[House Report 115-980]
[From the U.S. Government Publishing Office]


115th Congress    }                                    {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                    {      115-980

======================================================================



 
        FEDERAL RESERVE SUPERVISION TESTIMONY CLARIFICATION ACT

                                _______
                                

 September 26, 2018.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4753]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4753) to amend the Federal Reserve Act to 
require the Vice Chairman for Supervision of the Board of 
Governors of the Federal Reserve System to provide a written 
report, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Federal Reserve Supervision Testimony 
Clarification Act''.

SEC. 2. VICE CHAIRMAN FOR SUPERVISION REPORT REQUIREMENT.

  Paragraph (12) of section 10 of the Federal Reserve Act (12 U.S.C. 
247b) is amended--
          (1) by redesignating such paragraph as paragraph (11); and
          (2) in such paragraph--
                  (A) by striking ``shall appear'' and inserting 
                ``shall provide written testimony and appear''; and
                  (B) by adding at the end the following: ``If, at the 
                time of any appearance described in this paragraph, the 
                position of Vice Chairman for Supervision is vacant, 
                the Chairman or their designee shall appear instead and 
                provide the required written testimony.''.

                          Purpose and Summary

    On January 10, 2018, Representative Frank Lucas introduced 
H.R. 4753, the ``Federal Reserve Supervision Testimony 
Clarification Act'', which clarifies Section 1108 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act. This 
legislation establishes procedures to fulfill Section 1108's 
semi-annual testimony mandate for the Federal Reserve's Vice 
Chairman for Supervision. The legislation establishes that the 
Chairman of the Board of Governors of the Federal Reserve 
System (Federal Reserve), or the Chairman's designee, will 
fulfill the testimony requirement for the Federal Reserve's 
Vice Chairman for Supervision if the United States Senate has 
not confirmed an individual to serve as the Vice Chairman for 
Supervision.

                  Background and Need for Legislation

    Section 1108 of Dodd-Frank Wall Street Reform and Consumer 
Protection Act (P.L. 111-203) amended Section 10 of the Federal 
Reserve Act and created a new position at the Federal Reserve, 
the Vice Chairman for Supervision. The Vice Chairman for 
Supervision is a presidential appointee subject to the advice 
and consent of the Senate. This amendment to the Federal 
Reserve Act also requires the Vice Chairman for Supervision to 
testify semi-annually before Committee on Financial Services of 
the House of Representatives and the Committee on Banking, 
Housing and Urban Affairs of the United States Senate. The 
testimony, as mandated by the amendment to the Federal Reserve 
Act, requires the Vice Chairman for Supervision to discuss 
``the efforts, activities, objectives, and plans of the Board 
with respect to the conduct of supervision and regulation of 
depository institution holding companies and other financial 
firms supervised by the Board.''
    During his tenure as a Federal Reserve Board Governor, 
Daniel Tarullo fulfilled this function in practice. However, 
the Obama Administration never nominated him (or anybody else) 
to formally serve as the Federal Reserve's Vice Chairman for 
Supervision. The failure to nominate former Governor Tarullo or 
any other person to the Vice Chairman for Supervision avoided 
accountability measures that Congress established for that 
position, including the requirement to appear before Congress.
    During President Obama's administration, Financial Services 
Committee Chairman Jeb Hensarling and former Senate Banking, 
Housing and Urban Affairs Committee Chairman, Richard Shelby, 
sent a letter on September 21, 2016 to former Federal Reserve 
Chair Janet Yellen to ``appear semi-annually before both the 
Senate Committee on Banking, Housing, and Urban Affairs, and 
the House Committee on Financial Services to testify on the 
matters specified in Section 1108 of the Dodd-Frank Act, until 
the position of Vice Chairman for Supervision position is 
filled.''
    The Federal Reserve Supervision Testimony Clarification 
Act, H.R. 4753, requires the Vice Chairman for Supervision to 
provide as part of his or her statutorily required semi-annual 
testimony a report on the status of proposed and anticipated 
rulemakings. H.R. 4753 also requires that, if the Vice Chairman 
for Supervision position is vacant, then the Chairman of the 
Board of Governors or the Chairman's designee must fulfill the 
statutory requirement for semi-annual testimony.

                                Hearings

    The Subcommittee on Monetary Policy and Trade held a 
hearing titled ``A Further Examination of Federal Reserve 
Reform Proposals'' to consider matters relating to H.R. 4753 on 
January 10, 2018.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
September 13, 2018, and ordered H.R. 4753 to be reported 
favorably to the House without amendment by a recorded vote of 
49 yeas to 0 nays (recorded vote no. FC-203), a quorum being 
present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 49 yeas to 0 nays 
(Record vote no. FC-203), a quorum being present.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 4753 
will strengthen Congress's ability to fulfill its statutory 
mandate to effectively supervise the Federal Reserve System.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    The Committee has not received an estimate of new budget 
authority contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to Sec. 
402 of the Congressional Budget Act of 1974. In compliance with 
clause 3(c)(2) of rule XIII of the Rules of the House, the 
Committee opines that H.R. 4753 will not establish any new 
budget or entitlement authority or create any tax expenditures.

