection:
``(d) Blackout Period.--
``(1) In general.--During a blackout period, the only
public communications that may be made by members and staff
of the Committee with respect to macroeconomic or financial
developments or about current or prospective monetary policy
issues are the following:
``(A) The dissemination of published data, surveys, and
reports that have been cleared for publication by the Board
of Governors of the Federal Reserve System.
``(B) Answers to technical questions specific to a data
release.
``(C) Communications with respect to the prudential or
supervisory functions of the Board of Governors.
``(2) Blackout period defined.--For purposes of this
subsection, and with respect to a meeting of the Committee
described under subsection (a), the term `blackout period'
means the time period that--
``(A) begins immediately after midnight on the day that is
one week prior to the date on which such meeting takes place;
and
``(B) ends at midnight on the day after the date on which
such meeting takes place.
``(3) Exemption for chairman of the board of governors.--
Nothing in this section shall prohibit the Chairman of the
Board of Governors of the Federal Reserve System from
participating in or issuing public communications.''.

SEC. 4. MEMBERSHIP OF FEDERAL OPEN MARKET COMMITTEE.

Section 12A(a) of the Federal Reserve Act (12 U.S.C.
263(a)) is amended--
(1) in the first sentence, by striking ``five'' and
inserting ``six'';
(2) in the second sentence, by striking ``One by the board
of directors'' and all that follows through the period at the
end and inserting the following: ``One by the boards of
directors of the Federal Reserve Banks of New York and
Boston; one by the boards of directors of the Federal Reserve
Banks of Philadelphia and Cleveland; one by the boards of
directors of the Federal Reserve Banks of Richmond and
Atlanta; one by the boards of directors of the Federal
Reserve Banks of Chicago and St. Louis; one by the boards of
directors of the Federal Reserve Banks of Minneapolis and
Kansas City; and one by the boards of directors of the
Federal Reserve Banks of Dallas and San Francisco.''; and
(3) by inserting after the second sentence the following:
``In odd numbered calendar years, one representative shall be
elected from each of the Federal Reserve Banks of Boston,
Philadelphia, Richmond, Chicago, Minneapolis, and Dallas. In
even-numbered calendar years, one representative shall be
elected from each of the Federal Reserve Banks of New York,
Cleveland, Atlanta, St. Louis, Kansas City, and San
Francisco.''.

SEC. 5. REQUIREMENTS FOR STRESS TESTS AND SUPERVISORY LETTERS
FOR THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM.

(a) Stress Test Rulemaking, GAO Review, and Publication of
Results.--Section 165(i)(1)(B) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5365(i)(1)(B))
is amended--
(1) by amending clause (i) to read as follows:
``(i) shall--

``(I) issue regulations, after providing for public notice
and comment, that provide for at least 3 different sets of
conditions under which the evaluation required by this
subsection shall be conducted, including baseline, adverse,
and severely adverse, and methodologies, including models
used to estimate losses on certain assets; and
``(II) provide copies of such regulations to the
Comptroller General of the United States and the Panel of
Economic Advisors of the Congressional Budget Office before
publishing such regulations;''; and

(2) in clause (v), by inserting before the period the
following: ``, including any results of a resubmitted test''.
(b) Application of CCAR.--Section 165(i)(1) of such Act is
further amended by adding at the end the following new
subparagraph:
``(C) Application to ccar.--The requirements of
subparagraph (B) shall apply to all stress tests performed
under the Comprehensive Capital Analysis and Review exercise
established by the Board of Governors.''.
(c) Publication of the Number of Supervisory Letters Sent
to the Largest Bank Holding Companies.--Section 165 of such
Act is further amended by adding at the end the following new
subsection:
``(l) Publication of Supervisory Letter Information.--The
Board of Governors shall publicly disclose--
``(1) the aggregate number of supervisory letters sent to
bank holding companies described in subsection (a) since the
date of the enactment of this section, and keep such number
updated; and
``(2) the aggregate number of such letters that are
designated as `Matters Requiring Attention' and the aggregate
number of such letters that are designated as `Matters
Requiring Immediate Attention'.''.

SEC. 6. FREQUENCY OF TESTIMONY OF THE CHAIRMAN OF THE BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM TO
CONGRESS.

(a) In General.--Section 2B of the Federal Reserve Act (12
U.S.C. 225b) is amended--
(1) by striking ``semi-annual'' each place it appears and
inserting ``quarterly''; and
(2) in subsection (a)(2)--
(A) by inserting ``and October 20'' after ``July 20'' each
place it appears; and
(B) by inserting ``and May 20'' after ``February 20'' each
place it appears.
(b) Conforming Amendment.--Paragraph (12) of section 10 of
the Federal Reserve Act (12 U.S.C. 247b(12)) is amended by
striking ``semi-annual'' and inserting ``quarterly''.

SEC. 7. VICE CHAIRMAN FOR SUPERVISION REPORT REQUIREMENT.

Paragraph (12) of section 10 of the Federal Reserve Act (12
U.S.C. 247(b)) is amended--
(1) by redesignating such paragraph as paragraph (11); and
(2) in such paragraph, by adding at the end the following:
``In each such appearance, the Vice Chairman for Supervision
shall provide written testimony that includes the status of
all pending and anticipated rulemakings that are being made
by the Board of Governors of the Federal Reserve System. If,
at the time of any appearance described in this paragraph,
the position of Vice Chairman for Supervision is vacant, the
Vice Chairman for the Board of Governors of the Federal
Reserve System (who has the responsibility to serve in the
absence of the Chairman) shall appear instead and provide the
required written testimony. If, at the time of any appearance
described in this paragraph, both Vice Chairman positions are
vacant, the Chairman of the Board of Governors of the Federal
Reserve System shall appear instead and provide the required
written testimony.''.

[[Page H8333]]

SEC. 8. ECONOMIC ANALYSIS OF REGULATIONS OF THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

(a) Amendment to Federal Reserve Act.--Section 11 of the
Federal Reserve Act (12 U.S.C. 248) is amended by inserting
after subsection (l) the following new subsection:
``(m) Consideration of Economic Impacts.--
``(1) In general.--Before issuing any regulation, the Board
of Governors of the Federal Reserve System shall--
``(A) clearly identify the nature and source of the problem
that the proposed regulation is designed to address and
assess the significance of that problem;
``(B) assess whether any new regulation is warranted or,
with respect to a proposed regulation that the Board of
Governors is required to issue by statute and with respect to
which the Board has the authority to exempt certain persons
from the application of such regulation, compare--
``(i) the costs and benefits of the proposed regulation;
and
``(ii) the costs and benefits of a regulation under which
the Board exempts all persons from the application of the
proposed regulation, to the extent the Board is able;
``(C) assess the qualitative and quantitative costs and
benefits of the proposed regulation and propose or adopt a
regulation only on a reasoned determination that the benefits
of the proposed regulation outweigh the costs of the
regulation;
``(D) identify and assess available alternatives to the
proposed regulation that were considered, including any
alternative offered by a member of the Board of Governors of
the Federal Reserve System or the Federal Open Market
Committee and including any modification of an existing
regulation, together with an explanation of why the
regulation meets the regulatory objectives more effectively
than the alternatives; and
``(E) ensure that any proposed regulation is accessible,
consistent, written in plain language, and easy to understand
and shall measure, and seek to improve, the actual results of
regulatory requirements.
``(2) Considerations and actions.--
``(A) Required actions.--In deciding whether and how to
regulate, the Board shall assess the costs and benefits of
available regulatory alternatives, including the alternative
of not regulating, and choose the approach that maximizes net
benefits. Specifically, the Board shall--
``(i) evaluate whether, consistent with achieving
regulatory objectives, the regulation is tailored to impose
the least impact on the availability of credit and economic
growth and to impose the least burden on society, including
market participants, individuals, businesses of different
sizes, and other entities (including State and local
governmental entities), taking into account, to the extent
practicable, the cumulative costs of regulations;
``(ii) evaluate whether the regulation is inconsistent,
incompatible, or duplicative of other Federal regulations;
and
``(iii) with respect to a proposed regulation that the
Board is required to issue by statute and with respect to
which the Board has the authority to exempt certain persons
from the application of such regulation, compare--

``(I) the costs and benefits of the proposed regulation;
and
``(II) the costs and benefits of a regulation under which
the Board exempts all persons from the application of the
proposed regulation, to the extent the Board is able.

