I 

112TH CONGRESS 

2D SESSION H. R. 4180 

To amend the Federal Reserve Act to improve the functioning and transparency of the Board of Governors of the Federal Reserve System and 

the Federal Open Market Committee, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 8, 2012 

Mr. BRADY of Texas (for himself, Mr. PENCE, Mr. GARRETT, Mr. PETRI, Mr. 

ROKITA, Mr. FLORES, Mr. KINGSTON, Mr. MULVANEY, Mr. FLAKE, Mr. 

LANKFORD, Mr. PITTS, Mr. FRANKS of Arizona, Mr. FLEMING, Mr. 

GOWDY, Mr. BURGESS, Mrs. LUMMIS, Mr. WALSH of Illinois, Mr. 

RIBBLE, Mr. DUNCAN of South Carolina, Mr. JONES, Mr. COLE, Mr. 

LAMBORN, Mr. PEARCE, Mr. MANZULLO, Mr. MCCLINTOCK, and Mr. 

SULLIVAN) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Federal Reserve Act to improve the functioning and transparency of the Board of Governors of 

the Federal Reserve System and the Federal Open Market Committee, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Sound Dollar Act of 2012’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—SINGLE MANDATE FOR PRICE STABILITY ACT 

Sec. 101. Findings. 

Sec. 102. Price stability mandate. 

TITLE II—FINANCIAL STABILITY AND MORAL HAZARD 

MITIGATION ACT 

Sec. 201. Findings. 

Sec. 202. Lender-of-last-resort policy. 

TITLE III—DIVERSIFYING THE FEDERAL OPEN MARKET 

COMMITTEE TO REFLECT A 21ST CENTURY ECONOMY ACT 

Sec. 301. Findings. 

Sec. 302. Federal Open Market Committee membership. 

TITLE IV—DEMYSTIFICATION OF MONETARY POLICY DECISIONS 

ACT 

Sec. 401. Findings. 

Sec. 402. Release of transcripts. 

TITLE V—EXCHANGE RATE RESPONSIBILITY ACT 

Sec. 501. Findings. 

Sec. 502. Report on the effect of exchange rate policy. 

Sec. 503. Renaming of Exchange Stabilization Fund. 

Sec. 504. Conversion to all-SDR Fund. 

TITLE VI—CREDIT ALLOCATION NEUTRALITY ACT 

Sec. 601. Findings. 

Sec. 602. Limitation on certain non-emergency security purchases. 

TITLE VII—BUREAU OF CONSUMER FINANCIAL PROTECTION 

FUNDING ACT 

Sec. 701. Findings. 

Sec. 702. Bureau of Consumer Financial Protection Funding. 

3 TITLE I—SINGLE MANDATE FOR 

4 PRICE STABILITY ACT 

5 SEC. 101. FINDINGS. 

6 The Congress finds the following: 


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1 (1) Monetary policy can only affect the level of 

2 employment in the short term because nonmonetary 

3 factors determine the level of employment in the 

4 long term. At best, the Federal Reserve may tempo5 rarily increase the level of employment through mon6 etary policy, but such efforts risk the possibility of 

7 price inflation and increased business cycle volatility 

8 in the future. However, the Federal Reserve can 

9 achieve price stability in the long term through mon10 etary policy. Price stability is desirable because both 

11 price inflation and price deflation damage the U.S. 

12 economy. Therefore, to maximize long-term economic 

13 growth and achieve the highest sustainable level of 

14 real output and employment, price stability should 

15 be the objective of monetary policy. 

16 (2) Countries whose central bank has a single 

17 mandate for price stability generally have a better 

18 record of achieving stable prices than countries 

19 whose central bank has a mandate that gives equal 

20 weight to other objectives such as maximum employ21 ment or low interest rates. 

22 (3) In general, an overly accommodative mone23 tary policy inflates both asset prices and prices for 

24 goods and services. However, an overly accommoda25 tive monetary policy may sometimes cause a 


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1 misallocation of capital that inflates asset prices dis2 proportionately, creating unsustainable bubbles in 

3 asset prices, while prices indices for goods and serv4 ices do not register significant price inflation. When 

5 asset bubbles burst, many investments must be liq6 uidated at considerable cost to the U.S. economy in 

7 terms of lower real output and employment. 

