Vote Explanation for the Fed Oversight Reform and Modernization FORM Act (H.R. 3189)

11/24/2015

The Federal Reserve, or Fed for short, is the nation’s central bank. The Fed is an independent government agency that plays a key role in conducting the nation’s monetary policy. Its actions impact your bank account, student loans, credit cards, 401k and just about anything else having to do with the economy.

Congress creates long-term goals for monetary policy and gives the Fed independence to achieve those goals. This means the Fed is not subject to short-term political pressures and can focus on its mandate by Congress to help create maximum employment and stable prices that help businesses and consumers.

On Thursday, the House of Representatives passed the Fed Oversight Reform and Modernization FORM Act (H.R. 3189). This bill attempts to create more transparency and openness at the Fed, something I am for. However, this bill goes about it in a way that would ultimately be harmful to the nation’s economy, jeopardize the Fed’s independence and inject politics into our nation’s monetary policy decision-making process.

Specifically this bill would:

• Restrict the Fed’s emergency lending authorities, reducing the Fed’s ability to act during times of crisis;

• Effectively put Congress in charge of reviewing short-term monetary policy decisions, creating a bureaucratic second-guessing and politicization of monetary policy; and

• Tie the Fed to an overly simplistic, formulaic approach to setting interest rates, something Federal Reserve Chair Janet Yellen said, “would lead to poor economic outcomes.”

For those reasons, I voted against this legislation.