[Congressional Record Volume 141, Number 20 (Wednesday, February 1, 1995)]
[Senate]
[Page S1868]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                RECOGNITION OF THE FEDERAL RESERVE BOARD

  Mr. DORGAN. Mr. President, there is almost nothing in Government 
worse than to have people do significant work and get almost no credit 
for it. So today, as the Federal Reserve Board once again closets 
itself in its concrete temple, locks its door, goes in the secret room, 
and makes decisions about interest rates that every single American 
will pay, I figured maybe we ought to give credit to those who are 
going to do the work and cast the votes. I do not know what is going to 
be announced in the next couple of hours, but I am told by almost 
everybody who thinks they know that the Federal Reserve Board will 
increase interest rates for the seventh time in less than a year; for 
the seventh time in less than a year they will increase people's 
mortgage rates.
  I met a fellow the other day who said, ``I am paying $115 more now 
for my home mortgage now because of the Fed.'' In the past year, the 
Federal Reserve has increased people's interest rates on credit cards 
and has increased the Federal Government's deficit by $125 billion over 
5 years just to pay the interest on the debt.
  So they take action that has a significant impact on this country. I 
want to tell the American people who they are. Lord, it seems to me if 
you are doing work this important, you at least need to get credit for 
it. Let me tell the American people who is going to do this today. This 
is the Federal Reserve Board on this chart, the top line of pictures. 
These people are all appointed by the President and confirmed by the 
Senate. So they go through the Senate for confirmation. But they are 
joined in that room--which the public is kept out of, by the way--by 
presidents of the Federal Reserve banks in the country, the regional 
Federal banks.
  These people are not appointed by the President. They are not 
confirmed by the Senate. But they are going to go into the room on a 
rotating basis. There will be five of them in that room today who will 
actually cast votes on monetary policy and interest rates. They are not 
appointed by anybody, not confirmed by anybody. They owe their jobs to 
the regional Federal Reserve bank boards of directors, the majority of 
whom are their local bankers. These folks will go into the room 
representing the local bankers' interests. They will take action to 
increase interest rates for this country.
  The four, today, who will vote--it is a rotating vote--are Mr. 
McDonough from New York, Kathy Minehan from Boston, Michael Moskow from 
Chicago, Tom Melzer from St. Louis, and Tom Hoenig from Kansas City. 
They will, with the Board of Governors, cast votes.
  Let me, without being disrespectful, say this--and I emphasize that I 
am not being disrespectful. I do not have any idea what is in their 
heads down at the Federal Reserve Board. I would like to have those 
heads examined to find out what facts are rattling around in those 
heads that persuade these people that there is a new wave of inflation 
somewhere on the horizon. What persuades them to put the brakes on the 
American economy? Who has appointed them to become human brake pads to 
decide to slow down the American economy? And whose divine notion is it 
that unemployment in America should never fall below 5 percent, and 
economic growth should apparently never go above 2\1/2\, 3 percent. 
Where on Earth did these notions come from?
  If this country faced credible inflation problems, I would not be 
here at all criticizing the Federal Reserve Board. We have had four 
successive years of decreasing inflation. There is no--I emphasize no--
credible evidence that we have a new wave of inflation on the horizon. 
Yet, today, and again, if the pundits are correct, the Federal Reserve 
Board will take one more step that most surely will put the brakes on 
the economic progress we have seen and probably move this country 
toward a recession.
  This is not a newfound concern of mine. The Federal Reserve Board 
operates by itself, in secret, and no, I am not saying let us put 
politics in monetary policy. I am not saying give to it the Senator 
from Utah to handle or the Senator from North Dakota or my colleagues 
in the Senate or the House. But here is a copy of the Constitution. The 
copy of the Constitution begins with these three words: ``We the 
people''--not we the bankers, the central bankers or we the Federal 
Reserve, but ``We the people.'' A question this important, that affects 
economic growth in this country and the pocketbook of every single 
American, and especially coming at a time when all of the credible 
evidence would seem to me to imply that the Fed's policies are wrong, 
leads me again to ask the question: Why does this continue? By whose 
authority does this continue?
  I hope one day soon that we will discover a Federal Reserve Board 
that understands that you have two twin economic goals in America. Yes, 
two: price stability, absolutely, which has been a goal in this country 
for decades. Price stability and full employment. Price stability and 
economic growth are the twin economic goals in this country, only one 
of which this board cares much about. And even at that, when it cares 
about price stability, it fights the wrong fight at the wrong time.
  I have young children who look for dragons under their bed at night 
because they hear noises and they wonder where does it come from, where 
does it lurk? Then they read books like Tony the Dragon. When you look 
at all of the credible evidence, where are the dragons this board looks 
for? What fights does the Fed wage, that it wins because it has no 
opponent?
  I hope one of these days the American people will get better news 
from that Federal agency, that dinosaur that still operates in secret 
when the watchword of American democracy is ``openness.'' Maybe one day 
there will be enough of us here who care and enough of us here who 
think alike to believe that reform--yes, reform--ought to touch this 
institution as well.

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