8 (4) Price stability cannot always be measured 

9 solely through price indices for goods and services 

10 since such indices exclude changes in asset prices. 

11 Therefore, the Federal Reserve should monitor (A) 

12 the prices of, and the expected returns from, major 

13 asset classes (including equities, residential real es14 tate, commercial and industrial real estate, agricul15 tural real estate, gold and other commodities, cor16 porate bonds, U.S. Government bonds, State and 

17 local government bonds, and other securities), (B) 

18 the value of the U.S. dollar relative to other cur19 rencies, and (C) the value of the United States dol20 lar relative to gold, as metrics to determine whether 

21 the Federal Reserve’s monetary policy is consistent 

22 with long-term price stability. 

23 SEC. 102. PRICE STABILITY MANDATE. 

24 (a) IN GENERAL.—Section 2A of the Federal Reserve 

25 Act is amended— 


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1 (1) by striking ‘‘goals of maximum employment, 

2 stable prices, and moderate long-term interest rates’’ 

3 and inserting ‘‘goal of long-term price stability’’; 

4 (2) by striking ‘‘The Board of Governors’’ and 

5 inserting the following: 

6 ‘‘(a) IN GENERAL.—The Board of Governors’’; and 

7 (3) by adding at the end the following: 

8 ‘‘(b) PRICE STABILITY METRICS.— 

9 ‘‘(1) IN GENERAL.—The Board of Governors of 

10 the Federal Reserve System and the Federal Open 

11 Market Committee shall— 

12 ‘‘(A) define the term ‘long-term price sta13 bility’ for purposes of subsection (a); and 

14 ‘‘(B) establish metrics that the Board and 

15 the Committee will use to evaluate whether 

16 long-term price stability is being achieved. 

17 ‘‘(2) ESTABLISHMENT OF METRICS.—In estab18 lishing the metrics described under paragraph 

19 (1)(B), the Board and Committee shall— 

20 ‘‘(A) take into consideration price indices 

21 of goods and services; and 

22 ‘‘(B) evaluate, on an ongoing basis— 

23 ‘‘(i) whether such metrics are com24 prehensively reflecting price movements in 

25 the economy; and 


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1 ‘‘(ii) whether any price movements not 

2 captured by the price indices of goods and 

3 services are causing a significant 

4 misallocation of capital in the United 

5 States economy. 

6 ‘‘(3) METRIC EVALUATION.—The Board and 

7 Committee shall, with respect to the evaluation proc8 ess required pursuant to paragraph (2)(B), mon9 itor— 

10 ‘‘(A) the prices of, and the expected re11 turns from, major asset classes (including equi12 ties, residential real estate, commercial and in13 dustrial real estate, agricultural real estate, 

14 commodities, corporate bonds, State and local 

15 government bonds, and other securities) and 

16 the allocation of capital in financial markets 

17 and the broader economy; 

18 ‘‘(B) the value of the United States dollar 

19 relative to other currencies; and 

20 ‘‘(C) the value of the United States dollar 

21 relative to gold. 

22 ‘‘(4) PUBLIC DISCLOSURE; REPORT TO THE

23 CONGRESS.—The Board and the Committee shall, 

24 with respect to the definition of long-term price staVerDate Mar 15 2010 21:56 Mar 09, 2012 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4180.IH H4180

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1 bility and the establishment of metrics set pursuant 

2 to paragraph (1)— 

3 ‘‘(A) make such definition and metrics 

4 available to the public on a website maintained 

5 by the Board or the Committee; and 

6 ‘‘(B) each time such definition and metrics 

7 are set or revised, issue a report to the Con8 gress stating such definition and metrics.’’. 