``(B) Additional considerations.--In addition, in making a
reasoned determination of the costs and benefits of a
proposed regulation, the Board shall, to the extent that each
is relevant to the particular proposed regulation, take into
consideration the impact of the regulation, including
secondary costs such as an increase in the cost or a
reduction in the availability of credit or investment
services or products, on--
``(i) the safety and soundness of the United States banking
system;
``(ii) market liquidity in securities markets;
``(iii) small businesses;
``(iv) community banks;
``(v) economic growth;
``(vi) cost and access to capital;
``(vii) market stability;
``(viii) global competitiveness;
``(ix) job creation;
``(x) the effectiveness of the monetary policy transmission
mechanism; and
``(xi) employment levels.
``(3) Explanation and comments.--The Board shall explain in
its final rule the nature of comments that it received and
shall provide a response to those comments in its final rule,
including an explanation of any changes that were made in
response to those comments and the reasons that the Board did
not incorporate concerns related to the potential costs or
benefits in the final rule.
``(4) Postadoption impact assessment.--
``(A) In general.--Whenever the Board adopts or amends a
regulation designated as a `major rule' within the meaning of
section 804(2) of title 5, United States Code, it shall
state, in its adopting release, the following:
``(i) The purposes and intended consequences of the
regulation.
``(ii) The assessment plan that will be used, consistent
with the requirements of subparagraph (B), to assess whether
the regulation has achieved the stated purposes.
``(iii) Appropriate postimplementation quantitative and
qualitative metrics to measure the economic impact of the
regulation and the extent to which the regulation has
accomplished the stated purpose of the regulation.
``(iv) Any reasonably foreseeable indirect effects that may
result from the regulation.
``(B) Requirements of assessment plan and report.--
``(i) Requirements of plan.--The assessment plan required
under this paragraph shall consider the costs, benefits, and
intended and unintended consequences of the regulation. The
plan shall specify the data to be collected, the methods for
collection and analysis of the data, and a date for
completion of the assessment. The assessment plan shall
include an analysis of any jobs added or lost as a result of
the regulation, differentiating between public and private
sector jobs.
``(ii) Submission and publication of report.--The Board
shall, not later than 2 years after the publication of the
adopting release, publish the assessment plan in the Federal
Register for notice and comment. If the Board determines, at
least 90 days before the deadline for publication of the
assessment plan, that an extension is necessary, the Board
shall publish a notice of such extension and the specific
reasons why the extension is necessary in the Federal
Register. Any material modification of the assessment plan,
as necessary to assess unforeseen aspects or consequences of
the regulation, shall be promptly published in the Federal
Register for notice and comment.
``(iii) Data collection not subject to notice and comment
requirements.--If the Board has published the assessment plan
for notice and comment at least 30 days before the adoption
of a regulation designated as a major rule, the collection of
data under the assessment plan shall not be subject to the
notice and comment requirements in section 3506(c) of title
44, United States Code (commonly referred to as the Paperwork
Reduction Act). Any material modification of the plan that
requires collection of data not previously published for
notice and comment shall also be exempt from such
requirements if the Board has published notice in the Federal
Register for comment on the additional data to be collected,
at least 30 days before the initiation of data collection.
``(iv) Final action.--Not later than 180 days after
publication of the assessment plan in the Federal Register,
the Board shall issue for notice and comment a proposal to
amend or rescind the regulation, or shall publish a notice
that the Board has determined that no action will be taken on
the regulation. Such a notice will be deemed a final agency
action.
``(5) Covered regulations and other actions.--Solely as
used in this subsection, the term `regulation'--
``(A) means a statement of general applicability and future
effect that is designed to implement, interpret, or prescribe
law or policy, or to describe the procedure or practice
requirements of the Board of Governors, including rules,
orders of general applicability, interpretive releases, and
other statements of general applicability that the Board of
Governors intends to have the force and effect of law; and
``(B) does not include--
``(i) a regulation issued in accordance with the formal
rulemaking provisions of section 556 or 557 of title 5,
United States Code;
``(ii) a regulation that is limited to the organization,
management, or personnel matters of the Board of Governors;
``(iii) a regulation promulgated pursuant to statutory
authority that expressly prohibits compliance with this
provision; or
``(iv) a regulation that is certified by the Board of
Governors to be an emergency action, if such certification is
published in the Federal Register.''.
(b) Rule of Construction.--Nothing in this section shall
apply to the requirements regarding the conduct of monetary
policy described in section 2.

SEC. 9. SALARIES, FINANCIAL DISCLOSURES, AND OFFICE STAFF OF
THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM.

(a) In General.--Section 11 of the Federal Reserve Act (12
U.S.C. 248) is amended--
(1) by redesignating the second subsection (s) (relating to
``Assessments, Fees, and Other Charges for Certain
Companies'') as subsection (t); and
(2) by adding at the end the following new subsections:
``(u) Ethics Standards for Members and Employees.--
``(1) Prohibited and restricted financial interests and
transactions.--The members and employees of the Board of
Governors of the Federal Reserve System shall be subject to
the provisions under section 4401.102 of title 5, Code of
Federal Regulations, to the same extent as such provisions
apply to an employee of the Securities and Exchange
Commission.
``(2) Treatment of brokerage accounts and availability of
account statements.--The members and employees of the Board
of Governors of the Federal Reserve System shall--
``(A) disclose all brokerage accounts that they maintain,
as well as those in which they control trading or have a
financial interest (including managed accounts, trust
accounts, investment club accounts, and the accounts of
spouses or minor children who live with the member or
employee); and
``(B) with respect to any securities account that the
member or employee is required to disclose to the Board of
Governors, authorize their brokers and dealers to send
duplicate

[[Page H8334]]

account statements directly to Board of Governors.
``(3) Prohibitions related to outside employment and
activities.--The members and employees of the Board of
Governors of the Federal Reserve System shall be subject to
the prohibitions related to outside employment and activities
described under section 4401.103(c) of title 5, Code of
Federal Regulations, to the same extent as such prohibitions
apply to an employee of the Securities and Exchange
Commission.
``(4) Additional ethics standards.--The members and
employees of the Board of Governors of the Federal Reserve
System shall be subject to--
``(A) the employee responsibilities and conduct regulations
of the Office of Personnel Management under part 735 of title
5, Code of Federal Regulations;
``(B) the canons of ethics contained in subpart C of part
200 of title 17, Code of Federal Regulations, to the same
extent as such subpart applies to the employees of the
Securities and Exchange Commission; and
``(C) the regulations concerning the conduct of members and
employees and former members and employees contained in
subpart M of part 200 of title 17, Code of Federal
Regulations, to the same extent as such subpart applies to
the employees of the Securities and Exchange Commission.
``(v) Disclosure of Staff Salaries and Financial
Information.--The Board of Governors of the Federal Reserve
System shall make publicly available, on the website of the
Board of Governors, a searchable database that contains the
names of all members, officers, and employees of the Board of
Governors who receive an annual salary in excess of the
annual rate of basic pay for GS-15 of the General Schedule,
and--
``(1) the yearly salary information for such individuals,
along with any nonsalary compensation received by such
individuals; and
``(2) any financial disclosures required to be made by such
individuals.''.
(b) Office Staff for Each Member of the Board of
Governors.--Subsection (l) of section 11 of the Federal
Reserve Act (12 U.S.C. 248) is amended by adding at the end
the following: ``Each member of the Board of Governors of the
Federal Reserve System may employ, at a minimum, 2
individuals, with such individuals selected by such member
and the salaries of such individuals set by such member. A
member may employ additional individuals as determined
necessary by the Board of Governors.''.

SEC. 10. REQUIREMENTS FOR INTERNATIONAL PROCESSES.

(a) Board of Governors Requirements.--Section 11 of the
Federal Reserve Act (12 U.S.C. 248), as amended by section 9
of this Act, is further amended by adding at the end the
following new subsection:
``(w) International Processes.--
``(1) Notice of process; consultation.--At least 30
calendar days before any member or employee of the Board of
Governors of the Federal Reserve System participates in a
process of setting financial standards as a part of any
foreign or multinational entity, the Board of Governors
shall--
``(A) issue a notice of the process, including the subject
matter, scope, and goals of the process, to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(B) make such notice available to the public, including
on the website of the Board of Governors; and
``(C) solicit public comment, and consult with the
committees described under subparagraph (A), with respect to
the subject matter, scope, and goals of the process.
``(2) Public reports on process.--After the end of any
process described under paragraph (1), the Board of Governors
shall issue a public report on the topics that were discussed
during the process and any new or revised rulemakings or
policy changes that the Board of Governors believes should be
implemented as a result of the process.
``(3) Notice of agreements; consultation.--At least 90
calendar days before any member or employee of the Board of
Governors of the Federal Reserve System participates in a
process of setting financial standards as a part of any
foreign or multinational entity, the Board of Governors
shall--
``(A) issue a notice of agreement to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(B) make such notice available to the public, including
on the website of the Board of Governors; and
``(C) consult with the committees described under
subparagraph (A) with respect to the nature of the agreement
and any anticipated effects such agreement will have on the
economy.
``(4) Definition.--For purposes of this subsection, the
term `process' shall include any official proceeding or
meeting on financial regulation of a recognized international
organization with authority to set financial standards on a
global or regional level, including the Financial Stability
Board, the Basel Committee on Banking Supervision (or a
similar organization), and the International Association of
Insurance Supervisors (or a similar organization).''.
(b) FDIC Requirements.--The Federal Deposit Insurance Act
(12 U.S.C. 1811 et seq.) is amended by adding at the end the
following new section:

``SEC. 51. INTERNATIONAL PROCESSES.

