U.S. House Republicans propose Fed reforms, set hearing

WASHINGTON Mon Jul 7, 2014 6:31pm EDT

The sun rises to the east of the U.S. Federal Reserve building in Washington, July 31, 2013. REUTERS/Jonathan Ernst

The sun rises to the east of the U.S. Federal Reserve building in Washington, July 31, 2013.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives on Monday introduced a bill that would require the Federal Reserve to disclose more information, and set a hearing to discuss reform at the U.S. central bank.

The title of the hearing is "Legislation to Reform the Federal Reserve on Its 100-year Anniversary," according to an announcement by the U.S. House Financial Services Committee. The hearing was set for Thursday, 10:00 am EST (1400 GMT).

The notice did not mention any specific legislation, but a memo sent later by committee staffers said two Republican congressmen have introduced H.R. 5018, known as the Federal Reserve Accountability and Transparency Act.

The bill, sponsored by Representatives Bill Huizenga of Michigan and Scott Garrett of New Jersey, would require the Fed to conduct cost-benefit analysis when adopting new rules and require transparency for Fed stress tests on banks and on international regulations. The bill also would require the Fed to disclose the salaries of highly paid employees, according to the memo, which was obtained by Reuters.

House staffers said the bill will be discussed at the hearing on Thursday.

The memo said the hearing would include economics professors John Taylor of Stanford, Simon Johnson of the Massachusetts Institute of Technology along with Mark Calabria of the Cato Institute and Hester Peirce, of George Mason University.

Committee Chairman Jeb Hensarling has pledged to demand more transparency from the Fed.

Some politicians have criticized the central bank for its aggressive actions after the financial crisis to lower unemployment and stimulate the economy using unconventional tools such as a monthly bond-buying program and building a balance sheet that now exceeds $4.5 trillion.

A Federal Reserve Spokeswoman declined to comment on the upcoming hearing. Republican lawmakers have grown more critical of the Fed and the powers granted to it under the 2010 Dodd-Frank financial reform law that was passed in response to the U.S. financial crisis of 2007-09.

Congressman Scott Garrett, a New Jersey Republican, introduced legislation this year that takes aim at the Financial Stability Oversight Council (FSOC), created under Dodd-Frank to monitor emerging systemic risks. The council comprises heads of the top financial regulators including the Federal Reserve, and is chaired by Treasury Secretary Jack Lew. The group can impose additional regulations on any financial firms large enough that their failure could destabilize the economy.

Garrett's bill contains a number of measures to make the council more transparent.

Prior attempts to rein in the Fed include a 2012 proposal to subject the central bank to audits, which sailed through the U.S. House of Representatives. The legislation, written by Republican representative Ron Paul, whose anti-Fed crusade prompted a presidential bid and his grass-roots folk-hero status, was re-introduced last year.

Texas Congressman Kevin Brady is also sponsoring a bill that aims to strip the Fed of its low unemployment mandate, among other measures.

(Reporting by Michael Flaherty; Additional reporting by David Lawder; Editing by James Dalgleish and David Gregorio)

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Comments (35)
nose2066 wrote:
Every time that the stockmarkets fell a few percentage points, the Federal Reserve would have chairman Ben Bernanke come out and say some soothing words about keeping easy monetary policy until some indefinite time in the future. Now the new chair-person, Janet Yellen has taken over that role of lead cheerleader.

There’s a massive conflict of interest between the Federal Reserve’s apparent role as cheerleader and main support for the financial system, while at the same time, the Federal Reserve is supposed to regulate the financial system.

In professional sports, would they have the cheerleaders also referee the game???

Jul 07, 2014 12:33pm EDT  --  Report as abuse
CharlesReed wrote:
First thing they need to put in check is the the Federal Reserve Bank (Fed) negotiated the Independent (wink wink) Foreclosure Review Board when in fact about 800,000 loan they had an interest in the securities that loan were in, passed onto the US taxpayers the losses, as they cancel the “No Standing” payout portion of the settlements.

America does not understand why out their pockets it was that the FHA took a $70 billion loss, when the FHA does not originate, buy or sell FHA mortgages and was tricked into purchasing the properties at the illegal foreclosure sales, plus paying out insurance claims to people not entitled too!

Jul 07, 2014 1:38pm EDT  --  Report as abuse
janeygirl wrote:
Someone please explain to me why executives from top U.S. banks are allowed to serve on the board of directors of the Federal Reserve. That’s the single biggest conflict of interest in U.S. history.

The banks know and can trade on interest rate decisions from the Fed because those banks ARE the Fed.

Also, when banks that are part of the Fed say they’re taking loans from the Fed and loaning them back to the Fed for interest payments, that simply means that the banks are paying themselves interest on loans from the American people. That’s outright theft!

Jul 07, 2014 3:22pm EDT  --  Report as abuse
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