79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–980 

FEDERAL RESERVE SUPERVISION TESTIMONY 

CLARIFICATION ACT 

SEPTEMBER 26, 2018.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 4753] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 4753) to amend the Federal Reserve Act to require the 

Vice Chairman for Supervision of the Board of Governors of the 

Federal Reserve System to provide a written report, and for other 

purposes, having considered the same, report favorably thereon 

with an amendment and recommend that the bill as amended do 

pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Federal Reserve Supervision Testimony Clarification Act’’. 

SEC. 2. VICE CHAIRMAN FOR SUPERVISION REPORT REQUIREMENT. 

Paragraph (12) of section 10 of the Federal Reserve Act (12 U.S.C. 247b) is 

amended— 

(1) by redesignating such paragraph as paragraph (11); and 

(2) in such paragraph— 

(A) by striking ‘‘shall appear’’ and inserting ‘‘shall provide written testimony and appear’’; and 

(B) by adding at the end the following: ‘‘If, at the time of any appearance 

described in this paragraph, the position of Vice Chairman for Supervision 

is vacant, the Chairman or their designee shall appear instead and provide 

the required written testimony.’’. 

PURPOSE AND SUMMARY

On January 10, 2018, Representative Frank Lucas introduced 

H.R. 4753, the ‘‘Federal Reserve Supervision Testimony Clarification Act’’, which clarifies Section 1108 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act. This legislation estabVerDate Sep 11 2014 00:57 Oct 02, 2018 Jkt 079006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR980.XXX HR980

SSpencer on DSKBBXCHB2PROD with REPORTS
2 

lishes procedures to fulfill Section 1108’s semi-annual testimony 

mandate for the Federal Reserve’s Vice Chairman for Supervision. 

The legislation establishes that the Chairman of the Board of Governors of the Federal Reserve System (Federal Reserve), or the 

Chairman’s designee, will fulfill the testimony requirement for the 

Federal Reserve’s Vice Chairman for Supervision if the United 

States Senate has not confirmed an individual to serve as the Vice 

Chairman for Supervision. 

BACKGROUND AND NEED FOR LEGISLATION

Section 1108 of Dodd-Frank Wall Street Reform and Consumer 

Protection Act (P.L. 111–203) amended Section 10 of the Federal 

Reserve Act and created a new position at the Federal Reserve, the 

Vice Chairman for Supervision. The Vice Chairman for Supervision 

is a presidential appointee subject to the advice and consent of the 

Senate. This amendment to the Federal Reserve Act also requires 

the Vice Chairman for Supervision to testify semi-annually before 

Committee on Financial Services of the House of Representatives 

and the Committee on Banking, Housing and Urban Affairs of the 

United States Senate. The testimony, as mandated by the amendment to the Federal Reserve Act, requires the Vice Chairman for 

Supervision to discuss ‘‘the efforts, activities, objectives, and plans 

of the Board with respect to the conduct of supervision and regulation of depository institution holding companies and other financial 

firms supervised by the Board.’’ 

During his tenure as a Federal Reserve Board Governor, Daniel 

Tarullo fulfilled this function in practice. However, the Obama Administration never nominated him (or anybody else) to formally 

serve as the Federal Reserve’s Vice Chairman for Supervision. The 

failure to nominate former Governor Tarullo or any other person to 

the Vice Chairman for Supervision avoided accountability measures 

that Congress established for that position, including the requirement to appear before Congress. 

During President Obama’s administration, Financial Services 

Committee Chairman Jeb Hensarling and former Senate Banking, 

Housing and Urban Affairs Committee Chairman, Richard Shelby, 

sent a letter on September 21, 2016 to former Federal Reserve 

Chair Janet Yellen to ‘‘appear semi-annually before both the Senate Committee on Banking, Housing, and Urban Affairs, and the 

House Committee on Financial Services to testify on the matters 

specified in Section 1108 of the Dodd-Frank Act, until the position 

of Vice Chairman for Supervision position is filled.’’ 

The Federal Reserve Supervision Testimony Clarification Act, 

H.R. 4753, requires the Vice Chairman for Supervision to provide 

as part of his or her statutorily required semi-annual testimony a 

report on the status of proposed and anticipated rulemakings. H.R. 

4753 also requires that, if the Vice Chairman for Supervision position is vacant, then the Chairman of the Board of Governors or the 

Chairman’s designee must fulfill the statutory requirement for 

semi-annual testimony. 

HEARINGS

The Subcommittee on Monetary Policy and Trade held a hearing 

titled ‘‘A Further Examination of Federal Reserve Reform ProVerDate Sep 11 2014 00:57 Oct 02, 2018 Jkt 079006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR980.XXX HR980

SSpencer on DSKBBXCHB2PROD with REPORTS
3 

posals’’ to consider matters relating to H.R. 4753 on January 10, 

2018. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

September 13, 2018, and ordered H.R. 4753 to be reported favorably to the House without amendment by a recorded vote of 49 

yeas to 0 nays (recorded vote no. FC–203), a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed 

to by a recorded vote of 49 yeas to 0 nays (Record vote no. FC–203), 

a quorum being present. 


