–Vice Chairman of Joint Economic Committee Introduces Wide-Ranging Bill
–Rep. Brady: Bill Would Have All Regional Presidents Vote In FOMC
–Rep. Brady: Expanded FOMC Reduces ‘Overwhelming Influence’ of DC, NYC
By John Shaw
WASHINGTON (MNI) – Rep. Kevin Brady, the vice chairman of the Joint
Economic Committee, unveiled Monday sweeping legislation to revamp the
mission and decision-making structure of the Federal Reserve Board.
In a speech at the American Enterprise Institute called a “New
Mission For the Fed,” Brady said it’s now time to overhaul America’s
“We must thoughtfully and clearly define the role of the Federal
Reserve Board,” Brady said.
But he said he does not want Congress to get in the business of
micromanaging monetary policy.
“I am firmly committed to the independence of the Federal Reserve
in conducting monetary policy,” Brady said.
In his remarks, Brady said 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 Exchange Stabilization
The bill would require the Consumer Financial Protection Agency to
secure its annual funds through Congress’ 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.
Many Democrats are near incredulous at the idea of having the Fed
concentrate exclusively on price stability, especially during a time of
sluggish growth and tame inflation.
The bill does reflect the fact that Republicans in both Congress
and the presidential campaign trail have grown sharply critical of the
Fed since 2008. Several of the leading GOP candidates for president,
including Mitt Romney, have said they would not reappoint Ben Bernanke
to another term as the Fed chairman.
** Market News International Washington Bureau: (202) 371-2121 **