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115th Congress    }                                {    Rept. 115-1116
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                {            Part 1

======================================================================



 
                   FEDERAL RESERVE REFORM ACT OF 2018

                                _______
                                

January 2, 2019.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 6741]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 6741) to amend the Federal Reserve Act to 
increase monetary policy transparency and accountability and to 
make reforms to the Federal Reserve System, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Federal Reserve 
Reform Act of 2018''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Monetary policy transparency and accountability.
Sec. 3. Independence from credit policy.
Sec. 4. Congressional accountability for emergency lending programs.
Sec. 5. Interest rates on balances maintained at a Federal Reserve Bank 
by depository institutions established by Federal Open Market 
Committee.
Sec. 6. Membership of Federal Open Market Committee.
Sec. 7. Bringing the non-monetary policy related functions of the Board 
of Governors of the Federal Reserve System into the appropriations 
process.
Sec. 8. Amendment to appointment of presidents of Federal Reserve 
Banks.
Sec. 9. Federal Open Market Committee blackout period.
Sec. 10. Salaries, financial disclosures, and office staff of the Board 
of Governors of the Federal Reserve System.
Sec. 11. Vice Chairman for Supervision report requirement.

SEC. 2. MONETARY POLICY TRANSPARENCY AND ACCOUNTABILITY.

  Section 12A of the Federal Reserve Act (12 U.S.C. 263) is amended--
          (1) by redesignating subsections (b) and (c) as subsections 
        (d) and (e), respectively; and
          (2) by inserting after subsection (a) the following new 
        subsections:
  ``(b) Policy Transparency.--
          ``(1) Monetary policy strategy.--
                  ``(A) In general.--The Committee shall annually 
                establish exactly 1 monetary policy strategy, which 
                shall serve as a non-technical public communication of 
                the Committee's consensus expectation for the conduct 
                of monetary policy during that calendar year.
                  ``(B) Requirements.--Each monetary policy strategy of 
                the Committee shall include the following:
                          ``(i) A plain English description of how the 
                        Committee would adjust each of the following 
                        monetary policy instruments in reaction to 
                        changes in a small and well-defined set of 
                        publicly available economic indicators:
                                  ``(I) Short-term interest rate 
                                targets established by the Committee.
                                  ``(II) Open-market operations 
                                authorized under section 14.
                                  ``(III) Earnings on balances 
                                maintained at a Federal reserve bank by 
                                or on behalf of a depository 
                                institution under section 19(b)(12).
                          ``(ii) An identification of 1 monetary policy 
                        instrument from the list in clause (i) that the 
                        Committee expects to use as the primary 
                        instrument for implementing the monetary policy 
                        strategy described under subparagraph (A).
          ``(2) Reference monetary policy rules.--In addition to the 
        monetary policy strategy required under paragraph (1), the 
        Committee shall annually adopt at least 1 and not more than 3 
        reference monetary policy rules, each of which shall 
        mathematically express how the primary monetary policy 
        instrument identified under paragraph (1)(B)(ii) reacts to 
        changes in a small and well-defined set of publicly available 
        economic indicators.
          ``(3) Deviations.--Nothing in this subsection shall be 
        construed to prevent the Committee from setting short-term 
        interest rate targets, conducting open-market operations, or 
        paying earnings on balances pursuant to section 19(b)(12) in a 
        manner that deviates from a monetary policy strategy or any 
        reference monetary policy rules established under this 
        subsection.
  ``(c) Testimony and Reports of the Chairman.--The Chairman shall, 
concurrent with each semi-annual hearing required under section 2B, 
submit a report to the Committee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Banking and Financial Services of 
the House of Representatives, containing--
          ``(1) a statement as to whether the monetary policy strategy 
        established under subsection (b)(1) qualitatively differs from 
        any of the reference monetary policy rules required under 
        subsection (b)(2) and, if applicable, a full and non-technical 
        explanation of any such difference;
          ``(2) a statement as to whether the Committee's conduct of 
        monetary policy since the previous report quantitatively 
        differs from any reference monetary policy rule and, if 
        applicable, a full and non-technical explanation of any such 
        differences; and
          ``(3) a description of--
                  ``(A) the circumstances under which the Committee's 
                monetary policy strategy may be amended from year to 
                year; and
                  ``(B) a full and non-technical explanation of any 
                such actual amendment.''.

SEC. 3. INDEPENDENCE FROM CREDIT POLICY.

  (a) Returning to a Monetary Policy Balance Sheet.--
          (1) In general.--Not later than 1 year after the date of the 
        enactment of this Act--
                  (A) the Board of Governors of the Federal Reserve 
                System shall transfer to the Department of the Treasury 
                all covered assets that are neither gold stock, 
                Treasury currency, nor direct obligations of the United 
                States, foreign central banks, or the International 
                Monetary Fund; and
                  (B) the Secretary of the Treasury shall transfer to 
                the Federal reserve banks direct obligations of the 
                United States of equivalent market value to such 
                covered assets.
          (2) Covered assets defined.--In this subsection, the term 
        ``covered assets'' means all assets--
                  (A) purchased through open-market operations by the 
                Federal reserve banks; or
                  (B) acquired through transactions under the following 
                sections of the Federal Reserve Act (12 U.S.C. 221 et 
                seq.):
                          (i) Section 10A before the date of the 
                        enactment of this Act.
                          (ii) Section 10B.
                          (iii) Section 13.
                          (iv) Section 13A.
                          (v) Section 24.
  (b) Open Market Asset Purchases.--Section 14(b) (12 U.S.C. 355) of 
the Federal Reserve Act (relating to ``Purchase and sale of obligations 
of United States, States, counties, etc.'') is amended to read as 
follows:
  ``(b) To buy and sell in the open market, at home or abroad, under 
the direction and regulations of the Federal Open Market Committee, 
gold stock, Treasury currency, or direct obligations of the United 
States, foreign central banks, or the International Monetary Fund. 
Nothing in this subsection shall be construed to limit advances under 
section 10B, or discount loans under sections 13, 13A, or 24.''.
  (c) Maintaining a Monetary Policy Balance Sheet.--
          (1) Assets acquired under emergency lending.--Section 13(3) 
        of the Federal Reserve Act (12 U.S.C. 343(3)) is amended by 
        adding at the end the following new subparagraph:
                  ``(F) Not later than 1 year after a Federal reserve 
                bank acquires any assets under this paragraph that are 
                neither gold nor direct obligations of the United 
                States, foreign central banks, or the International 
                Monetary Fund--
                          ``(i) the Board shall transfer such assets of 
                        the Federal reserve bank to the Department of 
                        the Treasury; and
                          ``(ii) the Secretary of the Treasury shall 
                        transfer to the Federal reserve banks direct 
                        obligations of the United States of equivalent 
                        market value to the assets described in clause 
                        (i).''.
          (2) Repeal of authority to provide emergency advances to 
        groups of member banks.--Section 10A of the Federal Reserve Act 
        is repealed.
          (3) Assets acquired through advances to member banks.--The 
        second undesignated paragraph of subsection (a) of section 10B 
        of the Federal Reserve Act is amended--
                  (A) by inserting ``not'' before ``secured by mortgage 
                loans''; and
                  (B) by striking ``lowest discount rate'' and 
                inserting ``highest discount rate''.

SEC. 4. CONGRESSIONAL ACCOUNTABILITY FOR EMERGENCY LENDING PROGRAMS.

  Section 13(3) of the Federal Reserve Act (12 U.S.C. 343(3)), as 
amended by section 3, is further 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 striking ``the affirmative vote of not less 
                than five members'' and inserting ``the prior approval 
                of the Secretary of the Treasury and not less than \2/
                3\ of the members of the Federal Open Market 
                Committee'';
          (2) in subparagraph (B)--
                  (A) by moving such subparagraph 4 ems to the left;
                  (B) 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 
                the 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 on the value of the 
        collateral 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.'';
                  (C) 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.''; and
                  (D) by striking clause (iv);
          (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:
                  ``(G) Joint resolution of approval.--
                          ``(i) In general.--A program or facility 
                        created under subparagraph (A) shall terminate 
                        on the date that is 30 calendar days after the 
                        date on which Congress receives a report 
                        described in subparagraph (C) unless there is 
                        enacted into law a joint resolution approving 
                        the program or facility not later than 30 
                        calendar days after the date on which the 
                        report is received. Any loan offered through 
                        the program or facility that is outstanding as 
                        of the date on which the program or facility is 
                        terminated shall be repaid in full not later 
                        than 30 calendar days after the date on which 
                        the program or facility is terminated.
                          ``(ii) Contents of joint resolution.--For the 
                        purpose of this subparagraph, the term `joint 
                        resolution' means only a joint resolution--
                                  ``(I) that is introduced not later 
                                than 3 calendar days after the date on 
                                which the report described in 
                                subparagraph (C) is received by 
                                Congress;
                                  ``(II) that does not have a preamble;
                                  ``(III) the title of which is as 
                                follows: `Joint resolution relating to 
                                the approval of a program or facility 
                                created by the Board of Governors of 
                                the Federal Reserve System'; and
                                  ``(IV) the matter after the resolving 
                                clause of which is as follows: `That 
                                Congress approves the program or 
                                facility created by the Board of 
                                Governors of the Federal Reserve System 
                                on __________.' (The blank space being 
                                appropriately filled in).
                          ``(iii) Fast track consideration in house of 
                        representatives.--
                                  ``(I) Reconvening.--Upon receipt of a 
                                report under subparagraph (C), the 
                                Speaker, if the House would otherwise 
                                be adjourned, shall notify the Members 
                                of the House that, pursuant to this 
                                subparagraph, the House shall convene 
                                not later than the second calendar day 
                                after receipt of such report.
                                  ``(II) Reporting and discharge.--Any 
                                committee of the House of 
                                Representatives to which a joint 
                                resolution is referred shall report it 
                                to the House not later than 5 calendar 
                                days after the date of receipt of the 
                                report described in subparagraph (C). 
                                If a committee fails to report the 
                                joint resolution within that period, 
                                the committee shall be discharged from 
                                further consideration of the joint 
                                resolution and the joint resolution 
                                shall be referred to the appropriate 
                                calendar.
                                  ``(III) Proceeding to 
                                consideration.--After each committee 
                                authorized to consider a joint 
                                resolution reports it to the House or 
                                has been discharged from its 
                                consideration, it shall be in order, 
                                not later than the sixth day after 
                                Congress receives the report described 
                                in subparagraph (C), to move to proceed 
                                to consider the joint resolution in the 
                                House. All points of order against the 
                                motion are waived. Such a motion shall 
                                not be in order after the House has 
                                disposed of a motion to proceed on the 
                                joint resolution. The previous question 
                                shall be considered as ordered on the 
                                motion to its adoption without 
                                intervening motion. The motion shall 
                                not be debatable. A motion to 
                                reconsider the vote by which the motion 
                                is disposed of shall not be in order.
                                  ``(IV) Consideration.--The joint 
                                resolution shall be considered as read. 
                                All points of order against the joint 
                                resolution and against its 
                                consideration are waived. The previous 
                                question shall be considered as ordered 
                                on the joint resolution to its passage 
                                without intervening motion except 2 
                                hours of debate equally divided and 
                                controlled by the proponent and an 
                                opponent. A motion to reconsider the 
                                vote on passage of the joint resolution 
                                shall not be in order.
                          ``(iv) Fast track consideration in senate.--
                                  ``(I) Reconvening.--Upon receipt of a 
                                report under subparagraph (C), if the 
                                Senate has adjourned or recessed for 
                                more than 2 days, the majority leader 
                                of the Senate, after consultation with 
                                the minority leader of the Senate, 
                                shall notify the Members of the Senate 
                                that, pursuant to this subparagraph, 
                                the Senate shall convene not later than 
                                the second calendar day after receipt 
                                of such report.
                                  ``(II) Placement on calendar.--Upon 
                                introduction in the Senate, the joint 
                                resolution shall be placed immediately 
                                on the calendar.
                                  ``(III) Floor consideration.--
                                          ``(aa) In general.--
                                        Notwithstanding Rule XXII of 
                                        the Standing Rules of the 
                                        Senate, it is in order at any 
                                        time during the period 
                                        beginning on the fourth day 
                                        after the date on which 
                                        Congress receives a report 
                                        described in subparagraph (C) 
                                        and ending on the sixth day 
                                        after the date on which 
                                        Congress receives the report 
                                        (even though a previous motion 
                                        to the same effect has been 
                                        disagreed to) to move to 
                                        proceed to the consideration of 
                                        the joint resolution, and all 
                                        points of order against the 
                                        joint resolution (and against 
                                        consideration of the joint 
                                        resolution) are waived. The 
                                        motion to proceed is not 
                                        debatable. The motion is not 
                                        subject to a motion to 
                                        postpone. A motion to 
                                        reconsider the vote by which 
                                        the motion is agreed to or 
                                        disagreed to shall not be in 
                                        order. If a motion to proceed 
                                        to the consideration of the 
                                        resolution is agreed to, the 
                                        joint resolution shall remain 
                                        the unfinished business until 
                                        disposed of.
                                          ``(bb) Debate.--Debate on the 
                                        joint resolution, and on all 
                                        debatable motions and appeals 
                                        in connection therewith, shall 
                                        be limited to not more than 10 
                                        hours, which shall be divided 
                                        equally between the majority 
                                        and minority leaders or their 
                                        designees. A motion further to 
                                        limit debate is in order and 
                                        not debatable. An amendment to, 
                                        or a motion to postpone, or a 
                                        motion to proceed to the 
                                        consideration of other 
                                        business, or a motion to 
                                        recommit the joint resolution 
                                        is not in order.
                                          ``(cc) Vote on passage.--The 
                                        vote on passage shall occur 
                                        immediately following the 
                                        conclusion of the debate on a 
                                        joint resolution, and a single 
                                        quorum call at the conclusion 
                                        of the debate if requested in 
                                        accordance with the rules of 
                                        the Senate.
                                          ``(dd) Rulings of the chair 
                                        on procedure.--Appeals from the 
                                        decisions of the Chair relating 
                                        to the application of the rules 
                                        of the Senate, as the case may 
                                        be, to the procedure relating 
                                        to a joint resolution shall be 
                                        decided without debate.
                          ``(v) Coordination with action by other 
                        house.--
                                  ``(I) In general.--If, before the 
                                passage by one House of a joint 
                                resolution of that House, that House 
                                receives from the other House a joint 
                                resolution, then the following 
                                procedures shall apply:
                                          ``(aa) The joint resolution 
                                        of the other House shall not be 
                                        referred to a committee.
                                          ``(bb) With respect to a 
                                        joint resolution of the House 
                                        receiving the resolution--
                                                  ``(AA) the procedure 
                                                in that House shall be 
                                                the same as if no joint 
                                                resolution had been 
                                                received from the other 
                                                House; but
                                                  ``(BB) the vote on 
                                                passage shall be on the 
                                                joint resolution of the 
                                                other House.
                                  ``(II) Treatment of joint resolution 
                                of other house.--If one House fails to 
                                introduce or consider a joint 
                                resolution under this section, the 
                                joint resolution of the other House 
                                shall be entitled to expedited floor 
                                procedures under this section.
                                  ``(III) Consideration after 
                                passage.--If, following passage of the 
                                joint resolution in the Senate, the 
                                Senate then receives the companion 
                                measure from the House of 
                                Representatives, the companion measure 
                                shall not be debatable.
                                  ``(IV) Vetoes.--If the President 
                                vetoes the joint resolution, the period 
                                beginning on the date the President 
                                vetoes the joint resolution and ending 
                                on the date the Congress receives the 
                                veto message with respect to the joint 
                                resolution shall be disregarded in 
                                computing the 30-calendar day period 
                                described in clause (i) and debate on a 
                                veto message in the Senate under this 
                                section shall be 1 hour equally divided 
                                between the majority and minority 
                                leaders or their designees.
                                  ``(V) Rules of house of 
                                representatives and senate.--This 
                                subparagraph is enacted by Congress--
                                          ``(aa) as an exercise of the 
                                        rulemaking power of the Senate 
                                        and House of Representatives, 
                                        respectively, and as such it is 
                                        deemed a part of the rules of 
                                        each House, respectively, but 
                                        applicable only with respect to 
                                        the procedure to be followed in 
                                        that House in the case of a 
                                        joint resolution, and it 
                                        supersedes other rules only to 
                                        the extent that it is 
                                        inconsistent with such rules; 
                                        and
                                          ``(bb) with full recognition 
                                        of the constitutional right of 
                                        either House to change the 
                                        rules (so far as relating to 
                                        the procedure of that House) at 
                                        any time, in the same manner, 
                                        and to the same extent as in 
                                        the case of any other rule of 
                                        that House.
                  ``(H) 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.
                  ``(I) 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 Financial Stability Act 
                        of 2010 (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.''.

SEC. 5. 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. 6. 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 representatives 
        of the Federal Reserve banks to be selected as hereinafter 
        provided'' and inserting ``one representative from each of the 
        Federal Reserve banks'';
          (2) in the second sentence, by striking ``and, beginning'' 
        and all that follows through ``San Francisco''; and
          (3) by striking the third and fourth sentences.

SEC. 7. BRINGING THE NON-MONETARY POLICY RELATED FUNCTIONS OF THE BOARD 
                    OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM INTO THE 
                    APPROPRIATIONS PROCESS.

  (a) In General.--The Federal Reserve Act is amended by inserting 
after section 11B the following:

``SEC. 11C. APPROPRIATIONS REQUIREMENT FOR NON-MONETARY POLICY RELATED 
                    ADMINISTRATIVE COSTS.

  ``(a) Appropriations Requirement.--
          ``(1) Recovery of costs of annual appropriation.--The Board 
        of Governors of the Federal Reserve System and the Federal 
        reserve banks shall collect assessments and other fees, as 
        provided under this Act, that are designed to recover the costs 
        to the Government of the annual appropriation to the Board of 
        Governors of the Federal Reserve System by Congress. The Board 
        of Governors of the Federal Reserve System and the Federal 
        reserve banks may only incur obligations or allow and pay 
        expenses with respect to non-monetary policy related 
        administrative costs pursuant to an appropriations Act.
          ``(2) Offsetting collections.--Assessments and other fees 
        described under paragraph (1) for any fiscal year--
                  ``(A) shall be deposited and credited as offsetting 
                collections to the account providing appropriations to 
                the Board of Governors of the Federal Reserve System; 
                and
                  ``(B) shall not be collected for any fiscal year 
                except to the extent provided in advance in 
                appropriation Acts.
          ``(3) Limitation.--This subsection shall only apply to the 
        non-monetary policy related administrative costs of the Board 
        of Governors of the Federal Reserve System.
  ``(b) Definitions.--For purposes of this section:
          ``(1) Monetary policy.--The term `monetary policy' means a 
        strategy for producing a generally acceptable exchange medium 
        that supports the productive employment of economic resources 
        by reliably serving as both a unit of account and store of 
        value.
          ``(2) Non-monetary policy related administrative costs.--The 
        term `non-monetary policy related administrative costs' means 
        administrative costs not related to the conduct of monetary 
        policy, and includes--
                  ``(A) direct operating expenses for supervising and 
                regulating entities supervised and regulated by the 
                Board of Governors of the Federal Reserve System, 
                including conducting examinations, conducting stress 
                tests, communicating with the entities regarding 
                supervisory matters and laws, and regulations;
                  ``(B) operating expenses for activities integral to 
                carrying out supervisory and regulatory 
                responsibilities, such as training staff in the 
                supervisory function, research and analysis functions 
                including library subscription services, and collecting 
                and processing regulatory reports filed by supervised 
                institutions; and
                  ``(C) support, overhead, and pension expenses related 
                to the items described under subparagraphs (A) and 
                (B).''.
  (b) Effective Date.--The amendments made by this section shall apply 
with respect to expenses paid and fees collected on or after October 1, 
2018.

SEC. 8. AMENDMENT TO APPOINTMENT OF PRESIDENTS OF FEDERAL RESERVE 
                    BANKS.

