II 

112TH CONGRESS 

2D SESSION S. 2247 

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 SENATE OF THE UNITED STATES 

MARCH 28, 2012 

Mr. LEE introduced the following bill; which was read twice and referred to 

the Committee on Banking, Housing, and Urban Affairs 

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 ‘‘Federal Reserve Modernization Act of 2012’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—SINGLE MANDATE FOR PRICE STABILITY ACT 


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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. 

1 TITLE I—SINGLE MANDATE FOR 

2 PRICE STABILITY ACT 

3 SEC. 101. FINDINGS. 

4 The Congress finds the following: 

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

6 employment in the short term because nonmonetary 

7 factors determine the level of employment in the 

8 long term. At best, the Federal Reserve may tempo9 rarily increase the level of employment through monVerDate Mar 15 2010 03:15 Mar 29, 2012 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247

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1 etary policy, but such efforts risk the possibility of 

2 price inflation and increased business cycle volatility 

3 in the future. However, the Federal Reserve can 

4 achieve price stability in the long term through mon5 etary policy. Price stability is desirable because both 

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

7 economy. Therefore, to maximize long-term economic 

8 growth and achieve the highest sustainable level of 

9 real output and employment, price stability should 

10 be the objective of monetary policy. 

11 (2) Countries whose central bank has a single 

12 mandate for price stability generally have a better 

13 record of achieving stable prices than countries 

14 whose central bank has a mandate that gives equal 

15 weight to other objectives such as maximum employ16 ment or low interest rates. 

17 (3) In general, an overly accommodative mone18 tary policy inflates both asset prices and prices for 

19 goods and services. However, an overly accommoda20 tive monetary policy may sometimes cause a 

21 misallocation of capital that inflates asset prices dis22 proportionately, creating unsustainable bubbles in 

23 asset prices, while price indices for goods and serv24 ices do not register significant price inflation. When 

25 asset bubbles burst, many investments must be liqVerDate Mar 15 2010 03:15 Mar 29, 2012 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247

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1 uidated at considerable cost to the U.S. economy in 

2 terms of lower real output and employment. 

3 (4) Price stability cannot always be measured 

4 solely through price indices for goods and services 

5 since such indices exclude changes in asset prices. 

6 Therefore, the Federal Reserve should monitor (A) 

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

8 asset classes (including equities, residential real es9 tate, commercial and industrial real estate, agricul10 tural real estate, gold and other commodities, cor11 porate bonds, U.S. Government bonds, State and 

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

13 the value of the U.S. dollar relative to other cur14 rencies, and (C) the value of the United States dol15 lar relative to gold, as metrics to determine whether 

16 the Federal Reserve’s monetary policy is consistent 

17 with long-term price stability. 

18 SEC. 102. PRICE STABILITY MANDATE. 

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

20 Act is amended— 

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

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

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

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

25 inserting the following: 


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

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

3 ‘‘(b) PRICE STABILITY METRICS.— 

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

5 the Federal Reserve System and the Federal Open 

6 Market Committee shall— 

7 ‘‘(A) define the term ‘long-term price sta8 bility’ for purposes of subsection (a); and 

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

10 the Committee will use to evaluate whether 

11 long-term price stability is being achieved. 

12 ‘‘(2) ESTABLISHMENT OF METRICS.—In estab13 lishing the metrics described under paragraph 

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

15 ‘‘(A) take into consideration price indices 

16 of goods and services; and 

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

18 ‘‘(i) whether such metrics are com19 prehensively reflecting price movements in 

20 the economy; and 

21 ‘‘(ii) whether any price movements not 

22 captured by the price indices of goods and 

23 services are causing a significant 

24 misallocation of capital in the United 

25 States economy. 


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

2 Committee shall, with respect to the evaluation proc3 ess required pursuant to paragraph (2)(B), mon4 itor— 

5 ‘‘(A) the prices of, and the expected re6 turns from, major asset classes (including equi7 ties, residential real estate, commercial and in8 dustrial real estate, agricultural real estate, 

9 commodities, corporate bonds, State and local 

10 government bonds, and other securities) and 

11 the allocation of capital in financial markets 

12 and the broader economy; 

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

14 relative to other currencies; and 

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

16 relative to gold. 