9 (b) ADDITIONAL EVALUATIONS AND DETERMINA10 TIONS INCLUDED IN SEMI-ANNUAL REPORT TO CON11 GRESS.—Section 2B(b) of the Federal Reserve Act is 

12 amended— 

13 (1) by striking ‘‘containing a discussion’’ and 

14 inserting the following: 

15 ‘‘containing— 

16 ‘‘(1) a discussion’’; 

17 (2) by striking the period and inserting a semi18 colon; and 

19 (3) by adding at the end the following: 

20 ‘‘(2) the results of the evaluation process con21 ducted pursuant to section 2A(b)(2)(B); 

22 ‘‘(3) a determination of whether the goal of 

23 long-term price stability is being met and, if such 

24 goal is not being met, an explanation of why the goal 

25 is not being met and the steps that the Board and 


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1 the Federal Open Market Committee will take to en2 sure that the goal is met in the future; 

3 ‘‘(4) a description of the main monetary policy 

4 instruments used by the Board and the Federal 

5 Open Market Committee and a description of the 

6 strategy of the Board and the Committee with re7 spect to using such instruments to achieve the goal 

8 of long-term price stability; and’’. 

9 TITLE II—FINANCIAL STABILITY 

10 AND MORAL HAZARD MITIGA11 TION ACT 

12 SEC. 201. FINDINGS. 

13 The Congress finds the following: 

14 (1) The Federal Reserve performs an essential 

15 function for financial stability by serving as lender 

16 of last resort in order to— 

17 (A) prevent the unnecessary failures of 

18 otherwise solvent United States banks and 

19 other financial institutions; 

20 (B) reduce the likelihood of financial con21 tagion and disruptions in United States finan22 cial markets; and 

23 (C) minimize any adverse effects on real 

24 output and employment in the United States 

25 economy. 


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1 (2) In acting as the lender of last resort, the 

2 Federal Reserve, may— 

3 (A) buy debt securities at fair market 

4 value; or 

5 (B) provide short-term credit, secured by 

6 appropriate collateral in proper margin, to oth7 erwise solvent banks and other financial institu8 tions that encounter funding difficulties during 

9 a financial crisis. 

10 (3) Nevertheless, in its nearly 100-year history, 

11 the Federal Reserve has never clearly articulated its 

12 lender-of-last-resort policy. 

13 (4) The absence of an official lender-of-last-re14 sort policy has led to— 

15 (A) increased economic uncertainty be16 cause no one knows with certainty how the Fed17 eral Reserve may behave; 

18 (B) financially distressed firms seeking po19 litical solutions in the form of pressure from 

20 Congress or the Administration being placed on 

21 the Federal Reserve to act to save them; and 

22 (C) a moral hazard problem from financial 

23 institutions taking greater risks and increasing 

24 leverage based upon assumptions of how the 

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1 mal statement assuring how the Federal Re2 serve will act. 

3 (5) By establishing a formal lender-of-last-re4 sort policy, the Federal Reserve would decrease un5 certainty in the market during times of financial cri6 sis and mitigate the moral hazards created by recent 

7 bailouts. 

8 (6) An official lender-of-last-resort policy should 

9 provide that once a financial crisis has dissipated, 

10 the Federal Reserve should, in an orderly way, sell 

11 any debt securities that— 

12 (A) the Federal Reserve acquired acting as 

13 lender of last resort; and 

14 (B) the Federal Reserve does not normally 

15 own for its System Account. 

16 (7) Further, to reduce moral hazard, the Fed17 eral Reserve’s lender-of-last-resort policy should 

18 make clear that credit in any form will not be pro19 vided to insolvent banks or other financial institu20 tion. 

21 SEC. 202. LENDER-OF-LAST-RESORT POLICY. 

22 (a) IN GENERAL.—Not later than the end of the 1- 

23 year period beginning on the date of the enactment of this 

24 Act, the Board of Governors of the Federal Reserve SysVerDate Mar 15 2010 21:56 Mar 09, 2012 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4180.IH H4180

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1 tem shall clearly articulate the Board’s lender-of-last-re2 sort policy. 

