[House Report 115-318]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-318
======================================================================
FEDERAL RESERVE TRANSPARENCY ACT OF 2017
_______
September 21, 2017.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Gowdy, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 24]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 24) to require a full audit of the
Board of Governors of the Federal Reserve System and the
Federal reserve banks by the Comptroller General of the United
States, and for other purposes, having considered the same,
report favorably thereon without amendment and recommend that
the bill do pass.
CONTENTS
Page
Committee Statement and Views.................................... 2
Section-by-Section............................................... 4
Committee Consideration.......................................... 5
Roll Call Votes.................................................. 5
Application of Law to the Legislative Branch..................... 5
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 5
Statement of General Performance Goals and Objectives............ 5
Duplication of Federal Programs.................................. 5
Disclosure of Directed Rule Makings.............................. 6
Federal Advisory Committee Act................................... 6
Unfunded Mandates Statement...................................... 6
Earmark Identification........................................... 6
Committee Estimate............................................... 6
Budget Authority and Congressional Budget Office Cost Estimate... 6
Changes in Existing Law Made by the Bill, as Reported............ 8
Minority Views................................................... 19
Committee Statement and Views
Purpose and Summary
H.R. 24 directs the Government Accountability Office (GAO)
to conduct a full audit of the Federal Reserve within a year of
enactment. GAO must also provide a report on this audit to
Congress ninety days after the audit is complete.
Background and Need for Legislation
Congress delegated its power to regulate the supply and
value of money to the Federal Reserve System (the Fed) under
Article I, Section 8, of the Constitution. Compared to other
government agencies, the Federal Reserve System enjoys a unique
degree of independence from Congress and the President.
Generally, economists consider this arrangement to lead to
better policy outcomes.\1\ Over the years, the Fed's quasi-
public structure has created an inherent tension between the
need for oversight and transparency and the need for the Fed to
have operational independence to effectively deliberate on
monetary policy.
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\1\Marc Labonte, Federal Reserve: Oversight and Disclosure Issues,
Mar. 27, 2017, (R42079) Cong. Research Serv., available at https://
fas.org/sgp/crs/misc/R42079.pdf.
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As an instrument of monetary policy, the Fed was designed
to be politically independent. However, this has created
challenges in conducting congressional oversight. For example,
unlike most other government agencies, the Fed is self-
financing and its budget is not subject to the appropriations
or authorization process.\2\ There is no congressional
budgetary oversight of the Fed and no regular process for
Congress to ensure the Fed is properly utilizing its funds.\3\
Unlike other government agencies, under the current system
Congress is unable to use control over the Fed's resources as
leverage to achieve its goals.\4\
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\2\Id.
\3\Id.
\4\Id.
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In 2007, the Fed took several steps in its aggressive
response to the financial crisis that led it to impact more
political policy areas. Specifically, the Fed took ``a
political strategy that emphasized direct involvement and
commitment by the president to an early, large-scale, and
preemptive recapitalization of the financial sector by using
public funds.''\5\ Further, the Fed provided hundreds of
billions of dollars in loans to four select private entities
through quantitative easing and the creation of dollar swap
lines with the European Central Bank.\6\ In the process of
doing so, the Fed expanded its balance sheet from $850 billion
to over $4.4 trillion between September 2008 and September
2014.\7\ The Fed was able to undertake these measures by using
the broad powers in section 13(3) of the Federal Reserve Act to
take these steps without congressional input.\8\ These sweeping
measures had a substantial impact on the economic and fiscal
health of the United States and, as such, led to greater
interest in empowering Congress to conduct more stringent
oversight over the Federal Reserve System.
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\5\Phillip Y. Lipscy and Hirofumi Tankinami, The Politics of
Financial Crisis Response in Japan and the United States, Japanese
Journal of Political Science, Aug. 2013, available at http://
web.stanford.edu/plipscy/LipscyTakinami.pdf.
\6\Norbert J. Michel and Stephen Moore, Quantitative Easing, The
Fed's Balance Sheet, and Central Bank Insolvency, Heritage Foundation
(Aug. 2014), available at http://www.heritage.org/research/reports/
2014/08/quantitative-easing-the-feds-balance-sheet-and-central-bank-
insolvency.
\7\Id.
\8\Marc Labonte, Federal Reserve: Emergency Lending, Jan. 6, 2016,
available at https://fas.org/sgp/crs/misc/R44185.pdf.
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Prior to 1978, GAO only was permitted to audit the Fed's
role as an agent of the Treasury, under their authorization to
audit the Treasury. The GAO has conducted audits of the Fed
since 1978 under the Federal Banking Agency Audit Act of
1978.\9\ Although this law expanded GAO's access to the Fed's
role in banking regulations and payment systems, it
specifically prohibited GAO from investigating the following
four areas of the Fed's operations:\10\
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\9\31 U.S.C. Sec. 714.
\10\Federal Reserve: Oversight and Disclosure Issues, supra note 1.
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1. Transactions for or with a foreign central bank,
government of a foreign country, or non-private
international financing organization;
2. Deliberations, decisions, or actions on monetary
policy matters, including discount window operations,
reserves of member banks, securities credit, interest
on deposits, and open market operations;
3. Transactions made under the direction of the
Federal Open Market Committee; [and]
4. A part of a discussion or communication among or
between members of the [Federal Reserve Board of
Governors] and officers and employees of the Federal
Reserve System related to [the above three areas].\11\
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\11\31 U.S.C. Sec. 714(b).