  The fifth subparagraph of the fourth undesignated paragraph of 
section 4 of the Federal Reserve Act (12 U.S.C. 341) is amended by 
striking ``Class B and Class C directors'' and inserting ``board of 
directors''.

SEC. 9. FEDERAL OPEN MARKET COMMITTEE BLACKOUT PERIOD.

  Section 12A of the Federal Reserve Act (12 U.S.C. 263), as amended by 
section 2, is further amended by adding at the end the following new 
subsection:
  ``(f) 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. 10. 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) 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.
  ``(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. 11. VICE CHAIRMAN FOR SUPERVISION REPORT REQUIREMENT.

  Paragraph (12) of section 10 of the Federal Reserve Act (12 U.S.C. 
247b) is amended--
          (1) by redesignating such paragraph as paragraph (11); and
          (2) in such paragraph--
                  (A) by striking ``shall appear'' and inserting 
                ``shall provide written testimony and appear''; and
                  (B) by adding at the end the following: ``If, at the 
                time of any appearance described in this paragraph, the 
                position of Vice Chairman for Supervision is vacant, 
                the Chairman or their designee shall appear instead and 
                provide the required written testimony.''.

                          Purpose and Summary

    On September 7, 2018, Representative Andy Barr introduced 
H.R. 6741, the ``Federal Reserve Reform Act of 2018'' to 
provide for a reduction in monetary policy uncertainty, an 
orderly return to a more conventional monetary policy balance 
sheet; and hold Congress accountable for America's credit 
policy instead of ceding responsibility to the Federal Reserve 
for unconventional asset purchases. Given that interest on 
reserves now regularly serves as a monetary policy rate, H.R. 
6741 also provides for the Federal Reserve's full monetary 
policy committee--the Federal Open Market Committee or FOMC, 
not just the Board of Governors--to vote on those rates. It 
also provides for a more fully informed monetary policy by 
expanding FOMC voting membership to all Federal Reserve banks 
for each meeting. H.R. 6741 also provides greater 
accountability for bank supervision and regulation by requiring 
an appropriation for non-monetary policy related costs, and 
returns the authority for each class of Federal Reserve bank 
directors to contribute to the search and hiring process for 
District Bank presidents. H.R. 6741 reforms the ``blackout 
period'' that governs when Federal Reserve Governors and 
employees may publicly speak on certain matters; requires the 
Federal Reserve to disclose the salaries of highly paid 
employees; and provides for the Federal Reserve Chair or a 
designee to testify in the event that the Vice Chair for 
Supervision is vacant.

                  Background and Need for Legislation

    If monetary policy does not work, then our economy cannot 
work. H.R. 6741, the Federal Reserve Reform Act of 2018, thus 
provides for a more growth-oriented and less politically prone 
monetary policy. It does so, in important part, by
          (1) reducing growth-killing uncertainty that 
        undercuts the efficacy of monetary policies;
          (2) unwinding the Fed's non-monetary policy assets; 
        and
          (3) holding Congress accountable for America's credit 
        policies instead of relying on the Fed to initiate off-
        budget spending.
    Better communication may sound boring. But it is key to 
reducing growth-killing policy uncertainty that, according to 
Federal Reserve research, creates a significant drag on our 
economy.\1\ The Committee's legislation brings greater 
transparency to how monetary policy reacts to economic changes 
so that households and businesses have the information they 
need to make productive decisions.
---------------------------------------------------------------------------
    \1\A recent study by Federal Reserve Board economists finds that 
``uncertainty about monetary policy robustly raise credit spreads and 
reduce output.'' Source: Lucas Husted, John Rogers, and Bo Sun (2017). 
``Monetary Policy Uncertainty,'' International Finance Discussion 
Papers1215. Available at https://doi.org/10.17016/IFDP.2017.1215.
---------------------------------------------------------------------------
    The Federal Open Market Committee (FOMC) has characterized 
its conduct of monetary policy as, quote, ``data dependent.'' 
In doing so, however, it leaves households and businesses 
uncertain about what data matter and how they matter. By 
providing for the annual adoption of both a plain English 
policy strategy and a small set of comparison policy rules of 
the FOMC's own choosing, H.R. 6741 reduces that uncertainty to 
provide for a more reliable allocation of real goods and 
services to their most promising economic opportunities.
    Adopting the best of proposals from both sides of the 
aisle, this framework promises to reliably support a stronger 
economy that works for everyone. Testifying before our monetary 
policy subcommittee, Dr. Joseph Gagnon from the Peterson 
Institute shared the following observation:\2\
---------------------------------------------------------------------------
    \2\Monetary Policy and Trade Subcommittee hearing entitled ``The 
Fed Turns 100: Lessons Learned Over a Century of Central Banking,'' 
September 11, 2013. Quoted from page 11 of the printed hearing, 
available at https://financialservices.house.gov/calendar/
eventsingle.aspx?
EventID=347585.

          The best strategy is for the Fed to use various rules 
        in assessing the stance of policy. Whenever it deviates 
        noticeably from popular rules, the Fed should explain 
---------------------------------------------------------------------------
        clearly why it is doing so.

    The Federal Reserve Reform Act of 2018 provides for exactly 
the type of framework that Dr. Gagnon and other highly regarded 
witnesses from both sides of the aisle have advocated during 
extensive Committee hearings.
    In addition, monetary policy loses its independence when it 
extends into politically sensitive credit markets. Almost half 
of today's Federal Reserve balance sheet continues to reflect 
the Fed's emergency expedition into favoring some asset prices 
at the expense of others.\3\ In addition to distorting the 
price of credit and thus compromising efficiency in the real 
economy, the Fed's decade-old maintenance of this expedition 
(with little if any end in sight) continues to put monetary 
policy independence at undue risk. The Federal Reserve Reform 
Act of 2018 thus provides for an asset swap facility that 
leaves the Fed with the assets it needs to conduct monetary 
policy and requiring our government's fiscal principals--
Congress--to decide in a more accountable manner when and where 
American households and businesses fund the public coffers.
---------------------------------------------------------------------------
    \3\Federal Reserve Statistical Release (H.4.1), ``Factors Affecting 
Reserve Balances,'' October 26, 2017. Accessed October 27, 2017 at 
Board of Governors, Recent Balance Sheet Trends, available at https://
www.federalreserve.gov/releases/h41/current/h41.htm.
---------------------------------------------------------------------------
    Monetary policy works best when it simply helps goods and 
services readily find their most promising opportunities. To be 
sure, realizing this ideal is hard, even under favorable 
conditions. It becomes harder still when central banks step 
beyond their monetary policy roles and into the political realm 
of favoring some credit prices over others (as the Fed has 
done, for example, by purchasing almost $2 trillion of MBS 
during and after the Financial Crisis).\4\
---------------------------------------------------------------------------
    \4\As of October 26, 2017, the Federal Reserve banks own almost 
$1.8 trillion of Federal agency debt securities and Mortgage-backed 
securities. Source: https://www.federalreserve.gov/releases/h41/
current/h41.htm.
---------------------------------------------------------------------------
    Economists of different stripes shared strong concerns to 
the Committee about this unfortunate development. Testifying as 
a minority witness before the monetary policy subcommittee, MIT 
Professor Simon Johnson observed that:\5\
---------------------------------------------------------------------------
    \5\See the MPT Subcommittee hearing entitled ``Unconventional 
monetary policy,'' December 7, 2016. Archived webcast available at 
https://financialservices.house.gov/calendar/eventsingle.
aspx?EventID=401201.

          we're all agreeing . . . that fiscal policy 
        infrastructure is the responsibility of the fiscal 
        authority, which is that Congress in the United States 
        . . . it is not the responsibility, and should not 
---------------------------------------------------------------------------
        become the responsibility of the Federal Reserve.

    The Federal Reserve Reform Act of 2018 provides for an 
orderly return of the Fed's balance sheet to what former 
Federal Reserve Board Chair Yellen called ``a primarily 
treasury-only portfolio,''\6\ and thus promotes both a more 
resilient financial system and more productive allocation of 
credit in the real economy.
---------------------------------------------------------------------------
    \6\Full-Committee hearing entitled ``Monetary Policy and the State 
of the Economy,'' July 12, 2017. Archived webcast available at https://
financialservices.house.gov/calendar/eventsingle.
aspx?EventID=402098.
---------------------------------------------------------------------------
    H.R. 6741 also provides for a long-overdue framework that 
holds Congress to account for extending emergency credit to 
distressed banks. Time and again, Americans have watched their 
Federal Reserve stretch its mandates beyond the breaking point, 
with the predictable result of increased financial fragility 
and decreased economic opportunity.
    Politicians and advocacy groups from both sides of the 
aisle agree that doing better requires a brighter line between 
conventional monetary policy and emergency credit policy. 
Following the introduction of Warren-Vitter, the President and 
CEO of Better Markets warned that:\7\
---------------------------------------------------------------------------
    \7\Dennis Kelleher, ``Better Markets Statement on the Introduction 
of the Bailout Prevention Act,'' May 13, 2015. Accessed at https://
bettermarkets.com/newsroom/better-markets-statement-introduction-
bailout-prevention-act.

          While the much smaller $700 billion TARP program 
        received widespread scrutiny, the Fed's trillions in 
        bailouts did not. In fact, the public and even its 
        elected officials in Congress were mostly kept in the 
        dark about these bailouts. That was wrong. The Dodd-
        Frank Wall Street Reform and Consumer Protection Act 
        made some modest changes to limit the Fed's ability to 
        bailout Wall Street in the future, but more needs to be 
        done if taxpayers are to be protected, bailouts are to 
        be limited, too big to fail is to be ended and market 
        discipline is to apply to Wall Street like the rest of 
---------------------------------------------------------------------------
        America's banks and businesses.

    By drawing a bright line of accountability between monetary 
and credit policy, the Federal Reserve Reform Act of 2018 
provides for both a more productive monetary policy and less 
distortionary credit policy, and does so in a manner that 
Americans for Financial Reform\8\ characterized as aligning 
``not only with the intent of the Dodd-Frank Act, but with 
traditional principles of central bank lending that go back 
centuries.''\9\
---------------------------------------------------------------------------
    \8\``About AFR: Americans for Financial Reform is a nonpartisan and 
nonprofit coalition of more than 200 civil rights, consumer, labor, 
business, investor, faith-based, and civic and community groups. Formed 
in the wake of the 2008 crisis, we are working to lay the foundation 
for a strong, stable, and ethical financial system--one that serves the 
economy and the nation as a whole. AFR has been called ``the leading 
voice for Wall Street accountability'' in Washington (by Zach Carter of 
the Huffington Post).'' (Source: http://ourfinancialsecurity.org/about/
)
    \9\Quoted from Senator Elizabeth Warren, ``Warren, Vitter 
Introduced Bailout Prevention Act,'' May 13, 2015. Press release 
available at https://www.warren.senate.gov/?p=press_
release&id=818.
---------------------------------------------------------------------------
    The Dodd-Frank Act's post crisis regime rewarded the 
Federal Reserve with the greatest expansion of regulatory power 
in its history.\10\ The Federal Reserve, separate and apart 
from monetary policy, can now impose ``heightened prudential 
standards'' on any large financial institution deemed 
``systemically important.''\11\ Figuratively, and in some 
reported cases literally, the Federal Reserve has now taken a 
seat in bank board rooms where it can alarmingly influence, if 
not outright veto, mergers, acquisitions, and dividend 
distributions among other corporate actions.\12\ This unchecked 
power should concern us all. The ``Federal Reserve Reform Act'' 
makes a needed change by bifurcating the Fed's budget to 
separate the funding of the Federal Reserve's monetary policy 
function from its prudential regulator function. Monetary 
policy independence should not be an escape hatch from 
Congressional regulatory accountability, particularly as the 
Fed exercises its newly acquired powers to regulate an alarming 
share of our nation's economy.
---------------------------------------------------------------------------
    \10\``If anything, the major change in the post-crisis financial 
regulatory system is an increasingly powerful Federal Reserve.'' 
Source: http://www.hblr.org/2011/06/why-the-federal-reserve-is-dodd-
franks-big-winner/; ``The 2010 Dodd-Frank Wall Street Reform and 
Consumer Protection Act increased the powers of the Board of Governors 
of the Federal Reserve System along almost all dimensions pertaining to 
the supervision and operation of systemically important financial 
institutions, available at https://piie.com/publications/policy-briefs/
governing-federal-reserve-
system-after-dodd-frank-act.
    \11\See for example Dodd-Frank Act, Section 112. Council authority, 
Section 115. Enhanced supervision and prudential standard for nonbank 
financial companies supervised by the Board of Governors and certain 
bank holding companies, Section 120. Additional standards applicable to 
activities or practices for financial stability purposes, and Section 
121. Mitigation of risks to financial stability, available at https://
www.govtrack.us/congress/bills/111/hr4173/text.
    \12\See for example: Committee on Financial Services, April 17, 
2018, hearing entitled, ``Semi-Annual Testimony on the Federal 
Reserve's Regulation and Supervision of the Financial System,'' 
available at: https://financialservices.house.gov/calendar/
eventsingle.aspx?EventID=
403293; see also ``Quarles Defends Fed Moves on Bank Regulation'', 
available at: https://thehill.com/policy/finance/383601-quarles-
defends-feds-moves-on-bank-regulation-supervision.
---------------------------------------------------------------------------
    Regardless of the exigencies of 2008, monetary policy is 
not and can never be a substitute for sound fiscal policy. The 
nation needs a prudent path to a more normal Fed balance sheet 
in size and composition where interest rates are once again 
market based. Forays into credit allocation, fiscal policy and 
bank management threaten the Federal Reserve's monetary policy 
independence, not to mention checks and balances. Although a 
strong and independent Federal Reserve remains critical, we 
cannot afford to one day awake only to find our central bankers 
have become our central planners and long-term economic growth 
is harmed.\13\
---------------------------------------------------------------------------
    \13\See https://taxnews.ey.com/news/2017-1120-house-financial-
services-committee-questions-federal-reserve-chair-janet-yellen.
---------------------------------------------------------------------------
    American economic opportunity depends on monetary policy 
doing what it can and only what it can--that is, maintaining an 
efficient exchange medium so that real goods and services 
(which include labor) can freely engage their most promising 
opportunities. The Federal Reserve Reform Act of 2018 does just 
that, by reducing policy uncertainty, facilitating an orderly 
exit from distortionary Fed credit policies, holding Congress 
to account for risking taxpayers' money through emergency 
loans, providing for more deliberative and better informed 
monetary policies, and increasing accountability for bank 
supervision and regulation.

                                Hearings

    The Subcommittee on Monetary Policy and Trade held eight 
hearings to consider matters relating to H.R. 6741 on March 17, 
2017; April 4, 2017; April 26, 2017; April 28, 2017; June 28, 
2017; July 20, 2017; November 7, 2017; and January 10, 2018.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
September 13, 2018, and ordered H.R. 6741 to be reported 
favorably to the House, as amended by a recorded vote of 30 
yeas to 21 nays (recorded vote no. FC-212), a quorum being 
present. An amendment in the nature of a substitute, offered by 
Rep. Barr, was agreed to by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 30 yeas to 21 nays 
(Record vote no. FC-212), a quorum being present.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 6741 
will strengthen Federal Reserve System's ability to provide for 
efficient and effective monetary policies and supervisory 
services.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    The Committee has not received an estimate of new budget 
authority contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to Sec. 
402 of the Congressional Budget Act of 1974. In compliance with 
clause 3(c)(2) of rule XIII of the Rules of the House, the 
Committee opines that H.R. 6741 will not establish any new 
budget or entitlement authority or create any tax expenditures.

                 Congressional Budget Office Estimates

    The cost estimate prepared by the Director of the 
Congressional Budget Office pursuant to Sec. 402 of the 
Congressional Budget Act of 1974 was not submitted timely to 
the Committee.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995. The Committee has 
determined that the bill does not contain Federal mandates on 
the private sector. The Committee has determined that the bill 
does not impose a Federal intergovernmental mandate on State, 
local, or tribal governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5 (115th Congress), the 
following statement is made concerning directed rule makings: 
The Committee estimates that the bill requires no directed rule 
makings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This Section cites H.R. 6741 as the ``Federal Reserve 
Reform Act of 2018.''

Section 2. Monetary policy transparency and accountability

    This section provides for the Committee to annually 
establish a non-technical monetary policy strategy, as well as 
a small set of reference rules to increase policy transparency.

Section 3. Independence from credit policy

    This section provides for timely asset swaps between the 
Federal Reserve System and Department of the Treasury so as to 
ensure that assets on the Federal Reserve's balance sheet 
exclude those that are not gold stock, Treasury currency, or 
direct obligations of the United States, foreign central banks, 
or the International Monetary Fund.

Section 4. Congressional accountability for emergency lending

    This section provides for the ratification of emergency 
loans via a Joint Resolution, and thus allow Federal Reserve 
banks to continue their origination of Section 13(3) lending 
facilities, while returning Article I responsibility for 
associated fiscal consequences to Congress, and thus 
strengthening both fiscal policy accountability and monetary 
policy independence.

Section 5. Interest rates on balances maintained at a Federal Reserve 
        bank by depository institutions established by the Federal Open 
        Market Committee

    This section provides for the Federal Open Market Committee 
(FOMC) to participate in the establishment of interest rates on 
balances maintained at a Federal Reserve Bank by depository 
institutions.

Section 6. Membership of Federal Open Market Committee

    This section provides for every District Bank to vote on 
the Fed's policy directive during every Federal Open Market 
Committee (FOMC) meeting.

Section 7. Bringing the non-monetary policy related functions of the 
        board of governors of the Federal Reserve system into the 
        appropriations process

    This section provides for the on-budget funding of the 
Federal Reserve's non-monetary policy administrative costs.

Section 8. Amendment to appointment of presidents of Federal Reserve 
        banks

    This section provides for each class of Federal Reserve 
District bank directors to participate in the process of hiring 
their District bank presidents.

Section 9. Federal Open Market Committee blackout period

    This section provides for more clarity about timing of 
blackout periods associated with FOMC meetings.

Section 10. Salaries, financial disclosures, and office staff of the 
        board of governors of the Federal Reserve system

    This section provides for greater transparency to Federal 
Reserve compensation policies.

Section 11. Vice Chairman for Supervision report requirement

    This section provides for the Federal Reserve Board Chair, 
or the Chair's designee, to appear before Congress, in the 
event that the Vice Chairman for Supervision has not been 
confirmed.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                          FEDERAL RESERVE ACT




           *       *       *       *       *       *       *
                         federal reserve banks.