``(a) Notice of Process; Consultation.--At least 30
calendar days before the Board of Directors participates in a
process of setting financial standards as a part of any
foreign or multinational entity, the Board of Directors
shall--
``(1) issue a notice of the process, including the subject
matter, scope, and goals of the process, to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(2) make such notice available to the public, including
on the website of the Corporation; and
``(3) solicit public comment, and consult with the
committees described under paragraph (1), with respect to the
subject matter, scope, and goals of the process.
``(b) Public Reports on Process.--After the end of any
process described under subsection (a), the Board of
Directors shall issue a public report on the topics that were
discussed at the process and any new or revised rulemakings
or policy changes that the Board of Directors believes should
be implemented as a result of the process.
``(c) Notice of Agreements; Consultation.--At least 90
calendar days before the Board of Directors participates in a
process of setting financial standards as a part of any
foreign or multinational entity, the Board of Directors
shall--
``(1) issue a notice of agreement to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(2) make such notice available to the public, including
on the website of the Corporation; and
``(3) consult with the committees described under paragraph
(1) with respect to the nature of the agreement and any
anticipated effects such agreement will have on the economy.
``(d) Definition.--For purposes of this section, the term
`process' shall include any official proceeding or meeting on
financial regulation of a recognized international
organization with authority to set financial standards on a
global or regional level, including the Financial Stability
Board, the Basel Committee on Banking Supervision (or a
similar organization), and the International Association of
Insurance Supervisors (or a similar organization).''.
(c) Treasury Requirements.--Section 325 of title 31, United
States Code, is amended by adding at the end the following
new subsection:
``(d) International Processes.--
``(1) Notice of process; consultation.--At least 30
calendar days before the Secretary participates in a process
of setting financial standards as a part of any foreign or
multinational entity, the Secretary shall--
``(A) issue a notice of the process, including the subject
matter, scope, and goals of the process, to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(B) make such notice available to the public, including
on the website of the Department of the Treasury; and
``(C) solicit public comment, and consult with the
committees described under subparagraph (A), with respect to
the subject matter, scope, and goals of the process.
``(2) Public reports on process.--After the end of any
process described under paragraph (1), the Secretary shall
issue a public report on the topics that were discussed at
the process and any new or revised rulemakings or policy
changes that the Secretary believes should be implemented as
a result of the process.
``(3) Notice of agreements; consultation.--At least 90
calendar days before the Secretary participates in a process
of setting financial standards as a part of any foreign or
multinational entity, the Secretary shall--
``(A) issue a notice of agreement to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(B) make such notice available to the public, including
on the website of the Department of the Treasury; and
``(C) consult with the committees described under
subparagraph (A) with respect to the nature of the agreement
and any anticipated effects such agreement will have on the
economy.
``(4) Definition.--For purposes of this subsection, the
term `process' shall include any official proceeding or
meeting on financial regulation of a recognized international
organization with authority to set financial standards on a
global or regional level, including the Financial Stability
Board, the Basel Committee on Banking Supervision (or a
similar organization), and the International Association of
Insurance Supervisors (or a similar organization).''.
(d) OCC Requirements.--Chapter one of title LXII of the
Revised Statutes of the United States (12 U.S.C. 21 et seq.)
is amended--
(1) by adding at the end the following new section:

``SEC. 5156B. INTERNATIONAL PROCESSES.

``(a) Notice of Process; Consultation.--At least 30
calendar days before the Comptroller of the Currency
participates in a process of setting financial standards as a
part of any foreign or multinational entity, the Comptroller
of the Currency shall--

[[Page H8335]]

``(1) issue a notice of the process, including the subject
matter, scope, and goals of the process, to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(2) make such notice available to the public, including
on the website of the Office of the Comptroller of the
Currency; and
``(3) solicit public comment, and consult with the
committees described under paragraph (1), with respect to the
subject matter, scope, and goals of the process.
``(b) Public Reports on Process.--After the end of any
process described under subsection (a), the Comptroller of
the Currency shall issue a public report on the topics that
were discussed at the process and any new or revised
rulemakings or policy changes that the Comptroller of the
Currency believes should be implemented as a result of the
process.
``(c) Notice of Agreements; Consultation.--At least 90
calendar days before the Comptroller of the Currency
participates in a process of setting financial standards as a
part of any foreign or multinational entity, the Board of
Directors shall--
``(1) issue a notice of agreement to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(2) make such notice available to the public, including
on the website of the Office of the Comptroller of the
Currency; and
``(3) consult with the committees described under paragraph
(1) with respect to the nature of the agreement and any
anticipated effects such agreement will have on the economy.
``(d) Definition.--For purposes of this section, the term
`process' shall include any official proceeding or meeting on
financial regulation of a recognized international
organization with authority to set financial standards on a
global or regional level, including the Financial Stability
Board, the Basel Committee on Banking Supervision (or a
similar organization), and the International Association of
Insurance Supervisors (or a similar organization).''; and
(2) in the table of contents for such chapter, by adding at
the end the following new item:

``5156B. International processes.''.
(e) Securities and Exchange Commission Requirements.--
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following new
subsection:
``(j) International Processes.--
``(1) Notice of process; consultation.--At least 30
calendar days before the Commission participates in a process
of setting financial standards as a part of any foreign or
multinational entity, the Commission shall--
``(A) issue a notice of the process, including the subject
matter, scope, and goals of the process, to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(B) make such notice available to the public, including
on the website of the Commission; and
``(C) solicit public comment, and consult with the
committees described under subparagraph (A), with respect to
the subject matter, scope, and goals of the process.
``(2) Public reports on process.--After the end of any
process described under paragraph (1), the Commission shall
issue a public report on the topics that were discussed at
the process and any new or revised rulemakings or policy
changes that the Commission believes should be implemented as
a result of the process.
``(3) Notice of agreements; consultation.--At least 90
calendar days before the Commission participates in a process
of setting financial standards as a part of any foreign or
multinational entity, the Commission shall--
``(A) issue a notice of agreement to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate;
``(B) make such notice available to the public, including
on the website of the Commission; and
``(C) consult with the committees described under
subparagraph (A) with respect to the nature of the agreement
and any anticipated effects such agreement will have on the
economy.
``(4) Definition.--For purposes of this subsection, the
term `process' shall include any official proceeding or
meeting on financial regulation of a recognized international
organization with authority to set financial standards on a
global or regional level, including the Financial Stability
Board, the Basel Committee on Banking Supervision (or a
similar organization), and the International Association of
Insurance Supervisors (or a similar organization).''.

SEC. 11. AMENDMENTS TO POWERS OF THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM.

(a) In General.--Section 13(3) of the Federal Reserve Act
(12 U.S.C. 343(3)) is amended--
(1) in subparagraph (A)--
(A) by inserting ``that pose a threat to the financial
stability of the United States'' after ``unusual and exigent
circumstances''; and
(B) by inserting ``and by the affirmative vote of not less
than nine presidents of the Federal reserve banks'' after
``five members'';
(2) in subparagraph (B)--
(A) in clause (i), by inserting at the end the following:
``Federal reserve banks may not accept equity securities
issued by the recipient of any loan or other financial
assistance under this paragraph as collateral. Not later than
6 months after the date of enactment of this sentence, the
Board shall, by rule, establish--

``(I) a method for determining the sufficiency of the
collateral required under this paragraph;
``(II) acceptable classes of collateral;
``(III) the amount of any discount of such value that the
Federal reserve banks will apply for purposes of calculating
the sufficiency of collateral under this paragraph; and
``(IV) a method for obtaining independent appraisals of the
value of collateral the Federal reserve banks receive.''; and

(B) in clause (ii)--
(i) by striking the second sentence; and
(ii) by inserting after the first sentence the following:
``A borrower shall not be eligible to borrow from any
emergency lending program or facility unless the Board and
all federal banking regulators with jurisdiction over the
borrower certify that, at the time the borrower initially
borrows under the program or facility, the borrower is not
insolvent.'';
(3) by inserting ``financial institution'' before
``participant'' each place such term appears;
(4) in subparagraph (D)(i), by inserting ``financial
institution'' before ``participants''; and
(5) by adding at the end the following new subparagraphs:
``(F) Penalty rate.--
``(i) In general.--Not later than 6 months after the date
of enactment of this subparagraph, the Board shall, with
respect to a recipient of any loan or other financial
assistance under this paragraph, establish by rule a minimum
interest rate on the principal amount of any loan or other
financial assistance.
``(ii) Minimum interest rate defined.--In this
subparagraph, the term `minimum interest rate' shall mean the
sum of--

``(I) the average of the secondary discount rate of all
Federal Reserve banks over the most recent 90-day period; and
``(II) the average of the difference between a distressed
corporate bond yield index (as defined by rule of the Board)
and a bond yield index of debt issued by the United States
(as defined by rule of the Board) over the most recent 90-day
period.

``(G) Financial institution participant defined.--For
purposes of this paragraph, the term `financial institution
participant'--
``(i) means a company that is predominantly engaged in
financial activities (as defined in section 102(a) of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (12
U.S.C. 5311(a))); and
``(ii) does not include an agency described in subparagraph
(W) of section 5312(a)(2) of title 31, United States Code, or
an entity controlled or sponsored by such an agency.''.
(b) Conforming Amendment.--Section 11(r)(2)(A) of such Act
is amended--
(1) in clause (ii)(IV), by striking ``; and'' and inserting
a semicolon;
(2) in clause (iii), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new clause:
``(iv) the available members secure the affirmative vote of
not less than nine presidents of the Federal reserve
banks.''.

