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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 2247 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Federal Reserve 
Modernization Act of 2012''.
    (b) Table of Contents.--The table of contents for 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.

            TITLE I--SINGLE MANDATE FOR PRICE STABILITY ACT

SEC. 101. FINDINGS.

    The Congress finds the following:
            (1) Monetary policy can only affect the level of employment 
        in the short term because nonmonetary factors determine the 
        level of employment in the long term. At best, the Federal 
        Reserve may temporarily increase the level of employment 
        through monetary policy, but such efforts risk the possibility 
        of price inflation and increased business cycle volatility in 
        the future. However, the Federal Reserve can achieve price 
        stability in the long term through monetary policy. Price 
        stability is desirable because both price inflation and price 
        deflation damage the U.S. economy. Therefore, to maximize long-
        term economic growth and achieve the highest sustainable level 
        of real output and employment, price stability should be the 
        objective of monetary policy.
            (2) Countries whose central bank has a single mandate for 
        price stability generally have a better record of achieving 
        stable prices than countries whose central bank has a mandate 
        that gives equal weight to other objectives such as maximum 
        employment or low interest rates.
            (3) In general, an overly accommodative monetary policy 
        inflates both asset prices and prices for goods and services. 
        However, an overly accommodative monetary policy may sometimes 
        cause a misallocation of capital that inflates asset prices 
        disproportionately, creating unsustainable bubbles in asset 
        prices, while price indices for goods and services do not 
        register significant price inflation. When asset bubbles burst, 
        many investments must be liquidated at considerable cost to the 
        U.S. economy in terms of lower real output and employment.
            (4) Price stability cannot always be measured solely 
        through price indices for goods and services since such indices 
        exclude changes in asset prices. Therefore, the Federal Reserve 
        should monitor (A) the prices of, and the expected returns 
        from, major asset classes (including equities, residential real 
        estate, commercial and industrial real estate, agricultural 
        real estate, gold and other commodities, corporate bonds, U.S. 
        Government bonds, State and local government bonds, and other 
        securities), (B) the value of the U.S. dollar relative to other 
        currencies, and (C) the value of the United States dollar 
        relative to gold, as metrics to determine whether the Federal 
        Reserve's monetary policy is consistent with long-term price 
        stability.

SEC. 102. PRICE STABILITY MANDATE.

    (a) In General.--Section 2A of the Federal Reserve Act is amended--
            (1) by striking ``goals of maximum employment, stable 
        prices, and moderate long-term interest rates'' and inserting 
        ``goal of long-term price stability'';
            (2) by striking ``The Board of Governors'' and inserting 
        the following:
    ``(a) In General.--The Board of Governors''; and
            (3) by adding at the end the following:
    ``(b) Price Stability Metrics.--
            ``(1) In general.--The Board of Governors of the Federal 
        Reserve System and the Federal Open Market Committee shall--
                    ``(A) define the term `long-term price stability' 
                for purposes of subsection (a); and
                    ``(B) establish metrics that the Board and the 
                Committee will use to evaluate whether long-term price 
                stability is being achieved.
            ``(2) Establishment of metrics.--In establishing the 
        metrics described under paragraph (1)(B), the Board and 
        Committee shall--
                    ``(A) take into consideration price indices of 
                goods and services; and
                    ``(B) evaluate, on an ongoing basis--
                            ``(i) whether such metrics are 
                        comprehensively reflecting price movements in 
                        the economy; and
                            ``(ii) whether any price movements not 
                        captured by the price indices of goods and 
                        services are causing a significant 
                        misallocation of capital in the United States 
                        economy.
            ``(3) Metric evaluation.--The Board and Committee shall, 
        with respect to the evaluation process required pursuant to 
        paragraph (2)(B), monitor--
                    ``(A) the prices of, and the expected returns from, 
                major asset classes (including equities, residential 
                real estate, commercial and industrial real estate, 
                agricultural real estate, commodities, corporate bonds, 
                State and local government bonds, and other securities) 
                and the allocation of capital in financial markets and 
                the broader economy;
                    ``(B) the value of the United States dollar 
                relative to other currencies; and
                    ``(C) the value of the United States dollar 
                relative to gold.
            ``(4) Public disclosure; report to the congress.--The Board 
        and the Committee shall, with respect to the definition of 
        long-term price stability and the establishment of metrics set 
        pursuant to paragraph (1)--
                    ``(A) make such definition and metrics available to 
                the public on a website maintained by the Board or the 
                Committee; and
                    ``(B) each time such definition and metrics are set 
                or revised, issue a report to the Congress stating such 
                definition and metrics.''.
    (b) Additional Evaluations and Determinations Included in Semi-
Annual Report to Congress.--Section 2B(b) of the Federal Reserve Act is 
amended--
            (1) by striking ``containing a discussion'' and inserting 
        the following:
``containing--
            ``(1) a discussion'';
            (2) by striking the period and inserting a semicolon; and
            (3) by adding at the end the following:
            ``(2) the results of the evaluation process conducted 
        pursuant to section 2A(b)(2)(B);
            ``(3) a determination of whether the goal of long-term 
        price stability is being met and, if such goal is not being 
        met, an explanation of why the goal is not being met and the 
        steps that the Board and the Federal Open Market Committee will 
        take to ensure that the goal is met in the future;
            ``(4) a description of the main monetary policy instruments 
        used by the Board and the Federal Open Market Committee and a 
        description of the strategy of the Board and the Committee with 
        respect to using such instruments to achieve the goal of long-
        term price stability; and''.

