WASHINGTON, July 25 (Reuters) - The U.S. House Financial Services Committee said on Friday that it will vote on a bill next week aimed at bringing more transparency to the Federal Reserve, including the controversial requirement of adopting a rules-based approach to its policy.
Fed officials and economists have expressed concern that the legislation threatens to strip independence from the Fed, which sets monetary policy for the United States under the dual mandate of keeping unemployment low and keeping prices stable.
The bill, which Fed Chair Janet Yellen has criticized in public testimony, will come up for a House vote on Tuesday, committee chairman and Texas Republican Jeb Hensarling said in a statement.
The Republican-sponsored legislation is unlikely to gain any traction in the Democrat-led Senate, but it could come up for a “show” vote in the House before congressional mid-term elections.
The bill HR 5018, sponsored by Republicans Bill Huizenga of Michigan and Scott Garrett of New Jersey, would also require the Fed to disclose the salaries of its highest earners, require quarterly testimony from the Chair and cost-based analyses before enacting any regulation.
The bill also calls for changes in the way the Fed conducts its stress tests on banks.
Yellen called the adoption of a monetary policy rule “a grave mistake” in her July 16 testimony to the House Financial Services Committee, explaining that such an approach takes away the Fed’s flexibility and that such a policy would have made the economic impact of the financial crisis even worse.
HR 5018 is one of several bills aimed at placing further scrutiny on the Fed, which embarked on extraordinary monetary policy measures in 2008 after the financial crisis. (Reporting by Michael Flaherty; Editing by Ken Wills)