                 Congressional Budget Office Estimates

    The cost estimate prepared by the Director of the 
Congressional Budget Office pursuant to Sec. 402 of the 
Congressional Budget Act of 1974 was not submitted timely to 
the Committee.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995. The Committee has 
determined that the bill does not contain Federal mandates on 
the private sector. The Committee has determined that the bill 
does not impose a Federal intergovernmental mandate on State, 
local, or tribal governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This Section cites H.R. 4753 as the Federal Reserve 
Supervision Testimony Clarification Act.

Section 2. Vice Chairman for Supervision report requirement

    This section provides for the Federal Reserve Board Chair, 
or the Chair's designee, to appear before Congress, in the 
event that the Vice Chairman for Supervision has not been 
confirmed.

         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):

         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):

                          FEDERAL RESERVE ACT




           *       *       *       *       *       *       *
            board of governors of the federal reserve system

  Sec.  10. The Board of Governors of the Federal Reserve 
System (hereinafter referred to as the ``Board'') shall be 
composed of seven members, to be appointed by the President, by 
and with the advice and consent of the Senate, after the date 
of enactment of the Banking Act of 1935, for terms of fourteen 
years except as hereinafter provided, but each appointive 
member of the Federal Reserve Board in office on such date 
shall continue to serve as a member of the Board until February 
1, 1936, and the Secretary of the Treasury and the Comptroller 
of the Currency shall continue to serve as members of the Board 
until February 1, 1936. In selecting the members of the Board, 
not more than one of whom shall be selected from any one 
Federal Reserve district, the President shall have due regard 
to a fair representation of the financial, agricultural, 
industrial, and commercial interests, and geographical 
divisions of the country. In selecting members of the Board, 
the President shall appoint at least 1 member with demonstrated 
primary experience working in or supervising community banks 
having less than $10,000,000,000 in total assets. The members 
of the Board shall devote their entire time to the business of 
the Board and shall each receive and annual salary of $15,000, 
payable monthly, together with actual necessary traveling 
expenses.
   The members of the Board shall be ineligible during the time 
they are in office and for two years thereafter to hold any 
office, position, or employment in any member bank, except that 
this restriction shall not apply to a member who has served the 
full term for which he was appointed. Upon the expiration of 
the term of any appointive member of the Federal Reserve Board 
in office on the date of enactment of the Banking Act of 1935, 
the President shall fix the term of the successor to such 
member at not to exceed fourteen years, as designated by the 
President at the time of nomination, but in such manner as to 
provide for the expiration of the term of not more than one 
member in any two-year period, and thereafter each member shall 
hold office for a term of fourteen years from the expiration of 
the term of his predecessor, unless sooner removed for cause by 
the President. Of the persons thus appointed, 1 shall be 
designated by the President, by and with the advice and consent 
of the Senate, to serve as Chairman of the Board for a term of 
4 years, and 2 shall be designated by the President, by and 
with the advice and consent of the Senate, to serve as Vice 
Chairmen of the Board, each for a term of 4 years, 1 of whom 
shall serve in the absence of the Chairman, as provided in the 
fourth undesignated paragraph of this section, and 1 of whom 
shall be designated Vice Chairman for Supervision. The Vice 
Chairman for Supervision shall develop policy recommendations 
for the Board regarding supervision and regulation of 
depository institution holding companies and other financial 
firms supervised by the Board, and shall oversee the 
supervision and regulation of such firms. The chairman of the 
Board, subject to its supervision, shall be its active 
executive officer. Each member of the Board shall within 
fifteen days after notice of appointment make and subscribe to 
the oath of office. Upon the expiration of their terms of 
office, members of the Board shall continue to serve until 
their successors are appointed and have qualified. Any person 
appointed as a member of the Board after the date of enactment 
of the Banking Act of 1935 shall not be eligible for 
reappointment as such member after he shall have served a full 
term of fourteen years.
   The Board of Governors of the Federal Reserve System shall 
have power to levy semiannually upon the Federal reserve banks, 
in proportion to their capital stock and surplus, an assessment 
sufficient to pay its estimated expenses and the salaries of 
its members and employees for the half year succeeding the 
levying of such assessment, together with any deficit carried 
forward from the preceding half year, and such assessments may 
include amounts sufficient to provide for the acquisition by 
the Board in its own name of such site or building in the 
District of Columbia as in its judgment alone shall be 
necessary for the purpose of providing suitable and adequate 
quarters for the performance of its functions. After September 
1, 2000, the Board may also use such assessments to acquire, in 
its own name, a site or building (in addition to the facilities 
existing on such date) to provide for the performance of the 