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

18 CONGRESS.—The Board and the Committee shall, 

19 with respect to the definition of long-term price sta20 bility and the establishment of metrics set pursuant 

21 to paragraph (1)— 

22 ‘‘(A) make such definition and metrics 

23 available to the public on a website maintained 

24 by the Board or the Committee; and 


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

2 are set or revised, issue a report to the Con3 gress stating such definition and metrics.’’. 

4 (b) ADDITIONAL EVALUATIONS AND DETERMINA5 TIONS INCLUDED IN SEMI-ANNUAL REPORT TO CON6 GRESS.—Section 2B(b) of the Federal Reserve Act is 

7 amended— 

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

9 inserting the following: 

10 ‘‘containing— 

11 ‘‘(1) a discussion’’; 

12 (2) by striking the period and inserting a semi13 colon; and 

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

15 ‘‘(2) the results of the evaluation process con16 ducted pursuant to section 2A(b)(2)(B); 

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

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

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

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

21 the Federal Open Market Committee will take to en22 sure that the goal is met in the future; 

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

24 instruments used by the Board and the Federal 

25 Open Market Committee and a description of the 


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1 strategy of the Board and the Committee with re2 spect to using such instruments to achieve the goal 

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

4 TITLE II—FINANCIAL STABILITY 

5 AND MORAL HAZARD MITIGA6 TION ACT 

7 SEC. 201. FINDINGS. 

8 The Congress finds the following: 

9 (1) The Federal Reserve performs an essential 

10 function for financial stability by serving as lender 

11 of last resort in order to— 

12 (A) prevent the unnecessary failures of 

13 otherwise solvent United States banks and 

14 other financial institutions; 

15 (B) reduce the likelihood of financial con16 tagion and disruptions in United States finan17 cial markets; and 

18 (C) minimize any adverse effects on real 

19 output and employment in the United States 

20 economy. 

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

22 Federal Reserve, may— 

23 (A) buy debt securities at fair market 

24 value; or 


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

2 appropriate collateral in proper margin, to oth3 erwise solvent banks and other financial institu4 tions that encounter funding difficulties during 

5 a financial crisis. 

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

7 the Federal Reserve has never clearly articulated its 

8 lender-of-last-resort policy. 

9 (4) The absence of an official lender-of-last-re10 sort policy has led to— 

11 (A) increased economic uncertainty be12 cause no one knows with certainty how the Fed13 eral Reserve may behave; 

14 (B) financially distressed firms seeking po15 litical solutions in the form of pressure from 

16 Congress or the Administration being placed on 

17 the Federal Reserve to act to save them; and 

18 (C) a moral hazard problem from financial 

19 institutions taking greater risks and increasing 

20 leverage based upon assumptions of how the 

21 Federal Reserve will act, though there is no for22 mal statement assuring how the Federal Re23 serve will act. 

24 (5) By establishing a formal lender-of-last-re25 sort policy, the Federal Reserve would decrease unVerDate Mar 15 2010 03:15 Mar 29, 2012 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247

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1 certainty in the market during times of financial cri2 sis and mitigate the moral hazards created by recent 

3 bailouts. 

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

5 provide that once a financial crisis has dissipated, 

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

7 any debt securities that— 

8 (A) the Federal Reserve acquired acting as 

9 lender of last resort; and 

10 (B) the Federal Reserve does not normally 

11 own for its System Account. 

12 (7) Further, to reduce moral hazard, the Fed13 eral Reserve’s lender-of-last-resort policy should 

14 make clear that credit in any form will not be pro15 vided to insolvent banks or other financial institu16 tion. 

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

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

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

20 Act, the Board of Governors of the Federal Reserve Sys21 tem shall clearly articulate the Board’s lender-of-last-re22 sort policy. 