SEC. 12. INTEREST RATES ON BALANCES MAINTAINED AT A FEDERAL
RESERVE BANK BY DEPOSITORY INSTITUTIONS
ESTABLISHED BY FEDERAL OPEN MARKET COMMITTEE.

Subparagraph (A) of section 19(b)(12) of the Federal
Reserve Act (12 U.S.C. 461(b)(12)(A)) is amended by inserting
``established by the Federal Open Market Committee'' after
``rate or rates''.

SEC. 13. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

(a) In General.--Notwithstanding section 714 of title 31,
United States Code, or any other provision of law, the
Comptroller General of the United States shall complete an
audit of the Board of Governors of the Federal Reserve System
and the Federal reserve banks under subsection (b) of such
section 714 within 12 months after the date of the enactment
of this Act.
(b) Report.--
(1) In general.--Not later than 90 days after the audit
required pursuant to subsection (a) is completed, the
Comptroller General--
(A) shall submit to Congress a report on such audit; and
(B) shall make such report available to the Speaker of the
House, the majority and minority leaders of the House of
Representatives, the majority and minority leaders of the
Senate, the Chairman and Ranking Member of the committee and
each subcommittee of jurisdiction in the House of
Representatives and the Senate, and any other Member of
Congress who requests the report.
(2) Contents.--The report under paragraph (1) shall include
a detailed description of the findings and conclusion of the
Comptroller General with respect to the audit that is the
subject of the report, together with such recommendations for
legislative or administrative action as the Comptroller
General may determine to be appropriate.
(c) Repeal of Certain Limitations.--Subsection (b) of
section 714 of title 31, United

[[Page H8336]]

States Code, is amended by striking the second sentence.
(d) Technical and Conforming Amendments.--
(1) In general.--Section 714 of title 31, United States
Code, is amended--
(A) in subsection (d)(3), by striking ``or (f)'' each place
such term appears;
(B) in subsection (e), by striking ``the third undesignated
paragraph of section 13'' and inserting ``section 13(3)'';
and
(C) by striking subsection (f).
(2) Federal reserve act.--Subsection (s) (relating to
``Federal Reserve Transparency and Release of Information'')
of section 11 of the Federal Reserve Act (12 U.S.C. 248) is
amended--
(A) in paragraph (4)(A), by striking ``has the same meaning
as in section 714(f)(1)(A) of title 31, United States Code''
and inserting ``means a program or facility, including any
special purpose vehicle or other entity established by or on
behalf of the Board of Governors of the Federal Reserve
System or a Federal reserve bank, authorized by the Board of
Governors under section 13(3), that is not subject to audit
under section 714(e) of title 31, United States Code'';
(B) in paragraph (6), by striking ``or in section
714(f)(3)(C) of title 31, United States Code, the information
described in paragraph (1) and information concerning the
transactions described in section 714(f) of such title,'' and
inserting ``the information described in paragraph (1)''; and
(C) in paragraph (7), by striking ``and section 13(3)(C),
section 714(f)(3)(C) of title 31, United States Code, and''
and inserting ``, section 13(3)(C), and''.

SEC. 14. REPORTING REQUIREMENT FOR EXPORT-IMPORT BANK.

The Board of Governors of the Federal Reserve System shall
include, as part of the monthly Federal Reserve statistical
release titled ``Industrial Production or Capacity
Utilization'' (or any successor release), an analysis of--
(1) the impact on the index described in the statistical
release due to the operation of the Export-Import Bank; and
(2) the amount of foreign industrial production supported
by foreign export credit agencies, using the same method used
to measure industrial production in the statistical release
and scaled to be comparable to the industrial production
measurement for the United States.

SEC. 15. MEMBERSHIP OF BOARD OF DIRECTORS OF THE FEDERAL
RESERVE BANKS.

Section 4 of the Federal Reserve Act (12 U.S.C. 302) is
amended--
(1) in the eleventh undesignated paragraph (relating to
Class B), by striking ``and consumers'' and inserting
``consumers, and traditionally underserved communities and
populations''; and
(2) in the twelfth undesignated paragraph (relating to
Class C), by striking ``and consumers'' and inserting
``consumers, and traditionally underserved communities and
populations''.

SEC. 16. ESTABLISHMENT OF A CENTENNIAL MONETARY COMMISSION.

(a) Short Title.--This section may be cited as the
``Centennial Monetary Commission Act of 2015''.
(b) Findings.--Congress finds the following:
(1) The Constitution endows Congress with the power ``to
coin money, regulate the value thereof''.
(2) Following the financial crisis known as the Panic of
1907, Congress established the National Monetary Commission
to provide recommendations for the reform of the financial
and monetary systems of the United States.
(3) Incorporating several of the recommendations of the
National Monetary Commission, Congress created the Federal
Reserve System in 1913. As currently organized, the Federal
Reserve System consists of the Board of Governors in
Washington, District of Columbia, and the Federal Reserve
Banks organized into 12 districts around the United States.
The stockholders of the 12 Federal Reserve Banks include
national and certain State-chartered commercial banks, which
operate on a fractional reserve basis.
(4) Originally, Congress gave the Federal Reserve System a
monetary mandate to provide an elastic currency, within the
context of a gold standard, in response to seasonal
fluctuations in the demand for currency.
(5) Congress also gave the Federal Reserve System a
financial stability mandate to serve as the lender of last
resort to solvent but illiquid banks during a financial
crisis.
(6) In 1977, Congress changed the monetary mandate of the
Federal Reserve System to a dual mandate for maximum
employment and stable prices.
(7) Empirical studies and historical evidence, both within
the United States and in other countries, demonstrate that
price stability is desirable because both inflation and
deflation damage the economy.
(8) The economic challenge of recent years--most notably
the bursting of the housing bubble, the financial crisis of
2008, and the ensuing anemic recovery--have occurred at great
cost in terms of lost jobs and output.
(9) Policymakers are reexamining the structure and
functioning of financial institutions and markets to
determine what, if any, changes need to be made to place the
financial system on a stronger, more sustainable path going
forward.
(10) The Federal Reserve System has taken extraordinary
actions in response to the recent economic challenges.
(11) The Federal Open Market Committee has engaged in
multiple rounds of quantitative easing, providing
unprecedented liquidity to financial markets, while
committing to holding short-term interest rates low for a
seemingly indefinite period, and pursuing a policy of credit
allocation by purchasing Federal agency debt and mortgage-
backed securities.
(12) In the wake of the recent extraordinary actions of the
Federal Reserve System, Congress--consistent with its
constitutional responsibilities and as it has done
periodically throughout the history of the United States--has
once again renewed its examination of monetary policy.
(13) Central in such examination has been a renewed look at
what is the most proper mandate for the Federal Reserve
System to conduct monetary policy in the 21st century.
(c) Establishment of a Centennial Monetary Commission.--
There is established a commission to be known as the
``Centennial Monetary Commission'' (in this section referred
to as the ``Commission'').
(d) Study and Report on Monetary Policy.--
(1) Study.--The Commission shall--
(A) examine how United States monetary policy since the
creation of the Board of Governors of the Federal Reserve
System in 1913 has affected the performance of the United
States economy in terms of output, employment, prices, and
financial stability over time;
(B) evaluate various operational regimes under which the
Board of Governors of the Federal Reserve System and the
Federal Open Market Committee may conduct monetary policy in
terms achieving the maximum sustainable level of output and
employment and price stability over the long term,
including--
(i) discretion in determining monetary policy without an
operational regime;
(ii) price level targeting;
(iii) inflation rate targeting;
(iv) nominal gross domestic product targeting (both level
and growth rate);
(v) the use of monetary policy rules; and
(vi) the gold standard;
(C) evaluate the use of macro-prudential supervision and
regulation as a tool of monetary policy in terms of achieving
the maximum sustainable level of output and employment and
price stability over the long term;
(D) evaluate the use of the lender-of-last-resort function
of the Board of Governors of the Federal Reserve System as a
tool of monetary policy in terms of achieving the maximum
sustainable level of output and employment and price
stability over the long term; and
(E) recommend a course for United States monetary policy
going forward, including--
(i) the legislative mandate;
(ii) the operational regime;
(iii) the securities used in open market operations; and
(iv) transparency issues.
(2) Report.--Not later than December 1, 2016, the
Commission shall submit to Congress and make publicly
available a report containing a statement of the findings and
conclusions of the Commission in carrying out the study under
paragraph (1), together with the recommendations the
Commission considers appropriate.
(e) Membership.--
(1) Number and appointment.--
(A) Appointed voting members.--The Commission shall contain
12 voting members as follows:
(i) Six members appointed by the Speaker of the House of
Representatives, with four members from the majority party
and two members from the minority party.
(ii) Six members appointed by the President Pro Tempore of
the Senate, with four members from the majority party and two
members from the minority party.
(B) Chairman.--The Speaker of the House of Representatives
and the majority leader of the Senate shall jointly designate
one of the members of the Commission as Chairman.
(C) Non-voting members.--The Commission shall contain 2
non-voting members as follows:
(i) One member appointed by the Secretary of the Treasury.
(ii) One member who is the president of a district Federal
reserve bank appointed by the Chair of the Board of Governors
of the Federal Reserve System.
(2) Period of appointment.--Each member shall be appointed
for the life of the Commission.
(3) Timing of appointment.--All members of the Commission
shall be appointed not later than 30 days after the date of
the enactment of this section.
(4) Vacancies.--A vacancy in the Commission shall not
affect its powers, and shall be filled in the manner in which
the original appointment was made.
(5) Meetings.--
(A) Initial meeting.--The Commission shall hold its initial
meeting and begin the operations of the Commission as soon as
is practicable.
(B) Further meetings.--The Commission shall meet upon the
call of the Chair or a majority of its members.
(6) Quorum.--Seven voting members of the Commission shall
constitute a quorum but a lesser number may hold hearings.

