[Congressional Record Volume 162, Number 7 (Tuesday, January 12, 2016)]
[Senate]
[Pages S46-S50]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   FEDERAL RESERVE TRANSPARENCY BILL

  Mr. TOOMEY. Mr. President, I rise this morning to speak about the 
legislation we will be considering this afternoon. Specifically, my 
understanding is we will be voting on a procedural measure which will 
allow us to take up legislation that is commonly known as auditing the 
Fed. I want to address that.
  Let me start with the context that I think is important to think 
about when we consider whether we ought to even modestly change the 
relationship that exists between Congress and the Fed. It starts for me 
with the simple observation that the financial crisis of 2008 is over. 
It actually ended a long time ago. It has been a number of years now 
that our financial system and our economy has not been in the imminent-
crisis-meltdown mode that it was in the fall of 2008. In fact, for 
several years now we have had meager but some economic growth. Our 
banking system has been massively recapitalized. There is no current or 
imminent wave of bankruptcies in really any segment of the economy.
  Yet despite the fact that we are clearly not in a financial or 
economic crisis, we have crisis-era monetary policy, policy from the 
Fed that one would expect to occur--presumably--only in a crisis. The 
recent very modest change in Fed policy, the movement in the Fed funds 
rate from a target of zero to 25 basis points to 25 to 50 basis points 
is arguably the most modest tightening in Fed history. You couldn't 
even begin to suggest that this is a tightening of monetary policy. 
This is just a very slightly less easy money policy. That is what we 
have.
  So in my view there are huge dangers and problems that are associated 
with the Fed pursuing this completely unprecedented and, I would say, 
radical experiment in monetary policy. I wish to talk about a few of 
those this morning.
  One of the first and clearest problems is because the Fed has kept 
interest rates so low for so long, the Fed has caused a big 
misallocation of resources. This undoubtedly caused asset bubbles that 
are existing today that would not have occurred had it not been for the 
abnormal monetary policy. For instance, take sovereign debt markets. In 
many cases--especially in Europe--we have debt issued by governments 
and the return on those instruments is negative. In other words it 
doesn't cost the government money to borrow money, which is abnormal. 
You have to pay interest to borrow money normally. In fact, the 
government gets paid to borrow money, which is ridiculous and it is 
extremely abnormal. It has happened in the United States, not at the 
moment but in recent history. As a result of this Fed policy, we have 
had the bizarre world of negative interest rates. That is just one 
category that has clearly been in the bubble.
  Most observers believe that the high-yield market, the junk bond 
market, was in a bubble. That has gone through a very turbulent time 
and a big selloff--arguably, some of the years coming out of that 
bubble, but who knows. There has been considerable speculation that 
there are real estate bubbles, other financial assets. This is 
inevitable when the Fed distorts monetary policy, and it is a 
disturbing echo of the distortion that occurred back in the early part 
of the very beginning of this century, when the Fed's extremely low 
monetary policy of very low interest rates contributed to a housing 
bubble which of course ended up collapsing in the financial crisis, but 
that is just one category of problems the Fed causes with these ultra-
low interest rates.
  Of course, the second is the corollary that people who have saved 
money and want to invest in a low-risk investment are completely denied 
an opportunity to get a return. The savers are forced to--the 
expression is--reach for yield, which is to say: Take your money out of 
the bank and buy something else because you are earning nothing with 
the bank.
  Well, you know what, for a lot of people a savings account at the 
bank is appropriate for their circumstances, for their risk tolerance, 
but they are driven away from that because bank deposits yield pretty 
much zero.
  Consider the case of an elderly couple who lives in Allentown, PA. 
They worked their whole lives, saved whenever they could, sacrificed, 
chose not to squander their money, and they lived modestly rather than 
lavishly. They did it in the expectation that when they retired, this 
nest egg that they had worked decades to build, this savings account at 
the bank, was going to yield a little bit of income to help them make 
ends meet in their retirement, to help supplement whatever Social 
Security and whatever pension they might have.
  What we have done to those folks--and they are all over America--who 
have spent a lifetime living prudently, carefully, sacrificing savings, 
we have said: Well, you made a huge mistake because the government is 
making sure you earn nothing on those savings.
  Joseph Stiglitz is a very respected economist. His research has 
demonstrated that this zero interest rate and quantitative easing--as 
it is described, this Fed monetary policy--has contributed 
significantly to expanding income and wealth inequality. It is not a 
surprise.
  This Fed policy has been very good for stocks. Stock prices have gone 
up, generally. It has been terrible for people with a bank account. 
While wealthy people have a lot of money in stocks, people of much more 
modest means tend to have more of their money sitting in a savings 
account which, as I have just described, earned zero. So the income 
inequality problem is exacerbated.
  In addition, what the Fed has been doing is encouraging fiscal 
irresponsibility in Washington. What the heck, borrowing is free, which 
it basically has been for the Federal Government. Why not run big 
deficits and borrow lots of money? That is an attitude that some people 
have. It frankly diminishes the pressure on Congress to pursue sensible 
and responsible monetary policy. When the Fed is willing to just buy up 
all the debt and buy it at an extremely low interest rate, it 
encourages irresponsible behavior.
  Now, of course, because the Federal Government has accumulated this 
$18 trillion mountain of debt, if and when interest rates return to 
something like normal--which one day they will, whether the Fed likes 
it or not--then that is a devastating problem for our budget outlook.
  So all of this is particularly disturbing to me when you consider 
that this massive creation of money, this flooding the world with 
dollars that the Fed has engaged in, does not create wealth. It is the 
difference between money and wealth.
  So some people might feel wealthier when they see stock prices rise 
if they have stocks, but that can be a very artificial phenomenon. It 
is an inflation in asset prices. It is not an improvement in 
productivity. It is not an expansion in our economic output. It is not 
actual wealth. It is numbers on a piece of paper.
  Of course, what the Fed is able to inflate in this artificial means 
by creating lots of money, well, that can eventually deflate. Whatever 
good they think they were accomplishing on the way up, why should we 
think we couldn't see the reverse on the way back down? This is what I 
think is the fundamental problem. The fact is, we have factors that are 
holding back our economy that are very real and very important, and the 
Fed's monetary policy can't correct that.
  We have a Tax Code that is completely uncompetitive. It discourages 
work. It discourages savings. It discourages investment. It makes us 
less competitive in countries around the