SSpencer on DSKBBXCHB2PROD with REPORTS
4 


SSpencer on DSKBBXCHB2PROD with REPORTSInsert graphic folio 5 HR980.001
5 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 4753 will 

strengthen Congress’s ability to fulfill its statutory mandate to effectively supervise the Federal Reserve System. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

The Committee has not received an estimate of new budget authority contained in the cost estimate prepared by the Director of 

the Congressional Budget Office pursuant to Sec. 402 of the Congressional Budget Act of 1974. In compliance with clause 3(c)(2) of 

rule XIII of the Rules of the House, the Committee opines that 

H.R. 4753 will not establish any new budget or entitlement authority or create any tax expenditures. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

The cost estimate prepared by the Director of the Congressional 

Budget Office pursuant to Sec. 402 of the Congressional Budget Act 

of 1974 was not submitted timely to the Committee. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. The Committee has 

determined that the bill does not contain Federal mandates on the 

private sector. The Committee has determined that the bill does 

not impose a Federal intergovernmental mandate on State, local, or 

tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 


SSpencer on DSKBBXCHB2PROD with REPORTS
6 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires no directed rule makings within the meaning of such section. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This Section cites H.R. 4753 as the Federal Reserve Supervision 

Testimony Clarification Act. 

Section 2. Vice Chairman for Supervision report requirement 

This section provides for the Federal Reserve Board Chair, or the 

Chair’s designee, to appear before Congress, in the event that the 

Vice Chairman for Supervision has not been confirmed. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

FEDERAL RESERVE ACT 

* * * * * * * 

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

SEC. 10. The Board of Governors of the Federal Reserve System 

(hereinafter referred to as the ‘‘Board’’) shall be composed of seven 

members, to be appointed by the President, by and with the advice 


SSpencer on DSKBBXCHB2PROD with REPORTS
7 

and consent of the Senate, after the date of enactment of the Banking Act of 1935, for terms of fourteen years except as hereinafter 

provided, but each appointive member of the Federal Reserve 

Board in office on such date shall continue to serve as a member 

of the Board until February 1, 1936, and the Secretary of the 

Treasury and the Comptroller of the Currency shall continue to 

serve as members of the Board until February 1, 1936. In selecting 

the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district, the President shall 

have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country. In selecting members of the Board, the President shall appoint at least 1 member with demonstrated primary 

experience working in or supervising community banks having less 

than $10,000,000,000 in total assets. The members of the Board 

shall devote their entire time to the business of the Board and 

shall each receive and annual salary of $15,000, payable monthly, 

together with actual necessary traveling expenses. 

The members of the Board shall be ineligible during the time 

they are in office and for two years thereafter to hold any office, 

position, or employment in any member bank, except that this restriction shall not apply to a member who has served the full term 

for which he was appointed. Upon the expiration of the term of any 

appointive member of the Federal Reserve Board in office on the 

date of enactment of the Banking Act of 1935, the President shall 

fix the term of the successor to such member at not to exceed fourteen years, as designated by the President at the time of nomination, but in such manner as to provide for the expiration of the 

term of not more than one member in any two-year period, and 

thereafter each member shall hold office for a term of fourteen 

years from the expiration of the term of his predecessor, unless 

sooner removed for cause by the President. Of the persons thus appointed, 1 shall be designated by the President, by and with the 

advice and consent of the Senate, to serve as Chairman of the 

Board for a term of 4 years, and 2 shall be designated by the President, by and with the advice and consent of the Senate, to serve 

as Vice Chairmen of the Board, each for a term of 4 years, 1 of 

whom shall serve in the absence of the Chairman, as provided in 

the fourth undesignated paragraph of this section, and 1 of whom 

shall be designated Vice Chairman for Supervision. The Vice Chairman for Supervision shall develop policy recommendations for the 

Board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the 

Board, and shall oversee the supervision and regulation of such 

firms. The chairman of the Board, subject to its supervision, shall 

be its active executive officer. Each member of the Board shall 

within fifteen days after notice of appointment make and subscribe 

to the oath of office. Upon the expiration of their terms of office, 

members of the Board shall continue to serve until their successors 

are appointed and have qualified. Any person appointed as a member of the Board after the date of enactment of the Banking Act 

of 1935 shall not be eligible for reappointment as such member 

after he shall have served a full term of fourteen years. 