23 (b) CONSULTATION.—In articulating the policy re24 quired under subsection (a), the Board of Governors shall 

25 consult with— 


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1 (1) the Federal Reserve bank presidents; 

2 (2) the Comptroller of the Currency; 

3 (3) the Chairperson of the Federal Deposit In4 surance Corporation; 

5 (4) the Securities and Exchange Commission; 

6 (5) the Commodity Futures Trading Commis7 sion; and 

8 (6) such other persons with expertise in finan9 cial services regulation and monetary policy as the 

10 Board of Governors may determine appropriate. 

11 TITLE III—DIVERSIFYING THE 

12 FEDERAL OPEN MARKET 

13 COMMITTEE TO REFLECT A 

14 21ST CENTURY ECONOMY ACT 

15 SEC. 301. FINDINGS. 

16 The Congress finds the following: 

17 (1) The Federal Reserve Act delineates specific 

18 requirements for the seven governors charged with 

19 oversight of the Federal Reserve System. 

20 (2) In a reflection of the Federal Reserve Sys21 tem’s decentralized structure that broadly distrib22 utes power and responsibility across the Nation, the 

23 Act mandates that the presidentially appointed gov24 ernors come from a wide range of geographic loca25 tions and professional backgrounds. Specifically, the 


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1 first undesignated paragraph under section 10 of the 

2 Federal Reserve Act states that ‘‘In selecting the 

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

4 shall be selected from any one Federal Reserve Dis5 trict, the President shall have due regard to a fair 

6 representation of the financial, agricultural, indus7 trial, and commercial interests and geographical di8 visions of the country.’’. 

9 (3) The Federal Open Monetary Committee 

10 consists of members of the Board of Governors and 

11 the President or Vice President of the Federal Re12 serve Bank of New York on a permanent basis and 

13 rotates voting membership among the remaining Re14 gional Reserve Banks. 

15 (4) The existing structure of the Federal Open 

16 Market Committee places too much authority in the 

17 hands of Washington and New York at the expense 

18 of the remainder of the United States. 

19 (5) Monetary policy should be conducted in the 

20 interest of all Americans and that policy goal is best 

21 achieved by a Federal Open Market Committee that 

22 provides greater representation and voice in policy 

23 decisions to the entire Nation as represented by the 

24 Regional Reserve Banks. This objective is best 

25 achieved by reforming the voting membership of the 


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1 Federal Open Market Committee to include all Re2 gional Reserve Banks on a permanent basis. 

3 SEC. 302. FEDERAL OPEN MARKET COMMITTEE MEMBER4 SHIP. 

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

6 U.S.C. 263(a)) is amended— 

7 (1) by striking ‘‘five representatives of the Fed8 eral Reserve banks to be selected as hereinafter pro9 vided.’’ and inserting ‘‘1 representative from each of 

10 the Federal Reserve banks.’’; and 

11 (2) by striking ‘‘and, beginning with the elec12 tion for the term commencing March 1, 1943, shall 

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

14 directors of the Federal Reserve Bank of New York, 

15 one by the boards of directors of the Federal Re16 serve Banks of Boston, Philadelphia, and Richmond, 

17 one by the boards of directors of the Federal Re18 serve Banks of Cleveland and Chicago, one by the 

19 boards of directors of the Federal Reserve Banks of 

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

21 boards of directors of the Federal Reserve Banks of 

22 Minneapolis, Kansas City, and San Francisco. In 

23 such elections each board of directors shall have one 

24 vote; and the details of such elections may be gov25 erned by regulations prescribed by the committee, 


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1 which may be amended from time to time.’’ and in2 serting ‘‘and shall be elected by the board of direc3 tors of the Federal Reserve bank that they are to 

4 represent.’’. 

5 TITLE IV—DEMYSTIFICATION OF 

6 MONETARY POLICY DECI7 SIONS ACT 

8 SEC. 401. FINDINGS. 

9 The Congress finds the following: 

10 (1) A more efficient release of transcripts from 

11 the Federal Reserve would result in better guidance 

12 for market participants, and hence more economi13 cally efficient decisionmaking. 