3 (b) CONSULTATION.—In articulating the policy re4 quired under subsection (a), the Board of Governors shall 

5 consult with— 

6 (1) the Federal Reserve bank presidents; 

7 (2) the Comptroller of the Currency; 

8 (3) the Chairperson of the Federal Deposit In9 surance Corporation; 

10 (4) the Securities and Exchange Commission; 

11 (5) the Commodity Futures Trading Commis12 sion; and 

13 (6) such other persons with expertise in finan14 cial services regulation and monetary policy as the 

15 Board of Governors may determine appropriate. 

16 TITLE III—DIVERSIFYING THE 

17 FEDERAL OPEN MARKET 

18 COMMITTEE TO REFLECT A 

19 21ST CENTURY ECONOMY ACT 

20 SEC. 301. FINDINGS. 

21 The Congress finds the following: 

22 (1) The Federal Reserve Act delineates specific 

23 requirements for the seven governors charged with 

24 oversight of the Federal Reserve System. 


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1 (2) In a reflection of the Federal Reserve Sys2 tem’s decentralized structure that broadly distrib3 utes power and responsibility across the Nation, the 

4 Act mandates that the presidentially appointed gov5 ernors come from a wide range of geographic loca6 tions and professional backgrounds. Specifically, the 

7 first undesignated paragraph under section 10 of the 

8 Federal Reserve Act states that ‘‘In selecting the 

9 members of the Board, not more than one of whom 

10 shall be selected from any one Federal Reserve Dis11 trict, the President shall have due regard to a fair 

12 representation of the financial, agricultural, indus13 trial, and commercial interests and geographical di14 visions of the country.’’. 

15 (3) The Federal Open Monetary Committee 

16 consists of members of the Board of Governors and 

17 the President or Vice President of the Federal Re18 serve Bank of New York on a permanent basis and 

19 rotates voting membership among the remaining Re20 gional Reserve Banks. 

21 (4) The existing structure of the Federal Open 

22 Market Committee places too much authority in the 

23 hands of Washington and New York at the expense 

24 of the remainder of the United States. 


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1 (5) Monetary policy should be conducted in the 

2 interest of all Americans and that policy goal is best 

3 achieved by a Federal Open Market Committee that 

4 provides greater representation and voice in policy 

5 decisions to the entire Nation as represented by the 

6 Regional Reserve Banks. This objective is best 

7 achieved by reforming the voting membership of the 

8 Federal Open Market Committee to include all Re9 gional Reserve Banks on a permanent basis. 

10 SEC. 302. FEDERAL OPEN MARKET COMMITTEE MEMBER11 SHIP. 

12 Section 12A(a) of the Federal Reserve Act (12 

13 U.S.C. 263(a)) is amended— 

14 (1) by striking ‘‘five representatives of the Fed15 eral Reserve banks to be selected as hereinafter pro16 vided.’’ and inserting ‘‘1 representative from each of 

17 the Federal Reserve banks.’’; and 

18 (2) by striking ‘‘and, beginning with the elec19 tion for the term commencing March 1, 1943, shall 

20 be elected annually as follows: One by the board of 

21 directors of the Federal Reserve Bank of New York, 

22 one by the boards of directors of the Federal Re23 serve Banks of Boston, Philadelphia, and Richmond, 

24 one by the boards of directors of the Federal Re25 serve Banks of Cleveland and Chicago, one by the 


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1 boards of directors of the Federal Reserve Banks of 

2 Atlanta, Dallas, and St. Louis, and one by the 

3 boards of directors of the Federal Reserve Banks of 

4 Minneapolis, Kansas City, and San Francisco. In 

5 such elections each board of directors shall have one 

6 vote; and the details of such elections may be gov7 erned by regulations prescribed by the committee, 

8 which may be amended from time to time.’’ and in9 serting ‘‘and shall be elected by the board of direc10 tors of the Federal Reserve bank that they are to 

11 represent.’’. 