[[Page S47]]

world that have more sensible tax codes than we have. We need to fix 
the Tax Code. Monetary policy cannot make up for a badly flawed Tax 
Code.
  We have unsustainable entitlement programs. They are the ultimate 
drivers of large and growing deficits, and we will not be on a 
sustainable path until we fix these programs, and monetary policy can't 
make up for the cloud they cast over our economy. We have a declining 
percentage of Americans who are participating in the workforce. This is 
a huge problem for us. Again, monetary policy does nothing about that.
  Finally, we have been overregulating this economy on a completely 
unprecedented scale. The massive wave of overregulation that this 
administration, and on some occasions Congress, has inflicted on our 
economy clearly contributes a great deal to the subpar economic growth 
we have been living through. Again, monetary policy doesn't reverse 
that. It doesn't change that. It seems to me that, despite all their 
good intentions, their intentions themselves were flawed in that the 
Fed seems to be trying to compensate for the flawed policy in these 
other areas.

  Given the magnitude, the persistence, and the dangers of pursuing 
this kind of monetary policy, I think it is time that Congress reassert 
its authority over monetary affairs. The Constitution clearly gives 
Congress the responsibility to mint coins and to print money. In 1914, 
Congress delegated the management of our currency to the Fed. For a 
long time there was a sense that we ought to just leave them to their 
own devices and not pay very much attention. I think those days are 
past. I think the Fed's behavior obligates us to take a different 
approach.
  One good beginning step is the legislation we are considering today, 
which would audit the Fed. All it really does is give Congress and the 
American people the opportunity to examine and understand the mechanics 
and the thinking behind changes in monetary policy in something close 
to real time. I think we absolutely need that. I will say that I was a 
skeptic about this for a long time. I thought: I am not so sure it is 
such a good idea to have Congress looking over the shoulders of the 
folks making monetary policy. But I think the dangerous behavior that 
the Fed has engaged in for years now means they have squandered the 
right to be independent. We need to have more supervision.
  A next step which I think would be very important is for Congress to 
require the Fed to adopt a rule that would govern monetary policy. If 
we let the Fed decide what that rule should be and if circumstances 
require it, in the opinion of the Fed, they ought to be able to deviate 
from that rule. But they should come and explain to the American people 
and to Congress when and why they are deviating, rather than have year 
after year of this bizarre, unnatural policy that is very hard to 
explain and understand.
  So I am going to support the legislation we are considering this 
afternoon, the audit the fed bill. It is one of many important steps we 
can take to restore the accountability that the Fed ought to have. It 
is important that we get on a different path with our monetary policy. 
I understand it is not going to occur overnight, and it is not going to 
occur entirely as a result of this legislation. But this policy has 
been going on too long, and it is time for Congress to reassert its 
authority.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. HELLER. Mr. President, I come to the floor today to offer my 
strong support for the legislation we are debating today that would 
finally audit the Federal Reserve.
  Since I came to Congress, I have supported auditing the Fed. When I 
was first elected to the House of Representatives, I would attend 
briefings hosted by Congressman Ron Paul, Senator Paul's father, and I 
learned why more accountability and transparency was needed at the Fed.
  I remember talking to Congressman Paul on the House floor about 
various issues at the Fed, and that is when I started to support this 
bill to audit the Fed, just as I am supporting his son's bill today. I 
thank Senator Paul for continuing to take up this cause and for 
building the momentum to audit the Fed that has led us to where we are 
today.