14 (2) According to Federal Reserve Chairman 

15 Ben Bernanke, ‘‘when the monetary policy com16 mittee regularly provides information about objec17 tives, economic outlook, and policy plans, two bene18 fits result: (1) markets will price assets more effi19 ciently, and (2) a closer alignment between market 

20 participants’ expectations about the course of future 

21 short-term interest rates and’’ the views of policy22 makers. 

23 (3) The Federal Reserve is able to release tran24 scripts more efficiently without compromising their 

25 decisionmaking process. 


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1 SEC. 402. RELEASE OF TRANSCRIPTS. 

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

3 U.S.C. 263(a)) is amended by adding at the end the fol4 lowing: 

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

6 shall release meeting transcripts to the public not later 

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

8 TITLE V—EXCHANGE RATE 

9 RESPONSIBILITY ACT 

10 SEC. 501. FINDINGS. 

11 The Congress finds as follows: 

12 (1) The Board of Governors of the Federal Re13 serve System and the Federal Open Market Com14 mittee exercise control over the supply of U.S. dol15 lars, which is a major factor affecting the foreign ex16 change rate value of the United States dollar. There17 fore, the Board of Governors and Federal Open 

18 Market Committee should report to Congress on the 

19 impact of monetary policy on the foreign exchange 

20 rate value of the United States dollar. 

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

22 the Treasury have repeatedly used the Exchange 

23 Stabilization Fund for purposes that were not envi24 sioned by Congress. To prevent further abuses, the 

25 Exchange Stabilization Fund should be renamed as 

26 the Special Drawing Rights Fund. The Special 


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1 Drawing Rights Fund should hold the Special Draw2 ing Rights that the International Monetary Fund 

3 provided to the United States. Any other assets cur4 rently in the Exchange Stabilization Fund should be 

5 liquidated, and the proceeds used to reduce the pub6 lic debt. 

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

8 POLICY. 

9 Section 2B(b) of the Federal Reserve Act, as amend10 ed by section 102(b), is further amended by adding at the 

11 end the following: 

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

13 Board and the Federal Open Market Committee are 

14 affecting the foreign exchange rate value of the 

15 United States dollar.’’. 

16 SEC. 503. RENAMING OF EXCHANGE STABILIZATION FUND. 

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

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

19 each place such term appears and inserting ‘‘Special 

20 Drawing Rights Fund’’. 

21 (b) CONFORMING AMENDMENTS.— 

22 (1) BALANCED BUDGET AND EMERGENCY DEF23 ICIT CONTROL ACT OF 1985.—Section 255(g)(1)(A) 

24 of the Balanced Budget and Emergency Deficit Con25 trol Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended 


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1 by striking ‘‘Exchange Stabilization Fund’’ and in2 serting ‘‘Special Drawing Rights Fund’’. 

3 (2) EMERGENCY ECONOMIC STABILIZATION ACT

4 OF 2008.—The Emergency Economic Stabilization 

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

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

7 Stabilization Fund’’ each place such term ap8 pears in headings and text and inserting ‘‘Spe9 cial Drawing Rights Fund’’; and 

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

11 the table of contents of such Act, by striking 

12 ‘‘Exchange Stabilization Fund’’ and inserting 

13 ‘‘Special Drawing Rights Fund’’. 

14 (3) INTERNATIONAL FINANCIAL INSTITUTIONS

15 ACT.—Section 1704 of the International Financial 

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

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

18 appears and inserting ‘‘Special Drawing Rights 

19 Fund’’. 

20 (4) SPECIAL DRAWING RIGHTS ACT.—The Spe21 cial Drawing Rights Act (22 U.S.C. 286n et seq.) is 

22 amended by striking ‘‘Exchange Stabilization Fund’’ 

23 each place such term appears and inserting ‘‘Special 

24 Drawing Rights Fund’’. 


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1 (c) REFERENCES.—Any reference in a law, regula2 tion, document, paper, or other record of the United 

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

4 deemed a reference to the ‘‘Special Drawing Rights 

5 Fund’’. 

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

7 (a) FUNDS USED TO REDUCE THE DEBT.—The Sec8 retary of the Treasury shall liquidate all property in the 

9 Special Drawing Rights Fund (as so renamed under sec10 tion 503), other than Special Drawing Rights, and use all 

11 such amounts to reduce the public debt. 