     TITLE II--FINANCIAL STABILITY AND MORAL HAZARD MITIGATION ACT

SEC. 201. FINDINGS.

    The Congress finds the following:
            (1) The Federal Reserve performs an essential function for 
        financial stability by serving as lender of last resort in 
        order to--
                    (A) prevent the unnecessary failures of otherwise 
                solvent United States banks and other financial 
                institutions;
                    (B) reduce the likelihood of financial contagion 
                and disruptions in United States financial markets; and
                    (C) minimize any adverse effects on real output and 
                employment in the United States economy.
            (2) In acting as the lender of last resort, the Federal 
        Reserve, may--
                    (A) buy debt securities at fair market value; or
                    (B) provide short-term credit, secured by 
                appropriate collateral in proper margin, to otherwise 
                solvent banks and other financial institutions that 
                encounter funding difficulties during a financial 
                crisis.
            (3) Nevertheless, in its nearly 100-year history, the 
        Federal Reserve has never clearly articulated its lender-of-
        last-resort policy.
            (4) The absence of an official lender-of-last-resort policy 
        has led to--
                    (A) increased economic uncertainty because no one 
                knows with certainty how the Federal Reserve may 
                behave;
                    (B) financially distressed firms seeking political 
                solutions in the form of pressure from Congress or the 
                Administration being placed on the Federal Reserve to 
                act to save them; and
                    (C) a moral hazard problem from financial 
                institutions taking greater risks and increasing 
                leverage based upon assumptions of how the Federal 
                Reserve will act, though there is no formal statement 
                assuring how the Federal Reserve will act.
            (5) By establishing a formal lender-of-last-resort policy, 
        the Federal Reserve would decrease uncertainty in the market 
        during times of financial crisis and mitigate the moral hazards 
        created by recent bailouts.
            (6) An official lender-of-last-resort policy should provide 
        that once a financial crisis has dissipated, the Federal 
        Reserve should, in an orderly way, sell any debt securities 
        that--
                    (A) the Federal Reserve acquired acting as lender 
                of last resort; and
                    (B) the Federal Reserve does not normally own for 
                its System Account.
            (7) Further, to reduce moral hazard, the Federal Reserve's 
        lender-of-last-resort policy should make clear that credit in 
        any form will not be provided to insolvent banks or other 
        financial institution.

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

    (a) In General.--Not later than the end of the 1-year period 
beginning on the date of the enactment of this Act, the Board of 
Governors of the Federal Reserve System shall clearly articulate the 
Board's lender-of-last-resort policy.
    (b) Consultation.--In articulating the policy required under 
subsection (a), the Board of Governors shall consult with--
            (1) the Federal Reserve bank presidents;
            (2) the Comptroller of the Currency;
            (3) the Chairperson of the Federal Deposit Insurance 
        Corporation;
            (4) the Securities and Exchange Commission;
            (5) the Commodity Futures Trading Commission; and
            (6) such other persons with expertise in financial services 
        regulation and monetary policy as the Board of Governors may 
        determine appropriate.

TITLE III--DIVERSIFYING THE FEDERAL OPEN MARKET COMMITTEE TO REFLECT A 
                        21ST CENTURY ECONOMY ACT

SEC. 301. FINDINGS.

    The Congress finds the following:
            (1) The Federal Reserve Act delineates specific 
        requirements for the seven governors charged with oversight of 
        the Federal Reserve System.
            (2) In a reflection of the Federal Reserve System's 
        decentralized structure that broadly distributes power and 
        responsibility across the Nation, the Act mandates that the 
        presidentially appointed governors come from a wide range of 
        geographic locations and professional backgrounds. 
        Specifically, the first undesignated paragraph under section 10 
        of the Federal Reserve Act states that ``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.''.
            (3) The Federal Open Monetary Committee consists of members 
        of the Board of Governors and the President or Vice President 
        of the Federal Reserve Bank of New York on a permanent basis 
        and rotates voting membership among the remaining Regional 
        Reserve Banks.
            (4) The existing structure of the Federal Open Market 
        Committee places too much authority in the hands of Washington 
        and New York at the expense of the remainder of the United 
        States.
            (5) Monetary policy should be conducted in the interest of 
        all Americans and that policy goal is best achieved by a 
        Federal Open Market Committee that provides greater 
        representation and voice in policy decisions to the entire 
        Nation as represented by the Regional Reserve Banks. This 
        objective is best achieved by reforming the voting membership 
        of the Federal Open Market Committee to include all Regional 
        Reserve Banks on a permanent basis.

SEC. 302. FEDERAL OPEN MARKET COMMITTEE MEMBERSHIP.