  Sec. 4. When the organization committee shall have 
established Federal reserve districts as provided in section 
two of this Act, a certificate shall be filed with the 
Comptroller of the Currency showing the geographical limits of 
such districts and the Federal reserve city designated in each 
of such districts. The Comptroller of the Currency shall 
thereupon cause to be forwarded to each national bank located 
in each district, and to such other banks declared to be 
eligible by the organization committee which may apply 
therefor, an application blank in form to be approved by the 
organization committee, which blank shall contain a resolution 
to be adopted by the board of directors of each bank executing 
such application, authorizing a subscription to the capital 
stock of the Federal reserve bank organizing in that district 
in accordance with the provisions of this Act. (Omitted from 
U.S. Code)
   When the minimum amount of capital stock prescribed by this 
Act for the organization of any Federal reserve bank shall have 
been subscribed and allotted, the organization committee shall 
designate any five banks of those whose applications have been 
received, to execute a certificate of organization, and 
thereupon the banks so designated shall, under their seals, 
make an organization certificate which shall specifically state 
the name of such Federal reserve bank, the territorial extent 
of the district over which the operations of such Federal 
reserve bank are to be carried on, the city and State in which 
said bank is to be located, the amount of capital stock and the 
number of shares into which the same is divided, the name and 
place of doing business of each bank executing such 
certificate, and of all banks which have subscribed to the 
capital stock of such Federal reserve bank and the number of 
shares subscribed by each, and the fact that the certificate is 
made to enable those banks executing same, and all banks which 
have subscribed or may thereafter subscribe to the capital 
stock of such Federal reserve bank, to avail themselves of the 
advantages of this Act. (Omitted from U.S. Code)
   The said organization certificate shall be acknowledged 
before a judge of some court of record or notary public; and 
shall be, together with the acknowledgment thereof, 
authenticated by the seal of such court, or notary, transmitted 
to the Comptroller of the Currency, who shall file, record and 
carefully preserve the same in his office. (Omitted from U.S. 
Code)
   Upon the filing of such certificate with the Comptroller of 
the Currency as aforesaid, the said Federal reserve bank shall 
become a body corporate and as such, and in the name designated 
in such organization certificate, shall have power--
   First. To adopt and use a corporate seal.
   Second. To have succession after the approval of this Act 
until dissolved by Act of Congress or until forfeiture of 
franchise for violation of law.
   Third. To make contracts.
   Fourth. To sue and be sued, complain and defend, in any 
court of law or equity.
   Fifth. To appoint by its board of directors a president, 
vice presidents, and such officers and employees as are not 
otherwise provided for in this Act, to define their duties, 
require bonds for them and fix the penalty thereof, and to 
dismiss at pleasure such officers or employees. The president 
shall be the chief executive officer of the bank and shall be 
appointed by the [Class B and Class C directors] board of 
directors of the bank, with the approval of the Board of 
Governors of the Federal Reserve System, for a term of 5 years; 
and all other executive officers and all employees of the bank 
shall be directly responsible to the president. The first vice 
president of the bank shall be appointed in the same manner and 
for the same term as the president, and shall, in the absence 
or disability of the president or during a vacancy in the 
office of president, serve as chief executive officer of the 
bank. Whenever a vacancy shall occur in the office of the 
president or the first vice president, it shall be filled in 
the manner provided for original appointments; and the person 
so appointed shall hold office until the expiration of the term 
of his predecessor.
   Sixth. To prescribe by its board of directors, by-laws not 
inconsistent with law, regulating the manner in which its 
general business may be conducted, and the privileges granted 
to it by law may be exercised and enjoyed.
   Seventh. To exercise by its board of directors, or duly 
authorized officers or agents, all powers specifically granted 
by the provisions of this Act and such incidental powers as 
shall be necessary to carry on the business of banking within 
the limitations prescribed by this Act.
   Eighth. Upon deposit with the Treasurer of the United States 
of any bonds of the United States in the manner provided by 
existing law relating to national banks, to receive from the 
Secretary of the Treasury circulating notes in blank, 
registered and countersigned as provided by law, equal in 
amount to the par value of the bonds so deposited, such notes 
to be issued under the same conditions and provisions of law as 
relate to the issue of circulating notes of national banks 
secured by bonds of the United States bearing the circulating 
privilege, except that the issue of such notes shall not be 
limited to the capital stock of such Federal reserve bank.
   But no Federal reserve bank shall transact any business 
except such as is incidental and necessarily preliminary to its 
organization until it has been authorized by the Comptroller of 
the Currency to commence business under the provisions of this 
Act.
   Every Federal reserve bank shall be conducted under the 
supervision and control of a board of directors.
   The board of directors shall perform the duties usually 
appertaining to the office of directors of banking associations 
and all such duties as are prescribed by law.
   Said board of directors shall administer the affairs of said 
bank fairly and impartially and without discrimination in favor 
of or against any member bank or banks and may, subject to the 
provisions of law and the orders of the Board of Governors of 
the Federal Reserve System, extend to each member bank such 
discounts, advancements, and accommodations as may be safely 
and reasonably made with due regard for the claims and demands 
of other member banks, the maintenance of sound credit 
conditions, and the accommodation of commerce, industry, and 
agriculture. The Board of Governors of the Federal Reserve 
System may prescribe regulations further defining within the 
limitations of this Act the conditions under which discounts, 
advancements, and the accommodations may be extended to member 
banks. Each Federal reserve bank shall keep itself informed of 
the general character and amount of the loans and investments 
of its member banks with a view to ascertaining whether undue 
use is being made of bank credit for the speculative carrying 
of or trading in securities, real estate, or commodities, or 
for any other purpose inconsistent with the maintenance of 
sound credit conditions; and, in determining whether to grant 
or refuse advances, rediscounts or other credit accommodations, 
the Federal reserve bank shall give consideration to such 
information. The chairman of the Federal reserve bank shall 
report to the Board of Governors of the Federal Reserve System 
any such undue use of bank credit by any member bank, together 
with his recommendation. Whenever, in the judgment of the Board 
of Governors of the Federal Reserve System, any member bank is 
making such undue use of bank credit, the Board may, in its 
discretion, after reasonable notice and an opportunity for a 
hearing, suspend such bank from the use of the credit 
facilities of the Federal Reserve System and may terminate such 
suspension or may renew it from time to time.
   Such board of directors shall be selected as hereinafter 
specified and shall consist of nine members, holding office for 
three years, and divided into three classes, designated as 
classes A, B, and C.
   Class A shall consist of three members, without 
discrimination on the basis of race, creed, color, sex, or 
national origin, who shall be chosen by and be representative 
of the stock-holding banks.
   Class B shall consist of three members, who shall represent 
the public and shall be elected without discrimination on the 
basis of race, creed, color, sex, or national origin, and with 
due but not exclusive consideration to the interests of 
agriculture, commerce, industry, services, labor, and 
consumers.
   Class C shall consist of three members who shall be 
designated by the Board of Governors of the Federal Reserve 
System. They shall be elected to represent the public, without 
discrimination on the basis of race, creed, color, sex, or 
national origin, and with due but not exclusive consideration 
to the interests of agriculture, commerce, industry, services, 
labor, and consumers. When the necessary subscriptions to the 
capital stock have been obtained for the organization of any 
Federal reserve bank, the Board of Governors of the Federal 
Reserve System shall appoint the class C directors and shall 
designate one of such directors as chairman of the board to be 
selected. Pending the designation of such chairman, the 
organization committee shall exercise the powers and duties 
appertaining to the office of chairman in the organization of 
such Federal reserve bank. (Partially incorporated in 12 U.S.C. 
302)
   No Senator or Representative in Congress shall be a member 
of the Board of Governors of the Federal Reserve System or an 
officer or a director of a Federal reserve bank.
   No director of class B shall be an officer, director, or 
employee of any bank.
   No director of class C shall be an officer, director, 
employee, or stockholder of any bank.
   Directors of Class A and Class B shall be chosen in the 
following manner:
   The Board of Governors of the Federal Reserve System shall 
classify the member banks of the district into three general 
groups or divisions, designating each group by number. Each 
group shall consist as nearly as may be of banks of similar 
capitalization. Each member bank shall be permitted to nominate 
to the chairman of the board of directors of the Federal 
reserve bank of the district one candidate for director of 
Class A and one candidate for director of Class B. The 
candidates so nominated shall be listed by the chairman, 
indicating by whom nominated, and a copy of said list shall, 
within fifteen days after its completion, be furnished by the 
chairman to each member bank. Each member bank by a resolution 
of the board or by an amendment to its by-laws shall authorize 
its president, cashier, or some other to cast the vote of the 
member bank in the elections of Class A and Class B directors: 
Provided, That whenever any member banks within the same 
Federal Reserve district are subsidiaries of the same bank 
holding company within the meaning of the Bank Holding Company 
Act of 1956, participation in any such nomination or election 
by such member banks, including such bank holding company if it 
is also a member bank, shall be confined to one of such banks, 
which may be designated for the purpose by such holding 
company.
   Within fifteen days after receipt of the list of candidates 
the duly authorized officer of a member bank shall certify to 
the chairman his first, second, and other choices for director 
of Class A and Class B, respectively, upon a preferential 
ballot upon a form furnished by the Chairman of the Board of 
directors of the Federal reserve bank of the district. Each 
such officer shall make a cross opposite the name of the first 
second, and other choices for a director of Class A and for a 
director of Class B, but shall not vote more than one choice 
for any one candidate. No officer or director of a member bank 
shall be eligible to serve as a Class A director unless 
nominated and elected by banks which are members of the same 
group as the member bank of which he is an officer or director.
   Any person who is an officer or director of more than one 
member bank shall not be eligible for nominations as a Class A 
director except by banks in the same group as the bank having 
the largest aggregate resources of any of those of which such 
person is an officer or director.
   Any candidate having a majority of all votes cast in the 
column of first choice shall be declared elected. If no 
candidate have a majority of all the votes in the first column, 
then there shall be added together the votes cast by the 
electors for such candidates in the second column and the votes 
cast for the several candidates in the first column. The 
candidate then having a majority of the electors voting and the 
highest number of combined votes shall be declared elected. If 
no candidate have a majority of electors voting and the highest 
number of votes when the first and second choices shall have 
been added, then the votes cast in the third column for other 
choices shall be added together in like manner, and the 
candidate then having the highest number of votes shall be 
declared elected. An immediate report of election shall be 
declared.
   Class C directors shall be appointed by the Board of 
Governors of the Federal Reserve System. They shall have been 
for at least two years residents of the district for which they 
are appointed, one of whom shall be designated by said board as 
chairman of the board of directors of the Federal reserve bank 
and as ``Federal reserve agent.'' He shall be a person of 
tested banking experience, and in addition to his duties as 
chairman of the board of directors of the Federal reserve bank 
he shall be required to maintain, under regulations to be 
established by the Board of Governors of the Federal Reserve 
System, a local office of said board on the premises of the 
Federal reserve bank. He shall make regular reports to the 
Board of Governors of the Federal Reserve System and shall act 
as its official representative for the performance of the 
functions conferred upon it by this Act. He shall receive an 
annual compensation to be fixed by the Board of Governors of 
the Federal Reserve System and paid monthly by the Federal 
reserve bank to which he is designated. One of the directors of 
class C shall be appointed by the Board of Governors of the 
Federal Reserve System as deputy chairman to exercise the 
powers of the chairman of the board when necessary. In case of 
the absence of the chairman and deputy chairman, the third 
class C director shall preside at meetings of the board.
   Subject to the approval of the Board of Governors of the 
Federal Reserve System, the Federal reserve agent shall appoint 
one or more assistants. Such assistants, who shall be persons 
of tested banking experience, shall assist the Federal reserve 
agent in the performance of his duties and shall also have 
power to act in his name and stead during his absence or 
disability. The Board of Governors of the Federal Reserve 
System shall require such bonds of the assistant Federal 
reserve agents as it may deem necessary for the protection of 
the United States. Assistants to the Federal reserve agent 
shall receive an annual compensation, to be fixed and paid in 
the same manner as that of the Federal reserve agent.
   Directors of Federal reserve banks shall receive, in 
addition to any compensation otherwise provided, a reasonable 
allowance for necessary expenses in attending meetings of their 
respective boards, which amounts shall be paid by the 
respective Federal reserve banks. Any compensation that may be 
provided by boards of directors of Federal reserve banks for 
directors, officers or employees shall be subject to the 
approval of the Board of Governors of the Federal Reserve 
System.
   The Reserve Bank Organization Committee may, in organizing 
Federal reserve banks, call such meetings of bank directors in 
the several districts as may be necessary to carry out the 
purposes of this Act, and may exercise the functions herein 
conferred upon the chairman of the board of directors of each 
Federal reserve bank pending the complete organization of such 
bank. (Omitted from U.S. Code)
   At the first meeting of the full board of directors of each 
Federal reserve bank, it shall be the duty of the directors of 
classes A, B and C, respectively, to designate one of the 
members of each class whose term of office shall expire in one 
year from the first of January nearest to date of such meeting, 
one whose term of office shall expire at the end of two years 
from said date, and one whose term of office shall expire at 
the end of three years from said date. Thereafter every 
director of a Federal reserve bank chosen as hereinbefore 
provided shall hold office for a term of three years. 
Vancancies that may occur in the several classes of directors 
of Federal reserve banks may be filled in the manner provided 
for the original selection of such directors, such appointees 
to hold office for the unexpired terms of their predecessors.

           *       *       *       *       *       *       *


            board of governors of the federal reserve system

  Sec. 10. The Board of Governors of the Federal Reserve System 
(hereinafter referred to as the ``Board'') shall be composed of 
seven members, to be appointed by the President, by and with 
the advice and consent of the Senate, after the date of 
enactment of the Banking Act of 1935, for terms of fourteen 
years except as hereinafter provided, but each appointive 
member of the Federal Reserve Board in office on such date 
shall continue to serve as a member of the Board until February 
1, 1936, and the Secretary of the Treasury and the Comptroller 
of the Currency shall continue to serve as members of the Board 
until February 1, 1936. In selecting the members of the Board, 
not more than one of whom shall be selected from any one 
Federal Reserve district, the President shall have due regard 
to a fair representation of the financial, agricultural, 
industrial, and commercial interests, and geographical 
divisions of the country. In selecting members of the Board, 
the President shall appoint at least 1 member with demonstrated 
primary experience working in or supervising community banks 
having less than $10,000,000,000 in total assets. The members 
of the Board shall devote their entire time to the business of 
the Board and shall each receive and annual salary of $15,000, 
payable monthly, together with actual necessary traveling 
expenses.
   The members of the Board shall be ineligible during the time 
they are in office and for two years thereafter to hold any 
office, position, or employment in any member bank, except that 
this restriction shall not apply to a member who has served the 
full term for which he was appointed. Upon the expiration of 
the term of any appointive member of the Federal Reserve Board 
in office on the date of enactment of the Banking Act of 1935, 
the President shall fix the term of the successor to such 
member at not to exceed fourteen years, as designated by the 
President at the time of nomination, but in such manner as to 
provide for the expiration of the term of not more than one 
member in any two-year period, and thereafter each member shall 
hold office for a term of fourteen years from the expiration of 
the term of his predecessor, unless sooner removed for cause by 
the President. Of the persons thus appointed, 1 shall be 
designated by the President, by and with the advice and consent 
of the Senate, to serve as Chairman of the Board for a term of 
4 years, and 2 shall be designated by the President, by and 
with the advice and consent of the Senate, to serve as Vice 
Chairmen of the Board, each for a term of 4 years, 1 of whom 
shall serve in the absence of the Chairman, as provided in the 
fourth undesignated paragraph of this section, and 1 of whom 
shall be designated Vice Chairman for Supervision. The Vice 
Chairman for Supervision shall develop policy recommendations 
for the Board regarding supervision and regulation of 
depository institution holding companies and other financial 
firms supervised by the Board, and shall oversee the 
supervision and regulation of such firms. The chairman of the 
Board, subject to its supervision, shall be its active 
executive officer. Each member of the Board shall within 
fifteen days after notice of appointment make and subscribe to 
the oath of office. Upon the expiration of their terms of 
office, members of the Board shall continue to serve until 
their successors are appointed and have qualified. Any person 
appointed as a member of the Board after the date of enactment 
of the Banking Act of 1935 shall not be eligible for 
reappointment as such member after he shall have served a full 
term of fourteen years.
   The Board of Governors of the Federal Reserve System shall 
have power to levy semiannually upon the Federal reserve banks, 
in proportion to their capital stock and surplus, an assessment 
sufficient to pay its estimated expenses and the salaries of 
its members and employees for the half year succeeding the 
levying of such assessment, together with any deficit carried 
forward from the preceding half year, and such assessments may 
include amounts sufficient to provide for the acquisition by 
the Board in its own name of such site or building in the 
District of Columbia as in its judgment alone shall be 
necessary for the purpose of providing suitable and adequate 
quarters for the performance of its functions. After September 
1, 2000, the Board may also use such assessments to acquire, in 
its own name, a site or building (in addition to the facilities 
existing on such date) to provide for the performance of the 
functions of the Board. After approving such plans, estimates, 
and specifications as it shall have caused to be prepared, the 
Board may, notwithstanding any other provision of law, cause to 
be constructed on any site so acquired by it a building or 
buildings suitable and adequate in its judgment for its 
purposes and proceed to take all such steps as it may deem 
necessary or appropriate in connection with the construction, 
equipment, and furnishing of such building or buildings. The 
Board may maintain, enlarge, or remodel any building or 
buildings so acquired or constructed and shall have sole 
control of such building or buildings and space therein.
   The principal offices of the Board shall be in the District 
of Columbia. At meetings of the Board the chairman shall 
preside, and, in his absence, the vice chairman shall preside. 
In the absence of the chairman and the vice chairman, the Board 
shall elect a member to act as chairman pro tempore. The Board 
shall determine and prescribe the manner in which its 
obligations shall be incurred and its disbursements and 
expenses allowed and paid, and may leave on deposit in the 
Federal Reserve banks the proceeds of assessments levied upon 
them to defray its estimated expenses and the salaries of its 
members and employees, whose employment, compensation, leave, 
and expenses shall be governed solely by the provisions of this 
Act, specific amendments thereof, and rules and regulations of 
the Board not inconsistent therewith; and funds derived from 
such assessments shall not be construed to be Government funds 
or appropriated moneys. No member of the Board of Governors of 
the Federal Reserve System shall be an officer or director of 
any bank, banking institution, trust company, or Federal 
Reserve bank or hold stock in any bank, banking institution, or 
trust company; and before entering upon his duties as a member 
of the Board of Governors of the Federal Reserve System he 
shall certify under oath that he has complied with this 
requirement, and such certification shall be filed with the 
secretary of the Board. Whenever a vacancy shall occur, other 
than by expiration of term, among the six members of the Board 
of Governors of the Federal Reserve System appointed by the 
President as above provided, a successor shall be appointed by 
the President, by and with the advice and consent of the 
Senate, to fill such vacancy, and when appointed he shall hold 
office for the unexpired term of his predecessor.
   The President shall have power to fill all vacancies that 
may happen on the Board of Governors of the Federal Reserve 
System during the recess of the Senate by granting commissions 
which shall expire with the next session of the Senate.
   Nothing in this Act contained shall be construed as taking 
away any powers heretofore vested by law in the Secretary of 
the Treasury which relate to the supervision, management, and 
control of the Treasury Department and bureaus under such 
department, and wherever any power vested by this Act in the 
Board of Governors of the Federal Reserve System or the Federal 
reserve agent appears to conflict with the powers of the 
Secretary of the Treasury, such powers shall be exercised 
subject to the supervision and control of the Secretary.
   The Board of Governors of the Federal Reserve System shall 
annually make a full report of its operations to the Speaker of 
the House of Representatives, who shall cause the same to be 
printed for the information of the Congress. The report 
required under this paragraph shall include the reports 
required under section 707 of the Equal Credit Opportunity Act, 
section 18(f)(7) of the Federal Trade Commission Act, section 
114 of the Truth in Lending Act, and the tenth undesignated 
paragraph of this section.
   No Federal Reserve bank may authorize the acquisition or 
construction of any branch building, or enter into any contract 
or other obligation for the acquisition or construction of any 
branch building, without the approval of the Board.
   The Board of Governors of the Federal Reserve System shall 
keep a complete record of the action taken by the Board and by 
the Federal Open Market Committee upon all questions of policy 
relating to open-market operations and shall record therein the 
votes taken in connection with the determination of open-market 
policies and the reasons underlying the action of the Board and 
the Committee in each instance. The Board shall keep a similar 
record with respect to all questions of policy determined by 
the Board, and shall include in its annual report to the 
Congress a full account of the action so taken during the 
preceding year with respect to open-market policies and 
operations and with respect to the policies determined by it 
and shall include in such report a copy of the records required 
to be kept under the provisions of this paragraph.
          [(12)] (11) Appearances before congress.--The Vice 
        Chairman for Supervision [shall appear] shall provide 
        written testimony and appear before the Committee on 
        Banking, Housing, and Urban Affairs of the Senate and 
        the Committee on Financial Services of the House of 
        Representatives and at semi-annual hearings regarding 
        the efforts, activities, objectives, and plans of the 
        Board with respect to the conduct of supervision and 
        regulation of depository institution holding companies 
        and other financial firms supervised by the Board. If, 
        at the time of any appearance described in this 
        paragraph, the position of Vice Chairman for 
        Supervision is vacant, the Chairman or their designee 
        shall appear instead and provide the required written 
        testimony.
  [Sec. 10A. Upon receiving the consent of not less than five 
members of the Board of Governors of the Federal Reserve 
System, any Federal Reserve bank may make advances, in such 
amount as the board of directors of such Federal Reserve bank 
may determine, to groups of five or more member banks within 
its district, a majority of them independently owned and 
controlled, upon their time or demand promissory notes, 
provided the bank or banks which receive the proceeds of such 
advances as herein provided have no adequate amounts of 
eligible and acceptable assets available to enable such bank or 
banks to obtain sufficient credit accommodations from the 
Federal Reserve bank through rediscounts or advances other than 
as provided in section 10(b). The liability of the individual 
banks in each group must be limited to such proportion of the 
total amount advanced to such group as the deposit liability of 
the respective banks bears to the aggregate deposit liability 
of all banks in such group, but such advances may be made to a 
lesser number of such member banks if the aggregate amount of 
their deposit liability constitutes at least 10 per centum of 
the entire deposit liability of the member banks within such 
district. Such banks shall be authorized to distribute the 
proceeds of such loans to such of their number and in such 
amount as they may agree upon, but before so doing they shall 
require such recipient banks to deposit with a suitable 
trustee, representing the entire group, their individual notes 
made in favor of the group protected by such collateral 
security as may be agreed upon. Any Federal Reserve bank making 
such advance shall charge interest or discount thereon at a 
rate not less than 1 per centum above its discount rate in 
effect at the time of making such advance. No such note upon 
which advances are made by a Federal Reserve bank under this 
section shall be eligible under section 16 of this Act as 
collateral security for Federal Reserve notes.
   [No obligations of any foreign government, individual, 
partnership, association, or corporation organized under the 
laws thereof shall be eligible as collateral security for 
advances under this section.
   [Member banks are authorized to obligate themselves in 
accordance with the provisions of this section. ]
  Sec. 10B. (a) In General.--Any Federal Reserve bank, under 
rules and regulations prescribed by the Board of Governors of 
the Federal Reserve System, may make advances to any member 
bank on its time or demand notes having maturities of not more 
than four months and which are secured to the satisfaction of 
such Federal Reserve bank.
       Notwithstanding the foregoing, any Federal Reserve bank, 
under rules and regulations prescribed by the Board of 
Governors of the Federal Reserve System, may make advances to 
any member bank on its time notes having such maturities as the 
Board may prescribe and which are not secured by mortgage loans 
covering a one-to-four family residence. Such advances shall 
bear interest at a rate equal to the [lowest discount rate] 
highest discount rate in effect at such Federal Reserve bank on 
the date of such note.
  (b) Limitations on Advances.--
          (1) Limitation on extended periods.--Except as 
        provided in paragraph (2), no advances to any 
        undercapitalized depository institution by any Federal 
        Reserve bank under this section may be outstanding for 
        more than 60 days in any 120-day period.
          (2) Viability exception.--
                  (A) In general.--If--
                          (i) the head of the appropriate 
                        Federal banking agency certifies in 
                        advance in writing to the Federal 
                        Reserve bank that any depository 
                        institution is viable; or
                          (ii) the Board conducts an 
                        examination of any depository 
                        institution and the Chairman of the 
                        Board certifies in writing to the 
                        Federal Reserve bank that the 
                        institution is viable,
                the limitation contained in paragraph (1) shall 
                not apply during the 60-day period beginning on 
                the date such certification is received.
                  (B) Extensions of period.--The 60-day period 
                may be extended for additional 60-day periods 
                upon receipt by the Federal Reserve bank of 
                additional written certifications under 
                subparagraph (A) with respect to each such 
                additional period.
                  (C) Authority to issue a certificate of 
                viability may not be delegated.--The authority 
                of the head of any agency to issue a written 
                certification of viability under this paragraph 
                may not be delegated to any other person.
                  (D) Extended advances subject to paragraph 
                (3).--Notwithstanding paragraph (1), an 
                undercapitalized depository institution which 
                does not have a certificate of viability in 
                effect under this paragraph may have advances 
                outstanding for more than 60 days in any 120-
                day period if the Board elects to treat--
                          (i) such institution as critically 
                        undercapitalized under paragraph (3); 
                        and
                          (ii) any such advance as an advance 
                        described in subparagraph (A)(i) of 
                        paragraph (3).
          (3) Advances to critically undercapitalized 
        depository institutions.--
                  (A) Liability for increased loss.--
                Notwithstanding any other provision of this 
                section, if--
                          (i) in the case of any critically 
                        undercapitalized depository 
                        institution--
                                  (I) any advance under this 
                                section to such institution is 
                                outstanding without payment 
                                having been demanded as of the 
                                end of the 5-day period 
                                beginning on the date the 
                                institution becomes a 
                                critically undercapitalized 
                                depository institution; or
                                  (II) any new advance is made 
                                to such institution under this 
                                section after the end of such 
                                period; and
                          (ii) after the end of that 5-day 
                        period, the Deposit Insurance Fund of 
                        the Federal Deposit Insurance 
                        Corporation incurs a loss exceeding the 
                        loss that the Corporation would have 
                        incurred if it had liquidated that 
                        institution as of the end of that 
                        period,
                the Board shall, subject to the limitations in 
                subparagraph (B), be liable to the Federal 
                Deposit Insurance Corporation for the excess 
                loss, without regard to the terms of the 
                advance or any collateral pledged to secure the 
                advance.
                  (B) Limitation on excess loss.--The liability 
                of the Board under subparagraph (A) shall not 
                exceed the lesser of the following:
                          (i) The amount of the loss the Board 
                        or any Federal Reserve bank would have 
                        incurred on the increases in the amount 
                        of advances made after the 5-day period 
                        referred to in subparagraph (A) if 
                        those increased advances had been 
                        unsecured.
                          (ii) The interest received on the 
                        increases in the amount of advances 
                        made after the 5-day period referred to 
                        in subparagraph (A).
                  (C) Federal reserve to pay obligation.--The 
                Board shall pay the Federal Deposit Insurance 
                Corporation the amount of any liability of the 
                Board under subparagraph (A).
                  (D) Report.--The Board shall report to the 
                Congress on any excess loss liability it incurs 
                under subparagraph (A), as limited by 
                subparagraph (B)(i), and the reasons therefore, 
                not later than 6 months after incurring the 
                liability.
          (4) No obligation to make advances.--A Federal 
        Reserve bank shall have no obligation to make, 
        increase, renew, or extend any advance or discount 
        under this Act to any depository institution.
          (5) Definitions.--
                  (A) Appropriate federal banking agency.--The 
                term ``appropriate Federal banking agency'' has 
                the same meaning as in section 3 of the Federal 
                Deposit Insurance Act.
                  (B) Critically undercapitalized.--The term 
                ``critically undercapitalized'' has the same 
                meaning as in section 38 of the Federal Deposit 
                Insurance Act.
                  (C) Depository institution.--The term 
                ``depository institution'' has the same meaning 
                as in section 3 of the Federal Deposit 
                Insurance Act.
                  (D) Undercapitalized depository 
                institution.--The term ``undercapitalized 
                depository institution'' means any depository 
                institution which--
                          (i) is undercapitalized, as defined 
                        in section 38 of the Federal Deposit 
                        Insurance Act; or
                          (ii) has a composite CAMEL rating of 
                        5 under the Uniform Financial 
                        Institutions Rating System (or an 
                        equivalent rating by any such agency 
                        under a comparable rating system) as of 
                        the most recent examination of such 
                        institution.
                  (E) Viable.--A depository institution is 
                ``viable'' if the Board or the appropriate 
                Federal banking agency determines, giving due 
                regard to the economic conditions and 
                circumstances in the market in which the 
                institution operates, that the institution--
                          (i) is not critically 
                        undercapitalized;
                          (ii) is not expected to become 
                        critically undercapitalized; and
                          (iii) is not expected to be placed in 
                        conservatorship or receivership.