The Board of Governors of the Federal Reserve System shall 

have power to levy semiannually upon the Federal reserve banks, 


SSpencer on DSKBBXCHB2PROD with REPORTS
8 

in proportion to their capital stock and surplus, an assessment sufficient to pay its estimated expenses and the salaries of its members and employees for the half year succeeding the levying of such 

assessment, together with any deficit carried forward from the preceding half year, and such assessments may include amounts sufficient to provide for the acquisition by the Board in its own name 

of such site or building in the District of Columbia as in its judgment alone shall be necessary for the purpose of providing suitable 

and adequate quarters for the performance of its functions. After 

September 1, 2000, the Board may also use such assessments to acquire, in its own name, a site or building (in addition to the facilities existing on such date) to provide for the performance of the 

functions of the Board. After approving such plans, estimates, and 

specifications as it shall have caused to be prepared, the Board 

may, notwithstanding any other provision of law, cause to be constructed on any site so acquired by it a building or buildings suitable and adequate in its judgment for its purposes and proceed to 

take all such steps as it may deem necessary or appropriate in connection with the construction, equipment, and furnishing of such 

building or buildings. The Board may maintain, enlarge, or remodel any building or buildings so acquired or constructed and 

shall have sole control of such building or buildings and space 

therein. 

The principal offices of the Board shall be in the District of Columbia. At meetings of the Board the chairman shall preside, and, 

in his absence, the vice chairman shall preside. In the absence of 

the chairman and the vice chairman, the Board shall elect a member to act as chairman pro tempore. The Board shall determine and 

prescribe the manner in which its obligations shall be incurred and 

its disbursements and expenses allowed and paid, and may leave 

on deposit in the Federal Reserve banks the proceeds of assessments levied upon them to defray its estimated expenses and the 

salaries of its members and employees, whose employment, compensation, leave, and expenses shall be governed solely by the provisions of this Act, specific amendments thereof, and rules and regulations of the Board not inconsistent therewith; and funds derived 

from such assessments shall not be construed to be Government 

funds or appropriated moneys. No member of the Board of Governors of the Federal Reserve System shall be an officer or director 

of any bank, banking institution, trust company, or Federal Reserve bank or hold stock in any bank, banking institution, or trust 

company; and before entering upon his duties as a member of the 

Board of Governors of the Federal Reserve System he shall certify 

under oath that he has complied with this requirement, and such 

certification shall be filed with the secretary of the Board. Whenever a vacancy shall occur, other than by expiration of term, among 

the six members of the Board of Governors of the Federal Reserve 

System appointed by the President as above provided, a successor 

shall be appointed by the President, by and with the advice and 

consent of the Senate, to fill such vacancy, and when appointed he 

shall hold office for the unexpired term of his predecessor. 

The President shall have power to fill all vacancies that may 

happen on the Board of Governors of the Federal Reserve System 

during the recess of the Senate by granting commissions which 

shall expire with the next session of the Senate. 


SSpencer on DSKBBXCHB2PROD with REPORTS
9 

Nothing in this Act contained shall be construed as taking away 

any powers heretofore vested by law in the Secretary of the Treasury which relate to the supervision, management, and control of 

the Treasury Department and bureaus under such department, and 

wherever any power vested by this Act in the Board of Governors 

of the Federal Reserve System or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury, 

such powers shall be exercised subject to the supervision and control of the Secretary. 

The Board of Governors of the Federal Reserve System shall annually make a full report of its operations to the Speaker of the 

House of Representatives, who shall cause the same to be printed 

for the information of the Congress. The report required under this 

paragraph shall include the reports required under section 707 of 

the Equal Credit Opportunity Act, section 18(f)(7) of the Federal 

Trade Commission Act, section 114 of the Truth in Lending Act, 

and the tenth undesignated paragraph of this section. 

No Federal Reserve bank may authorize the acquisition or construction of any branch building, or enter into any contract or other 

obligation for the acquisition or construction of any branch building, without the approval of the Board. 

The Board of Governors of the Federal Reserve System shall 

keep a complete record of the action taken by the Board and by the 

Federal Open Market Committee upon all questions of policy relating to open-market operations and shall record therein the votes 

taken in connection with the determination of open-market policies 

and the reasons underlying the action of the Board and the Committee in each instance. The Board shall keep a similar record with 

respect to all questions of policy determined by the Board, and 

shall include in its annual report to the Congress a full account of 

the action so taken during the preceding year with respect to openmarket policies and operations and with respect to the policies determined by it and shall include in such report a copy of the 

records required to be kept under the provisions of this paragraph. 

ø(12)¿ (11) APPEARANCES BEFORE CONGRESS.—The Vice 

Chairman for Supervision øshall appear¿ shall provide written 

testimony and appear before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives and at semiannual hearings regarding the efforts, activities, objectives, 

and plans of the Board with respect to the conduct of supervision and regulation of depository institution holding companies and other financial firms supervised by the Board. If, at 

the time of any appearance described in this paragraph, the position of Vice Chairman for Supervision is vacant, the Chairman or their designee shall appear instead and provide the required written testimony. 

* * * * * * * 

Æ 


SSpencer on DSKBBXCHB2PROD with REPORTS