  Since its founding, the Federal Reserve has often operated in 
secrecy, even though it is the biggest influence on our country's 
economy. The Fed's actions affect every American family and their hard-
earned income. I am fortunate to be chairman of the Economic Policy 
Subcommittee on the Senate banking committee, where I have direct 
oversight over the Federal Reserve's monetary policies. I can say that 
the Federal Reserve's actions warrant passage of this legislation. For 
several years we have seen unprecedented monetary and regulatory 
policies come from the Fed. One of the riskiest policies I have ever 
seen is the Fed's stimulus program of quantitative easing. The Federal 
Reserve essentially turned on their computers, fired up their 
electronic printing presses, created new money out of thin air, and 
started to buy assets.
  Now, we may ask ourselves this: How big is this stimulus program? It 
is an unbelievable number. As of today, it is nearly $4.5 trillion. Let 
me say that again: $4.5 trillion. And that is with a ``t.'' That is 
more than four times the cost of President Obama's own failed stimulus 
program. And who has benefited from this quantitative easing? I can 
tell you in two words: It is Wall Street. That is right. Wall Street 
hit the jackpot because the Fed's easy money policies drove everybody 
into the equities market to get any return they possibly could on their 
investments. Wall Street won, and Main Street, savers, and workers 
lost.
  The scary part is the Fed won't rule out buying more assets in the 
future. If we ask the Fed today when or how they would begin to reduce 
their $4.5 trillion balance sheet, there is nothing but silence. Is 
that being transparent? Is that accountability? No, absolutely not. 
This is just one of the reasons why we must pass this bill to audit the 
Fed.
  I find it ironic that the Federal Reserve is so opposed to being 
audited, because they themselves go around auditing lending 
institutions all the time. I frequently hear from community lenders in 
Nevada who have either the Federal Reserve, the FDIC, the National 
Credit Union Administration or the Consumer Financial Protection Bureau 
knocking on their door all the time. These community lenders have not 
caused the financial crisis, yet they are the ones feeling the brunt of 
all these audits. Why should there be a double standard that government 
agencies can examine every American's bank account but the American 
public can't examine those same agencies back? Again, this is why we 
must pass this legislation to audit the Fed.
  I remind my colleagues that even though most of the news about the 
Fed revolves around interest rates and the Fed's monetary policy, the 
Fed is also responsible for major regulations that touch on almost 
every aspect of our financial system. Now, I support reasonable 
regulations, but only after thoughtful and careful evaluations. I think 
it should be mandated that the Fed conduct a cost-benefit analysis of 
all their proposed regulations and always allow for public comment on 
proposed regulations.
  I am also very concerned that the Fed is getting involved in 
financial sectors in which they have not been in the past. We have a 
long tradition here in the United States of having a time-tested and 
effective State-based insurance regulatory system. Unfortunately, Dodd-
Frank has changed all that, and now the Federal Reserve has new 
authorities over the insurance sector.
  Right now, as we speak, the Fed is attempting to regulate capital 
standard requirements for insurance companies in the United States. 
This will be the first time the Federal Government imposes domestic 
Federal capital standards on the State-regulated insurance industry.
  I worked very hard to ensure bank-centric standards are not 
inappropriately applied to the insurance industry by the Fed. But not 
only does the Fed want to add their own domestic layer of rules on top 
of State-based insurance regulations, they even want another layer of 
one-size-fits-all international capital standards on top of that. I 
almost have to laugh, because it is only in Washington, DC, where a 
Federal agency can put the trailer in front of the truck.
  Unfortunately, that is exactly what the Fed is doing by working on 
international capital standards before they