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H.R. 24 authorizes GAO to audit several types of
transactions that it is currently prohibited from investigating
under current law. Specifically, GAO will be permitted to:
investigate the Fed's transactions with foreign banks and
countries; deliberations, decisions, or actions on monetary
policy matters; transactions made under the direction of the
Federal Open Market Committee; and discussions or
communications among or between members of the Federal Reserve
Board and the Federal Reserve System. H.R. 24 will not
negatively impact the Fed's independence because this GAO
oversight will not ``under current law, release any
confidential information identifying institutions that have
borrowed from the Fed or the details of other
transactions.''\12\
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\12\Federal Reserve: Oversight and Disclosure Issues, supra note 1.
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Legislative History
H.R. 24, the Federal Reserve Transparency Act of 2017, was
introduced on January 3, 2017, by Representative Thomas Massie
(R-KY) and referred to the Committee on Oversight and
Government Reform. On March 28, 2017, the Committee considered
H.R. 24 at a business meeting. The Committee ordered the bill
favorably reported by voice vote.
In the 114th Congress, Representative Massie introduced
H.R. 24, the Federal Reserve Transparency Act of 2015, on
January 6, 2015, and it was referred to the Committee on
Oversight and Government Reform. On May 17, 2016, the Committee
considered H.R. 24 at a business meeting. The Committee ordered
the bill favorably reported, as amended, by voice vote.
In the 113th Congress, Representative Paul Broun (R-GA)
introduced H.R. 24, the Federal Reserve Transparency Act of
2014, on January 3, 2013, which was referred to the Committee
on Oversight and Government Reform and in addition to the
Committee on Financial Services. The Committee on Oversight and
Government Reform considered H.R. 24 at a business meeting on
July 24, 2014. The Committee ordered the bill favorably
reported, as amended, by voice vote. On September 16, 2014, the
Committee on Financial Services discharged the bill. On
September 17, 2014, the House passed H.R. 24 under suspension
of the rules by a vote of 332 to 92.
In the 112th Congress, Representative Ron Paul (R-TX)
introduced H.R. 459, the Federal Reserve Transparency Act of
2012, on January 26, 2011. H.R. 459 was referred to the
Committee on Oversight and Government Reform and in addition to
the Committee on Financial Services. The Committee on Oversight
and Government Reform considered H.R. 459 at a business meeting
on June 27, 2012, and ordered the bill favorably reported, as
amended, by voice vote. On July 18, 2012, the Committee on
Financial Services discharged the bill. On July 25, 2012, the
House passed H.R. 459, as amended, under suspension of the
rules by a vote of 327 to 98.
Section-by-Section
Section 1. Short title
The short title of the bill is the ``Federal Reserve
Transparency Act of 2017.''
Section 2. Audit reform and transparency for the Board of Governors of
the Federal Reserve System
Subsection (a) requires the Comptroller General of the
United States to complete an audit of the Board of Governors of
the Federal Reserve System and the Federal reserve banks within
12 months after the date of enactment.
Subsection (b) requires a report be submitted to Congress
within 90 days of completing the audit and making the report
available to the Speaker of the House, the majority and
minority leaders of the House of Representatives, the majority
and minority leaders of the Senate, the Chairman and the
Ranking Member of the Committee and each subcommittee of
jurisdiction in the House of Representatives and the Senate, as
well as any other Members of Congress who request the report.
Paragraph (2) of subsection (b) requires the report to
include a detailed description of the findings and conclusion
of the Comptroller General with respect to the audit, along
with recommendations for legislative or administrative action
as the Comptroller General may determine to be appropriate.
Subsection (c) amends section 714 of title 31, United
States Code, by striking the second sentence in subsection (b),
which prohibits GAO audits of the Board of Governors of the
Federal Reserve System and Federal reserve banks from
including:
1. Transactions for or with a foreign central bank,
government of a foreign country, or non-private
international financing organization;
2. Deliberations, decisions, or actions on monetary
policy matters, including discount window operations,
reserves of member banks, securities credit, interest
on deposits, and open market operations;
3. Transactions made under the direction of the
Federal Open Market Committee; and
4. A part of a discussion or communication among or
between members of the Board and officers and employees
of the Federal Reserve System related to the above
items.
Subsection (d) makes various technical and conforming
amendments to section 714 of title 31, United States Code.
Committee Consideration
On March 28, 2017, the Committee met in open session and
ordered reported favorably the bill, H.R. 24, by voice vote, a
quorum being present.
Roll Call Votes
There were no roll call votes during Full Committee
consideration of H.R. 24.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to the terms and conditions of
employment or access to public services and accommodations.
This bill requires a full audit of the Board of Governors of
the Federal Reserve System and the Federal Reserve banks by the
Comptroller General of the United States. As such, this bill
does not relate to employment or access to public services and
accommodations.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goal or objective of this bill is to improve congressional
oversight of the Federal Reserve System without impacting
operational independence.
