–Vice Chairman of Joint Economic Committee To Focus on Fed
–Rep. Brady: Panel To Study How Fed Should ‘Achieve A Sound Dollar’
–Panel To Hear From John Taylor, William Poole, Laurence Meyer

By John Shaw

WASHINGTON (MNI) – Rep. Kevin Brady, the vice chairman of the Joint
Economic Committee, said Friday that his panel will hold a hearing next
week to consider “how the Federal Reserve should achieve a sound

In a statement, Brady said his panel will hold a hearing Tuesday at
2.p.m to consider future Fed policies.

Brady said his panel will hear from former Fed governor Laurence
Meyer, former president of the St. Louis Federal Reserve Bank William
Poole and former Treasury Under Secretary John Taylor.

Several weeks ago, Brady unveiled sweeping legislation to revamp
the mission and decision-making structure of the Federal Reserve Board.
It’s likely that Brady will invite the witnesses to comment on his

Brady says it’s now time for the Fed’s mandate to focus exclusively
on price stability rather than operating under it’s long-standing dual
mandate of price stability and full employment.

Brady’s bill would require the Fed to use inflation targeting to
achieve stable prices.

The bill would require the Fed to “formally articulate it’s lender
of last resort” policy to eliminate uncertainty in markets.

Brady’s bill would expand voting membership in the FOMC to 19 —
the seven Fed governors and the 12 regional Fed Bank presidents. This
expanded membership, Brady said, would “broaden input, increase
geographic diversity and reduce the overwhelming influence of Washington
and New York.”

The bill would require the Fed to release FOMC meeting transcripts
within three years of each FOMC meeting rather than the current
five-year release period. This would enhance transparency at the central
bank, Brady said.

Brady’s legislation would require the Fed to report on the impact
of FOMC policies on the exchange rate value of the dollar.

The legislation would prohibit the Fed from investing in any
instruments others than U.S. Treasuries, repos and reverse repos, except
during times of emergency.

The Brady bill would put sharp limits on the the Treasury
Department’s Exchange Stabilization Fund.

The bill would require the Consumer Financial Protection Agency to
secure its annual funds through Congress’s regular appropriations

The legislation faces an uncertain future.

Brady’s Joint Economic Committee does not have any legislative
authority, so his bill would have to be considered by the House
Financial Services Committee which Brady is not a member of.

While it’s possible the House Republican leadership could put the
bill on a fast-track, there is virtually no prospect for the
legislation moving in the Senate this year.

Sen. Richard Shelby, the ranking Republican on the Senate Banking
Committee, has told Market News International that he does not see any
legislation altering the structure or role of the Fed passing Congress
this year.

** Market News International Washington Bureau: 202-371-2121 **

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