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

13 United States Code, is amended— 

14 (1) in subsection (a)(1)— 

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

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

17 and 

18 (B) by striking ‘‘, and for investing in obli19 gations of the United States Government those 

20 amounts in the fund the Secretary of the Treas21 ury, with the approval of the President, decides 

22 are not required at the time to carry out this 

23 section. Proceeds of sales and investments, 

24 earnings, and interest shall be paid into the 

25 fund and are available to carry out this section. 


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1 However, the fund is not available to pay ad2 ministrative expenses’’; and 

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

4 following: 

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

6 RIGHTS.—Notwithstanding any other provision of law, 

7 only Special Drawing Rights may be deposited into the 

8 Special Drawing Rights Fund.’’. 

9 (c) CONFORMING AMENDMENTS.— 

10 (1) BRETTON WOODS AGREEMENTS ACT.—Sec11 tion 18 of the Bretton Woods Agreements Act (22 

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

13 (2) SUPPORT FOR EAST EUROPEAN DEMOCRACY

14 (SEED) ACT OF 1989.—The Support for East Euro15 pean Democracy (SEED) Act of 1989 (22 U.S.C. 

16 5401 et seq.) is amended— 

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

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

19 the paragraph and inserting ‘‘such as the au20 thority provided in section 102(c) of this Act.’’; 

21 and 

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

23 101(b)—’’ and all that follows through the end 

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

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1 nity and international financial institutions to 

2 determine the extent of emergency assistance 

3 required by Poland for the fourth quarter of 

4 1989.’’. 

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

6 would otherwise have been deposited into the Special 

7 Drawing Rights Fund (as so renamed under subsection 

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

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

10 Secretary of the Treasury shall use such funds to reduce 

11 the public debt. 

12 (e) WIND DOWN PERIOD FOR CERTAIN TRANS13 ACTIONS.—Notwithstanding any other provision of this 

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

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

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

17 Special Drawing Rights Fund as needed to fulfill any out18 standing obligations on the Fund. 

19 TITLE VI—CREDIT ALLOCATION 

20 NEUTRALITY ACT 

21 SEC. 601. FINDINGS. 

22 The Congress finds the following: 

23 (1) In conducting open market operations, the 

24 Federal Open Market Committee should not allocate 


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1 credit among households, firms, and sectors of the 

2 United States economy. 

3 (2) To assure the credit allocation neutrality of 

4 open market operations among households, firms, 

5 and sectors of the United States economy, the Fed6 eral Open Market Committee should conduct open 

7 market operations in United States Government se8 curities, and repurchase and reverse repurchase 

9 agreements that have a term of 1 year or less, ex10 cept in unusual and exigent circumstances. 

11 SEC. 602. LIMITATION ON CERTAIN NON-EMERGENCY SECU12 RITY PURCHASES. 

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

14 amended— 

15 (1) in section 12A, by adding at the end the fol16 lowing: 

17 ‘‘(d) EMERGENCY PURCHASING AUTHORITY.— 

18 ‘‘(1) IN GENERAL.—In unusual and exigent cir19 cumstances, the Committee, by the affirmative vote 

of at least 2 20 ⁄3 of the members of the Committee, may 

21 authorize any Federal Reserve bank, during such pe22 riod as the Committee may determine— 

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

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

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1 ing six months, issued in anticipation of the col2 lection of taxes or in anticipation of the receipt 

3 of assured revenues by any State, county, dis4 trict, political subdivision, or municipality in the 

5 continental United States, including irrigation, 

6 drainage and reclamation districts, and obliga7 tions of, or fully guaranteed as to principal and 

8 interest by, a foreign government or agency 

9 thereof; and 

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

11 under the direction and regulations of the Com12 mittee, any obligation which is a direct obliga13 tion of, or fully guaranteed as to principal and 

14 interest by, any agency of the United States. 