12 TITLE IV—DEMYSTIFICATION OF 

13 MONETARY POLICY DECI14 SIONS ACT 

15 SEC. 401. FINDINGS. 

16 The Congress finds the following: 

17 (1) A more efficient release of transcripts from 

18 the Federal Reserve would result in better guidance 

19 for market participants, and hence more economi20 cally efficient decisionmaking. 

21 (2) According to Federal Reserve Chairman 

22 Ben Bernanke, ‘‘when the monetary policy com23 mittee regularly provides information about objec24 tives, economic outlook, and policy plans, two bene25 fits result: (1) markets will price assets more effiVerDate Mar 15 2010 23:37 Mar 09, 2012 Jkt 019200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H4180.IH H4180

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1 ciently, and (2) a closer alignment between market 

2 participants’ expectations about the course of future 

3 short-term interest rates and’’ the views of policy4 makers. 

5 (3) The Federal Reserve is able to release tran6 scripts more efficiently without compromising their 

7 decisionmaking process. 

8 SEC. 402. RELEASE OF TRANSCRIPTS. 

9 Section 12A(a) of the Federal Reserve Act (12 

10 U.S.C. 263(a)) is amended by adding at the end the fol11 lowing: 

12 ‘‘(d) RELEASE OF TRANSCRIPTS.—The Committee 

13 shall release meeting transcripts to the public not later 

14 than the end of the 3-year period following each meeting.’’. 

15 TITLE V—EXCHANGE RATE 

16 RESPONSIBILITY ACT 

17 SEC. 501. FINDINGS. 

18 The Congress finds as follows: 

19 (1) The Board of Governors of the Federal Re20 serve System and the Federal Open Market Com21 mittee exercise control over the supply of U.S. dol22 lars, which is a major factor affecting the foreign ex23 change rate value of the United States dollar. There24 fore, the Board of Governors and Federal Open 

25 Market Committee should report to Congress on the 


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1 impact of monetary policy on the foreign exchange 

2 rate value of the United States dollar. 

3 (2) Over the last several decades, Secretaries of 

4 the Treasury have repeatedly used the Exchange 

5 Stabilization Fund for purposes that were not envi6 sioned by Congress. To prevent further abuses, the 

7 Exchange Stabilization Fund should be renamed as 

8 the Special Drawing Rights Fund. The Special 

9 Drawing Rights Fund should hold the Special Draw10 ing Rights that the International Monetary Fund 

11 provided to the United States. Any other assets cur12 rently in the Exchange Stabilization Fund should be 

13 liquidated, and the proceeds used to reduce the pub14 lic debt. 

15 SEC. 502. REPORT ON THE EFFECT OF EXCHANGE RATE 

16 POLICY. 

17 Section 2B(b) of the Federal Reserve Act, as amend18 ed by section 102(b), is further amended by adding at the 

19 end the following: 

20 ‘‘(5) an analysis of how the policies of the 

21 Board and the Federal Open Market Committee are 

22 affecting the foreign exchange rate value of the 

23 United States dollar.’’. 


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1 SEC. 503. RENAMING OF EXCHANGE STABILIZATION FUND. 

2 (a) IN GENERAL.—Section 5302 of title 31, United 

3 States Code, is amended by striking ‘‘stabilization fund’’ 

4 each place such term appears and inserting ‘‘Special 

5 Drawing Rights Fund’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) BALANCED BUDGET AND EMERGENCY DEF8 ICIT CONTROL ACT OF 1985.—Section 255(g)(1)(A) 

9 of the Balanced Budget and Emergency Deficit Con10 trol Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended 

11 by striking ‘‘Exchange Stabilization Fund’’ and in12 serting ‘‘Special Drawing Rights Fund’’. 

13 (2) EMERGENCY ECONOMIC STABILIZATION ACT

14 OF 2008.—The Emergency Economic Stabilization 

15 Act of 2008 (12 U.S.C. 5211 et seq.) is amended— 

16 (A) in section 131, by striking ‘‘Exchange 

17 Stabilization Fund’’ each place such term ap18 pears in headings and text and inserting ‘‘Spe19 cial Drawing Rights Fund’’; and 

20 (B) in the item relating to section 131 in 

21 the table of contents of such Act, by striking 

22 ‘‘Exchange Stabilization Fund’’ and inserting 

23 ‘‘Special Drawing Rights Fund’’. 

