Federal Reserve Transparency Act of 2014

Floor Speech

Mr. Speaker, I rise today in opposition to H.R. 24, a bill that would undermine the Federal Reserve's independence and politicize its monetary policy decision making.

Mr. Speaker, this so called ``Federal Reserve Transparency Act'' has little to do with bringing transparency and accountability to the Federal Reserve. The truth is--this bill is nothing more than an effort to pressure and discourage the Fed from ever again being able to take the extraordinary action it has taken in recent years--action which has lowered unemployment, stabilized prices, and kept our economy from entering a second Great Depression.

Mr. Speaker, the Federal Reserve is already subject to extensive transparency, oversight and disclosure requirements, including regular audits with limited exemptions.

The fact is, since 1982 the Government Accountability Office has had the authority to audit the books of the Federal Reserve Board and the Federal Reserve Banks. And in 2009, as part of the Dodd-Frank Act, Congress required GAO to audit the emergency lending facilities created in response to the financial crisis. This has already been accomplished and the results of the audit are posted on the Federal Reserve's website.

If that wasn't enough, the Board's financial statements are audited on an annual basis by an outside auditor--and the results are published in the Board's Annual Report.

In addition to audits of its financial statements and emergency lending programs, the Federal Reserve provides comprehensive communication on monetary policy deliberations--releasing statements, publishing minutes and issuing transcripts following the completion of Federal Open Market Committee Meetings.

Furthermore, since 2011 the Chairman of the Federal Reserve has held regular press conferences to discuss the outlook for the economy and explain the rationale for its Federal Reserve policy decisions.

I find it baffling that we are here debating whether the Federal Reserve should be more open and transparent--even as Janet Yellen is scheduled to hold a press conference to discuss the outlook for monetary policy tomorrow afternoon.

While the Fed's decisions are--and must continue to be--transparent, it is also imperative that monetary policy decision making remain insulated from short-term political pressures--in order to promote economic growth and keep inflation in check.

But Mr. Speaker, this legislation would empower the GAO to investigate any and all policy decisions made by members of the Federal Reserve's rate setting committee, including decisions about when, and how, to unwind the Federal Reserve's ongoing stimulus program.

Doing so would wipe out all of the statutory protections that ensure deliberations, decisions, and actions on monetary policy matters are shielded from second guessing.

By empowering the GAO to challenge the decisions of Fed policy experts, and make legislative or administrative recommendations to the Congress, this measure aims to inject political pressure into monetary policy decisions--something that would undermine Fed's ability to make the tough--and sometimes unpopular--decisions that are necessary for the good of the economy.

But this is not the Republican Majority's first politically motivated assault on the Federal Reserve's independence. We've seen this time and again.

Earlier this year Financial Services Committee Republicans took up and passed the ``FRAT Act'', a bill which virtually eliminates any discretion the Fed has to set monetary policy--by forcing it to make decisions in accordance with a mathematical formula and by requiring GAO to investigate any deviation from it--even in the case of changing economic conditions.

Such absurd constraints on the Federal Reserve would inevitably increase uncertainty surrounding policy decisions, and decrease the public's confidence that the Fed can act appropriately in response to new economic realities.

In closing I would reiterate that it is important for the American people to understand that these bills are not designed to address real problems, or a lack of transparency. Rather, the FRAT Act--and the bill before us today--are unnecessary.

They will cause needless uncertainty and undermine the Fed's ability to conduct monetary policy in an independent manner.

I urge my colleagues to oppose this legislation.

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