[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.
____________________