[[Page S48]]

complete their own domestic standards. I have serious concerns about 
these international efforts. Together with Senator Tester of Montana, 
we introduced the bipartisan International Insurance Capital Standards 
Accountability Act, which would compel the Federal Reserve and the 
Treasury Department to complete a study on consumers and markets in the 
United States before supporting any international insurance proposal or 
international insurance capital standard.
  These are just a few of the examples of some of the Fed's 
questionable actions. As I said earlier, this legislation to audit the 
Fed is critical to bring transparency and accountability to the Fed, 
but even more fundamental changes need to be made.
  A few months ago, Chairman Shelby put together an impressive bill 
that the Senate Banking, Housing, and Urban Affairs Committee passed 
with my support, which would make important reforms to the Fed. One 
provision would establish a commission to study the potential 
restructuring of the districts in the Federal Reserve System. Chairman 
Shelby's bill would also require the Fed's Federal Open Market 
Committee to make more frequent and detailed reporting requirements to 
Congress and to increase transparency by reducing the time lag for 
Federal Open Market Committee transcripts from 5 years to 3 years. 
These are very reasonable changes that I think Democrats and 
Republicans alike can support, and I hope that Chairman Shelby's bill 
will be brought to the Senate floor soon.
  The Federal Reserve recently celebrated its 100th anniversary, and in 
many aspects the Fed has not changed much since Woodrow Wilson's time. 
As most of us know, a few months ago we cut a very specific dividend 
that banks receive for buying stock of the Federal Reserve System in 
order to pay for the highway bill. While the debate mostly centered on 
how to cut the dividend, I was trying to figure out why the Federal 
Reserve requires banks to buy these so-called stocks to begin with. 
After all, it doesn't look like the Fed is in desperate need of funds, 
because over the past half dozen years the Fed has sent nearly half a 
trillion dollars of profits to the U.S. Treasury.
  One hundred years ago, these stock purchases and dividends were meant 
to incentivize banks to join the Federal Reserve System. Since that 
time, laws have been passed that essentially don't give a bank the 
choice as to whether or not they want to be supervised by the Federal 
Reserve System because, by law, the Fed has gained authority over all 
banks that are eligible for FDIC insurance. Just because something was 
standard practice over 100 years ago does not mean it is still needed 
today. I think it is time to review and examine these Federal Reserve 
membership requirements even further.
  My colleagues, it is essential that Congress exercise its 
constitutional responsibility to conduct oversight and scrutinize of 
the Federal Reserve in an open and transparent way, which is why I will 
proudly vote today to move forward with auditing the Fed, and I 
encourage my colleagues to join me.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. BROWN. Mr. President, I rise today to speak in opposition to S. 
2232, the Federal Reserve Transparency Act. I am concerned that, out of 
all the issues before the Senate and out of all the issues we need to 
work on--in terms of growth, in terms of ISIS, in terms of wage 
inequality, in terms of transportation, and so many other issues--this 
is the first bill the Senate considers at the beginning of the year.
  I will talk for a moment about the direction in which we should go, 
but I want to talk about this issue. There are so many issues we are 
not talking about--national security, job creation, college 
affordability, student debt, and immigration.
  In my time in Ohio over the past several weeks, people talked to me 
about all kinds of different issues that Congress should be addressing. 
But it, frankly, comes as no surprise to anybody watching or any of my 
colleagues that not one person came up to me and said: ``Congress needs 
a greater say in monetary policy.'' There is no demand for that, except 
from those who want to score political points. There is no reason for 
this. There is no legitimate public function that we should even do 
this legislation, the Federal Reserve Transparency Act. And don't be 
fooled by the name of the bill because it really isn't about 
transparency. It is about the Federal Reserve but not about 
transparency. But let me move on.
  Federal Reserve Chair Janet Yellen recently wrote to Senate leaders, 
copying all of us in the Senate, and spoke to the central problem with 
this legislation:

       This bill risks undoing the steady progress that has been 
     made on the economic recovery over recent years in an 
     environment with low and stable inflation expectations; 
     progress that was made in part because the Federal Reserve is 
     able to make independent decisions in the longer-term 
     economic interest of the American people.
       ``Audit the Fed'' legislation, if enacted, would undermine 
     the independence of the Federal Reserve and likely lead to an 
     increase in inflation fears and market interest rates, a 
     diminished status of the dollar in global financial markets, 
     increased debt service costs for the federal government, and 
     reduced economic and financial stability.

  Janet Yellen is exactly right. This legislation is about 535 Members 
of Congress getting involved in Federal monetary policy. I can't 
imagine that the American people want a Federal Reserve where Congress 
is so involved that it is disruptive and where it becomes so political. 
That is really what this is all about. It is about a handful of Members 
of the House and Senate who want to govern monetary policy in a way so 
that it ultimately won't work in the public interest. It is about their 
political talking points. It is about all of that.

  Let's go back. When President Obama took office--you will hear about 
this in tonight's speech, I assume, down the hall in the House of 
Representatives--our country was losing about 800,000 jobs a month when 
he took office. In February 2010, we did the Recovery Act and the auto 
rescue. Since February 2010, we have seen job growth for about 69, 70, 
71 straight months since the auto rescue. I know what the auto rescue 
meant in my State. I know we see an auto industry that is doing very 
well and we see a lot more people back to work.
  Supporters of auditing the Fed claim they want to make the Fed's 
operations and activities more transparent. We know that is not what 
this is about. In a statement in July, the Senate banking committee 
chairman--the Republican chair of the committee, Richard Shelby, hit 
the nail on the head. Here is what he said:

       A lot of people called for an audit of the Fed for years, 
     but they already audit the Fed for years . . . I don't 
     believe they're just talking about an audit, like you'd audit 
     the books of somebody--they're talking about monetary policy. 
     They're talking about . . . 435 members of the House and 100 
     Senators getting into the day-to-day business of the monetary 
     policy of the Fed. We created the Fed, Congress did, to get 
     politics as far as we could out of it. I don't believe we 
     need politics back in it.

  Chairman Shelby is right. We don't need 535 Members of Congress on 
the Federal Open Market Committee. One of the most important components 
we need for sound monetary decisionmaking policy is political 
independence.
  Senator Paul--the sponsor of this--argues that we need to understand 
the ``extent of the Fed's balance sheet.''
  Congress already requires the Federal Reserve to have its financial 
statements audited every year by an external auditor, someone who is 
outside, independent of all matters relating to the Fed. The Fed 
releases a quarterly report presenting detailed information on the 
Fed's balance sheet and information on the combined financial position 
and results of operations of the Federal Reserve Banks. That report is 
released to Congress. The report is available to the public on the 
Fed's Web site. Anyone can go to federalreserve.gov right now and read 
it.
  Each week the Fed publishes its balance sheet and charts of recent 
balance sheet trends. There are legitimate criticisms of the Federal 
Reserve. There always have been. There probably always will be because 
of its reach and complexity, but since the crisis the Fed has gotten 
better. It has gotten better in part because of the last two Chairs of 
the Federal Reserve--Ben Bernanke, a Bush appointee and then an Obama 
nominee the second time, and with Janet Yellen, an Obama