Duplication of Federal Programs
No provision of this bill establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that enacting this bill does not
direct the completion of any specific rule makings within the
meaning of section 551 or title 5, United States Code.
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of Section 5(b) of the appendix to title 5,
United States Code.
Unfunded Mandates Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement as to
whether the provisions of the reported include unfunded
mandates. In compliance with this requirement, the Committee
has included below a letter received from the Congressional
Budget Office.
Earmark Identification
This bill does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Committee Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
this bill. However, clause 3(d)(2)(B) of that Rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974, which the Committee has included below.
Budget Authority and Congressional Budget Office Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following cost estimate for this bill from the Director of
the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 18, 2017.
Hon. Jason Chaffetz,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 24, the Federal
Reserve Transparency Act of 2017.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Nathaniel
Frentz.
Sincerely,
Keith Hall.
Enclosure.
H.R. 24--Federal Reserve Transparency Act of 2017
H.R. 24 would amend federal law regarding audits of the
Federal Reserve System. Specifically, the bill would direct the
Government Accountability Office (GAO) to prepare, within 12
months of enactment, an audit of the Board of Governors of the
Federal Reserve System and the Federal Reserve banks. The bill
would also repeal prohibitions under current law that prevent
GAO from auditing the Federal Reserve's monetary policy and any
of the Federal Reserve's transactions involving a foreign
central bank, the government of a foreign country, or a
nonprivate international financing organization. CBO expects
that the removal of those prohibitions would result in future
requests from Members of Congress for GAO to conduct additional
oversight and analysis of the Federal Reserve System on a
periodic basis.
Based on an analysis of information from GAO regarding the
amount of effort required for its previous audit of the Federal
Reserve, which was required by the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Public Law 111-203), CBO
estimates that implementing H.R. 24 would cost $6 million over
the 2018-2022 period; such spending would be subject to the
availability of appropriated funds. That cost would cover full-
time and part-time GAO employees plus administrative expenses
necessary to prepare the audit required by the bill as well as
additional oversight and analysis that CBO expects would result
from implementing the bill.
In addition, based on information provided by the Federal
Reserve and on information provided by GAO regarding the likely
costs of similar proposals aimed at oversight of the Federal
Reserve, CBO estimates that enacting H.R. 24 would increase
costs of the Federal Reserve starting in 2018, and thus
decrease federal revenues by $3 million over the 2018-2027
period. That estimate of revenue reductions reflects higher
costs of the Federal Reserve System associated with
coordination of the initial audit and future oversight and
analysis by GAO. Because enacting H.R. 24 would affect
revenues, pay-as-you-go procedures apply. CBO estimates that
enacting H.R. 24 would not affect direct spending.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending or revenues. The net changes in revenues that
are subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 24, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM ON MARCH 28, 2017
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By fiscal year, in millions of dollars--
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2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017-2022 2017-2027
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NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Impact....................... 0 1 0 0 0 0 0 0 0 0 0 2 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.
CBO estimates that enacting the legislation would not
increase net direct spending or on-budget deficits by more than
$5 billion in any of the four consecutive 10-year periods
beginning in 2028.
H.R. 24 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for the estimate is Nathaniel Frentz.
The estimate was approved by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis, and John McClelland,
Assistant Director for Tax Analysis.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
TITLE 31, UNITED STATES CODE
* * * * * * *
SUBTITLE I--GENERAL
* * * * * * *
CHAPTER 7--GOVERNMENT ACCOUNTABILITY OFFICE
* * * * * * *
SUBCHAPTER II--GENERAL DUTIES AND POWERS
* * * * * * *
Sec. 714. Audit of Financial Institutions Examination Council, Federal
Reserve Board, Federal reserve banks, Federal
Deposit Insurance Corporation, and Office of
Comptroller of the Currency
(a) In this section, ``agency'' means the Financial
Institutions Examination Council, the Board of Governors of the
Federal Reserve System (in this section referred to as the
``Board''), Federal reserve banks, the Federal Deposit
Insurance Corporation, and the Office of the Comptroller of the
Currency.
(b) Under regulations of the Comptroller General, the
Comptroller General shall audit an agency, but may carry out an
onsite examination of an open insured bank or bank holding
company only if the appropriate agency has consented in
writing. [Audits of the Board and Federal reserve banks may not
include--]
[(1) transactions for or with a foreign central bank,
government of a foreign country, or nonprivate
international financing organization;
[(2) deliberations, decisions, or actions on monetary
policy matters, including discount window operations,
reserves of member banks, securities credit, interest
on deposits, and open market operations;
[(3) transactions made under the direction of the
Federal Open Market Committee; or
[(4) a part of a discussion or communication among or
between members of the Board and officers and employees
of the Federal Reserve System related to clauses (1)-
(3) of this subsection.]
(c)(1) Except as provided in this subsection, an officer or
employee of the Government Accountability Office may not
disclose information identifying an open bank, an open bank
holding company, or a customer of an open or closed bank or
bank holding company. The Comptroller General may disclose
information related to the affairs of a closed bank or closed
bank holding company identifying a customer of the closed bank
or closed bank holding company only if the Comptroller General
believes the customer had a controlling influence in the
management of the closed bank or closed bank holding company or
was related to or affiliated with a person or group having a
controlling influence.