24 (3) INTERNATIONAL FINANCIAL INSTITUTIONS

25 ACT.—Section 1704 of the International Financial 

26 Institutions Act (22 U.S.C. 262r–3) is amended by 


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1 striking ‘‘stabilization fund’’ each place such term 

2 appears and inserting ‘‘Special Drawing Rights 

3 Fund’’. 

4 (4) SPECIAL DRAWING RIGHTS ACT.—The Spe5 cial Drawing Rights Act (22 U.S.C. 286n et seq.) is 

6 amended by striking ‘‘Exchange Stabilization Fund’’ 

7 each place such term appears and inserting ‘‘Special 

8 Drawing Rights Fund’’. 

9 (c) REFERENCES.—Any reference in a law, regula10 tion, document, paper, or other record of the United 

11 States to the ‘‘Exchange Stabilization Fund’’ shall be 

12 deemed a reference to the ‘‘Special Drawing Rights 

13 Fund’’. 

14 SEC. 504. CONVERSION TO ALL-SDR FUND. 

15 (a) FUNDS USED TO REDUCE THE DEBT.—The Sec16 retary of the Treasury shall liquidate all property in the 

17 Special Drawing Rights Fund (as so renamed under sec18 tion 503), other than Special Drawing Rights, and use all 

19 such amounts to reduce the public debt. 

20 (b) LIMITATION ON FUND.—Section 5302 of title 31, 

21 United States Code, is amended— 

22 (1) in subsection (a)(1)— 

23 (A) by striking ‘‘is available to carry out’’ 

24 and inserting ‘‘is only available to carry out’’; 

25 and 


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1 (B) by striking ‘‘, and for investing in obli2 gations of the United States Government those 

3 amounts in the fund the Secretary of the Treas4 ury, with the approval of the President, decides 

5 are not required at the time to carry out this 

6 section. Proceeds of sales and investments, 

7 earnings, and interest shall be paid into the 

8 fund and are available to carry out this section. 

9 However, the fund is not available to pay ad10 ministrative expenses’’; and 

11 (2) by striking subsection (b) and inserting the 

12 following: 

13 ‘‘(b) FUND ONLY TO HOLD SPECIAL DRAWING

14 RIGHTS.—Notwithstanding any other provision of law, 

15 only Special Drawing Rights may be deposited into the 

16 Special Drawing Rights Fund.’’. 

17 (c) CONFORMING AMENDMENTS.— 

18 (1) BRETTON WOODS AGREEMENTS ACT.—Sec19 tion 18 of the Bretton Woods Agreements Act (22 

20 U.S.C. 286e–3) is hereby repealed. 

21 (2) SUPPORT FOR EAST EUROPEAN DEMOCRACY

22 (SEED) ACT OF 1989.—The Support for East Euro23 pean Democracy (SEED) Act of 1989 (22 U.S.C. 

24 5401 et seq.) is amended— 


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1 (A) in section 101(b)(1), by striking ‘‘such 

2 as—’’ and all that follows through the end of 

3 the paragraph and inserting ‘‘such as the au4 thority provided in section 102(c) of this Act.’’; 

5 and 

6 (B) in section 102(a), by striking ‘‘section 

7 101(b)—’’ and all that follows through the end 

8 of the subsection and inserting ‘‘section 101(b), 

9 should work closely with the European Commu10 nity and international financial institutions to 

11 determine the extent of emergency assistance 

12 required by Poland for the fourth quarter of 

13 1989.’’. 

14 (d) TREATMENT OF CERTAIN FUNDS.—Funds that 

15 would otherwise have been deposited into the Special 

16 Drawing Rights Fund (as so renamed under subsection 

17 (a)), but for the amendments made by this section, shall 

18 instead be paid to the Secretary of the Treasury, and the 

19 Secretary of the Treasury shall use such funds to reduce 

20 the public debt. 