[[Page S49]]

nominee. Since the crisis, the Government Accountability Office has 
conducted over 100 audits of the Federal Reserve's activities. Many of 
these audits relate to the financial crisis, including the Fed's 
emergency lending activities. There is more and there should be more.
  The Fed is transparent and accountable in the following ways. Let me 
list them again. This is not an out-and-out defense of the Fed. They 
should be open to criticism. There is still much to criticize about 
them, but this legislation solves nothing, except to politicize the 
Fed. These are the ways the Fed is transparent and accountable: The 
Chair of the Federal Reserve is required to testify before the Senate 
Banking Committee and the House Financial Services Committee twice a 
year on monetary policy. In practice, she will testify at additional 
hearings and other topics. The Governors of the Federal Reserve and 
senior staff--that is, others of the nine members of the Federal 
Reserve--testify dozens more times every year.
  The Fed releases a statement after each Federal Open Market Committee 
meeting to describe the FOMC's decisions and the reasoning behind those 
decisions. The Chair holds press conferences four times a year after 
FOMC meetings. Minutes of FOMC meetings are released 3 weeks after each 
meeting and are available on the Federal Reserve's Web site. 
Transcripts of FOMC meetings are released earlier than before--5 years 
after each meeting and are available on the Fed's Web site. That is 
much earlier than most other central banks release transcripts, for 
obvious reasons.
  Summaries of the economic forecasts of FOMC participants, including 
their projections for the most likely path of the Federal funds rate, 
are released quarterly. The Board's Office of the Inspector General 
audits and investigates all of the Fed's Board and Reserve bank 
programs, operations, and functions. These completed audits, 
assessments, and reviews are listed in the Federal Reserve Board's 
annual report.
  The Fed releases detailed transaction-level data on the discount 
window lending and open market operations. This is relatively new. This 
was required by the Dodd-Frank Wall Street reform law. Clearly, 
Congress knew the Fed was not as responsible and open as it should be. 
One of the things we did in Dodd-Frank was this reform. All securities 
that the Fed holds are published on the Federal Reserve Bank of New 
York's Web site.
  The New York Fed, the most important district regional Federal 
Reserve--there are 12 of them, including one in the city I live in, 
Cleveland. The New York Fed is the most important for a number of 
reasons. It publishes an annual report of the system open market 
account that includes a detailed summary of open market operations over 
the year, and it includes balance sheet and income projections. I would 
add, this Chair of the Federal Reserve is more open to the public. This 
Chair of the Federal Reserve is out and about the country, as was her 
predecessor, Chairman Bernanke, and Chair Yellen even more so. She was 
in Cleveland not too long ago last summer making a speech to the City 
Club of Cleveland. Afterward she and I went to visit a large Cleveland 
national manufacturer with a large site in Cleveland so she could see 
the real economy, talk to workers, and see how important manufacturing 
is, especially in the middle of the country, to all things Federal 
Reserve.
  I wonder how many of those claiming the Fed is not transparent have 
actually taken the time to read some of these reports I mentioned--
whether it is the annual report, whether it is some of the audits, 
whether it is some of the transcripts of FOMC, and I wonder if they 
have listened to very many of these hours of testimony from Chair 
Yellen or from Governor Tarullo, Governor Powell or others on the 
Federal Reserve. The Fed is far from perfect. I have been one of its 
major critics in this body, as the ranking Democrat on banking, but I 
argued, for instance, that it should be a stronger regulator of the 
Nation's large bank holding companies. I appreciate what it is doing 
with living wills. I think that is very important. I especially 
appreciate what the Fed has done for stronger capital standards. To me, 
that is the most important thing we can do. It is more important than 
reinstatement of Glass-Steagall, more important than my amendment of 5 
years ago to break up the largest banks, making sure banks have 
significant enough capital to make the system safer and sounder, but it 
is hard to dispute that this Fed is one of the most transparent central 
banks in the world.
  What is this truly all about? I know some of people are unhappy about 