functions of the Board. After approving such plans, estimates, 
and specifications as it shall have caused to be prepared, the 
Board may, notwithstanding any other provision of law, cause to 
be constructed on any site so acquired by it a building or 
buildings suitable and adequate in its judgment for its 
purposes and proceed to take all such steps as it may deem 
necessary or appropriate in connection with the construction, 
equipment, and furnishing of such building or buildings. The 
Board may maintain, enlarge, or remodel any building or 
buildings so acquired or constructed and shall have sole 
control of such building or buildings and space therein.
   The principal offices of the Board shall be in the District 
of Columbia. At meetings of the Board the chairman shall 
preside, and, in his absence, the vice chairman shall preside. 
In the absence of the chairman and the vice chairman, the Board 
shall elect a member to act as chairman pro tempore. The Board 
shall determine and prescribe the manner in which its 
obligations shall be incurred and its disbursements and 
expenses allowed and paid, and may leave on deposit in the 
Federal Reserve banks the proceeds of assessments levied upon 
them to defray its estimated expenses and the salaries of its 
members and employees, whose employment, compensation, leave, 
and expenses shall be governed solely by the provisions of this 
Act, specific amendments thereof, and rules and regulations of 
the Board not inconsistent therewith; and funds derived from 
such assessments shall not be construed to be Government funds 
or appropriated moneys. No member of the Board of Governors of 
the Federal Reserve System shall be an officer or director of 
any bank, banking institution, trust company, or Federal 
Reserve bank or hold stock in any bank, banking institution, or 
trust company; and before entering upon his duties as a member 
of the Board of Governors of the Federal Reserve System he 
shall certify under oath that he has complied with this 
requirement, and such certification shall be filed with the 
secretary of the Board. Whenever a vacancy shall occur, other 
than by expiration of term, among the six members of the Board 
of Governors of the Federal Reserve System appointed by the 
President as above provided, a successor shall be appointed by 
the President, by and with the advice and consent of the 
Senate, to fill such vacancy, and when appointed he shall hold 
office for the unexpired term of his predecessor.
   The President shall have power to fill all vacancies that 
may happen on the Board of Governors of the Federal Reserve 
System during the recess of the Senate by granting commissions 
which shall expire with the next session of the Senate.
   Nothing in this Act contained shall be construed as taking 
away any powers heretofore vested by law in the Secretary of 
the Treasury which relate to the supervision, management, and 
control of the Treasury Department and bureaus under such 
department, and wherever any power vested by this Act in the 
Board of Governors of the Federal Reserve System or the Federal 
reserve agent appears to conflict with the powers of the 
Secretary of the Treasury, such powers shall be exercised 
subject to the supervision and control of the Secretary.
   The Board of Governors of the Federal Reserve System shall 
annually make a full report of its operations to the Speaker of 
the House of Representatives, who shall cause the same to be 
printed for the information of the Congress. The report 
required under this paragraph shall include the reports 
required under section 707 of the Equal Credit Opportunity Act, 
section 18(f)(7) of the Federal Trade Commission Act, section 
114 of the Truth in Lending Act, and the tenth undesignated 
paragraph of this section.
   No Federal Reserve bank may authorize the acquisition or 
construction of any branch building, or enter into any contract 
or other obligation for the acquisition or construction of any 
branch building, without the approval of the Board.
   The Board of Governors of the Federal Reserve System shall 
keep a complete record of the action taken by the Board and by 
the Federal Open Market Committee upon all questions of policy 
relating to open-market operations and shall record therein the 
votes taken in connection with the determination of open-market 
policies and the reasons underlying the action of the Board and 
the Committee in each instance. The Board shall keep a similar 
record with respect to all questions of policy determined by 
the Board, and shall include in its annual report to the 
Congress a full account of the action so taken during the 
preceding year with respect to open-market policies and 
operations and with respect to the policies determined by it 
and shall include in such report a copy of the records required 
to be kept under the provisions of this paragraph.
          [(12)] (11) Appearances before congress.--The Vice 
        Chairman for Supervision [shall appear] shall provide 
        written testimony and appear before the Committee on 
        Banking, Housing, and Urban Affairs of the Senate and 
        the Committee on Financial Services of the House of 
        Representatives and at semi-annual hearings regarding 
        the efforts, activities, objectives, and plans of the 
        Board with respect to the conduct of supervision and 
        regulation of depository institution holding companies 
        and other financial firms supervised by the Board. If, 
        at the time of any appearance described in this 
        paragraph, the position of Vice Chairman for 
        Supervision is vacant, the Chairman or their designee 
        shall appear instead and provide the required written 
        testimony.

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