21 (e) WIND DOWN PERIOD FOR CERTAIN TRANS22 ACTIONS.—Notwithstanding any other provision of this 

23 section, during the 3-year period beginning on the date 

24 of the enactment of this Act, property other than Special 

25 Drawing Rights may be deposited, and maintained, in the 


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1 Special Drawing Rights Fund as needed to fulfill any out2 standing obligations on the Fund. 

3 TITLE VI—CREDIT ALLOCATION 

4 NEUTRALITY ACT 

5 SEC. 601. FINDINGS. 

6 The Congress finds the following: 

7 (1) In conducting open market operations, the 

8 Federal Open Market Committee should not allocate 

9 credit among households, firms, and sectors of the 

10 United States economy. 

11 (2) To assure the credit allocation neutrality of 

12 open market operations among households, firms, 

13 and sectors of the United States economy, the Fed14 eral Open Market Committee should conduct open 

15 market operations in United States Government se16 curities, and repurchase and reverse repurchase 

17 agreements that have a term of 1 year or less, ex18 cept in unusual and exigent circumstances. 

19 SEC. 602. LIMITATION ON CERTAIN NON-EMERGENCY SECU20 RITY PURCHASES. 

21 (a) IN GENERAL.—The Federal Reserve Act is 

22 amended— 

23 (1) in section 12A, by adding at the end the fol24 lowing: 

25 ‘‘(d) EMERGENCY PURCHASING AUTHORITY.— 


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1 ‘‘(1) IN GENERAL.—In unusual and exigent cir2 cumstances, the Committee, by the affirmative vote 

of at least 2 3 ⁄3 of the members of the Committee, may 

4 authorize any Federal reserve bank, during such pe5 riod as the Committee may determine— 

6 ‘‘(A) to buy and sell, at home or abroad, 

7 bills, notes, revenue bonds, and warrants with a 

8 maturity from date of purchase of not exceed9 ing six months, issued in anticipation of the col10 lection of taxes or in anticipation of the receipt 

11 of assured revenues by any State, county, dis12 trict, political subdivision, or municipality in the 

13 continental United States, including irrigation, 

14 drainage and reclamation districts, and obliga15 tions of, or fully guaranteed as to principal and 

16 interest by, a foreign government or agency 

17 thereof; and 

18 ‘‘(B) to buy and sell in the open market, 

19 under the direction and regulations of the Com20 mittee, any obligation which is a direct obliga21 tion of, or fully guaranteed as to principal and 

22 interest by, any agency of the United States. 

23 ‘‘(2) MAXIMUM HOLDING PERIOD.—Any bond, 

24 bill, note, revenue bond, warrant, or other obligation 

25 purchased by a Federal reserve bank pursuant to 


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1 paragraph (1) shall be disposed of before the end of 

2 the 5-year period beginning on the end of the period 

3 determined by the Committee under paragraph (1). 

4 ‘‘(3) REPORT.—The Committee shall provide to 

5 the Committee on Banking, Housing, and Urban Af6 fairs of the Senate and the Committee on Financial 

7 Services of the House of Representatives, not later 

8 than 7 days after the Committee makes an author9 ization under this subsection, a report that in10 cludes— 

11 ‘‘(A) the justification for the exercise of 

12 authority to provide; 

13 ‘‘(B) the identity of the person to or from 

14 which purchases or sales were made; 

15 ‘‘(C) the date and amount of the purchases 

16 or sales; and 

17 ‘‘(D) the material terms of the purchases 

18 or sales.’’; and 

19 (2) in section 14(b)— 

20 (A) in paragraph (1), by striking ‘‘bonds 

21 issued under the provisions of subsection (c) of 

22 section 4 of the Home Owners’ Loan Act of 

23 1933, as amended, and having maturities from 

24 date of purchase of not exceeding six months, 

25 and bills, notes, revenue bonds, and warrants 


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1 with a maturity from date of purchase of not 