[[Page H8337]]

(7) Member of congress defined.--In this subsection, the
term ``Member of Congress'' means a Senator or a
Representative in, or Delegate or Resident Commissioner to,
the Congress.
(f) Powers.--
(1) Hearings and sessions.--The Commission or, on the
authority of the Commission, any subcommittee or member
thereof, may, for the purpose of carrying out this section,
hold hearings, sit and act at times and places, take
testimony, receive evidence, or administer oaths as the
Commission or such subcommittee or member thereof considers
appropriate.
(2) Contract authority.--To the extent or in the amounts
provided in advance in appropriation Acts, the Commission may
contract with and compensate government and private agencies
or persons to enable the Commission to discharge its duties
under this section, without regard to section 3709 of the
Revised Statutes (41 U.S.C. 5).
(3) Obtaining official data.--
(A) In general.--The Commission is authorized to secure
directly from any executive department, bureau, agency,
board, commission, office, independent establishment, or
instrumentality of the Government, any information, including
suggestions, estimates, or statistics, for the purposes of
this section.
(B) Requesting official data.--The head of such department,
bureau, agency, board, commission, office, independent
establishment, or instrumentality of the government shall, to
the extent authorized by law, furnish such information upon
request made by--
(i) the Chair;
(ii) the Chair of any subcommittee created by a majority of
the Commission; or
(iii) any member of the Commission designated by a majority
of the commission to request such information.
(4) Assistance from federal agencies.--
(A) General services administration.--The Administrator of
General Services shall provide to the Commission on a
reimbursable basis administrative support and other services
for the performance of the functions of the Commission.
(B) Other departments and agencies.--In addition to the
assistance prescribed in subparagraph (A), at the request of
the Commission, departments and agencies of the United States
shall provide such services, funds, facilities, staff, and
other support services as may be authorized by law.
(5) Postal service.--The Commission may use the United
States mails in the same manner and under the same conditions
as other departments and agencies of the United States.
(g) Commission Personnel.--
(1) Appointment and compensation of staff.--
(A) In general.--Subject to rules prescribed by the
Commission, the Chair may appoint and fix the pay of the
executive director and other personnel as the Chair considers
appropriate.
(B) Applicability of civil service laws.--The staff of the
Commission may be appointed without regard to the provisions
of title 5, United States Code, governing appointments in the
competitive service, and may be paid without regard to the
provisions of chapter 51 and subchapter III of chapter 53 of
that title relating to classification and General Schedule
pay rates, except that an individual so appointed may not
receive pay in excess of level V of the Executive Schedule.
(2) Consultants.--The Commission may procure temporary and
intermittent services under section 3109(b) of title 5,
United States Code, but at rates for individuals not to
exceed the daily equivalent of the rate of pay for a person
occupying a position at level IV of the Executive Schedule.
(3) Staff of federal agencies.--Upon request of the
Commission, the head of any Federal department or agency may
detail, on a reimbursable basis, any of the personnel of such
department or agency to the Commission to assist it in
carrying out its duties under this section.
(h) Termination of Commission.--
(1) In general.--The Commission shall terminate on June 1,
2017.
(2) Administrative activities before termination.--The
Commission may use the period between the submission of its
report and its termination for the purpose of concluding its
activities, including providing testimony to the committee of
Congress concerning its report.
(i) Authorization of Appropriations.--There is authorized
to be appropriated to carry out this section $1,000,000,
which shall remain available until the date on which the
Commission terminates.

SEC. 17. ELIMINATION OF SURPLUS FUNDS OF FEDERAL RESERVE
BANKS.

(a) In general.--Section 7 of the Federal Reserve Act (12
U.S.C. 289 et seq.) is amended--
(1) in subsection (a)--
(A) in the heading of such subsection, by striking ``And
Surplus Funds''; and
(B) In paragraph (2), by striking ``deposited in the
surplus fund of the bank'' and inserting ``transferred to the
Board of Governors of the Federal Reserve System for transfer
to the Secretary of the Treasury for deposit in the general
fund of the Treasury''; and
(C) by striking the first subsection (b) (relating to a
transfer for fiscal year 2000).
(b) Transfer to the Treasury.--The Federal Reserve banks
shall transfer all of the funds of the surplus funds of such
banks to the Board of Governers of the Federal Reserve System
for transfer to the Secretary of the Treasury for deposit in
the general fund of the Treasury.

The Acting CHAIR. No further amendment to the bill, as amended, shall
be in order except those printed in part C of House Report 114-341.
Each such further amendment may be offered only in the order printed in
the report, by a Member designated in the report, shall be considered
as read, shall be debatable for the time specified in the report
equally divided and controlled by the proponent and an opponent, shall
not be subject to amendment, and shall not be subject to a demand for
division of the question.

Amendment No. 1 Offered by Mr. Heck of Washington

The Acting CHAIR. It is now in order to consider amendment No. 1
printed in part C of House Report 114-341.
Mr. HECK of Washington. Mr. Chair, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:

Page 5, line 8, strike ``Not''.
Page 5, line 9, insert the following:
``(1) In general.--Not''.
Page 5, after line 15, insert the following:
``(2) Exception.--The requirements of paragraph (1) shall
not apply if the Federal Open Market Committee determines at
the end of a meeting that the current conditions represent a
significant divergence from the goals of maximum employment
and stable prices described in section 2A.''.

The Acting CHAIR. Pursuant to House Resolution 529, the gentleman
from Washington (Mr. Heck) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Washington.
Mr. HECK of Washington. Mr. Chair, I yield myself 2\1/2\ minutes.
Thus far, this has been an interesting debate that seems to have
mostly revolved around a philosophical point. On the one hand, you have
arguments for increased transparency and accountability. On the other
hand, you have arguments against increased political interference by
this institution. I have always proceeded with the assumption that
philosophical debates are irreconcilable in a lot of regards because
you have to presume that the other side has a point of view.
This is not why I oppose the underlying bill. Although I hasten to
add, why anybody would ever want to give more authority and control
over the levers of the economy to this institution, with its track
record in the last several years, including government shutdowns and
the like, is beyond me. Again, it is a philosophical debate.
Here is what is not debatable: what is proposed in this bill doesn't
work. It does not work. Let's back up. Essentially, color it any way
you want, this bill argues for the adoption of the so-called Taylor
rule. What is that?
The Taylor rule was devised by Professor Taylor of Stanford in the
1990s, looking back at the experience of the economy and what the Fed
had done using a mixture of GDP, GDP potential and inflation, and he
derived a formula. The problem is, again, it does not work. That is why
I have offered this amendment, which would provide the Fed the ability
to opt out, if we get to a stressful situation where clearly the
application of the Taylor rule wasn't working.
Here is the deal. I can prove to you that the Taylor rule wouldn't
work. Let me show you. We have had a couple of instances in recent
history in which we can test the application of the Taylor rule, both
against the Fed's mission to achieve price stability as well as achieve
full employment.
This chart tracks the years 1979 to 1983. The red line is what the
chair of the Fed, Mr. Volcker, utilized in the way of the actual Fed
fund rates. The blue line is the Taylor rule. You can see that for many
years, Mr. Volcker opted for a 5-percent increase over what the Taylor
rule would have been. You can also see that Mr. Volcker was right, that
he broke inflation.
Now, unless we want to return to 12 to 14 percent home mortgages and
a 17 to 18 percent inflation rate, we should----
The Acting CHAIR. The time of the gentleman has expired.
Mr. HECK of Washington. I yield myself an additional 30 seconds.
Quickly, here is the chart for the most recent economic crisis. The
red

[[Page H8338]]

line is what the Fed did. The Taylor rule is the blue line. This is
unemployment.
The Taylor rule would have provided, beginning back in 2010,
substantially higher interest rates when unemployment rates were still
unacceptably high. The Taylor rule doesn't work. Adopt my amendment.
I reserve the balance of my time.