decisions the Federal Reserve made during the financial crisis, 
including holding interest rates near zero for 7 years. They want to 
show their anger at the Fed by taking away independence, but without 
the Fed's extraordinary monetary policy actions, which might not have 
been possible if its actions were micromanaged by Congress, our economy 
would likely be in a far worse situation today.
  Several months ago I was asked by C-SPAN to interview Chairman 
Bernanke on one of its shows called ``After Words.'' We sat for an hour 
at a studio in Washington and discussed the memoir that Chairman 
Bernanke began to write on the day he left the Federal Reserve a couple 
of years ago. It was clear then that because Congress had pursued, in 
terms of fiscal policy, such austerity, he saw the economic growth that 
had started with the auto rescue and the Recovery Act, he saw that 
economic growth--immobilized is perhaps not the right word, but he saw 
that economic growth stall. He knew, because Congress was starting to 
squeeze the economy at that point with the wrong kind of fiscal policy, 
that he had to make up for it by low interest rates and ultimately by 
quantitative easing, which is what he did. So understanding that he 
knew he would offend some Members of Congress with that action, he also 
understood that because he was independent, he could do the kinds of 
things, as Chair Yellen has been able to do, to get this economy 
growing. Hence, in large part because of the auto rescue but in large 
part because of QE that the Federal Reserve has done through the last 
two Chairs of the Federal Reserve--one a Republican appointee and one a 
Democratic appointee--the Fed has been independent enough to do the 
right thing.
  Inflation remains low. We have something called a dual mandate, where 
the Federal Reserve is responsible for working to keep inflation at no 
more than 2 percent and unemployment at no more than 5 percent. The Fed 
has balanced that well. Inflation remains low, despite the doomsday 
prediction by many of this bill's proponents. We know our economy still 
has a way to go and that too many Americans are struggling, but it is 
clear that an increase in interest rates before last month would have 
been premature and would have been harmful to working Americans. If 
Congress were involved in that, in the way that the sponsor of this 
bill seems to want, our economy would be in much worse shape. I don't 
think there is much question about that.
  Audit the Fed legislation, there is also a backdoor, piecemeal way of 
instituting something called the Taylor rule, which is an attempt to 
impose a monetary policy role on the Fed. To me, this is the heart of 
this legislation that when they look at the dual mandate, they think 
way more about inflation, which is what the bondholders of Wall Street 
want them to do, and way less about fiscal policy and way less about 
low interest rates and way less about employment. The dual mandate is 
inflation and employment.
  If you lean far too much toward inflation, which is what Wall Street 
wants, then people on Main Street are left out. Frankly, that has been 
the story of the Fed for far too many years. That is why what Chairman 
Bernanke did and what Chairwoman Yellen have done is so important, but 
if the audit the Fed sponsors have their way, we will see some kind of 
Taylor rule.
  In November, House Republicans passed a Federal Reserve reform bill 
that imposes the Taylor rule. The enforcement mechanism? GAO reviews, 
audits, and reports. Is there any doubt that this is where the audit 
the Fed effort is headed next?
  I urge my colleagues to vote no this afternoon. This vote will take 
place in a couple of hours. It is in the interests of all of us to 
understand the role, the operations, and the activities of the Federal 
Reserve. We can do that better

[[Page S50]]

in this body. This is not the way to do it. We can do it better. It is 
also in the interest of the American economy for Congress to keep its 
political hands, if you will, out of monetary policy decisionmaking.
  If Republicans were serious about making the Fed work better, they 
would confirm the two pending nominees to the Board of Governors--a 
Republican community banker named Al Landon, who has been waiting for a 
nomination hearing for a year, and Kathryn Dominquez, a Democratic 
nominee, who has been waiting for nearly 6 months. Yet, instead of 
working to improve the Fed's operations, we are considering this bill 
to undermine it. It is a big mistake that most people I know who have 
any expertise in the Federal Reserve reject. I ask my colleagues to 
vote no.
  The PRESIDING OFFICER. The Republican whip.

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