2 exceeding six months, issued in anticipation of 

3 the collection of taxes or in anticipation of the 

4 receipt of assured revenues by any State, coun5 ty, district, political subdivision, or municipality 

6 in the continental United States, including irri7 gation, drainage and reclamation districts, and 

8 obligations of, or fully guaranteed as to prin9 cipal and interest by, a foreign government or 

10 agency thereof,’’; and 

11 (B) by amending paragraph (2) to read as 

12 follows: 

13 ‘‘(2) To enter into security repurchase agree14 ments and reverse repurchase agreements that have 

15 a term of 1 year or less, in accordance with rules 

16 and regulations prescribed by the Board of Gov17 ernors of the Federal Reserve System.’’. 

18 (b) TRANSITION PROVISION.—Each Federal reserve 

19 bank that holds bonds, bills, notes, revenue bonds, war20 rants, or other obligations purchased under the authority 

21 granted by a provision struck under subsection (a)(2) shall 

22 dispose of such obligations not later than the end of the 

23 5-year period beginning on the date of the enactment of 

24 this Act. 


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•HR 4180 IH

1 TITLE VII—BUREAU OF CON2 SUMER FINANCIAL PROTEC3 TION FUNDING ACT 

4 SEC. 701. FINDINGS. 

5 The Congress finds the following: 

6 (1) As our Nation’s central bank, the Federal 

7 Reserve conducts United States monetary policy and 

8 necessarily exercises broad oversight responsibility to 

9 ensure the safety, soundness, and smooth func10 tioning of the Nation’s banking and payments sys11 tems. 

12 (2) There exists a broad consensus among pol13 icymakers, academics, and most informed com14 mentators that central bank independence is nec15 essary to the proper and effective conduct of mone16 tary policy and those regulatory activities necessary 

17 for the implementation of such monetary policy. 

18 (3) In order to preserve the independence of its 

19 activities, the Federal Reserve should remain oper20 ationally and financially autonomous within the 

21 United States Government. 

22 (4) However, those activities that do not relate 

23 to the functions listed in paragraph (1) should not 

24 occur outside of the constitutionally granted authorVerDate Mar 15 2010 23:37 Mar 09, 2012 Jkt 019200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H4180.IH H4180

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•HR 4180 IH

1 ity of Congress to authorize and oversee the expendi2 ture of public funds. 

3 (5) Therefore, the Bureau of Consumer Finan4 cial Protection should be subject to the Federal ap5 propriations process to ensure effective Congres6 sional oversight over its activities and use of public 

7 funds. 

8 SEC. 702. BUREAU OF CONSUMER FINANCIAL PROTECTION 

9 FUNDING. 

10 (a) IN GENERAL.—Section 1017 of the Consumer Fi11 nancial Protection Act of 2010 is amended— 

12 (1) in subsection (a)— 

13 (A) by amending the heading of such sub14 section to read as follows: ‘‘BUDGET, FINAN15 CIAL MANAGEMENT, AND AUDIT.—’’; 

16 (B) by striking paragraphs (1), (2), and 

17 (3); 

18 (C) by redesignating paragraphs (4) and 

19 (5) as paragraphs (1) and (2), respectively; and 

20 (D) in paragraph (1), as so redesignated— 

21 (i) by striking subparagraph (E); and 

22 (ii) by redesignating subparagraph 

23 (F) as subparagraph (E); 

24 (2) by striking subsections (b) and (c); 


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•HR 4180 IH

1 (3) by redesignating subsections (d) and (e) as 

2 subsections (b) and (c), respectively; and 

3 (4) in subsection (c), as so redesignated— 

4 (A) by striking paragraphs (1), (2), and 

5 (3) and inserting the following: 

6 ‘‘(1) AUTHORIZATION OF APPROPRIATIONS.— 

7 There is authorized to be appropriated such funds as 

8 may be necessary to carry out this title.’’; and 

9 (B) by redesignating paragraph (4) as 

10 paragraph (2). 

11 (b) EFFECTIVE DATE.—The amendments made by 

12 this section shall take effect on October 1, 2012. 

Æ 


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