{time} 1845

Mr. HENSARLING. Mr. Chairman, I claim the time in opposition to the
amendment.
The Acting CHAIR. The gentleman from Texas is recognized for 5
minutes.
Mr. HENSARLING. Mr. Chairman, I do rise in opposition to the
amendment. The gentleman has clearly stated he doesn't like the
underlying bill, so his amendment simply guts the underlying bill and
allows the Fed to opt out of the underlying bill.
I have listened carefully to the gentleman's interest and what he
recited about the Taylor rule, but again I would encourage him to read
the bill because he would then know, as I suspect that he does, that
the Federal Reserve under the FORM Act is not mandated to follow the
Taylor rule. It is simply a comparison. So, if the Taylor rule is as
bad as the gentleman claims it will be, then the FORM Act will reveal
that to all the world. All the world will know this.
However, I think if we study economic history carefully, what we will
discover is that, when the Fed used a more predictable, rules-based
monetary policy to where investors and businesses actually had some
idea of what interest rates would be, the economy would flourish, as it
did during the great moderation.
So again, the FORM Act allows the Fed to use any monetary policy it
wishes, to change the policy, to deviate from the policy, but it has to
communicate that to the rest. That is essentially what the FORM Act
says. It is about communication. It doesn't tell them how to conduct
the policy. It does tell them how to communicate the policy to the
American people, who deserve to know this from the single most
important economic agency of government today.
Mr. HUIZENGA of Michigan. Will the gentleman yield?
Mr. HENSARLING. I yield to the gentleman, the author of the FORM Act.
Mr. HUIZENGA of Michigan. I appreciate the chairman yielding to me on
this.
Exactly what you were talking about is the case. This is merely a
benchmark guideline to measure against. In fact, in committee, when
Chair Yellen was testifying in front of our committee, I suggested
that, if they saw problems, that they would then put a floor or put a
ceiling on any movement that could happen within that timeframe. I
thought I gave a very helpful suggestion that we call it the Yellen
rule at that point, and she can claim credit for doing exactly what is
being discussed.
Mr. HENSARLING. Well, I thank the gentleman for his leadership on
this.
Again, I have portions of the act in front of me. The bill
stipulates: ``Nothing in this Act shall be construed to require.'' That
is what the act says on a formal policy directive. ``If the Federal
Open Market Committee determines that such plans cannot or should not
be achieved due to changing market conditions.''
Again this is about communication. When we have an economy that is
underperforming, where had we only had the average recovery in the
post-war era every man, woman, and child in America would have $6,000
more, millions would be back to work, I think the American people
deserve to ask some hard questions.
This is such an incredible red herring with this argument on
independence. Mr. Chairman, the Board of Governors have 14-year terms--
second only to lifetime appointments to the bench--14-year terms,
independent funding of the congressional appropriations process. And so
now we don't want them to answer some questions.
Will their feelings get hurt if they are asked some tough questions
by Members of Congress? Are they that delicate that they can't conduct
monetary policy if in an open committee hearing they have to answer
questions? I think the American people, Mr. Chairman, are saying: Give
me a break.
Mr. Chairman, I reserve the balance of my time.
Mr. HECK of Washington. Mr. Chairman, I yield myself 1\1/2\ minutes.
Where is it? Bring it. If it is not the Taylor rule, it is some other
rule that is going to work magically to achieve price stability and
full employment, you think it exists somewhere?
The Taylor rule is what is essentially referenced in the bill. You
say: But it isn't required.
Okay. There is a better rule? Show your hand. It is time to lay your
cards down. If there is actually some kind of mathematical magic
formula that can always trump human judgment and changing economic
circumstances, lay it on the table. But you haven't done it.
Mr. HENSARLING. Will the gentleman yield?
Mr. HECK of Washington. I would be glad to yield to the gentleman
from Texas out of my extreme respect for both you and the prime sponsor
of the bill.
Mr. HENSARLING. Whether you call it a rule or a method or approach,
the Fed is already doing something. They are looking at variables, and
they are making decisions. All we are asking is that they communicate
that to the rest of the American people. Ask them what their rule is.
We would like to know. That is what the FORM Act is all about.
Mr. HECK of Washington. Their rule is to break the back of inflation.
Their rule is to achieve increased employment. That is the rule they
use. Exercising, yes, judgment based upon ever-changing economic
circumstances.
But to suggest that you can arbitrarily apply a formula without being
willing to advance the formula, you want disclosure, you want
transparency? Start with you. Put your rule on the table.
I reserve the balance of my time.
Mr. HENSARLING. Again, it is up to the Fed. You can't argue this both
ways. The FORM Act is not imposing a rule. The Fed says that it is data
dependent. What is the data? What is the reaction function? Tell us
what you are doing. If you decide tomorrow morning you want to do it
differently, that is fine. Just tell the rest of us.
In this economy that continues to underperform, an economy that
continues to suffer, monetary policy ought to be made clear and
transparent to the American people. That is what the FORM Act demands.
I yield the remaining 15 seconds to the gentleman from Michigan (Mr.
Huizenga).
Mr. HUIZENGA of Michigan. Mr. Chairman, I don't trust Congress enough
for us to come up with the rule, which is why I wrote into the bill
that the Fed develops the rule, the guideline, the benchmark that they
put forward. We know they do this already. They look at the Taylor
rule, they look at a number of other models, and they then go advance
forward with the best policy that they think is the right thing. We are
just asking them to communicate that to Congress and the American
people.
Mr. HENSARLING. Mr. Chairman, I urge a rejection of the amendment.
I yield back the balance of my time.
Mr. HECK of Washington. Mr. Chairman, with all due respect to my
friend from Michigan, you didn't put the formula in the bill because it
doesn't exist. If it did, you would have put it in. If there would have
been an absolute magic formula that would keep this economy at full
employment and price stability, we would have it on the table, but no
such formula exists. That is why you didn't put it in the bill. It
doesn't exist.
Adopt the amendment. Allow the Fed to do the job to achieve price
stability and full employment.
I yield back the balance of my time.
The Acting CHAIR (Mr. Woodall). The question is on the amendment
offered by the gentleman from Washington (Mr. Heck).
The amendment was rejected.

Amendment No. 2 Offered by Mr. Heck of Washington

The Acting CHAIR. It is now in order to consider amendment No. 2
printed in part C of House Report 114-341.
Mr. HECK of Washington. Mr. Chairman, I have an amendment at the
desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:

[[Page H8339]]

Page 6, line 25, strike ``and''.
Page 7, line 3, strike the period at the end and insert ``;
and''.
Page 7, after line 3, insert the following:
``(9) include a plan to use the most accurate data, subject
to all historical revisions, for inputs into the Directive
Policy Rule and the Reference Policy Rule.''.

The Acting CHAIR. Pursuant to House Resolution 529, the gentleman
from Washington (Mr. Heck) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Washington.
Mr. HECK of Washington. Mr. Chairman, I yield myself such time as I
may consume.
Mr. Chairman, the purpose of this amendment is to ask the Fed to
build a time machine because, frankly, that is the only way that this
bill works.
You see, the fact of the matter is that, when Mr. Taylor, Professor
Taylor, devised his study, which was groundbreaking, was important, he
did so in the 1990s, looking back over the previous 10 years which, as
I indicated earlier, was an unusually fairly stable period of time,
unusually fairly stable, not an exceptional performance, good or bad,
in the economy.
He did so with the benefit of data that had been updated over time,
because, you see, the Bureau of Economic Analysis doesn't just do one
fixed number that people get to rely on. In fact, in the first year
they put out not one, not two, but three updates, called the advanced
estimate, the preliminary estimate, and the final estimate.
But wait, there is more, to quote the Ronco ad. The next year they
update again. That is called the annual reestimate. But wait, there is
more. Every 5 years they do a benchmark reestimate. That is the data
that Professor Taylor had the advantage of.
In essence, to ask the Fed to utilize or apply the Taylor rule or any
such thing like it, which does not exist, is to ask them to have the
benefit of data which is not final.
I don't know about you, but every month when the unemployment numbers
come out, I have begun to view them pretty skeptically over the years.
We all know the reason for that: because they get revised so much--so
much.
At the beginning of President Obama's first term, when he indicated,
as is often cited, that he would act to get unemployment no higher than
8 percent, he was doing so on the basis of the first estimate, which
said it was 6.7 percent or something like that. The revision was 7.8
percent 3 months later.
So the fact of the matter is the Taylor rule or anything like it has
the advantage of hindsight, which no rule can fully incorporate.
The purpose of this amendment--vote for it, vote against it--is if
you want to do this, build yourself a time machine, because that is the
only way you can reasonably, with any sense of scholarship and solid
research, be able to devise a formula that would work because we don't
know the conditions until quite sometime later.
Mr. Chairman, I reserve the balance of my time.
Mr. HENSARLING. Mr. Chairman, I ask unanimous consent to claim the
time in opposition to the amendment, although I am not opposed.
The Acting CHAIR. Is there objection to the request of the gentleman
from Texas?
There was no objection.
The Acting CHAIR. The gentleman from Texas is recognized for 5
minutes.
Mr. HENSARLING. Mr. Chairman, just to throw my friend and colleague a
curve ball, I will support his amendment. Although, I must admit, I am
somewhat surprised and shocked, given the debate of the last, that he
would want to interfere in the independence of the Fed and require them
to use fully revised data.
I will, nonetheless, support the amendment, notwithstanding the
intrusion upon their independence.
Mr. Chairman, I yield back the balance of my time.
Mr. HECK of Washington. Mr. Chairman, I am not often speechless in
the face of my friend from Texas' remarks.
Look, we cannot perform a calculation without accurate data. If you
are going to join me and throw in with H. G. Wells and a great heritage
of both literature and cinema history regarding time travel, then I can
do nothing but shockingly accept your gracious support of this
amendment.
Mr. Chairman, I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Washington (Mr. Heck).
The amendment was agreed to.