(2) An officer or employee of the Office may discuss a
customer, bank, or bank holding company with an official of an
agency and may report an apparent criminal violation to an
appropriate law enforcement authority of the United States
Government or a State.
(3) Except as provided under paragraph (4), an officer or
employee of the Government Accountability Office may not
disclose to any person outside the Government Accountability
Office information obtained in audits or examinations conducted
under subsection (e) and maintained as confidential by the
Board or the Federal reserve banks.
(4) This subsection shall not--
(A) authorize an officer or employee of an agency to
withhold information from any committee or subcommittee
of jurisdiction of Congress, or any member of such
committee or subcommittee; or
(B) limit any disclosure by the Government
Accountability Office to any committee or subcommittee
of jurisdiction of Congress, or any member of such
committee or subcommittee.
(d)(1) To carry out this section, all records and property of
or used by an agency, including samples of reports of
examinations of a bank or bank holding company the Comptroller
General considers statistically meaningful and workpapers and
correspondence related to the reports shall be made available
to the Comptroller General. The Comptroller General shall have
access to the officers, employees, contractors, and other
agents and representatives of an agency and any entity
established by an agency at any reasonable time as the
Comptroller General may request. The Comptroller General may
make and retain copies of such books, accounts, and other
records as the Comptroller General determines appropriate. The
Comptroller General shall give an agency a current list of
officers and employees to whom, with proper identification,
records and property may be made available, and who may make
notes or copies necessary to carry out an audit.
(2) The Comptroller General shall prevent unauthorized access
to records, copies of any record, or property of or used by an
agency or any person or entity described in paragraph (3)(A)
that the Comptroller General obtains during an audit.
(3)(A) For purposes of conducting audits and examinations
under subsection (e) [or (f)], the Comptroller General shall
have access, upon request, to any information, data, schedules,
books, accounts, financial records, reports, files, electronic
communications, or other papers, things or property belonging
to or in use by--
(i) any entity established by any action taken by the
Board or the Federal Reserve banks described under
subsection (e) [or (f)];
(ii) any entity participating in or receiving
assistance from any action taken by the Board or the
Federal Reserve banks described under subsection (e)
[or (f)], to the extent that the access and request
relates to that assistance; and
(iii) the officers, directors, employees, independent
public accountants, financial advisors and any and all
representatives of any entity described under clause
(i) or (ii); to the extent that the access and request
relates to that assistance;
(B) The Comptroller General shall have access as provided
under subparagraph (A) at such time as the Comptroller General
may request. The Comptroller General may make and retain copies
of books, accounts, and other records provided under
subparagraph (A) as the Comptroller General deems appropriate.
The Comptroller General shall provide to any person or entity
described in subparagraph (A) a current list of officers and
employees to whom, with proper identification, records and
property may be made available, and who may make notes or
copies necessary to carry out a audit or examination under this
subsection.
(C) Each contract, term sheet, or other agreement between the
Board or any Federal reserve bank (or any entity established by
the Board or any Federal reserve bank) and an entity receiving
assistance from any action taken by the Board described under
subsection (e) [or (f)] shall provide for access by the
Comptroller General in accordance with this paragraph.
(e) Notwithstanding subsection (b), the Comptroller General
may conduct audits, including onsite examinations when the
Comptroller General determines such audits and examinations are
appropriate, of any action taken by the Board under [the third
undesignated paragraph of section 13] section 13(3) of the
Federal Reserve Act (12 U.S.C. 343); with respect to a single
and specific partnership or corporation.
[(f) Audits of Credit Facilities of the Federal Reserve
System.--
[(1) Definitions.--In this subsection, the following
definitions shall apply:
[(A) Credit facility.--The term ``credit
facility'' means a program or facility,
including any special purpose vehicle or other
entity established by or on behalf of the Board
of Governors of the Federal Reserve System or a
Federal reserve bank, authorized by the Board
of Governors under section 13(3) of the Federal
Reserve Act (12 U.S.C. 343), that is not
subject to audit under subsection (e).
[(B) Covered transaction.--The term ``covered
transaction'' means any open market transaction
or discount window advance that meets the
definition of ``covered transaction'' in
section 11(s) of the Federal Reserve Act.
[(2) Authority for audits and examinations.--Subject
to paragraph (3), and notwithstanding any limitation in
subsection (b) on the auditing and oversight of certain
functions of the Board of Governors of the Federal
Reserve System or any Federal reserve bank, the
Comptroller General of the United States may conduct
audits, including onsite examinations, of the Board of
Governors, a Federal reserve bank, or a credit
facility, if the Comptroller General determines that
such audits are appropriate, solely for the purposes of
assessing, with respect to a credit facility or a
covered transaction--
[(A) the operational integrity, accounting,
financial reporting, and internal controls
governing the credit facility or covered
transaction;
[(B) the effectiveness of the security and
collateral policies established for the
facility or covered transaction in mitigating
risk to the relevant Federal reserve bank and
taxpayers;
[(C) whether the credit facility or the
conduct of a covered transaction
inappropriately favors one or more specific
participants over other institutions eligible
to utilize the facility; and
[(D) the policies governing the use,
selection, or payment of third-party
contractors by or for any credit facility or to
conduct any covered transaction.