           *       *       *       *       *       *       *

  Sec.  11. The Board of Governors of the Federal Reserve 
System shall be authorized and empowered:
  (a)(1) To examine at its discretion the accounts, books and 
affairs of each Federal reserve bank and of each member bank 
and to require such statements and reports as it may deem 
necessary. The said board shall publish once each week a 
statement showing the condition of each Federal reserve bank 
and a consolidated statement for all Federal reserve banks. 
Such statements shall show in detail the assets and liabilities 
of the Federal reserve banks, single and combined, and shall 
furnish full information regarding the character of the money 
held as reserve and the amount, nature and maturities of the 
paper and other investments owned or held by Federal reserve 
banks.
  (2) To require any depository institution specified in this 
paragraph to make, at such intervals as the Board may 
prescribe, such reports of its liabilities and assets as the 
Board may determine to be necessary or desirable to enable the 
Board to discharge its responsibility to monitor and control 
monetary and credit aggregates. Such reports shall be made (A) 
directly to the Board in the case of member banks and in the 
case of other depository institutions whose reserve 
requirements under section 19 of this Act exceed zero, and (B) 
for all other reports to the Board through the (i) Federal 
Deposit Insurance Corporation in the case of insured State 
savings associations that are insured depository institutions 
(as defined in section 3 of the Federal Deposit Insurance Act), 
State nonmember banks, savings banks, and mutual savings banks, 
(ii) National Credit Union Administration Board in the case of 
insured credit unions, (iii) the Comptroller of the Currency in 
the case of any Federal savings association which is an insured 
depository institution (as defined in section 3 of the Federal 
Deposit Insurance Act) or which is a member as defined in 
section 2 of the Federal Home Loan Bank Act, and (iv) such 
State officer or agency as the Board may designate in the case 
of any other type of bank, savings association, or credit 
union. The Board shall endeavor to avoid the imposition of 
unnecessary burdens on reporting institutions and the 
duplication of other reporting requirements. Except as 
otherwise required by law, any data provided to any department, 
agency, or instrumentality of the United States pursuant to 
other reporting requirements shall be made available to the 
Board. The Board may classify depository institutions for the 
purposes of this paragraph and may impose different 
requirements on each such class.
  (b) To permit, or, on the affirmative vote of at least five 
members of the Board of Governors of the Federal Reserve System 
to require Federal reserve banks to rediscount the discounted 
paper of other Federal reserve banks at rates of interest to be 
fixed by the Board of Governors of the Federal Reserve System.
  (c) To suspend for a period not exceeding thirty days, and 
from time to time to renew such suspension for periods not 
exceeding fifteen days, any reserve requirements specified in 
this Act.
  (d) To supervise and regulate through the Secretary of the 
Treasury the issue and retirement of Federal reserve notes, 
except for the cancellation and destruction, and accounting 
with respect to such cancellation and destruction, of notes 
unfit for circulation, and to prescribe rules and regulations 
under which such notes may be delivered by the Secretary of the 
Treasury to the Federal reserve agents applying therefor.
  (e) To add to the number of cities classified as Reserve 
cities under existing law in which national banking 
associations are subject to the Reserve requirements set forth 
in section twenty of this Act; or to reclassify existing 
Reserve cities or to terminate their designation as such.
  (f) To suspend or remove any officer or director of any 
Federal reserve bank, the cause of such removal to be forthwith 
communicated in writing by the Board of Governors of the 
Federal Reserve System to the removed officer or director and 
to said bank.
  (g) To require the writing off of doubtful or worthless 
assets upon the books and balance sheets of Federal reserve 
banks.
  (h) To suspend, for the violation of any of the provisions of 
this Act, the operations of any Federal reserve bank, to take 
possession thereof, administer the same during the period of 
suspension, and, when deemed advisable, to liquidate or 
reorganize such bank.
  (i) To require bonds of Federal reserve agents, to make 
regulations for the safeguarding of all collateral, bonds, 
Federal reserve notes, money or property of any kind deposited 
in the hands of such agents, and said board shall perform the 
duties, functions, or services specified in this Act, and make 
all rules and regulations necessary to enable said board 
effectively to perform the same.
  (j) To exercise general supervision over said Federal reserve 
banks.
  (k) To delegate, by published order or rule and subject to 
the Administrative Procedure Act, any of its functions, other 
than those relating to rulemaking or pertaining principally to 
monetary and credit policies, to one or more administrative law 
judges, members or employees of the Board, or Federal Reserve 
banks. The assignment of responsibility for the performance of 
any function that the Board determines to delegate shall be a 
function of the Chairman. The Board shall, upon the vote of one 
member, review action taken at a delegated level within such 
time and in such manner as the Board shall by rule prescribe. 
The Board of Governors may not delegate to a Federal reserve 
bank its functions for the establishment of policies for the 
supervision and regulation of depository institution holding 
companies and other financial firms supervised by the Board of 
Governors.
  (l) To employ such attorneys, experts, assistants, clerks, or 
other employees as may be deemed necessary to conduct the 
business of the board. All salaries and fees shall be fixed in 
advance by said board and shall be paid in the same manner as 
the salaries of the members of said board. All such attorneys, 
experts, assistants, clerks, and other employees shall be 
appointed without regard to the provisions of the Act of 
January sixteenth, eighteen hundred and eighty-three (volume 
twenty-two, United States Statutes at Large, page four hundred 
and three), and amendments thereto, or any rule or regulation 
made in pursuance thereof: Provided, That nothing herein shall 
prevent the President from placing said employees in the 
classified service. 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.
  (n) To examine, at the Board's discretion, any depository 
institution, and any affiliate of such depository institution, 
in connection with any advance to, any discount of any 
instrument for, or any request for any such advance or discount 
by, such depository institution under this Act.
  (o) Authority To Appoint Conservator or Receiver.--The Board 
may appoint the Federal Deposit Insurance Corporation as 
conservator or receiver for a State member bank under section 
11(c)(9) of the Federal Deposit Insurance Act.
  (p) Authority.--The Board may act in its own name and through 
its own attorneys in enforcing any provision of this title, 
regulations promulgated hereunder, or any other law or 
regulation, or in any action, suit, or proceeding to which the 
Board is a party and which involves the Board's regulation or 
supervision of any bank, bank holding company (as defined in 
section 2 of the Bank Holding Company Act of 1956), or other 
entity, or the administration of its operations.
  (q) Uniform Protection Authority for Federal Reserve 
Facilities.--
          (1) Notwithstanding any other provision of law, to 
        authorize personnel to act as law enforcement officers 
        to protect and safeguard the premises, grounds, 
        property, personnel, including members of the Board, of 
        the Board, or any Federal reserve bank, and operations 
        conducted by or on behalf of the Board or a reserve 
        bank.
          (2) The Board may, subject to the regulations 
        prescribed under paragraph (5), delegate authority to a 
        Federal reserve bank to authorize personnel to act as 
        law enforcement officers to protect and safeguard the 
        bank's premises, grounds, property, personnel, and 
        operations conducted by or on behalf of the bank.
          (3) Law enforcement officers designated or authorized 
        by the Board or a reserve bank under paragraph (1) or 
        (2) are authorized while on duty to carry firearms and 
        make arrests without warrants for any offense against 
        the United States committed in their presence, or for 
        any felony cognizable under the laws of the United 
        States committed or being committed within the 
        buildings and grounds of the Board or a reserve bank if 
        they have reasonable grounds to believe that the person 
        to be arrested has committed or is committing such a 
        felony. Such officers shall have access to law 
        enforcement information that may be necessary for the 
        protection of the property or personnel of the Board or 
        a reserve bank.
          (4) For purposes of this subsection, the term ``law 
        enforcement officers'' means personnel who have 
        successfully completed law enforcement training and are 
        authorized to carry firearms and make arrests pursuant 
        to this subsection.
          (5) The law enforcement authorities provided for in 
        this subsection may be exercised only pursuant to 
        regulations prescribed by the Board and approved by the 
        Attorney General.
  (r)(1) Any action that this Act provides may be taken only 
upon the affirmative vote of 5 members of the Board may be 
taken upon the unanimous vote of all members then in office if 
there are fewer than 5 members in office at the time of the 
action.
  (2)(A) Any action that the Board is otherwise authorized to 
take under section 13(3) may be taken upon the unanimous vote 
of all available members then in office, if--
          (i) at least 2 members are available and all 
        available members participate in the action;
          (ii) the available members unanimously determine 
        that--
                  (I) unusual and exigent circumstances exist 
                and the borrower is unable to secure adequate 
                credit accommodations from other sources;
                  (II) action on the matter is necessary to 
                prevent, correct, or mitigate serious harm to 
                the economy or the stability of the financial 
                system of the United States;
                  (III) despite the use of all means available 
                (including all available telephonic, 
                telegraphic, and other electronic means), the 
                other members of the Board have not been able 
                to be contacted on the matter; and
                  (IV) action on the matter is required before 
                the number of Board members otherwise required 
                to vote on the matter can be contacted through 
                any available means (including all available 
                telephonic, telegraphic, and other electronic 
                means); and
          (iii) any credit extended by a Federal reserve bank 
        pursuant to such action is payable upon demand of the 
        Board.
  (B) The available members of the Board shall document in 
writing the determinations required by subparagraph (A)(ii), 
and such written findings shall be included in the record of 
the action and in the official minutes of the Board, and copies 
of such record shall be provided as soon as practicable to the 
members of the Board who were not available to participate in 
the action and to the Chairman of the Committee on Banking, 
Housing, and Urban Affairs of the Senate and to the Chairman of 
the Committee on Financial Services of the House of 
Representatives.
  (s) Federal Reserve Transparency and Release of 
Information.--
          (1) In general.--In order to ensure the disclosure in 
        a timely manner consistent with the purposes of this 
        Act of information concerning the borrowers and 
        counterparties participating in emergency credit 
        facilities, discount window lending programs, and open 
        market operations authorized or conducted by the Board 
        or a Federal reserve bank, the Board of Governors shall 
        disclose, as provided in paragraph (2)--
                  (A) the names and identifying details of each 
                borrower, participant, or counterparty in any 
                credit facility or covered transaction;
                  (B) the amount borrowed by or transferred by 
                or to a specific borrower, participant, or 
                counterparty in any credit facility or covered 
                transaction;
                  (C) the interest rate or discount paid by 
                each borrower, participant, or counterparty in 
                any credit facility or covered transaction; and
                  (D) information identifying the types and 
                amounts of collateral pledged or assets 
                transferred in connection with participation in 
                any credit facility or covered transaction.
          (2) Mandatory release date.--In the case of--
                  (A) a credit facility, the Board shall 
                disclose the information described in paragraph 
                (1) on the date that is 1 year after the 
                effective date of the termination by the Board 
                of the authorization of the credit facility; 
                and
                  (B) a covered transaction, the Board shall 
                disclose the information described in paragraph 
                (1) on the last day of the eighth calendar 
                quarter following the calendar quarter in which 
                the covered transaction was conducted.
          (3) Earlier release date authorized.--The Chairman of 
        the Board may publicly release the information 
        described in paragraph (1) before the relevant date 
        specified in paragraph (2), if the Chairman determines 
        that such disclosure would be in the public interest 
        and would not harm the effectiveness of the relevant 
        credit facility or the purpose or conduct of covered 
        transactions.
          (4) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Credit facility.--The term ``credit 
                facility'' has the same meaning as in section 
                714(f)(1)(A) of title 31, United States Code.
                  (B) Covered transaction.--The term ``covered 
                transaction'' means--
                          (i) any open market transaction with 
                        a nongovernmental third party conducted 
                        under the first undesignated paragraph 
                        of section 14 or subparagraph (a), (b), 
                        or (c) of the 2nd undesignated 
                        paragraph of such section, after the 
                        date of enactment of the Dodd-Frank 
                        Wall Street Reform and Consumer 
                        Protection Act; and
                          (ii) any advance made under section 
                        10B after the date of enactment of that 
                        Act.
          (5) Termination of credit facility by operation of 
        law.--A credit facility shall be deemed to have 
        terminated as of the end of the 24-month period 
        beginning on the date on which the credit facility 
        ceases to make extensions of credit and loans, unless 
        the credit facility is otherwise terminated by the 
        Board before such date.
          (6) Consistent treatment of information.--Except as 
        provided in this subsection or section 13(3)(D), 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, shall be confidential, 
        including for purposes of section 552(b)(3) of title 5 
        of such Code, until the relevant mandatory release date 
        described in paragraph (2), unless the Chairman of the 
        Board determines that earlier disclosure of such 
        information would be in the public interest and would 
        not harm the effectiveness of the relevant credit 
        facility or the purpose of conduct of the relevant 
        transactions.
          (7) Protection of personal privacy.--This subsection 
        and section 13(3)(C), section 714(f)(3)(C) of title 31, 
        United States Code, and subsection (a) or (c) of 
        section 1109 of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act shall not be construed as 
        requiring any disclosure of nonpublic personal 
        information (as defined for purposes of section 502 of 
        the Gramm-Leach-Bliley Act (12 U.S.C. 6802)) concerning 
        any individual who is referenced in collateral pledged 
        or assets transferred in connection with a credit 
        facility or covered transaction, unless the person is a 
        borrower, participant, or counterparty under the credit 
        facility or covered transaction.
          (8) Study of foia exemption impact.--
                  (A) Study.--The Inspector General of the 
                Board of Governors of the Federal Reserve 
                System shall--
                          (i) conduct a study on the impact 
                        that the exemption from section 
                        552(b)(3) of title 5 (known as the 
                        Freedom of Information Act) established 
                        under paragraph (6) has had on the 
                        ability of the public to access 
                        information about the administration by 
                        the Board of Governors of emergency 
                        credit facilities, discount window 
                        lending programs, and open market 
                        operations; and
                          (ii) make any recommendations on 
                        whether the exemption described in 
                        clause (i) should remain in effect.
                  (B) Report.--Not later than 30 months after 
                the date of enactment of this section, the 
                Inspector General of the Board of Governors of 
                the Federal Reserve System shall submit a 
                report on the findings of the study required 
                under subparagraph (A) to the Committee on 
                Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services 
                of the House of Representatives, and publish 
                the report on the website of the Board.
          (9) Rule of construction.--Nothing in this section is 
        meant to affect any pending litigation or lawsuit filed 
        under section 552 of title 5, United States Code 
        (popularly known as the Freedom of Information Act), on 
        or before the date of enactment of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act.
  [(s)] (t) Assessments, Fees, and Other Charges for Certain 
Companies.--
          (1) In general.--The Board shall collect a total 
        amount of assessments, fees, or other charges from the 
        companies described in paragraph (2) that is equal to 
        the total expenses the Board estimates are necessary or 
        appropriate to carry out the supervisory and regulatory 
        responsibilities of the Board with respect to such 
        companies.
          (2) Companies.--The companies described in this 
        paragraph are--
                  (A) all bank holding companies having total 
                consolidated assets of $50,000,000,000 or more;
                  (B) all savings and loan holding companies 
                having total consolidated assets of 
                $50,000,000,000 or more; and
                  (C) all nonbank financial companies 
                supervised by the Board under section 113 of 
                the Dodd-Frank Wall Street Reform and Consumer 
                Protection Act.
  (u) 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.
  (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.

