[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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \2\Id.
    \3\Id.
    \4\Id.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \9\31 U.S.C. Sec. 714.
    \10\Federal Reserve: Oversight and Disclosure Issues, supra note 1.
---------------------------------------------------------------------------
          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\
---------------------------------------------------------------------------
    \11\31 U.S.C. Sec. 714(b).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \12\Federal Reserve: Oversight and Disclosure Issues, supra note 1.
---------------------------------------------------------------------------

                          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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2017   2018   2019   2020   2021   2022   2023   2024   2025   2026   2027  2017-2022  2017-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               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.]

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                              ----------                              


                          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.