[(3) Reports and delayed disclosure.--
[(A) Reports required.--A report on each
audit conducted under paragraph (2) shall be
submitted by the Comptroller General to the
Congress before the end of the 90-day period
beginning on the date on which such audit is
completed.
[(B) Contents.--The report under subparagraph
(A) shall include a detailed description of the
findings and conclusions of the Comptroller
General with respect to the matters described
in paragraph (2) that were audited and are the
subject of the report, together with such
recommendations for legislative or
administrative action relating to such matters
as the Comptroller General may determine to be
appropriate.
[(C) Delayed release of certain
information.--
[(i) In general.--The Comptroller
General shall not disclose to any
person or entity, including to
Congress, the names or identifying
details of specific participants in any
credit facility or covered transaction,
the amounts borrowed by or transferred
by or to specific participants in any
credit facility or covered transaction,
or identifying details regarding assets
or collateral held or transferred by,
under, or in connection with any credit
facility or covered transaction, and
any report provided under subparagraph
(A) shall be redacted to ensure that
such names and details are not
disclosed.
[(ii) Delayed release.--The
nondisclosure obligation under clause
(i) shall expire with respect to any
participant on the date on which the
Board of Governors, directly or through
a Federal reserve bank, publicly
discloses the identity of the subject
participant or the identifying details
of the subject assets, collateral, or
transaction.
[(iii) General release.--The
Comptroller General shall release a
nonredacted version of any report on a
credit facility 1 year after the
effective date of the termination by
the Board of Governors of the
authorization for the credit facility.
For purposes of this clause, a credit
facility shall be deemed to have
terminated 24 months after the date on
which the credit facility ceases to
make extensions of credit and loans,
unless the credit facility is otherwise
terminated by the Board of Governors.
[(iv) Exceptions.--The nondisclosure
obligation under clause (i) shall not
apply to the credit facilities Maiden
Lane, Maiden Lane II, and Maiden Lane
III.
[(v) Release of covered transaction
information.--The Comptroller General
shall release a nonredacted version of
any report regarding covered
transactions upon the release of the
information regarding such covered
transactions by the Board of Governors
of the Federal Reserve System, as
provided in section 11(s) of the
Federal Reserve Act.]
* * * * * * *
----------
FEDERAL RESERVE ACT
* * * * * * *
Sec. 11. The Board of Governors of the Federal Reserve System
shall be authorized and empowered:
(a)(1) To examine at its discretion the accounts, books and
affairs of each Federal reserve bank and of each member bank
and to require such statements and reports as it may deem
necessary. The said board shall publish once each week a
statement showing the condition of each Federal reserve bank
and a consolidated statement for all Federal reserve banks.
Such statements shall show in detail the assets and liabilities
of the Federal reserve banks, single and combined, and shall
furnish full information regarding the character of the money
held as reserve and the amount, nature and maturities of the
paper and other investments owned or held by Federal reserve
banks.
(2) To require any depository institution specified in this
paragraph to make, at such intervals as the Board may
prescribe, such reports of its liabilities and assets as the
Board may determine to be necessary or desirable to enable the
Board to discharge its responsibility to monitor and control
monetary and credit aggregates. Such reports shall be made (A)
directly to the Board in the case of member banks and in the
case of other depository institutions whose reserve
requirements under section 19 of this Act exceed zero, and (B)
for all other reports to the Board through the (i) Federal
Deposit Insurance Corporation in the case of insured State
savings associations that are insured depository institutions
(as defined in section 3 of the Federal Deposit Insurance Act),
State nonmember banks, savings banks, and mutual savings banks,
(ii) National Credit Union Administration Board in the case of
insured credit unions, (iii) the Comptroller of the Currency in
the case of any Federal savings association which is an insured
depository institution (as defined in section 3 of the Federal
Deposit Insurance Act) or which is a member as defined in
section 2 of the Federal Home Loan Bank Act, and (iv) such
State officer or agency as the Board may designate in the case
of any other type of bank, savings association, or credit
union. The Board shall endeavor to avoid the imposition of
unnecessary burdens on reporting institutions and the
duplication of other reporting requirements. Except as
otherwise required by law, any data provided to any department,
agency, or instrumentality of the United States pursuant to
other reporting requirements shall be made available to the
Board. The Board may classify depository institutions for the
purposes of this paragraph and may impose different
requirements on each such class.
(b) To permit, or, on the affirmative vote of at least five
members of the Board of Governors of the Federal Reserve System
to require Federal reserve banks to rediscount the discounted
paper of other Federal reserve banks at rates of interest to be
fixed by the Board of Governors of the Federal Reserve System.
(c) To suspend for a period not exceeding thirty days, and
from time to time to renew such suspension for periods not
exceeding fifteen days, any reserve requirements specified in
this Act.
(d) To supervise and regulate through the Secretary of the
Treasury the issue and retirement of Federal reserve notes,
except for the cancellation and destruction, and accounting
with respect to such cancellation and destruction, of notes
unfit for circulation, and to prescribe rules and regulations
under which such notes may be delivered by the Secretary of the
Treasury to the Federal reserve agents applying therefor.