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

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

17 purchased by a Federal Reserve bank pursuant to 

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

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

20 determined by the Committee under paragraph (1). 

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

22 the Committee on Banking, Housing, and Urban Af23 fairs of the Senate and the Committee on Financial 

24 Services of the House of Representatives, not later 

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1 ization under this subsection, a report that in2 cludes— 

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

4 authority to provide; 

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

6 which purchases or sales were made; 

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

8 or sales; and 

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

10 or sales.’’; and 

11 (2) in section 14(b)— 

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

13 issued under the provisions of subsection (c) of 

14 section 4 of the Home Owners’ Loan Act of 

15 1933, as amended, and having maturities from 

16 date of purchase of not exceeding six months, 

17 and bills, notes, revenue bonds, and warrants 

18 with a maturity from date of purchase of not 

19 exceeding six months, issued in anticipation of 

20 the collection of taxes or in anticipation of the 

21 receipt of assured revenues by any State, coun22 ty, district, political subdivision, or municipality 

23 in the continental United States, including irri24 gation, drainage and reclamation districts, and 

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1 cipal and interest by, a foreign government or 

2 agency thereof,’’; and 

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

4 follows: 

5 ‘‘(2) To enter into security repurchase agree6 ments and reverse repurchase agreements that have 

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

8 and regulations prescribed by the Board of Gov9 ernors of the Federal Reserve System.’’. 

10 (b) TRANSITION PROVISION.—Each Federal Reserve 

11 bank that holds bonds, bills, notes, revenue bonds, war12 rants, or other obligations purchased under the authority 

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

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

15 5-year period beginning on the date of the enactment of 

16 this Act. 

17 TITLE VII—BUREAU OF CON18 SUMER FINANCIAL PROTEC19 TION FUNDING ACT 

20 SEC. 701. FINDINGS. 

21 The Congress finds the following: 

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

23 Reserve conducts United States monetary policy and 

24 necessarily exercises broad oversight responsibility to 

25 ensure the safety, soundness, and smooth funcVerDate Mar 15 2010 03:15 Mar 29, 2012 Jkt 019200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\S2247.IS S2247

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•S 2247 IS

1 tioning of the Nation’s banking and payments sys2 tems. 

3 (2) There exists a broad consensus among pol4 icymakers, academics, and most informed com5 mentators that central bank independence is nec6 essary to the proper and effective conduct of mone7 tary policy and those regulatory activities necessary 

8 for the implementation of such monetary policy. 

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

10 activities, the Federal Reserve should remain oper11 ationally and financially autonomous within the 

12 United States Government. 

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

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

15 occur outside of the constitutionally granted author16 ity of Congress to authorize and oversee the expendi17 ture of public funds. 

18 (5) Therefore, the Bureau of Consumer Finan19 cial Protection should be subject to the Federal ap20 propriations process to ensure effective Congres21 sional oversight over its activities and use of public 

22 funds. 


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1 SEC. 702. BUREAU OF CONSUMER FINANCIAL PROTECTION 

2 FUNDING. 

3 (a) IN GENERAL.—Section 1017 of the Consumer Fi4 nancial Protection Act of 2010 is amended— 

5 (1) in subsection (a)— 

6 (A) by amending the heading of such sub7 section to read as follows: ‘‘BUDGET, FINAN8 CIAL MANAGEMENT, AND AUDIT.—’’; 

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

10 (3); 

11 (C) by redesignating paragraphs (4) and 

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

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

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

15 (ii) by redesignating subparagraph 

16 (F) as subparagraph (E); 

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

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

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

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

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

22 (3) and inserting the following: 

23 ‘‘(1) AUTHORIZATION OF APPROPRIATIONS.— 

24 There is authorized to be appropriated such funds as 

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


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1 (B) by redesignating paragraph (4) as 

2 paragraph (2). 

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

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

Æ 


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