           *       *       *       *       *       *       *


SEC. 11C. APPROPRIATIONS REQUIREMENT FOR NON-MONETARY POLICY RELATED 
                    ADMINISTRATIVE COSTS.

  (a) Appropriations Requirement.--
          (1) Recovery of costs of annual appropriation.--The 
        Board of Governors of the Federal Reserve System and 
        the Federal reserve banks shall collect assessments and 
        other fees, as provided under this Act, that are 
        designed to recover the costs to the Government of the 
        annual appropriation to the Board of Governors of the 
        Federal Reserve System by Congress. The Board of 
        Governors of the Federal Reserve System and the Federal 
        reserve banks may only incur obligations or allow and 
        pay expenses with respect to non-monetary policy 
        related administrative costs pursuant to an 
        appropriations Act.
          (2) Offsetting collections.--Assessments and other 
        fees described under paragraph (1) for any fiscal 
        year--
                  (A) shall be deposited and credited as 
                offsetting collections to the account providing 
                appropriations to the Board of Governors of the 
                Federal Reserve System; and
                  (B) shall not be collected for any fiscal 
                year except to the extent provided in advance 
                in appropriation Acts.
          (3) Limitation.--This subsection shall only apply to 
        the non-monetary policy related administrative costs of 
        the Board of Governors of the Federal Reserve System.
  (b) Definitions.--For purposes of this section:
          (1) Monetary policy.--The term ``monetary policy'' 
        means a strategy for producing a generally acceptable 
        exchange medium that supports the productive employment 
        of economic resources by reliably serving as both a 
        unit of account and store of value.
          (2) Non-monetary policy related administrative 
        costs.--The term ``non-monetary policy related 
        administrative costs'' means administrative costs not 
        related to the conduct of monetary policy, and 
        includes--
                  (A) direct operating expenses for supervising 
                and regulating entities supervised and 
                regulated by the Board of Governors of the 
                Federal Reserve System, including conducting 
                examinations, conducting stress tests, 
                communicating with the entities regarding 
                supervisory matters and laws, and regulations;
                  (B) operating expenses for activities 
                integral to carrying out supervisory and 
                regulatory responsibilities, such as training 
                staff in the supervisory function, research and 
                analysis functions including library 
                subscription services, and collecting and 
                processing regulatory reports filed by 
                supervised institutions; and
                  (C) support, overhead, and pension expenses 
                related to the items described under 
                subparagraphs (A) and (B).

           *       *       *       *       *       *       *

  Sec. 12A. (a) There is hereby created a Federal Open Market 
Committee (hereinafter referred to as the ``Committee''), which 
shall consist of the members of the Board of Governors of the 
Federal Reserve System and [five representatives of the Federal 
Reserve banks to be selected as hereinafter provided] one 
representative from each of the Federal Reserve banks. Such 
representatives shall be presidents or first vice presidents of 
Federal Reserve banks [and, beginning with the election for the 
term commencing March 1, 1943, shall be elected annually as 
follows: One by the board of directors of the Federal Reserve 
Bank of New York, one by the boards of directors of the Federal 
Reserve Banks of Boston, Philadelphia, and Richmond, one by the 
boards of directors of the Federal Reserve Banks of Cleveland 
and Chicago, one by the boards of directors of the Federal 
Reserve Banks of Atlanta, Dallas, and St. Louis, and one by the 
boards of directors of the Federal Reserve Banks of 
Minneapolis, Kansas City, and San Francisco].[ In such 
elections each board of directors shall have one vote; and the 
details of such elections may be governed by regulations 
prescribed by the committee, which may be amended from time to 
time. An alternate to serve in the absence of each such 
representative shall likewise be a president or first vice 
president of a Federal Reserve bank and shall be elected 
annually in the same manner.] The meetings of said Committee 
shall be held at Washington, District of Columbia, at least 
four times each year upon the call of the chairman of the Board 
of Governors of the Federal Reserve System or at the request of 
any three members of the Committee.
  (b) Policy Transparency.--
          (1) Monetary policy strategy.--
                  (A) In general.--The Committee shall annually 
                establish exactly 1 monetary policy strategy, 
                which shall serve as a non-technical public 
                communication of the Committee's consensus 
                expectation for the conduct of monetary policy 
                during that calendar year.
                  (B) Requirements.--Each monetary policy 
                strategy of the Committee shall include the 
                following:
                          (i) A plain English description of 
                        how the Committee would adjust each of 
                        the following monetary policy 
                        instruments in reaction to changes in a 
                        small and well-defined set of publicly 
                        available economic indicators:
                                  (I) Short-term interest rate 
                                targets established by the 
                                Committee.
                                  (II) Open-market operations 
                                authorized under section 14.
                                  (III) Earnings on balances 
                                maintained at a Federal reserve 
                                bank by or on behalf of a 
                                depository institution under 
                                section 19(b)(12).
                          (ii) An identification of 1 monetary 
                        policy instrument from the list in 
                        clause (i) that the Committee expects 
                        to use as the primary instrument for 
                        implementing the monetary policy 
                        strategy described under subparagraph 
                        (A).
          (2) Reference monetary policy rules.--In addition to 
        the monetary policy strategy required under paragraph 
        (1), the Committee shall annually adopt at least 1 and 
        not more than 3 reference monetary policy rules, each 
        of which shall mathematically express how the primary 
        monetary policy instrument identified under paragraph 
        (1)(B)(ii) reacts to changes in a small and well-
        defined set of publicly available economic indicators.
          (3) Deviations.--Nothing in this subsection shall be 
        construed to prevent the Committee from setting short-
        term interest rate targets, conducting open-market 
        operations, or paying earnings on balances pursuant to 
        section 19(b)(12) in a manner that deviates from a 
        monetary policy strategy or any reference monetary 
        policy rules established under this subsection.
  (c) Testimony and Reports of the Chairman.--The Chairman 
shall, concurrent with each semi-annual hearing required under 
section 2B, submit a report to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the Committee on 
Banking and Financial Services of the House of Representatives, 
containing--
          (1) a statement as to whether the monetary policy 
        strategy established under subsection (b)(1) 
        qualitatively differs from any of the reference 
        monetary policy rules required under subsection (b)(2) 
        and, if applicable, a full and non-technical 
        explanation of any such difference;
          (2) a statement as to whether the Committee's conduct 
        of monetary policy since the previous report 
        quantitatively differs from any reference monetary 
        policy rule and, if applicable, a full and non-
        technical explanation of any such differences; and
          (3) a description of--
                  (A) the circumstances under which the 
                Committee's monetary policy strategy may be 
                amended from year to year; and
                  (B) a full and non-technical explanation of 
                any such actual amendment.
  [(b)] (d) No Federal Reserve bank shall engage or decline to 
engage in open-market operations under section 14 of this Act 
except in accordance with the direction of and regulations 
adopted by the Committee. The Committee shall consider, adopt, 
and transmit to the several Federal Reserve banks, regulations 
relating to the open-market transactions of such banks.
  [(c)] (e) The time, character, and volume of all purchases 
and sales of paper described in section 14 of this Act as 
eligible for open-market operations shall be governed with a 
view to accommodating commerce and business and with regard to 
their bearing upon the general credit situation of the country.
  (f) 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.

                    powers of federal reserve banks.