(e) To add to the number of cities classified as Reserve
cities under existing law in which national banking
associations are subject to the Reserve requirements set forth
in section twenty of this Act; or to reclassify existing
Reserve cities or to terminate their designation as such.
(f) To suspend or remove any officer or director of any
Federal reserve bank, the cause of such removal to be forthwith
communicated in writing by the Board of Governors of the
Federal Reserve System to the removed officer or director and
to said bank.
(g) To require the writing off of doubtful or worthless
assets upon the books and balance sheets of Federal reserve
banks.
(h) To suspend, for the violation of any of the provisions of
this Act, the operations of any Federal reserve bank, to take
possession thereof, administer the same during the period of
suspension, and, when deemed advisable, to liquidate or
reorganize such bank.
(i) To require bonds of Federal reserve agents, to make
regulations for the safeguarding of all collateral, bonds,
Federal reserve notes, money or property of any kind deposited
in the hands of such agents, and said board shall perform the
duties, functions, or services specified in this Act, and make
all rules and regulations necessary to enable said board
effectively to perform the same.
(j) To exercise general supervision over said Federal reserve
banks.
(k) To delegate, by published order or rule and subject to
the Administrative Procedure Act, any of its functions, other
than those relating to rulemaking or pertaining principally to
monetary and credit policies, to one or more administrative law
judges, members or employees of the Board, or Federal Reserve
banks. The assignment of responsibility for the performance of
any function that the Board determines to delegate shall be a
function of the Chairman. The Board shall, upon the vote of one
member, review action taken at a delegated level within such
time and in such manner as the Board shall by rule prescribe.
The Board of Governors may not delegate to a Federal reserve
bank its functions for the establishment of policies for the
supervision and regulation of depository institution holding
companies and other financial firms supervised by the Board of
Governors.
(l) To employ such attorneys, experts, assistants, clerks, or
other employees as may be deemed necessary to conduct the
business of the board. All salaries and fees shall be fixed in
advance by said board and shall be paid in the same manner as
the salaries of the members of said board. All such attorneys,
experts, assistants, clerks, and other employees shall be
appointed without regard to the provisions of the Act of
January sixteenth, eighteen hundred and eighty-three (volume
twenty-two, United States Statutes at Large, page four hundred
and three), and amendments thereto, or any rule or regulation
made in pursuance thereof: Provided, That nothing herein shall
prevent the President from placing said employees in the
classified service.
(n) To examine, at the Board's discretion, any depository
institution, and any affiliate of such depository institution,
in connection with any advance to, any discount of any
instrument for, or any request for any such advance or discount
by, such depository institution under this Act.
(o) Authority To Appoint Conservator or Receiver.--The Board
may appoint the Federal Deposit Insurance Corporation as
conservator or receiver for a State member bank under section
11(c)(9) of the Federal Deposit Insurance Act.
(p) Authority.--The Board may act in its own name and through
its own attorneys in enforcing any provision of this title,
regulations promulgated hereunder, or any other law or
regulation, or in any action, suit, or proceeding to which the
Board is a party and which involves the Board's regulation or
supervision of any bank, bank holding company (as defined in
section 2 of the Bank Holding Company Act of 1956), or other
entity, or the administration of its operations.
(q) Uniform Protection Authority for Federal Reserve
Facilities.--
(1) Notwithstanding any other provision of law, to
authorize personnel to act as law enforcement officers
to protect and safeguard the premises, grounds,
property, personnel, including members of the Board, of
the Board, or any Federal reserve bank, and operations
conducted by or on behalf of the Board or a reserve
bank.
(2) The Board may, subject to the regulations
prescribed under paragraph (5), delegate authority to a
Federal reserve bank to authorize personnel to act as
law enforcement officers to protect and safeguard the
bank's premises, grounds, property, personnel, and
operations conducted by or on behalf of the bank.
(3) Law enforcement officers designated or authorized
by the Board or a reserve bank under paragraph (1) or
(2) are authorized while on duty to carry firearms and
make arrests without warrants for any offense against
the United States committed in their presence, or for
any felony cognizable under the laws of the United
States committed or being committed within the
buildings and grounds of the Board or a reserve bank if
they have reasonable grounds to believe that the person
to be arrested has committed or is committing such a
felony. Such officers shall have access to law
enforcement information that may be necessary for the
protection of the property or personnel of the Board or
a reserve bank.
(4) For purposes of this subsection, the term ``law
enforcement officers'' means personnel who have
successfully completed law enforcement training and are
authorized to carry firearms and make arrests pursuant
to this subsection.
(5) The law enforcement authorities provided for in
this subsection may be exercised only pursuant to
regulations prescribed by the Board and approved by the
Attorney General.
(r)(1) Any action that this Act provides may be taken only
upon the affirmative vote of 5 members of the Board may be
taken upon the unanimous vote of all members then in office if
there are fewer than 5 members in office at the time of the
action.