Amendment No. 3 Offered by Mr. Grayson

The Acting CHAIR. It is now in order to consider amendment No. 3
printed in part C of House Report 114-341.
Mr. GRAYSON. Mr. Chairman, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:

Page 44, line 25, insert ``annually'' after ``shall''.
Page 45, line 7, strike ``the audit'' and insert ``each
audit''.

The Acting CHAIR. Pursuant to House Resolution 529, the gentleman
from Florida (Mr. Grayson) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Florida.
Mr. GRAYSON. Mr. Chairman, my amendment would simply make the one-
time audit required by section 13 of this bill an annual audit. A 2011
GAO audit of the Fed, the only independent Fed audit in its 102-year
history, detailed how the United States provided at least $16 trillion
in loans to bail out American and foreign banks and businesses.
With an annual audit, Congress is at a great advantage in how to
avoid waste, fraud, and abuse at the Fed. I urge my colleagues to
support this amendment.
Mr. Chairman, I reserve the balance of my time.
Mr. HENSARLING. Mr. Chairman, I ask unanimous consent to claim the
time in opposition to the amendment, although I am not opposed.
The Acting CHAIR. Is there objection to the request of the gentleman
from Texas?
There was no objection.
The Acting CHAIR. The gentleman from Texas is recognized for 5
minutes.
Mr. HENSARLING. Mr. Chairman, I want to thank the gentleman from
Florida for his amendment. I rise in support of the amendment.
The FORM Act provides for GAO audits of the Federal Reserve but is
silent as to the frequency of when audits should occur. I think the
gentleman makes a compelling case.
This will clarify that GAO should audit the Fed on an annual basis,
and it will serve to help inform Congress and the American people with
regular updates on the Fed's activities. It will promote greater
transparency and accountability, which is the objective of the bill.
I urge all Members to adopt the amendment. I thank the gentleman for
his leadership here.
Mr. Chairman, I yield back the balance of my time.
Mr. GRAYSON. Mr. Chairman, I yield back the balance of my time.

{time} 1900

The Acting CHAIR. The question is on the amendment offered by the
gentleman from Florida (Mr. Grayson).
The amendment was agreed to.
The Acting CHAIR. It is now in order to consider amendment No. 4
printed in part C of House Report 114-341.

Amendment No. 5 Offered by Mr. Grayson

The Acting CHAIR. It is now in order to consider amendment No. 5
printed in part C of House Report 114-341.
Mr. GRAYSON. Mr. Chairman, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:

Add at the end of the bill the following:

SEC. 17. AMENDMENT TO FEDERAL RESERVE DISTRICTS.

(a) In General.--Section 2 of the Federal Reserve Act, (12
U.S.C. 222 et seq.) is amended--
(1) by striking ``twelve'' each place such term appears and
inserting ``fifteen'';
(2) by inserting after the fourth sentence the following:
``One such Federal reserve districts shall be for Northern
California (located in San Francisco), one such district
shall be for Southern California (located in Los Angeles),
and one such district shall be for Florida (located in
Orlando). The border between the two California districts
shall be drawn so that the districts are contiguous and
compact, the population of the districts is approximately
equal, and the districts do not divide any California county
border as in existence on the date of enactment of this
sentence.''

[[Page H8340]]

(b) Conforming Amendments.--Section 16 of such Act is
amended by striking ``twelve'' and inserting ``fifteen''.

The Acting CHAIR. Pursuant to House Resolution 529, the gentleman
from Florida (Mr. Grayson) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Florida.
Mr. GRAYSON. Mr. Chairman, my amendment would increase the number of
Federal Reserve Districts from 12 to 15. The three new districts would
be for northern California, southern California, and Florida; based in
San Francisco, Los Angeles, and Orlando. No current Federal Reserve
banks would be relocated as a result.
Take a look at the map to my right and you will see a map that is
over a century old. The Federal Reserve Districts have not been updated
significantly since they were first established in 1913--102 years ago.
It is time to bring our Federal Reserve Districts into the 21st
century.
Right now, for instance, one district represents everywhere from Utah
to the Pacific Ocean, including Alaska and Hawaii. The three new
districts would be centered in three of the fastest growing regions of
our country in terms of both population and economic growth.
In 1913, the 12th district, based in San Francisco, had only 6
percent of the population of the United States. In 2000, it had 19
percent, or 65 million Americans.
As you can see from the next chart, districts designed originally a
century ago to have equal population have reached the point where one
district has 10 times the population of another district.
In the case of the Western district, it now includes a total of nine
States jumbled together, California and eight surrounding States.
Similarly, the district including Florida and the neighboring States
has grown to 45 million Americans--twice the average. It combines
Florida and five neighboring States. It is time for the Fed to
recognize this change in where Americans live.
A similar change has been made in the court systems over the year.
The tenth circuit was taken out of the eighth circuit when the
population increased to the point where it was no longer sustainable as
a single circuit court.
Similarly, the 11th circuit--my circuit--was carved out of the fifth
circuit for exactly the same reason. But the Fed districts have
remained static now for a century.
I am proud to introduce this amendment to modernize the Federal
Service to more accurately reflect who we are as Americans and where we
live and where we work.
I yield to the gentlewoman from California (Ms. Maxine Waters).
Ms. MAXINE WATERS of California. Mr. Chair, while I appreciate the
spirit of the amendment, which seeks to ensure that the most populous
regions of the country have adequate representation within the Federal
Reserve system, I am concerned that the amendment does not fully
contemplate the implications of adding the additional reserve
districts.
For example, the amendment would add a Federal Reserve District
headquartered in San Francisco, a city which is already home to a
Federal Reserve bank. Furthermore, the current Federal Reserve Bank of
San Francisco has a number of branches located throughout the West,
including one in Los Angeles, a city which would be home to another
Federal Reserve Bank under the gentleman from Florida's amendment.
The amendment also does not address how the new Reserve Banks would
participate in the current rotation on the Federal Open Market
Committee, a matter which is prescribed by law under section 12(a) of
the Federal Reserve Act.
Rather than add an additional Reserve Bank or additional Reserve
Banks to the Federal Reserve system, I respectfully submit that the
desired effects of this amendment to provide greater diverse range of
views across our country could more usefully be achieved without
increasing the number of regional Reserve Banks and within the confines
of the current system.
The Acting CHAIR. The time of the gentleman from Florida has expired.
Mr. HENSARLING. Mr. Chairman, I rise in opposition to the amendment.
The Acting CHAIR. The gentleman from Texas is recognized for 5
minutes.
Mr. HENSARLING. Mr. Chairman, I want to--I guess to put it civilly--
gently oppose the amendment from the gentleman from Florida.
I think the gentleman from Florida does make some good points. These
Federal Reserve Districts, in some respects, are anachronistic. They
were derived from our early 20th century history. I do believe that it
is a subject that needs to be looked at. I am just not prepared to say
today that the gentleman has necessarily gotten it right.
There is probably something very humorous today about siting a
Federal Reserve Bank in the same city as Disney World. I will refrain
from making any such humorous references.
But, again, I think the gentleman makes a good point. I would like
this issue to go through regular order. I believe it is a matter that
Chairman Huizenga and the Monetary Policy and Trade Subcommittee of our
full committee will be taking a look at: Are these appropriate cities
for the Federal Reserve Banks to be sited?
So, again, I thank the gentleman for bringing the matter to the
House's attention, I thank him for bringing it to my attention, but I
am not prepared to say that San Francisco, L.A., or Orlando are
necessarily the places that Federal Reserve Banks ought to end up,
without going through regular order.
So I want to look at the matter, but I would otherwise encourage
Members at this time to reject the amendment of the gentleman from
Florida. I would ask the House to reject the amendment at this time.
Mr. Chairman, I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Florida (Mr. Grayson).
The amendment was rejected.

Amendment No. 6 Offered by Mr. King of Iowa

The Acting CHAIR. It is now in order to consider amendment No. 6
printed in part C of House Report 114-341.
Mr. KING of Iowa. Mr. Chairman, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:

Add at the end the following:

SEC. 17. PUBLIC TRANSCRIPTS OF FOMC MEETINGS.

Section 12A of the Federal Reserve Act (12 U.S.C. 263), as
amended by this Act, is further amended by adding at the end
the following:
``(e) Public Transcripts of Meetings.--The Committee
shall--
``(1) record all meetings of the Committee; and
``(2) make the full transcript of such meetings available
to the public.''.