  Sec. 13. Any Federal reserve bank may receive from any of its 
member banks or other depository institutions, and from the 
United States, deposits of current funds in lawful money, 
national-bank notes, Federal reserve notes, or checks, and 
drafts, payable upon presentation or other items, and also, for 
collection, maturing notes and bills; or, solely for purposes 
of exchange or of collection, may receive from other Federal 
reserve banks deposits of current funds in lawful money, 
national-bank notes, or checks upon other Federal reserve 
banks, and checks and drafts, payable upon presentation within 
its district or other items, and maturing notes and bills 
payable within its district; or, solely for the purposes of 
exchange or of collection, may receive from any nonmember bank 
or trust company or other depository institution deposits of 
current funds in lawful money, national-bank notes, Federal 
reserve notes, checks and drafts payable upon presentation or 
other items, or maturing notes and bills: Provided, Such 
nonmember bank or trust company or other depository institution 
maintains with the Federal reserve bank of its district a 
balance in such amount as the Board determines taking into 
account items in transit, services provided by the Federal 
Reserve bank, and other factors as the Board may deem 
appropriate: Provided further, That nothing in this or any 
other section of this Act shall be construed as prohibiting a 
member or nonmember bank or other depository institution from 
making reasonable charges, to be determined and regulated by 
the Board of Governors of the Federal Reserve System, but in no 
case to exceed 10 cents per $100 or fraction thereof, based on 
the total of checks and drafts presented at any one time, for 
collection or payment of checks and drafts and remission 
therefor by exchange or otherwise; but no such charges shall be 
made against the Federal reserve banks.
   Upon the indorsement of any of its member banks, which shall 
be deemed a waiver of demand, notice and protest by such bank 
as to its own indorsement exclusively, any Federal reserve bank 
may discount notes, drafts, and bills of exchange arising out 
of actual commercial transactions; that is, notes, drafts, and 
bills of exchange issued or drawn for agricultural, industrial, 
or commercial purposes, or the proceeds of which have been 
used, or are to be used, for such purposes, the Board of 
Governors of the Federal Reserve System to have the right to 
determine or define the character of the paper thus eligible 
for discount, within the meaning of this Act. Nothing in this 
Act contained shall be construed to prohibit such notes, 
drafts, and bills of exchange, secured by staple agricultural 
products, or other goods, wares, or merchandise from being 
eligible for such discount, and the notes, drafts, and bills of 
exchange of factors issued as such making advances exclusively 
to producers of staple agricultural products in their raw state 
shall be eligible for such discount; but such definition shall 
not include notes, drafts, or bills covering merely investments 
or issued or drawn for the purpose of carrying or trading in 
stocks, bonds, or other investment securities, except bonds and 
notes of the Government of the United States. Notes, drafts, 
and bills admitted to discount under the terms of this 
paragraph must have a maturity at the time of discount of not 
more than 90 days, exclusive of grace.
  (3)(A) In unusual and exigent circumstances that pose a 
threat to the financial stability of the United States, the 
Board of Governors of the Federal Reserve System, by [the 
affirmative vote of not less than five members] the prior 
approval of the Secretary of the Treasury and not less than \2/
3\ of the members of the Federal Open Market Committee, may 
authorize any Federal reserve bank, during such periods as the 
said board may determine, at rates established in accordance 
with the provisions of section 14, subdivision (d), of this 
Act, to discount for any financial institution participant in 
any program or facility with broad-based eligibility, notes, 
drafts, and bills of exchange when such notes, drafts, and 
bills of exchange are indorsed or otherwise secured to the 
satisfaction of the Federal Reserve bank: Provided, That before 
discounting any such note, draft, or bill of exchange, the 
Federal reserve bank shall obtain evidence that such financial 
institution participant in any program or facility with broad-
based eligibility is unable to secure adequate credit 
accommodations from other banking institutions. All such 
discounts for any financial institution participant in any 
program or facility with broad-based eligibility shall be 
subject to such limitations, restrictions, and regulations as 
the Board of Governors of the Federal Reserve System may 
prescribe.
  (B)(i) As soon as is practicable after the date of enactment 
of this subparagraph, the Board shall establish, by regulation, 
in consultation with the Secretary of the Treasury, the 
policies and procedures governing emergency lending under this 
paragraph. Such policies and procedures shall be designed to 
ensure that any emergency lending program or facility is for 
the purpose of providing liquidity to the financial system, and 
not to aid a failing financial company, and that the security 
for emergency loans is sufficient to protect taxpayers from 
losses and that any such program is terminated in a timely and 
orderly fashion. The policies and procedures established by the 
Board shall require that a Federal reserve bank assign, 
consistent with sound risk management practices and to ensure 
protection for the taxpayer, a lendable value to all collateral 
for a loan executed by a Federal reserve bank under this 
paragraph in determining whether the loan is secured 
satisfactorily for purposes of this paragraph. 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 the 
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 on the value of the 
        collateral 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. 
  (ii) The Board shall establish procedures to prohibit 
borrowing from programs and facilities by borrowers that are 
insolvent. 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. [Such 
procedures may include a certification from the chief executive 
officer (or other authorized officer) of the borrower, at the 
time the borrower initially borrows under the program or 
facility (with a duty by the borrower to update the 
certification if the information in the certification 
materially changes), that the borrower is not insolvent.] A 
borrower shall be considered insolvent for purposes of this 
subparagraph, if the borrower is in bankruptcy, resolution 
under title II of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, or any other Federal or State 
insolvency proceeding.
  (iii) A program or facility that is structured to remove 
assets from the balance sheet of a single and specific company, 
or that is established for the purpose of assisting a single 
and specific company avoid bankruptcy, resolution under title 
II of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act, or any other Federal or State insolvency proceeding, shall 
not be considered a program or facility with broad-based 
eligibility.
  [(iv) The Board may not establish any program or facility 
under this paragraph without the prior approval of the 
Secretary of the Treasury.]
          (C) The Board shall provide to the Committee on 
        Banking, Housing, and Urban Affairs of the Senate and 
        the Committee on Financial Services of the House of 
        Representatives--
                  (i) not later than 7 days after the Board 
                authorizes any loan or other financial 
                assistance under this paragraph, a report that 
                includes--
                          (I) the justification for the 
                        exercise of authority to provide such 
                        assistance;
                          (II) the identity of the recipients 
                        of such assistance;
                          (III) the date and amount of the 
                        assistance, and form in which the 
                        assistance was provided; and
                          (IV) the material terms of the 
                        assistance, including--
                                  (aa) duration;
                                  (bb) collateral pledged and 
                                the value thereof;
                                  (cc) all interest, fees, and 
                                other revenue or items of value 
                                to be received in exchange for 
                                the assistance;
                                  (dd) any requirements imposed 
                                on the recipient with respect 
                                to employee compensation, 
                                distribution of dividends, or 
                                any other corporate decision in 
                                exchange for the assistance; 
                                and
                                  (ee) the expected costs to 
                                the taxpayers of such 
                                assistance; and
                  (ii) once every 30 days, with respect to any 
                outstanding loan or other financial assistance 
                under this paragraph, written updates on--
                          (I) the value of collateral;
                          (II) the amount of interest, fees, 
                        and other revenue or items of value 
                        received in exchange for the 
                        assistance; and
                          (III) the expected or final cost to 
                        the taxpayers of such assistance.
          (D) The information required to be submitted to 
        Congress under subparagraph (C) related to--
                  (i) the identity of the financial institution 
                participants in an emergency lending program or 
                facility commenced under this paragraph;
                  (ii) the amounts borrowed by each financial 
                institution participant in any such program or 
                facility;
                  (iii) identifying details concerning the 
                assets or collateral held by, under, or in 
                connection with such a program or facility,
                shall be kept confidential, upon the written 
                request of the Chairman of the Board, in which 
                case such information shall be made available 
                only to the Chairpersons or Ranking Members of 
                the Committees described in subparagraph (C).
          (E) If an entity to which a Federal reserve bank has 
        provided a loan under this paragraph becomes a covered 
        financial company, as defined in section 201 of the 
        Dodd-Frank Wall Street Reform and Consumer Protection 
        Act, at any time while such loan is outstanding, and 
        the Federal reserve bank incurs a realized net loss on 
        the loan, then the Federal reserve bank shall have a 
        claim equal to the amount of the net realized loss 
        against the covered entity, with the same priority as 
        an obligation to the Secretary of the Treasury under 
        section 210(b) of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act.
          (F) Not later than 1 year after a Federal reserve 
        bank acquires any assets under this paragraph that are 
        neither gold nor direct obligations of the United 
        States, foreign central banks, or the International 
        Monetary Fund--
                  (i) the Board shall transfer such assets of 
                the Federal reserve bank to the Department of 
                the Treasury; and
                  (ii) the Secretary of the Treasury shall 
                transfer to the Federal reserve banks direct 
                obligations of the United States of equivalent 
                market value to the assets described in clause 
                (i).
          (G) Joint resolution of approval.--
                  (i) In general.--A program or facility 
                created under subparagraph (A) shall terminate 
                on the date that is 30 calendar days after the 
                date on which Congress receives a report 
                described in subparagraph (C) unless there is 
                enacted into law a joint resolution approving 
                the program or facility not later than 30 
                calendar days after the date on which the 
                report is received. Any loan offered through 
                the program or facility that is outstanding as 
                of the date on which the program or facility is 
                terminated shall be repaid in full not later 
                than 30 calendar days after the date on which 
                the program or facility is terminated.
                  (ii) Contents of joint resolution.--For the 
                purpose of this subparagraph, the term ``joint 
                resolution'' means only a joint resolution--
                          (I) that is introduced not later than 
                        3 calendar days after the date on which 
                        the report described in subparagraph 
                        (C) is received by Congress;
                          (II) that does not have a preamble;
                          (III) the title of which is as 
                        follows: ``Joint resolution relating to 
                        the approval of a program or facility 
                        created by the Board of Governors of 
                        the Federal Reserve System''; and
                          (IV) the matter after the resolving 
                        clause of which is as follows: ``That 
                        Congress approves the program or 
                        facility created by the Board of 
                        Governors of the Federal Reserve System 
                        on __________.'' (The blank space being 
                        appropriately filled in).
                  (iii) Fast track consideration in house of 
                representatives.--
                          (I) Reconvening.--Upon receipt of a 
                        report under subparagraph (C), the 
                        Speaker, if the House would otherwise 
                        be adjourned, shall notify the Members 
                        of the House that, pursuant to this 
                        subparagraph, the House shall convene 
                        not later than the second calendar day 
                        after receipt of such report.
                          (II) Reporting and discharge.--Any 
                        committee of the House of 
                        Representatives to which a joint 
                        resolution is referred shall report it 
                        to the House not later than 5 calendar 
                        days after the date of receipt of the 
                        report described in subparagraph (C). 
                        If a committee fails to report the 
                        joint resolution within that period, 
                        the committee shall be discharged from 
                        further consideration of the joint 
                        resolution and the joint resolution 
                        shall be referred to the appropriate 
                        calendar.
                          (III) Proceeding to consideration.--
                        After each committee authorized to 
                        consider a joint resolution reports it 
                        to the House or has been discharged 
                        from its consideration, it shall be in 
                        order, not later than the sixth day 
                        after Congress receives the report 
                        described in subparagraph (C), to move 
                        to proceed to consider the joint 
                        resolution in the House. All points of 
                        order against the motion are waived. 
                        Such a motion shall not be in order 
                        after the House has disposed of a 
                        motion to proceed on the joint 
                        resolution. The previous question shall 
                        be considered as ordered on the motion 
                        to its adoption without intervening 
                        motion. The motion shall not be 
                        debatable. A motion to reconsider the 
                        vote by which the motion is disposed of 
                        shall not be in order.
                          (IV) Consideration.--The joint 
                        resolution shall be considered as read. 
                        All points of order against the joint 
                        resolution and against its 
                        consideration are waived. The previous 
                        question shall be considered as ordered 
                        on the joint resolution to its passage 
                        without intervening motion except 2 
                        hours of debate equally divided and 
                        controlled by the proponent and an 
                        opponent. A motion to reconsider the 
                        vote on passage of the joint resolution 
                        shall not be in order.
                  (iv) Fast track consideration in senate.--
                          (I) Reconvening.--Upon receipt of a 
                        report under subparagraph (C), if the 
                        Senate has adjourned or recessed for 
                        more than 2 days, the majority leader 
                        of the Senate, after consultation with 
                        the minority leader of the Senate, 
                        shall notify the Members of the Senate 
                        that, pursuant to this subparagraph, 
                        the Senate shall convene not later than 
                        the second calendar day after receipt 
                        of such report.
                          (II) Placement on calendar.--Upon 
                        introduction in the Senate, the joint 
                        resolution shall be placed immediately 
                        on the calendar.
                          (III) Floor consideration.--
                                  (aa) In general.--
                                Notwithstanding Rule XXII of 
                                the Standing Rules of the 
                                Senate, it is in order at any 
                                time during the period 
                                beginning on the fourth day 
                                after the date on which 
                                Congress receives a report 
                                described in subparagraph (C) 
                                and ending on the sixth day 
                                after the date on which 
                                Congress receives the report 
                                (even though a previous motion 
                                to the same effect has been 
                                disagreed to) to move to 
                                proceed to the consideration of 
                                the joint resolution, and all 
                                points of order against the 
                                joint resolution (and against 
                                consideration of the joint 
                                resolution) are waived. The 
                                motion to proceed is not 
                                debatable. The motion is not 
                                subject to a motion to 
                                postpone. A motion to 
                                reconsider the vote by which 
                                the motion is agreed to or 
                                disagreed to shall not be in 
                                order. If a motion to proceed 
                                to the consideration of the 
                                resolution is agreed to, the 
                                joint resolution shall remain 
                                the unfinished business until 
                                disposed of.
                                  (bb) Debate.--Debate on the 
                                joint resolution, and on all 
                                debatable motions and appeals 
                                in connection therewith, shall 
                                be limited to not more than 10 
                                hours, which shall be divided 
                                equally between the majority 
                                and minority leaders or their 
                                designees. A motion further to 
                                limit debate is in order and 
                                not debatable. An amendment to, 
                                or a motion to postpone, or a 
                                motion to proceed to the 
                                consideration of other 
                                business, or a motion to 
                                recommit the joint resolution 
                                is not in order.
                                  (cc) Vote on passage.--The 
                                vote on passage shall occur 
                                immediately following the 
                                conclusion of the debate on a 
                                joint resolution, and a single 
                                quorum call at the conclusion 
                                of the debate if requested in 
                                accordance with the rules of 
                                the Senate.
                                  (dd) Rulings of the chair on 
                                procedure.--Appeals from the 
                                decisions of the Chair relating 
                                to the application of the rules 
                                of the Senate, as the case may 
                                be, to the procedure relating 
                                to a joint resolution shall be 
                                decided without debate.
                  (v) Coordination with action by other 
                house.--
                          (I) In general.--If, before the 
                        passage by one House of a joint 
                        resolution of that House, that House 
                        receives from the other House a joint 
                        resolution, then the following 
                        procedures shall apply:
                                  (aa) The joint resolution of 
                                the other House shall not be 
                                referred to a committee.
                                  (bb) With respect to a joint 
                                resolution of the House 
                                receiving the resolution--
                                          (AA) the procedure in 
                                        that House shall be the 
                                        same as if no joint 
                                        resolution had been 
                                        received from the other 
                                        House; but
                                          (BB) the vote on 
                                        passage shall be on the 
                                        joint resolution of the 
                                        other House.
                          (II) Treatment of joint resolution of 
                        other house.--If one House fails to 
                        introduce or consider a joint 
                        resolution under this section, the 
                        joint resolution of the other House 
                        shall be entitled to expedited floor 
                        procedures under this section.
                          (III) Consideration after passage.--
                        If, following passage of the joint 
                        resolution in the Senate, the Senate 
                        then receives the companion measure 
                        from the House of Representatives, the 
                        companion measure shall not be 
                        debatable.
                          (IV) Vetoes.--If the President vetoes 
                        the joint resolution, the period 
                        beginning on the date the President 
                        vetoes the joint resolution and ending 
                        on the date the Congress receives the 
                        veto message with respect to the joint 
                        resolution shall be disregarded in 
                        computing the 30-calendar day period 
                        described in clause (i) and debate on a 
                        veto message in the Senate under this 
                        section shall be 1 hour equally divided 
                        between the majority and minority 
                        leaders or their designees.
                          (V) Rules of house of representatives 
                        and senate.--This subparagraph is 
                        enacted by Congress--
                                  (aa) as an exercise of the 
                                rulemaking power of the Senate 
                                and House of Representatives, 
                                respectively, and as such it is 
                                deemed a part of the rules of 
                                each House, respectively, but 
                                applicable only with respect to 
                                the procedure to be followed in 
                                that House in the case of a 
                                joint resolution, and it 
                                supersedes other rules only to 
                                the extent that it is 
                                inconsistent with such rules; 
                                and
                                  (bb) with full recognition of 
                                the constitutional right of 
                                either House to change the 
                                rules (so far as relating to 
                                the procedure of that House) at 
                                any time, in the same manner, 
                                and to the same extent as in 
                                the case of any other rule of 
                                that House.
          (H) 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.
          (I) 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 Financial Stability Act 
                of 2010 (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.
   Upon the indorsement of any of its member banks, which shall 
be deemed a waiver of demand, notice, and protest by such bank 
as to its own indorsement exclusively, and subject to 
regulations and limitations to be prescribed by the Board of 
Governors of the Federal Reserve System, any Federal reserve 
bank may discount or purchase bills of exchange payable at 
sight or on demand which grow out of the domestic shipment or 
the exportation of nonperishable, readily marketable 
agricultural and other staples and are secured by bills of 
lading or other shipping documents conveying or securing title 
to such staples: Provided, That all such bills of exchange 
shall be forwarded promptly for collection, and demand for 
payment shall be made with reasonable promptness after the 
arrival of such staples at their destination: Provided further, 
That no such bill shall in any event be held by or for the 
account of a Federal reserve bank for a period in excess of 
ninety days. In discounting such bills Federal reserve banks 
may compute the interest to be deducted on the basis of the 
estimated life of each bill and adjust the discount after 
payment of such bills to conform to the actual life thereof.
   The aggregate of notes, drafts, and bills upon which any 
person, copartnership, association, or corporation is liable as 
maker, acceptor, indorser, drawer, or guarantor, rediscounted 
for any member bank, shall at no time exceed the amount for 
which such person, copartnership, association, or corporation 
may lawfully become liable to a national banking association 
under the terms of section 5200 of the Revised Statutes, as 
amended: Provided, however, That nothing in this paragraph 
shall be construed to change the character or class of paper 
now eligible for rediscount by Federal reserve banks.
   Any Federal reserve bank may discount acceptances of the 
kinds hereinafter described, which have a maturity at the time 
of discount of not more than 90 days' sight, exclusive of days 
of grace, and which are indorsed by at least one member bank: 
Provided, That such acceptances if drawn for an agricultural 
purpose and secured at the time of acceptance by warehouse 
receipts or other such documents conveying or securing title 
covering readily marketable staples may be discounted with a 
maturity at the time of discount of not more than six months' 
sight exclusive of days of grace.
  (7)(A) Any member bank and any Federal or State branch or 
agency of a foreign bank subject to reserve requirements under 
section 7 of the International Banking Act of 1978 (hereinafter 
in this paragraph referred to as ``institutions''), may accept 
drafts or bills of exchange drawn upon it having not more than 
six months' sight to run, exclusive of days of grace--
          (i) which grow out of transactions involving the 
        importation or exportation of goods;
          (ii) which grow out of transactions involving the 
        domestic shipment of goods; or
          (iii) which are secured at the time of acceptance by 
        a warehouse receipt or other such document conveying or 
        securing title covering readily marketable staples.
  (B) Except as provided in subparagraph (C), no institution 
shall accept such bills, or be obligated for a participation 
share in such bills, in an amount equal at any time in the 
aggregate to more than 150 per centum of its paid up and 
unimpaired capital stock and surplus or, in the case of a 
United States branch or agency of a foreign bank, its dollar 
equivalent as determined by the Board under subparagraph (H).
  (C) The Board, under such conditions as it may prescribe, may 
authorize, by regulation or order, any institution to accept 
such bills, or be obligated for a participation share in such 
bills, in an amount not exceeding at any time in the aggregate 
200 per centum of its paid up and unimpaired capital stock and 
surplus or, in the case of a United States branch or agency of 
a foreign bank, its dollar equivalent as determined by the 
Board under subparagraph (H).
  (D) Notwithstanding subparagraphs (B) and (C), with respect 
to any institution, the aggregate acceptances, including 
obligations for a participation share in such acceptances, 
growing out of domestic transactions shall not exceed 50 per 
centum of the aggregate of all acceptances, including 
obligations for a participation share in such acceptances, 
authorized for such institution under this paragraph.
  (E) No institution shall accept bills, or be obligated for a 
participation share in such bills, whether in a foreign or 
domestic transaction, for any one person, partnership, 
corporation, association or other entity in an amount equal at 
any time in the aggregate to more than 10 per centum of its 
paid up and unimpaired capital stock and surplus, or, in the 
case of a United States branch or agency of a foreign bank, its 
dollar equivalent as determined by the Board under subparagraph 
(H), unless the institution is secured either by attached 
documents or by some other actual security growing out of the 
same transaction as the acceptance.
  (F) With respect to an institution which issues an 
acceptance, the limitations contained in this paragraph shall 
not apply to that portion of an acceptance which is issued by 
such institution and which is covered by a participation 
agreement sold to another institution.
  (G) In order to carry out the purposes of this paragraph, the 
Board may define any of the terms used in this paragraph, and, 
with respect to institutions which do not have capital or 
capital stock, the Board shall define an equivalent measure to 
which the limitations contained in this paragraph shall apply.
  (H) Any limitation or restriction in this paragraph based on 
paid-up and unimpaired capital stock and surplus of an 
institution shall be deemed to refer, with respect to a United 
States branch or agency of a foreign bank, to the dollar 
equivalent of the paid-up capital stock and surplus of the 
foreign bank, as determined by the Board, and if the foreign 
bank has more than one United States branch or agency, the 
business transacted by all such branches and agencies shall be 
aggregated in determining compliance with the limitation or 
restriction.
  Any Federal reserve bank may make advances for periods not 
exceeding fifteen days to its member banks on their promissory 
notes secured by the deposit or pledge of bonds, notes, 
certificates of indebtedness or Treasury bills of the United 
States, or by the deposit or pledge of debentures or other such 
obligations of Federal intermediate credit banks which are 
eligible for purchase by Federal reserve banks under section 13 
(a) of this Act, or by the deposit or pledge of bonds issued 
under the provisions of subsection (c) of section 4 of the Home 
Owners' Loan Act of 1933, as amended; and any Federal reserve 
bank may make advances for periods not exceeding ninety days to 
its member banks on their promissory notes secured by such 
notes, drafts, bills of exchange, or bankers' acceptances as 
are eligible for rediscount or for purchase by Federal reserve 
banks under the provisions of this Act, or secured by such 
obligations as are eligible for purchase under section 14(b) of 
this Act. All such advances shall be made at rates to be 
established by such Federal reserve banks, such rates to be 
subject to the review and determination of the Board of 
Governors of the Federal Reserve System. If any member bank to 
which any such advance has been made shall, during the life or 
continuance of such advance, and despite an official warning of 
the reserve bank of the district or of the Board of Governors 
of the Federal Reserve System to the contrary, increase its 
outstanding loans secured by collateral in the form of stocks, 
bonds, debentures, or other such obligations, or loans made to 
members of any organized stock exchange, investment house, or 
dealer in securities, upon any obligation, note, or bill, 
secured or unsecured, for the purpose of purchasing and/or 
carrying stocks, bonds, or other investment securities (except 
obligations of the United States) such advance shall be deemed 
immediately due and payable, and such member bank shall be 
ineligible as a borrower at the reserve bank of the district 
under the provisions of this paragraph for such period as the 
Board of Governors of the Federal Reserve System shall 
determine: Provided, That no temporary carrying or clearance 
loans made solely for the purpose of facilitating the purchase 
or delivery of securities offered for public subscription shall 
be included in the loans referred to in this paragraph.
  
  The discount and rediscount and the purchase and sale by any 
Federal reserve bank of any bills receivable and of domestic 
and foreign bills of exchange, and of acceptances authorized by 
this Act, shall be subject to such restrictions, limitations, 
and regulations as may be imposed by the Board of Governors of 
the Federal Reserve System. (Omitted from U.S. Code)
  That in addition to the powers not vested by law in national 
banking associations organized under the laws of the United 
States any such association located and doing business in any 
place the population of which does not exceed five thousand 
inhabitants, as shown by the last preceding decennial census, 
may, under such rules and regulations as may be prescribed by 
the Comptroller of the Currency, act as the agent for any fire, 
life, or other insurance company authorized by the authorities 
of the State in which said bank is located to do business in 
said State, by soliciting and selling insurance and collecting 
premiums on policies issued by such company; and may receive 
for services so rendered such fees or commissions as may be 
agreed upon between the said association and the insurance 
company for which it may act as agent: Provided, however, That 
no such bank shall in any case assume or guarantee the payment 
of any premium on insurance policies issued through its agency 
by its principal: And provided further, That the bank shall not 
guarantee the truth of any statement made by an assured in 
filing his application for insurance.
  Any member bank may accept drafts or bills of exchange drawn 
upon it having not more than three months' sight to run, 
exclusive of days of grace, drawn under regulations to be 
prescribed by the Board of Governors of the Federal Reserve 
System by banks or bankers in foreign countries or dependencies 
or insular possessions of the United States for the purpose of 
furnishing dollar exchange as required by the usages of trade 
in the respective countries, dependencies, or insular 
possessions. Such drafts or bills may be acquired by Federal 
reserve banks in such amounts and subject to such regulations, 
restrictions, and limitations as may be prescribed by the Board 
of Governors of the Federal Reserve System: Provided, however, 
That no member bank shall accept such drafts or bills of 
exchange referred to this paragraph for any one bank to an 
amount exceeding in the aggregate ten per centum of the paid-up 
and unimpaired capital and surplus of the accepting bank unless 
the draft or bill of exchange is accompanied by documents 
conveying or securing title or by some other adequate security: 
Provided further, That no member bank shall accept such drafts 
or bills in an amount exceeding at any time the aggregate of 
one-half of its paid-up and unimpaired capital and surplus. 
(Omitted from U.S. Code)
  Subject to such limitations, restrictions and regulations as 
the Board of Governors of the Federal Reserve System may 
prescribe, any Federal reserve bank may make advances to any 
individual, partnership or corporation on the promissory notes 
of such individual, partnership or corporation secured by 
direct obligations of the United States or by any obligation 
which is a direct obligation of, or fully guaranteed as to 
principal and interest by, any agency of the United States. 
Such advances shall be made for periods not exceeding 90 days 
and shall bear interest at rates fixed from time to time by the 
Federal reserve bank, subject to the review and determination 
of the Board of Governors of the Federal Reserve System.
  Subject to such restrictions, limitations, and regulations as 
may be imposed by the Board of Governors of the Federal Reserve 
System, each Federal Reserve bank may receive deposits from, 
discount paper endorsed by, and make advances to any branch or 
agency of a foreign bank in the same manner and to the same 
extent that it may exercise such powers with respect to a 
member bank if such branch or agency is maintaining reserves 
with such Reserve bank pursuant to section 7 of the 
International Banking Act of 1978. In exercising any such 
powers with respect to any such branch or agency, each Federal 
Reserve bank shall give due regard to account balances being 
maintained by such branch or agency with such Reserve bank and 
the proportion of the assets of such branch or agency being 
held as reserves under section 7 of the International Banking 
Act of 1978. For the purposes of this paragraph, the terms 
``branch,''``agency,'' and ``foreign bank'' shall have the same 
meanings assigned to them in section 1 of the International 
Banking Act of 1978.