(2)(A) Any action that the Board is otherwise authorized to
take under section 13(3) may be taken upon the unanimous vote
of all available members then in office, if--
(i) at least 2 members are available and all
available members participate in the action;
(ii) the available members unanimously determine
that--
(I) unusual and exigent circumstances exist
and the borrower is unable to secure adequate
credit accommodations from other sources;
(II) action on the matter is necessary to
prevent, correct, or mitigate serious harm to
the economy or the stability of the financial
system of the United States;
(III) despite the use of all means available
(including all available telephonic,
telegraphic, and other electronic means), the
other members of the Board have not been able
to be contacted on the matter; and
(IV) action on the matter is required before
the number of Board members otherwise required
to vote on the matter can be contacted through
any available means (including all available
telephonic, telegraphic, and other electronic
means); and
(iii) any credit extended by a Federal reserve bank
pursuant to such action is payable upon demand of the
Board.
(B) The available members of the Board shall document in
writing the determinations required by subparagraph (A)(ii),
and such written findings shall be included in the record of
the action and in the official minutes of the Board, and copies
of such record shall be provided as soon as practicable to the
members of the Board who were not available to participate in
the action and to the Chairman of the Committee on Banking,
Housing, and Urban Affairs of the Senate and to the Chairman of
the Committee on Financial Services of the House of
Representatives.
(s) Federal Reserve Transparency and Release of
Information.--
(1) In general.--In order to ensure the disclosure in
a timely manner consistent with the purposes of this
Act of information concerning the borrowers and
counterparties participating in emergency credit
facilities, discount window lending programs, and open
market operations authorized or conducted by the Board
or a Federal reserve bank, the Board of Governors shall
disclose, as provided in paragraph (2)--
(A) the names and identifying details of each
borrower, participant, or counterparty in any
credit facility or covered transaction;
(B) the amount borrowed by or transferred by
or to a specific borrower, participant, or
counterparty in any credit facility or covered
transaction;
(C) the interest rate or discount paid by
each borrower, participant, or counterparty in
any credit facility or covered transaction; and
(D) information identifying the types and
amounts of collateral pledged or assets
transferred in connection with participation in
any credit facility or covered transaction.
(2) Mandatory release date.--In the case of--
(A) a credit facility, the Board shall
disclose the information described in paragraph
(1) on the date that is 1 year after the
effective date of the termination by the Board
of the authorization of the credit facility;
and
(B) a covered transaction, the Board shall
disclose the information described in paragraph
(1) on the last day of the eighth calendar
quarter following the calendar quarter in which
the covered transaction was conducted.
(3) Earlier release date authorized.--The Chairman of
the Board may publicly release the information
described in paragraph (1) before the relevant date
specified in paragraph (2), if the Chairman determines
that such disclosure would be in the public interest
and would not harm the effectiveness of the relevant
credit facility or the purpose or conduct of covered
transactions.
(4) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Credit facility.--The term ``credit
facility'' [has the same meaning as in section
714(f)(1)(A) of title 31, United States Code]
means a program or facility, including any
special purpose vehicle or other entity
established by or on behalf of the Board of
Governors of the Federal Reserve System or a
Federal reserve bank, authorized by the Board
of Governors under section 13(3), that is not
subject to audit under section 714(e) of title
31, United States Code.
(B) Covered transaction.--The term ``covered
transaction'' means--
(i) any open market transaction with
a nongovernmental third party conducted
under the first undesignated paragraph
of section 14 or subparagraph (a), (b),
or (c) of the 2nd undesignated
paragraph of such section, after the
date of enactment of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act; and
(ii) any advance made under section
10B after the date of enactment of that
Act.
(5) Termination of credit facility by operation of
law.--A credit facility shall be deemed to have
terminated as of the end of the 24-month period
beginning on the date on which the credit facility
ceases to make extensions of credit and loans, unless
the credit facility is otherwise terminated by the
Board before such date.
(6) Consistent treatment of information.--Except as
provided in this subsection or section 13(3)(D), [or in
section 714(f)(3)(C) of title 31, United States Code,
the information described in paragraph (1) and
information concerning the transactions described in
section 714(f) of such title,] the information
described in paragraph (1) shall be confidential,
including for purposes of section 552(b)(3) of title 5
of such Code, until the relevant mandatory release date
described in paragraph (2), unless the Chairman of the
Board determines that earlier disclosure of such
information would be in the public interest and would
not harm the effectiveness of the relevant credit
facility or the purpose of conduct of the relevant
transactions.
(7) Protection of personal privacy.--This subsection
[and section 13(3)(C), section 714(f)(3)(C) of title
31, United States Code, and], section 13(3)(C), and
subsection (a) or (c) of section 1109 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act shall
not be construed as requiring any disclosure of
nonpublic personal information (as defined for purposes
of section 502 of the Gramm-Leach-Bliley Act (12 U.S.C.
6802)) concerning any individual who is referenced in
collateral pledged or assets transferred in connection
with a credit facility or covered transaction, unless
the person is a borrower, participant, or counterparty
under the credit facility or covered transaction.
(8) Study of foia exemption impact.--
(A) Study.--The Inspector General of the
Board of Governors of the Federal Reserve
System shall--
(i) conduct a study on the impact
that the exemption from section
552(b)(3) of title 5 (known as the
Freedom of Information Act) established
under paragraph (6) has had on the
ability of the public to access
information about the administration by
the Board of Governors of emergency
credit facilities, discount window
lending programs, and open market
operations; and
(ii) make any recommendations on
whether the exemption described in
clause (i) should remain in effect.