The Acting CHAIR. Pursuant to House Resolution 529, the gentleman
from Iowa (Mr. King) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Iowa.
Mr. KING of Iowa. Mr. Chairman, amendment No. 6 is an amendment that
addresses the transparency that we have heard much dialogue about in
the debate here on the floor, especially from members of the Financial
Services Committee.
It is an amendment that requires that the records of the Federal Open
Market Committee be recorded, in the same fashion that our committee
meetings are recorded, and made public.
The FOMC sets the monetary policy for the U.S. economy, but there is
no law that compels the Fed to release FOMC meeting transcripts to the
public. The details of the meetings are crucial for an accurate
understanding of how the Fed views the state of the economy and the
reasoning behind Fed policy and actions. That has also been a
significant part of our debate here with the underlying bill.
So, my amendment directs them to keep a transcript, keep a record,
and make that record public. It compels those transcripts to be made
public so that those of us here in the United States Congress, but also
people in households and businesses across the country, can have a look
into the decisions that are made and especially the rationale behind
those decisions of the full proceedings of the Federal Open Market
Committee.

[[Page H8341]]

Every congressional hearing makes these transcripts publicly
available. That is what my amendment does. It requires the FOMC to do
the same. And I would urge its adoption.
Mr. Chairman, I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Chairman, I rise in opposition
to the gentleman's amendment.
The Acting CHAIR (Mr. Jody B. Hice of Georgia). The gentlewoman is
recognized for 5 minutes.
Ms. MAXINE WATERS of California. Mr. Chair, the amendment would, at
best, duplicate the Federal Reserve's current policy regarding the
disclosure of transcripts and, at worst, falsely imply that the Federal
Reserve would be prohibited from exercising its discretion in
determining when to release FOMC meeting transcripts in accordance with
prudent monetary policy. After all, communication in and of itself is a
key monetary policy tool, and it would be unwise to tie the Fed's hands
when it comes to using it.
Furthermore, any failure to allow the Federal Reserve to strike the
appropriate balance between transparency and the disclosure of
potentially market-moving information, particularly at a time of
financial stress, would have significant adverse impacts on our economy
and could, in turn, have a chilling effect on monetary policy
deliberations.
To underscore the fact that this potentially harmful amendment is
completely unnecessary, I think it is also worth pointing out that the
Federal Reserve is already a leader among central banks in advanced
economies when it comes to making its transcripts available to the
public.
While the Federal Reserve releases transcripts with a 5-year lag,
other advanced economies have adopted requirements to release
transcripts after much longer periods. Japan's Central Bank releases
transcripts to the public after 10 years, and the European Union
releases transcripts after 20 years.
In addition to releasing transcripts to the public, the Federal
Reserve employs a range of additional measures to enhance the public's
understanding of the Federal Open Market Committee's views and
expectations. For example, the Federal Reserve issues a statement
following the conclusion of each of its meetings that includes the
Federal Reserve's policy decisions and its rationale, includes the vote
of each FOMC member, and provides a short summary of any dissenting
views.
The Federal Reserve also releases detailed minutes that are released
on a 3-week lag following each FOMC meeting. The minutes contain a
detailed discussion of the policy deliberations and the range of views
that were presented and includes votes on each policy action taken by
each FOMC member.
Since 2011, the Chair of the Federal Reserve gives a press conference
following each FOMC meeting for which a summary of economic projections
is prepared, amounting to four press conferences each year. This
provides the opportunity for the Chair to explain her views and respond
to questions from the financial press.
In January 2012, the Federal Open Market Committee also published a
statement of longer-run goals and monetary policy strategy in which it
outlined how it would assess its compliance with statutory mandates to
promote full employment and price stability. Subsequently, in September
2014, the Federal Reserve published a statement outlining its policy,
normalization principles, and plans.
Finally, the Federal Reserve, as it is required by law, regularly
testifies before the House and Senate on monetary policy matters on no
less than two occasions a year. Chairman Yellen has made herself
available to testify on regulatory matters at the request of Congress.
So, all of this is to say that claims that the Federal Reserve lacks
transparency or doesn't communicate its thinking to the public just
don't hold up to the facts.
I urge Members to oppose this amendment.
Mr. Chairman, I reserve the balance of my time.

Modification to Amendment No. 6 Offered by Mr. King of Iowa

Mr. KING of Iowa. Mr. Chairman, I ask unanimous consent to modify my
amendment with the form I have placed at the desk.
The Acting CHAIR. The Clerk will report the modification.
The Clerk read as follows:
Modification to amendment No. 6 offered by Mr. King of Iowa:
Add at the end the following:
Page 53, line 4, strike ``and''.
Page 53, line 11, strike the period and insert ``; and''.
Page 53, after line 11, insert the following:
(F) consider the effects of the GDP output and employment
targets of the ``dual mandate'' (both from the creation of
the dual mandate in 1977 until the present time and estimates
of the future effect of the dual mandate ) on--
(i) United States economic activity;
(ii) Federal Reserve actions; and
(iii) Federal debt.
Page 53, line 18, add at the end the following: ``In making
such report, the Commission shall specifically report on the
considerations required under paragraph (1)(F).''.

{time} 1915

The Acting CHAIR. Is there objection to the request of the gentleman
from Iowa?
There was no objection.
The Acting CHAIR. The amendment is modified.
The Chair recognizes the gentleman from Iowa.
Mr. KING of Iowa. Mr. Chairman, I want to thank the ranking member
for her cooperation and opportunity to have this debate, and I will
just address it briefly.
In 1977, Congress established what is known as the dual mandate. The
dual mandate set the goals of the Federal Reserve System and the
Federal Open Market Committee to include goals of maximum employment
and stable prices.
There has been a lot of debate about whether the tension of those two
issues has brought about decisions of the Fed that might have otherwise
been different, and so this amendment requires a study to be done in
order to take a look at the effects of the dual mandate. It is pretty
simple that way, and I urge its support and adoption.
I circle back then to the transcripts. And in response to the
gentlewoman's comments, I would just remind Members of Congress that we
do keep records in all of our proceedings. There is a transcript taking
place right now of these proceedings, of each of our committees and
subcommittees. They are available to the public, and, in fact, we are
on C-SPAN with almost all of our subcommittees and committees today.
We are open. We are open records, and there is much sunlight on what
we do. And yet, many of the decisions that we make here have far less
impact on the American citizen than the decisions made by the Fed.
So, again, I urge the adoption of this modified amendment.
I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Chair, continuing time in
opposition, first, the notion that the Federal Reserve's large-scale
asset purchases did not help the economy and job growth is simply
false. The forceful and sustained actions that the Federal Reserve took
in recent years to bring us out of a recession and into recovery are
well-documented and cannot be overlooked.
For instance, the November jobs report showed the economy added a
whopping 271,000 jobs in October, pushing the unemployment rate down
and, even further, to 5 percent and bringing the total number of
private sector jobs created to more than 13.3 million over the past 68
months.
Second, the amendment's implication that the Federal Reserve's
monetary policy has added to the U.S. national debt is also
demonstrably false. Although raising revenue is not the purpose of
monetary policy, as a consequence of the Federal Reserve's actions in
recent years, it has generated substantial sums in the hundreds of
billions of dollars which has returned to the Treasury. These sums have
reduced the deficit, not contributed to it.
Rather than relentlessly attacking the Federal Reserve and taking
steps to undermine their independence, all of us really should be
thanking them for what they have done to get our economy back on track.
I yield back the balance of my time.
Mr. KING of Iowa. Mr. Chairman, I yield such time as he may consume
to the gentleman from Texas (Mr. Hensarling).
Mr. HENSARLING. I thank the gentleman for yielding.

[[Page H8342]]

I want to urge all Members of the House to adopt his amendment. With
respect to full transcripts of the FOMC meetings, all this is doing is
simply codifying a current practice. It is simply to make sure that
there is a transparency, at least this level of transparency, that the
Fed doesn't backslide.
With respect to the dual mandate, the truth is the Fed has many
mandates and they all ought to be examined. The Fed has been around for
100 years. It is time to poke under the hood. That is why we are having
the Centennial Monetary Commission, and I think it is important that we
take a good look to see if, at times, these are working at cross
purposes.
So I thank the gentleman from Iowa for his leadership. I urge all
Members to adopt his amendment.
Mr. KING of Iowa. Mr. Chairman, I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment, as modified,
offered by the gentleman from Iowa (Mr. King).
The amendment, as modified, was agreed to.
The Acting CHAIR. There being no further amendments, under the rule,
the Committee rises.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr.
Walker) having assumed the chair, Mr. Jody B. Hice of Georgia, Acting
Chair of the Committee of the Whole House on the state of the Union,
reported that that Committee, having had under consideration the bill
(H.R. 3189) to amend the Federal Reserve Act to establish requirements
for policy rules and blackout periods of the Federal Open Market
Committee, to establish requirements for certain activities of the
Board of Governors of the Federal Reserve System, and to amend title
31, United States Code, to reform the manner in which the Board of
Governors of the Federal Reserve System is audited, and for other
purposes, and, pursuant to House Resolution 529, he reported the bill
back to the House with sundry further amendments adopted in the
Committee of the Whole.
The SPEAKER pro tempore. Under the rule, the previous question is
ordered.
Is a separate vote demanded on any further amendment reported from
the Committee of the Whole? If not, the Chair will put them en gros.
The amendments were agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. Pursuant to clause 1(c) of rule XIX, further
consideration of H.R. 3189 is postponed.

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