           *       *       *       *       *       *       *


                         open-market operations

  Sec. 14. Any Federal reserve bank may, under rules and 
regulations prescribed by the Board of Governors of the Federal 
Reserve System, purchase and sell in the open market, at home 
or abroad, either from or to domestic or foreign banks, firms, 
corporations, or individuals, cable transfers and bankers' 
acceptances and bills of exchange of the kinds and maturities 
by this Act made eligible for rediscount, with or without the 
indorsement of a member bank.
   Every Federal reserve bank shall have power:
  (a) To deal in gold coin and bullion at home or abroad, to 
make loans thereon, exchange Federal reserve notes for gold, 
gold coin, or gold certificates, and to contract for loans of 
gold coin or bullion, giving therefor, when necessary, 
acceptable security, including the hypothecation of United 
States bonds or other securities which Federal reserve banks 
are authorized to hold;
  [(b)(1) To buy and sell, at home or abroad, bonds and notes 
of the United States, bonds issued under the provisions of 
subsection (c) of section 4 of the Home Owners' Loan Act of 
1933, as amended, and having maturities from date of purchase 
of not exceeding six months, and bills, notes, revenue bonds, 
and warrants with a maturity from date of purchase of not 
exceeding six months, issued in anticipation of the collection 
of taxes or in anticipation of the receipt of assured revenues 
by any State, county, district, political subdivision, or 
municipality in the continental United States, including 
irrigation, drainage and reclamation districts, and obligations 
of, or fully guaranteed as to principal and interest by, a 
foreign government or agency thereof, such purchases to be made 
in accordance with rules and regulations prescribed by the 
Board of Governors of the Federal Reserve System. 
Notwithstanding any other provision of this Act, any bonds, 
notes, or other obligations which are direct obligations of the 
United States or which are fully guaranteed by the United 
States as to principal and interest may be bought and sold 
without regard to maturities but only in the open market.
  [(2) To buy and sell in the open market, under the direction 
and regulations of the Federal Open Market Committee, any 
obligation which is a direct obligation of, or fully guaranteed 
as to principal and interest by, any agency of the United 
States. ]
  (b) To buy and sell in the open market, at home or abroad, 
under the direction and regulations of the Federal Open Market 
Committee, gold stock, Treasury currency, or direct obligations 
of the United States, foreign central banks, or the 
International Monetary Fund. Nothing in this subsection shall 
be construed to limit advances under section 10B, or discount 
loans under sections 13, 13A, or 24.
  (c) To purchase from member banks and to sell, with or 
without its indorsement, bills of exchange arising out of 
commercial transactions, as hereinbefore defined;
  (d) To establish from time to time, subject to review and 
determination of the Board of Governors of the Federal Reserve 
System, rates of discount to be charged by the Federal reserve 
bank for each class of paper, which shall be fixed with a view 
of accommodating commerce and business; but each such bank 
shall establish such rates every fourteen days, or oftener if 
deemed necessary by the Board;
  (e) To establish accounts with other Federal reserve banks 
for exchange purposes and, with the consent or upon the order 
and direction of the Board of Governors of the Federal Reserve 
System and under regulations to be prescribed by said board, to 
open and maintain accounts in foreign countries, appoint 
correspondents, and establish agencies in such countries 
wheresoever it may be deemed best for the purpose of 
purchasing, selling, and collecting bills of exchange, and to 
buy and sell, with or without its indorsement, through such 
correspondents or agencies, bills of exchange (or acceptances) 
arising out of actual commercial transactions which have not 
more than ninety days to run, exclusive of days of grace, and 
which bear the signature of two or more responsible parties, 
and, with the consent of the Board of Governors of the Federal 
Reserve System, to open and maintain banking accounts for such 
foreign correspondents or agencies, or for foreign banks or 
bankers, or for foreign states as defined in section 25 (b) of 
this Act. Whenever any such account has been opened or agency 
or correspondent has been appointed by a Federal reserve bank, 
with the consent of or under the order and direction of the 
Board of Governors of the Federal Reserve System, any other 
Federal reserve bank may, with the consent and approval of the 
Board of Governors of the Federal Reserve System, be permitted 
to carry on or conduct, through the Federal reserve bank 
opening such account or appointing such agency or 
correspondent, any transaction authorized by this section under 
rules and regulations to be prescribed by the board.
  (f) To purchase and sell in the open market, either from or 
to domestic banks, firms, corporations, or individuals, 
acceptances of Federal Intermediate Credit Banks and of 
National Agricultural Credit Corporations, whenever the Board 
of Governors of the Federal Reserve System shall declare that 
the public interest so requires.
  (g) The Board of Governors of the Federal Reserve System 
shall exercise special supervision over all relationships and 
transactions of any kind entered into by any Federal reserve 
bank with any foreign bank or banker, or with any group of 
foreign banks or bankers, and all such relationships and 
transactions shall be subject to such regulations, conditions, 
and limitations as the Board may prescribe. No officer or other 
representative of any Federal reserve bank shall conduct 
negotiations of any kind with the officers or representatives 
of any foreign bank or banker without first obtaining the 
permission of the Board of Governors of the Federal Reserve 
System. The Board of Governors of the Federal Reserve System 
shall have the right, in its discretion, to be represented in 
any conference or negotiations by such representative or 
representatives as the Board may designate. A full report of 
all conferences or negotiations, and all understandings or 
agreements arrived at or transactions agreed upon, and all 
other material facts appertaining to such conferences or 
negotiations, shall be filed with the Board of Governors of the 
Federal Reserve System in writing by a duly authorized officer 
of each Federal reserve bank which shall have participated in 
such conferences or negotiations.

           *       *       *       *       *       *       *

  Sec. 19. (a) The Board is authorized for the purposes of this 
section to define the terms used in this section, to determine 
what shall be deemed a payment of interest, to determine what 
types of obligations, whether issued directly by a member bank 
or indirectly by an affiliate of a member bank or by other 
means, and regardless of the use of the proceeds, shall be 
deemed a deposit, and to prescribe such regulations as it may 
deem necessary to effectuate the purposes of this section and 
to prevent evasions thereof.
  (b) Reserve Requirements.--
          (1) Definitions.--The following definitions and rules 
        apply to this subsection, subsection (c), section 11A, 
        the first paragraph of section 13, and the second, 
        thirteenth, and fourteenth paragraphs of section 16:
                  (A) The term ``depository institution'' 
                means--
                          (i) any insured bank as defined in 
                        section 3 of the Federal Deposit 
                        Insurance Act or any bank which is 
                        eligible to make application to become 
                        an insured bank under section 5 of such 
                        Act;
                          (ii) any mutual savings bank as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act or any bank which 
                        is eligible to make application to 
                        become an insured bank under section 5 
                        of such Act;
                          (iii) any savings bank as defined in 
                        section 3 of the Federal Deposit 
                        Insurance Act or any bank which is 
                        eligible to make application to become 
                        an insured bank under section 5 of such 
                        Act;
                          (iv) any insured credit union as 
                        defined in section 101 of the Federal 
                        Credit Union Act or any credit union 
                        which is eligible to make application 
                        to become an insured credit union 
                        pursuant to section 201 of such Act;
                          (v) any member as defined in section 
                        2 of the Federal Home Loan Bank Act;
                          (vi) any savings association (as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act) which is an 
                        insured depository institution (as 
                        defined in such Act) or is eligible to 
                        apply to become an insured depository 
                        institution under the Federal Deposit 
                        Insurance Act; and
                          (vii) for the purpose of section 13 
                        and the fourteenth paragraph of section 
                        16, any association or entity which is 
                        wholly owned by or which consists only 
                        of institutions referred to in clauses 
                        (i) through (vi).
                  (B) The term ``bank'' means any insured or 
                noninsured bank, as defined in section 3 of the 
                Federal Deposit Insurance Act, other than a 
                mutual savings bank or a savings bank as 
                defined in such section.
                  (C) The term ``transaction account'' means a 
                deposit or account on which the depositor or 
                account holder is permitted to make withdrawals 
                by negotiable or transferable instrument, 
                payment orders of withdrawal, telephone 
                transfers, or other similar items for the 
                purpose of making payments or transfers to 
                third persons or others. Such term includes 
                demand deposits, negotiable order of withdrawal 
                accounts, savings deposits subject to automatic 
                transfers, and share draft accounts.
                  (D) The term ``nonpersonal time deposits'' 
                means a transferable time deposit or account or 
                a time deposit or account representing funds 
                deposited to the credit of, or in which any 
                beneficial interest is held by, a depositor who 
                is not a natural person.
                  (E) The term ``reservable liabilities'' means 
                transaction accounts, nonpersonal time 
                deposits, and all net balances, loans, assets, 
                and obligations which are, or may be, subject 
                to reserve requirements under paragraph (5).
                  (F) In order to prevent evasions of the 
                reserve requirements imposed by this 
                subsection, after consultation with the Board 
                of Directors of the Federal Deposit Insurance 
                Corporation, the Comptroller of the Currency, 
                and the National Credit Union Administration 
                Board, the Board of Governors of the Federal 
                Reserve System is authorized to determine, by 
                regulation or order, that an account or deposit 
                is a transaction account if such account or 
                deposit may be used to provide funds directly 
                or indirectly for the purpose of making 
                payments or transfers to third persons or 
                others.
          (2) Reserve requirements.--(A) Each depository 
        institution shall maintain reserves against its 
        transaction accounts as the Board may prescribe by 
        regulation solely for the purpose of implementing 
        monetary policy--
                  (i) in a ratio of not greater than 3 percent 
                (and which may be zero) for that portion of its 
                total transaction accounts of $25,000,000 or 
                less, subject to subparagraph (C); and
                  (ii) in the ratio of 12 per centum, or in 
                such other ratio as the Board may prescribe not 
                greater than 14 per centum (and which may be 
                zero), for that portion of its total 
                transaction accounts in excess of $25,000,000, 
                subject to subparagraph (C).
          (B) Each depository institution shall maintain 
        reserves against its nonpersonal time deposits in the 
        ratio of 3 per centum, or in such other ratio not 
        greater than 9 per centum and not less than zero per 
        centum as the Board may prescribe by regulation solely 
        for the purpose of implementing monetary policy.
          (C) Beginning in 1981, not later than December 31 of 
        each year the Board shall issue a regulation increasing 
        for the next succeeding calendar year the dollar amount 
        which is contained in subparagraph (A) or which was 
        last determined pursuant to this subparagraph for the 
        purpose of such subparagraph, by an amount obtained by 
        multiplying such dollar amount by 80 per centum of the 
        percentage increase in the total transaction accounts 
        of all depository institutions. The increase in such 
        transaction accounts shall be determined by subtracting 
        the amount of such accounts on June 30 of the preceding 
        calendar year from the amount of such accounts on June 
        30 of the calendar year involved. In the case of any 
        such 12-month period in which there has been a decrease 
        in the total transaction accounts of all depository 
        institutions, the Board shall issue such a regulation 
        decreasing for the next succeeding calendar year such 
        dollar amount by an amount obtained by multiplying such 
        dollar amount by 80 per centum of the percentage 
        decrease in the total transaction accounts of all 
        depository institutions. The decrease in such 
        transaction accounts shall be determined by subtracting 
        the amount of such accounts on June 30 of the calendar 
        year involved from the amount of such accounts on June 
        30 of the previous calendar year.
          (D) Any reserve requirement imposed under this 
        subsection shall be uniformly applied to all 
        transaction accounts at all depository institutions. 
        Reserve requirements imposed under this subsection 
        shall be uniformly applied to nonpersonal time deposits 
        at all depository institutions, except that such 
        requirements may vary by the maturity of such deposits.
          (3) Waiver of ratio limits in extraordinary 
        circumstances.--Upon a finding by at least 5 members of 
        the Board that extraordinary circumstances require such 
        action, the Board, after consultation with the 
        appropriate committees of the Congress, may impose, 
        with respect to any liability of depository 
        institutions, reserve requirements outside the 
        limitations as to ratios and as to types of liabilities 
        otherwise prescribed by paragraph (2) for a period not 
        exceeding 180 days, and for further periods not 
        exceeding 180 days each by affirmative action by at 
        least 5 members of the Board in each instance. The 
        Board shall promptly transmit to the Congress a report 
        of any exercise of its authority under this paragraph 
        and the reasons for such exercise of authority.
          (4) Supplemental reserves.--(A) The Board may, upon 
        the affirmative vote of not less than 5 members, impose 
        a supplemental reserve requirement on every depository 
        institution of not more than 4 per centum of its total 
        transaction accounts. Such supplemental reserve 
        requirement may be imposed only if--
                  (i) the sole purpose of such requirement is 
                to increase the amount of reserves maintained 
                to a level essential for the conduct of 
                monetary policy;
                  (ii) such requirement is not imposed for the 
                purpose of reducing the cost burdens resulting 
                from the imposition of the reserve requirements 
                pursuant to paragraph (2);
                  (iii) such requirement is not imposed for the 
                purpose of increasing the amount of balances 
                needed for clearing purposes; and
                  (iv) on the date on which the supplemental 
                reserve requirement is imposed, except as 
                provided in paragraph (11), the total amount of 
                reserves required pursuant to paragraph (2) is 
                not less than the amount of reserves that would 
                be required if the initial ratios specified in 
                paragraph (2) were in effect.
          (B) The Board may require the supplemental reserve 
        authorized under subparagraph (A) only after 
        consultation with the Board of Directors of the Federal 
        Deposit Insurance Corporation, the Comptroller of the 
        Currency, and the National Credit Union Administration 
        Board. The Board shall promptly transmit to the 
        Congress a report with respect to any exercise of its 
        authority to require supplemental reserves under 
        subparagraph (A) and such report shall state the basis 
        for the determination to exercise such authority.
          (C) If a supplemental reserve under subparagraph (A) 
        has been required of depository institutions for a 
        period of one year or more, the Board shall review and 
        determine the need for continued maintenance of 
        supplemental reserves and shall transmit annual reports 
        to the Congress regarding the need, if any, for 
        continuing the supplemental reserve.
          (D) Any supplemental reserve imposed under 
        subparagraph (A) shall terminate at the close of the 
        first 90-day period after such requirement is imposed 
        during which the average amount of reserves required 
        under paragraph (2) are less than the amount of 
        reserves which would be required during such period if 
        the initial ratios specified in paragraph (2) were in 
        effect.
          (5) Reserves related to foreign obligations or 
        assets.--Foreign branches, subsidiaries, and 
        international banking facilities of nonmember 
        depository institutions shall maintain reserves to the 
        same extent required by the Board of foreign branches, 
        subsidiaries, and international banking facilities of 
        member banks. In addition to any reserves otherwise 
        required to be maintained pursuant to this subsection, 
        any depository institution shall maintain reserves in 
        such ratios as the Board may prescribe against--
                  (A) net balances owed by domestic offices of 
                such depository institution in the United 
                States to its directly related foreign offices 
                and to foreign offices of nonrelated depository 
                institutions;
                  (B) loans to United States residents made by 
                overseas offices of such depository institution 
                if such depository institution has one or more 
                offices in the United States; and
                  (C) assets (including participations) held by 
                foreign offices of a depository institution in 
                the United States which were acquired from its 
                domestic offices.
          (6) Exemption for certain deposits.--The requirements 
        imposed under paragraph (2) shall not apply to deposits 
        payable only outside the States of the United States 
        and the District of Columbia, except that nothing in 
        this subsection limits the authority of the Board to 
        impose conditions and requirements on member banks 
        under section 25 of this Act or the authority of the 
        Board under section 7 of the International Banking Act 
        of 1978.
          (7) Discount and borrowing.--Any depository 
        institution in which transaction accounts or 
        nonpersonal time deposits are held shall be entitled to 
        the same discount and borrowing privileges as member 
        banks. In the administration of discount and borrowing 
        privileges, the Board and the Federal Reserve banks 
        shall take into consideration the special needs of 
        savings and other depository institutions for access to 
        discount and borrowing facilities consistent with their 
        long-term asset portfolios and the sensitivity of such 
        institutions to trends in the national money markets.
          (8) Transitional adjustments.--
                  (A) Any depository institution required to 
                maintain reserves under this subsection which 
                was engaged in business on July 1, 1979, but 
                was not a member of the Federal Reserve System 
                on or after that date, shall maintain reserves 
                against its deposits during the first twelve-
                month period following the effective date of 
                this paragraph in amounts equal to one-eighth 
                of those otherwise required by this subsection, 
                during the second such twelve-month period in 
                amounts equal to one-fourth of those otherwise 
                required, during the third such twelve-month 
                period in amounts equal to three-eighths of 
                those otherwise required, during the fourth 
                twelve-month period in amounts equal to one-
                half of those otherwise required, and during 
                the fifth twelve-month period in amounts equal 
                to five-eighths of those otherwise required, 
                during the sixth twelve-month period in amounts 
                equal to three-fourths of those otherwise 
                required, and during the seventh twelve-month 
                period in amounts equal to seven-eighths of 
                those otherwise required. This subparagraph 
                does not apply to any category of deposits or 
                accounts which are first authorized pursuant to 
                Federal law in any State after April 1, 1980.
                  (B) With respect to any bank which was a 
                member of the Federal Reserve System during the 
                entire period beginning on July 1, 1979, and 
                ending on the effective date of the Monetary 
                Control Act of 1980, the amount of required 
                reserves imposed pursuant to this subsection on 
                and after the effective date of such Act that 
                exceeds the amount of reserves which would have 
                been required of such bank if the reserve 
                ratios in effect during the reserve computation 
                period immediately preceding such effective 
                date were applied may, at the discretion of the 
                Board and in accordance with such rules and 
                regulations as it may adopt, be reduced by 75 
                per centum during the first year which begins 
                after such effective date, 50 per centum during 
                the second year, and 25 per centum during the 
                third year.
                  (C)(i) With respect to any bank which is a 
                member of the Federal Reserve System on the 
                effective date of the Monetary Control Act of 
                1980, the amount of reserves which would have 
                been required of such bank if the reserve 
                ratios in effect during the reserve computation 
                period immediately preceding such effective 
                date were applied that exceeds the amount of 
                required reserves imposed pursuant to this 
                subsection shall, in accordance with such rules 
                and regulations as the Board may adopt, be 
                reduced by 25 per centum during the first year 
                which begins after such effective date, 50 per 
                centum during the second year, and 75 per 
                centum during the third year.
                  (ii) If a bank becomes a member bank during 
                the four-year period beginning on the effective 
                date of the Monetary Control Act of 1980, and 
                if the amount of reserves which would have been 
                required of such bank, determined as if the 
                reserve ratios in effect during the reserve 
                computation period immediately preceding such 
                effective date were applied, and as if such 
                bank had been a member during such period, 
                exceeds the amount of reserves required 
                pursuant to this subsection, the amount of 
                reserves required to be maintained by such bank 
                beginning on the date on which such bank 
                becomes a member of the Federal Reserve System 
                shall be the amount of reserves which would 
                have been required of such bank if it had been 
                a member on the day before such effective date, 
                except that the amount of such excess shall, in 
                accordance with such rules and regulations as 
                the Board may adopt, be reduced by 25 per 
                centum during the first year which begins after 
                such effective date, 50 per centum during the 
                second year, and 75 per centum during the third 
                year.
                  (D)(i) Any bank which was a member bank on 
                July 1, 1979, and which withdrew from 
                membership in the Federal Reserve System during 
                the period beginning on July 1, 1979, and 
                ending on March 31, 1980, shall maintain 
                reserves during the first twelve-month period 
                beginning on the date of enactment of this 
                clause in amounts equal to one-half of those 
                otherwise required by this subsection, during 
                the second such twelve-month period in amounts 
                equal to two-thirds of those otherwise 
                required, and during the third such twelve-
                month period in amounts equal to five-sixths of 
                those otherwise required.
                  (ii) Any bank which withdraws from membership 
                in the Federal Reserve System on or after the 
                date of enactment of the Depository 
                Institutions Deregulation and Monetary Control 
                Act of 1980 shall maintain reserves in the same 
                amount as member banks are required to maintain 
                under this subsection, pursuant to 
                subparagraphs (B) and (C)(i).
                  (E) This subparagraph applies to any 
                depository institution that, on August 1, 1978, 
                (i) was engaged in business as a depository 
                institution in a State outside the continental 
                limits of the United States, and (ii) was not a 
                member of the Federal Reserve System at any 
                time on or after such date. Such a depository 
                institution shall not be required to maintain 
                reserves against such deposits held or 
                maintained at its offices located in a State 
                outside the continental limits of the United 
                States until the first day of the sixth 
                calendar year which begins after the effective 
                date of the Monetary Control Act of 1980. Such 
                a depository institution shall maintain 
                reserves against such deposits during the sixth 
                calendar year which begins after such effective 
                date in an amount equal to one-eighth of that 
                otherwise required by paragraph (2), during the 
                seventh such year in an amount equal to one-
                fourth of that otherwise required, during the 
                eighth such year in an amount equal to three-
                eighths of that otherwise required, during the 
                ninth such year in an amount equal to one-half 
                of that otherwise required, during the tenth 
                such year in an amount equal to five-eighths of 
                that otherwise required, during the eleventh 
                such year in an amount equal to three-fourths 
                of that otherwise required, and during the 
                twelth such year in an amount equal to seven-
                eighths of that otherwise required.
          (9) Exemption.--This subsection shall not apply with 
        respect to any financial institution which--
                  (A) is organized solely to do business with 
                other financial institutions;
                  (B) is owned primarily by the financial 
                institutions with which it does business; and
                  (C) does not do business with the general 
                public.
          (10) Waivers.--In individual cases, where a Federal 
        supervisory authority waives a liquidity requirement, 
        or waives the penalty for failing to satisfy a 
        liquidity requirement, the Board shall waive the 
        reserve requirement, or waive the penalty for failing 
        to satisfy a reserve requirement, imposed pursuant to 
        this subsection for the depository institution involved 
        when requested by the Federal supervisory authority 
        involved.
          (11) Additional exemptions.--(A)(i) Notwithstanding 
        the reserve requirement ratios established under 
        paragraphs (2) and (5) of this subsection, a reserve 
        ratio of zero per centum shall apply to any combination 
        of reservable liabilities, which do not exceed 
        $2,000,000 (as adjusted under subparagraph (B)), of 
        each depository institution.
          (ii) Each depository institution may designate, in 
        accordance with such rules and regulations as the Board 
        shall prescribe, the types and amounts of reservable 
        liabilities to which the reserve ratio of zero per 
        centum shall apply, except that transaction accounts 
        which are designated to be subject to a reserve ratio 
        of zero per centum shall be accounts which would 
        otherwise be subject to a reserve ratio of 3 per centum 
        under paragraph (2).
          (iii) The Board shall minimize the reporting 
        necessary to determine whether depository institutions 
        have total reservable liabilities of less than 
        $2,000,000 (as adjusted under subparagraph (B)). 
        Consistent with the Board's responsibility to monitor 
        and control monetary and credit aggregates, depository 
        institutions which have reserve requirements under this 
        subsection equal to zero per centum shall be subject to 
        less overall reporting requirements than depository 
        institutions which have a reserve requirement under 
        this subsection that exceeds zero per centum.
          (B)(i) Beginning in 1982, not later than December 31 
        of each year, the Board shall issue a regulation 
        increasing for the next succeeding calendar year the 
        dollar amount specified in subparagraph (A), as 
        previously adjusted under this subparagraph, by an 
        amount obtained by multiplying such dollar amount by 80 
        per centum of the percentage increase in the total 
        reservable liabilities of all depository institutions.
          (ii) The increase in total reservable liabilities 
        shall be determined by subtracting the amount of total 
        reservable liabilities on June 30 of the preceding 
        calendar year from the amount of total reservable 
        liabilities on June 30 of the calendar year involved. 
        In the case of any such twelve-month period in which 
        there has been a decrease in the total reservable 
        liabilities of all depository institutions, no 
        adjustment shall be made. A decrease in total 
        reservable liabilities shall be determined by 
        subtracting the amount of total reservable liabilities 
        on June 30 of the calendar year involved from the 
        amount of total reservable liabilities on June 30 of 
        the previous calendar year.
          (12) Earnings on balances.--
                  (A) In general.--Balances maintained at a 
                Federal Reserve bank by or on behalf of a 
                depository institution may receive earnings to 
                be paid by the Federal Reserve bank at least 
                once each calendar quarter, at a rate or rates 
                established by the Federal Open Market 
                Committee not to exceed the general level of 
                short-term interest rates.
                  (B) Regulations relating to payments and 
                distributions.--The Board may prescribe 
                regulations concerning--
                          (i) the payment of earnings in 
                        accordance with this paragraph;
                          (ii) the distribution of such 
                        earnings to the depository institutions 
                        which maintain balances at such banks, 
                        or on whose behalf such balances are 
                        maintained; and
                          (iii) the responsibilities of 
                        depository institutions, Federal Home 
                        Loan Banks, and the National Credit 
                        Union Administration Central Liquidity 
                        Facility with respect to the crediting 
                        and distribution of earnings 
                        attributable to balances maintained, in 
                        accordance with subsection (c)(1)(A), 
                        in a Federal Reserve bank by any such 
                        entity on behalf of depository 
                        institutions.
                  (C) Depository institutions defined.--For 
                purposes of this paragraph, the term 
                ``depository institution'', in addition to the 
                institutions described in paragraph (1)(A), 
                includes any trust company, corporation 
                organized under section 25A or having an 
                agreement with the Board under section 25, or 
                any branch or agency of a foreign bank (as 
                defined in section 1(b) of the International 
                Banking Act of 1978).
  (c)(1) Reserves held by a depository institution to meet the 
requirements imposed pursuant to subsection (b) shall, subject 
to such rules and regulations as the Board shall prescribe, be 
in the form of--
          (A) balances maintained for such purposes by such 
        depository institution in the Federal Reserve bank of 
        which it is a member or at which it maintains an 
        account, except that (i) the Board may, by regulation 
        or order, permit depository institutions to maintain 
        all or a portion of their required reserves in the form 
        of vault cash, except that any portion so permitted 
        shall be identical for all depository institutions, and 
        (ii) vault cash may be used to satisfy any supplemental 
        reserve requirement imposed pursuant to subsection 
        (b)(4), except that all such vault cash shall be 
        excluded from any computation of earnings pursuant to 
        subsection (b); and
          (B) balances maintained by a depository institution 
        in a depository institution which maintains required 
        reserve balances at a Federal Reserve bank, in a 
        Federal Home Loan Bank, or in the National Credit Union 
        Administration Central Liquidity Facility, if such 
        depository institution, Federal Home Loan Bank, or 
        National Credit Union Administration Central Liquidity 
        Facility maintains such funds in the form of balances 
        in a Federal Reserve bank of which it is a member or at 
        which it maintains an account. Balances received by a 
        depository institution from a second depository 
        institution and used to satisfy the reserve requirement 
        imposed on such second depository institution by this 
        section shall not be subject to the reserve 
        requirements of this section imposed on such first 
        depository institution, and shall not be subject to 
        assessments or reserves imposed on such first 
        depository institution pursuant to section 7 of the 
        Federal Deposit Insurance Act (12 U.S.C. 1817), section 
        404 of the National Housing Act (12 U.S.C. 1727), or 
        section 202 of the Federal Credit Union Act (12 U.S.C. 
        1782).
  (2) The balances maintained to meet the reserve requirements 
of subsection (b) by a depository institution in a Federal 
Reserve bank or passed through a Federal Home Loan Bank or the 
National Credit Union Administration Central Liquidity Facility 
or another depository institution to a Federal Reserve bank may 
be used to satisfy liquidity requirements which may be imposed 
under other provisions of Federal or State law.
  (d) No member bank shall act as the medium or agent of any 
nonbanking corporation, partnership, association, business 
trust, or individual in making loans on the security of stocks, 
bonds, and other investment securities to brokers or dealers in 
stocks, bonds, and other investment securities. Every violation 
of this provision by any member bank shall be punishable by a 
fine of not more than $100 per day during the continuance of 
such violation; and such fine may be collected, by suit or 
otherwise, by the Federal reserve bank of the district in which 
such member bank is located.
  (e) No member bank shall keep on deposit with any depository 
institution which is not authorized to have access to Federal 
Reserve advances under section 10(b) of this Act a sum in 
excess of 10 per centum of its own paid-up capital and surplus. 
No member bank shall act as the medium or agent of a nonmember 
bank in applying for or receiving discounts from a Federal 
reserve bank under the provisions of this Act, except by 
permission of the Board of Governors of the Federal Reserve 
System.
  (f) The required balance carried by a member bank with a 
Federal reserve bank may, under the regulations and subject to 
such penalties as may be prescribed by the Board of Governors 
of the Federal Reserve System, be checked against and withdrawn 
by such member bank for the purpose of meeting existing 
liabilities.
  (g) In estimating the reserve balances required by this Act, 
member banks may deduct from the amount of their gross demand 
deposits the amounts of balances due from other banks (except 
Federal Reserve banks and foreign banks) and cash items in 
process of collection payable immediately upon presentation in 
the United States, within the meaning of these terms as defined 
by the Board of Governors of the Federal Reserve System.
  (h) National banks, or banks organized under local laws, 
located in a dependency or insular posssession or any part of 
the United States outside the continental United States may 
remain nonmember banks, and shall in that event maintain 
reserves and comply with all the conditions now provided by law 
regulating them; or said banks may, with the consent of the 
Board of Governors of the Federal Reserve System, become member 
banks of any one of the reserve districts, and shall in that 
event take stock, maintain reserves, and be subject to all the 
other provisions of this Act.
  (j) The Board may from time to time, after consulting with 
the Board of Directors of the Federal Deposit Insurance 
Corporation and the Director of the Office of Thrift 
Supervision, prescribe rules governing the payment and 
advertisement of interest on deposits, including limitations on 
the rates of interest which may be paid by member banks on time 
and savings deposits. The Board may prescribe different rate 
limitations for different classes of deposits, for deposits of 
different amounts or with different maturities or subject to 
different conditions regarding withdrawal or repayment, 
according to the nature or location of member banks or their 
depositors, or according to such other reasonable bases as the 
Board may deem desirable in the public interest. No member bank 
shall pay any time deposit before its maturity except upon such 
conditions and in accordance with such rules and regulations as 
may be prescribed by the said Board, or waive any requirement 
of notice before payment of any savings deposit except as to 
all savings deposits having the same requirement: Provided, 
That the provisions of this paragraph shall not apply to any 
deposit which is payable only at an office of a member bank 
located outside of the States of the United States and the 
District of Columbia. During the period commencing on October 
15, 1962, and ending on October 15, 1968, the provisions of 
this paragraph shall not apply to the rate of interest which 
may be paid by member banks on time deposits of foreign 
governments, monetary and financial authorities of foreign 
governments when acting as such, or international financial 
institutions of which the United States is a member.
  (k) No member bank or affiliate thereof, or any successor or 
assignee of such member bank or affiliate or any endorser, 
guarantor, or surety of such member bank or affiliate may 
plead, raise, or claim directly or by counterclaim, setoff, or 
otherwise, with respect to any deposit or obligation of such 
member bank or affiliate, any defense, right, or benefit under 
any provision of a statute or constitution of a State or of a 
territory of the United States, or of any law of the District 
of Columbia, regulating or limiting the rate of interest which 
may be charged, taken, received, or reserved, and any such 
provision is hereby preempted, and no civil or criminal penalty 
which would otherwise be applicable under such provision shall 
apply to such member bank or affiliate or to any other person.
  (l) Civil Money Penalty.--
          (1) First tier.--Any member bank which, and any 
        institution-affiliated party (within the meaning of 
        section 3(u) of the Federal Deposit Insurance Act) with 
        respect to such member bank who, violates any provision 
        of this section, or any regulation issued pursuant 
        thereto, shall forfeit and pay a civil penalty of not 
        more than $5,000 for each day during which such 
        violation continues.
          (2) Second tier.--Notwithstanding paragraph (1), any 
        member bank which, and any institution-affiliated party 
        (within the meaning of section 3(u) of the Federal 
        Deposit Insurance Act) with respect to such member bank 
        who--
                  (A)(i) commits any violation described in 
                paragraph (1);
                  (ii) recklessly engages in an unsafe or 
                unsound practice in conducting the affairs of 
                such member bank; or
                  (iii) breaches any fiduciary duty;
                  (B) which violation, practice, or breach--
                          (i) is part of a pattern of 
                        misconduct;
                          (ii) causes or is likely to cause 
                        more than a minimal loss to such member 
                        bank; or
                          (iii) results in pecuniary gain or 
                        other benefit to such party,
                shall forfeit and pay a civil penalty of not 
                more than $25,000 for each day during which 
                such violation, practice, or breach continues.
                  (3) Third tier.--Notwithstanding paragraphs 
                (1) and (2), any member bank which, and any 
                institution-affiliated party (within the 
                meaning of section 3(u) of the Federal Deposit 
                Insurance Act) with respect to such member bank 
                who--
                          (A) knowingly--
                                  (i) commits any violation 
                                described in paragraph (1);
                                  (ii) engages in any unsafe or 
                                unsound practice in conducting 
                                the affairs of such member 
                                bank; or
                                  (iii) breaches any fiduciary 
                                duty; and
                          (B) knowingly or recklessly causes a 
                        substantial loss to such member bank or 
                        a substantial pecuniary gain or other 
                        benefit to such party by reason of such 
                        violation, practice, or breach,
        shall forfeit and pay a civil penalty in an amount not 
        to exceed the applicable maximum amount determined 
        under paragraph (4) for each day during which such 
        violation, practice, or breach continues.
          (4) Maximum amounts of penalties for any violation 
        described in paragraph (3).--The maximum daily amount 
        of any civil penalty which may be assessed pursuant to 
        paragraph (3) for any violation, practice, or breach 
        described in such paragraph is--
                  (A) in the case of any person other than a 
                member bank, an amount not to exceed 
                $1,000,000; and
                  (B) in the case of a member bank, an amount 
                not to exceed the lesser of--
                          (i) $1,000,000; or
                          (ii) 1 percent of the total assets of 
                        such member bank.
          (5) Assessment; etc.--Any penalty imposed under 
        paragraph (1), (2), or (3) may be assessed and 
        collected by the Board in the manner provided in 
        subparagraphs (E), (F), (G), and (I) of section 8(i)(2) 
        of the Federal Deposit Insurance Act for penalties 
        imposed (under such section) and any such assessment 
        shall be subject to the provisions of such section.
          (6) Hearing.--The member bank or other person against 
        whom any penalty is assessed under this subsection 
        shall be afforded an agency hearing if such member bank 
        or person submits a request for such hearing within 20 
        days after the issuance of the notice of assessment. 
        Section 8(h) of the Federal Deposit Insurance Act shall 
        apply to any proceeding under this subsection.
          (7) Disbursement.--All penalties collected under 
        authority of this subsection shall be deposited into 
        the Treasury.
          (8) Violate defined.--For purposes of this section, 
        the term ``violate'' includes any action (alone or with 
        another or others) for or toward causing, bringing 
        about, participating in, counseling, or aiding or 
        abetting a violation.
          (9) Regulations.--The Board shall prescribe 
        regulations establishing such procedures as may be 
        necessary to carry out this subsection.
  (m) Notice Under This Section After Separation From 
Service.--The resignation, termination of employment or 
participation, or separation of an institution-affiliated party 
(within the meaning of section 3(u) of the Federal Deposit 
Insurance Act) with respect to a member bank (including a 
separation caused by the closing of such a bank) shall not 
affect the jurisdiction and authority of the Board to issue any 
notice and proceed under this section against any such party, 
if such notice is served before the end of the 6-year period 
beginning on the date such party ceased to be such a party with 
respect to such bank (whether such date occurs before, on, or 
after the date of the enactment of this subsection).