(B) Report.--Not later than 30 months after
the date of enactment of this section, the
Inspector General of the Board of Governors of
the Federal Reserve System shall submit a
report on the findings of the study required
under subparagraph (A) to the Committee on
Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives, and publish
the report on the website of the Board.
(9) Rule of construction.--Nothing in this section is
meant to affect any pending litigation or lawsuit filed
under section 552 of title 5, United States Code
(popularly known as the Freedom of Information Act), on
or before the date of enactment of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
(s) Assessments, Fees, and Other Charges for Certain
Companies.--
(1) In general.--The Board shall collect a total
amount of assessments, fees, or other charges from the
companies described in paragraph (2) that is equal to
the total expenses the Board estimates are necessary or
appropriate to carry out the supervisory and regulatory
responsibilities of the Board with respect to such
companies.
(2) Companies.--The companies described in this
paragraph are--
(A) all bank holding companies having total
consolidated assets of $50,000,000,000 or more;
(B) all savings and loan holding companies
having total consolidated assets of
$50,000,000,000 or more; and
(C) all nonbank financial companies
supervised by the Board under section 113 of
the Dodd-Frank Wall Street Reform and Consumer
Protection Act.
* * * * * * *
MINORITY VIEWS
The United States Federal Reserve System is an independent
central bank, and its monetary policy actions are not subject
to approval by other entities. This independence is critical to
the ability of the Board of Governors of the Federal Reserve to
pursue monetary policies it considers most responsive to the
nation's current economic conditions and most likely to fulfill
its dual mandate of promoting maximum employment and stable
prices.
The Federal Banking Agency Audit Act of 1978 established
that the Federal Reserve System may be audited by the
Government Accountability Office (GAO), and regular audits have
been conducted since that date. However, that Act included
protections now codified in 31 U.S.C. 714(b) to ensure that the
Federal Reserve's monetary policymaking remains independent
from outside political influence.
In 2010, the Dodd-Frank Wall Street Reform and Consumer
Protection Act expanded the types of audits GAO may conduct of
the Federal Reserve, as well as the data that regularly must be
disclosed to the public by the Federal Reserve.
For example, the Dodd-Frank Act required GAO to audit the
emergency financial assistance provided by the Federal Reserve
during the financial crisis. The Act also added a new
subsection (f) to 31 U.S.C. 714 which opens the transactions
and discount window operations authorized under section 11(s)
of the Federal Reserve Act to audit so GAO can assess their
operational integrity and internal controls, the effectiveness
of security and collateral policies, the fairness to all
institutions of such transactions, and the policies governing
the use of third-party contractors engaged to manage such
transactions.
The Dodd-Frank Act required the Federal Reserve to post on
its website all GAO reports, annual financial statements,
reports to Congress, and any other information ``necessary or
helpful to the public in understanding the accounting,
financial reporting and internal controls of the Board and
Federal Reserve banks.''
In addition, the Dodd-Frank Act required the Federal
Reserve to release information regarding borrowers and
counterparties participating in emergency credit facilities,
discount lending programs, and open market operations,
including the names of the parties, the amount borrowed by or
transferred to the participant or counterparty, the interest
rate or discount and the collateral pledged. The information
must be released within one year of the termination of a credit
facility, and within two years of a discount lending
transaction or open market operation.
The Dodd-Frank Act was carefully crafted to expand
transparency surrounding the Federal Reserve's operations
without impeding its ability to carry out the critical
responsibility of independently setting our nation's monetary
policy.
H.R. 24 would significantly alter this balance by
permanently repealing the provisions in 31 U.S.C. 714(b). GAO
would be permitted to audit the Federal Reserve's transactions
with foreign central banks and transactions conducted under the
direction of the Federal Open Market Committee. GAO also would
be able to audit the Federal Reserve's internal deliberations
on monetary policy matters, as well as discussions or
communications Members of the Board have with each other and
with staff of the Federal Reserve System regarding monetary
policy.
There is significant concern that opening the Federal
Reserve's monetary policy deliberations to GAO audit in this
way--including audits conducted without any significant elapse
of time from the point of decision--could influence how such
deliberations are conducted and potentially even the policies
that are chosen, thus degrading the independence of the Federal
Reserve.
If all restrictions on GAO's ability to audit the Federal
Reserve's deliberative processes are removed, members of
Congress could actively seek to influence the Federal Reserve's
deliberations by the types and subjects of audits they request
of GAO. Members of Congress could also seek to obtain the
materials GAO accesses when performing its audits, including
documents related to the Federal Reserve's deliberations.
The Committee passed similar legislation in the 112th,
113th, and 114th Congresses (H.R. 459, H.R. 24, and H.R. 24).
In those four Congresses, the Committee held only one hearing
to examine the consequences of this legislation. The
Committee's March 23, 2017, hearing titled ``Legislative
Proposals for Fostering Transparency'' examined transparency-
related legislation, including a brief discussion of H.R. 24.
The Committee has not heard from a single witness from the
Federal Reserve about how the legislation would impact the
agency's operations.
Moving forward on this bill without calling a single
witness from the Federal Reserve may result in many unforeseen
and potentially damaging consequences.
Elijah E. Cummings,
Ranking Member.