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 6741 would make significant and detrimental changes to 
the Federal Reserve System, severely limiting its discretion to 
conduct monetary policy and supervision of bank holding 
companies. Collectively, the bill would expand the voice of 
commercial banks, undermine the independence of the Federal 
Reserve, and destabilize the housing market.
    Expanding the voice of commercial banks. H.R. 6741 would 
empower commercial banks by giving them influence over the 
selection of members of the Federal Open Markets Committee 
(FOMC) and strengthening the authority of those members to make 
a larger number of monetary policy decisions on the FOMC. Class 
A directors, who are representatives of commercial banks, would 
be able to select the president of each Reserve Bank, which 
explicitly rolls back a key reform included in the Dodd-Frank 
Act that eliminated the role of these directors in selecting 
Reserve Bank presidents. Dodd-Frank eliminated the role of 
Class A directors to avoid the conflict of interest between 
member banks selecting a person who could influence when and 
how they could receive assistance from the Fed, which is their 
lender of last resort.
    H.R. 6741 would also expand the membership of the FOMC to 
allow one representative of each of the 12 Federal Reserve 
Banks to serve in a voting capacity on the Committee. Today, 
the FOMC is comprised of 12 members, seven of which (or a 
majority) are the Federal Reserve Governors, who are 
presidentially-appointed and Senate-confirmed, and the other 
five are Reserve Bank Presidents. By more than doubling the 
voting power of the Federal Reserve Banks, the bill would shift 
the balance of power away from the seven Governors in favor of 
the presidents of the 12 Reserve Banks. Reserve Banks and their 
presidents lack the same level of accountability as members of 
the Board of Governors. Not only are Reserve Bank presidents 
selected through a largely non-public process that lacks 
transparency, such institutions are considered private 
corporate entities (despite their public functions) and are 
therefore not covered by the Freedom of Information Act (FOIA). 
Reserve Banks also lack inspector general offices to monitor 
and correct wrongdoing.
    The bill would also transfer important monetary policy 
functions from the Board of Governors to the FOMC. For example, 
the FOMC would be authorized to set the interest rate paid on 
reserves held by member banks at the Federal Reserve. As a 
result, private bankers would have a much stronger voice to 
advocate for policy decisions that would directly benefit their 
bottom line. In addition, emergency financial decisions would 
now need a super majority of the FOMC putting difficult 
decisions like whether or not to assist the financial industry 
during a crisis in the hands of FOMC members chosen directly by 
the industry needing the assistance.
    Importantly, this influence could have powerful 
repercussions for the conduct of monetary policy and the vigor 
with which the Federal Reserve pursues its full employment 
mandate. Although low interest rates tend to promote 
employment, commercial banks tend not to prefer extended 
periods of low rates because they can erode their profits. In 
other words, if bankers are empowered to influence monetary 
policy decisions, such influence may favor bank profits at the 
expense of US workers.
    Undermining the independence of the Federal Reserve. H.R. 
6741 would also subject the nonmonetary policy functions of the 
Fed to the annual Congressional appropriations process. This 
would politicize the Fed's supervision and enforcement through 
the threat of budget riders and funding cuts and undermine the 
Fed's independent oversight of financial markets. In addition, 
because the Fed's oversight of bank holding companies and 
certain other financial institutions informs its conduct of 
monetary policy, subjecting its oversight to the appropriations 
process could also negatively affect the conduct of monetary 
policy.
    The bill would impose further limits on the discretion of 
the Federal Reserve, by requiring it to formally adopt 
``exactly one'' monetary policy strategy and between one and 
three reference policy rules annually. These reference rules 
not only further restrict the central bank's discretion to set 
monetary policy in the best interests of the economy, but 
illogically treat interest rate targeting as a separate 
monetary policy instrument from other open-market operations 
and the payment on interest on reserves, even though the latter 
two activities are a means of accomplishing the interest rate 
target. Former Fed Chair Yellen has said that it ``would be a 
grave mistake for the Federal Reserve to commit to conduct 
monetary policy according to a mathematical rule.''
    Destabilizing the Housing Market. Finally, H.R. 6741 would 
threaten the housing market as it recovers from the worst 
crisis since the Great Depression by undermining the Federal 
Reserves' work to stabilize the market. The bill requires, 
within a year from enactment, the Federal Reserve to transfer 
its portfolio of agency (i.e., Government Sponsored Enterprise) 
mortgage-backed securities (MBS) and other obligations that it 
purchased during and after the 2008 financial crisis to the 
Treasury. Treasury, in return, must transfer the assets to U.S. 
bonds of equivalent market value. Additionally, the bill 
restricts the Federal Reserve from making such purchases in the 
future. The bill further amends the Fed's emergency authority 
under Section 13(3) of the Federal Reserve Act to require that 
any extraordinary assets purchased pursuant to that authority 
be similarly exchanged with the Treasury for a similarly valued 
U.S. bond no later than one year after acquisition. Lastly, the 
bill also strikes the Fed's ability to provide certain 
emergency advances to bank.
    Even though the Federal Reserve's asset purchase program--
which added $1.7 trillion in agency MBS to the Fed's $4.5 
trillion balance sheet--succeeded in driving down long-term 
rates, including 30-year mortgage rates, critics have 
nonetheless argued that such purchases would lead to a period 
of high inflation, which has not proven true. Given that the 
mortgage finance sector was one of the hardest hit sectors 
during the 2008 crisis, the Federal Reserve sought to provide 
targeted relief to prevent further illiquidity-induced price 
declines. If enacted, the inability to purchase or hold agency 
securities may put upward pressure on MBS yields and mortgage 
rates, even today. The fire sale of MBS called for under the 
bill would also likely have significant adverse effects in 
financial markets. Notably, for the proposed transfer of 
existing assets to take place, there would have to be a large 
increase in the federal debt limit, a requirement that the 
legislation fails to contemplate.
    Generally, H.R. 6741 would harm the ability and mission of 
the Federal Reserve to promote stable interest rates and full 
employment, by empowering private commercial bankers to make 
monetary policy decisions, curtailing the independence of the 
institution and stripping the institution of its authority to 
respond appropriately to unforeseen financial crises. For the 
above reasons, we oppose the legislation.
                                   Maxine Waters.
                                   Carolyn B. Maloney.
                                   Nydia M. Velazquez.
                                   Wm. Lacy Clay.
                                   Michael E. Capuano.
                                   Charlie Crist.

                                  [all]