    Section 12A(a) of the Federal Reserve Act (12 U.S.C. 263(a)) is 
amended--
            (1) by striking ``five representatives of the Federal 
        Reserve banks to be selected as hereinafter provided.'' and 
        inserting ``1 representative from each of the Federal Reserve 
        banks.''; and
            (2) by striking ``and, beginning with the election for the 
        term commencing March 1, 1943, shall be elected annually as 
        follows: One by the board of directors of the Federal Reserve 
        Bank of New York, one by the boards of directors of the Federal 
        Reserve Banks of Boston, Philadelphia, and Richmond, one by the 
        boards of directors of the Federal Reserve Banks of Cleveland 
        and Chicago, one by the boards of directors of the Federal 
        Reserve Banks of Atlanta, Dallas, and St. Louis, and one by the 
        boards of directors of the Federal Reserve Banks of 
        Minneapolis, Kansas City, and San Francisco. In such elections 
        each board of directors shall have one vote; and the details of 
        such elections may be governed by regulations prescribed by the 
        committee, which may be amended from time to time.'' and 
        inserting ``and shall be elected by the board of directors of 
        the Federal Reserve bank that they are to represent.''.

       TITLE IV--DEMYSTIFICATION OF MONETARY POLICY DECISIONS ACT

SEC. 401. FINDINGS.

    The Congress finds the following:
            (1) A more efficient release of transcripts from the 
        Federal Reserve would result in better guidance for market 
        participants, and hence more economically efficient 
        decisionmaking.
            (2) According to Federal Reserve Chairman Ben Bernanke, 
        ``when the monetary policy committee regularly provides 
        information about objectives, economic outlook, and policy 
        plans, two benefits result: (1) markets will price assets more 
        efficiently, and (2) a closer alignment between market 
        participants' expectations about the course of future short-
        term interest rates and'' the views of policymakers.
            (3) The Federal Reserve is able to release transcripts more 
        efficiently without compromising their decisionmaking process.

SEC. 402. RELEASE OF TRANSCRIPTS.

    Section 12A(a) of the Federal Reserve Act (12 U.S.C. 263(a)) is 
amended by adding at the end the following:
    ``(d) Release of Transcripts.--The Committee shall release meeting 
transcripts to the public not later than the end of the 3-year period 
following each meeting.''.

               TITLE V--EXCHANGE RATE RESPONSIBILITY ACT

SEC. 501. FINDINGS.

    The Congress finds as follows:
            (1) The Board of Governors of the Federal Reserve System 
        and the Federal Open Market Committee exercise control over the 
        supply of U.S. dollars, which is a major factor affecting the 
        foreign exchange rate value of the United States dollar. 
        Therefore, the Board of Governors and Federal Open Market 
        Committee should report to Congress on the impact of monetary 
        policy on the foreign exchange rate value of the United States 
        dollar.
            (2) Over the last several decades, Secretaries of the 
        Treasury have repeatedly used the Exchange Stabilization Fund 
        for purposes that were not envisioned by Congress. To prevent 
        further abuses, the Exchange Stabilization Fund should be 
        renamed as the Special Drawing Rights Fund. The Special Drawing 
        Rights Fund should hold the Special Drawing Rights that the 
        International Monetary Fund provided to the United States. Any 
        other assets currently in the Exchange Stabilization Fund 
        should be liquidated, and the proceeds used to reduce the 
        public debt.

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

    Section 2B(b) of the Federal Reserve Act, as amended by section 
102(b), is further amended by adding at the end the following:
            ``(5) an analysis of how the policies of the Board and the 
        Federal Open Market Committee are affecting the foreign 
        exchange rate value of the United States dollar.''.

SEC. 503. RENAMING OF EXCHANGE STABILIZATION FUND.

    (a) In General.--Section 5302 of title 31, United States Code, is 
amended by striking ``stabilization fund'' each place such term appears 
and inserting ``Special Drawing Rights Fund''.
    (b) Conforming Amendments.--
            (1) Balanced budget and emergency deficit control act of 
        1985.--Section 255(g)(1)(A) of the Balanced Budget and 
        Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)(A)) 
        is amended by striking ``Exchange Stabilization Fund'' and 
        inserting ``Special Drawing Rights Fund''.
            (2) Emergency economic stabilization act of 2008.--The 
        Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 et 
        seq.) is amended--
                    (A) in section 131, by striking ``Exchange 
                Stabilization Fund'' each place such term appears in 
                headings and text and inserting ``Special Drawing 
                Rights Fund''; and
                    (B) in the item relating to section 131 in the 
                table of contents of such Act, by striking ``Exchange 
                Stabilization Fund'' and inserting ``Special Drawing 
                Rights Fund''.
            (3) International financial institutions act.--Section 1704 
        of the International Financial Institutions Act (22 U.S.C. 
        262r-3) is amended by striking ``stabilization fund'' each 
        place such term appears and inserting ``Special Drawing Rights 
        Fund''.
            (4) Special drawing rights act.--The Special Drawing Rights 
        Act (22 U.S.C. 286n et seq.) is amended by striking ``Exchange 
        Stabilization Fund'' each place such term appears and inserting 
        ``Special Drawing Rights Fund''.
    (c) References.--Any reference in a law, regulation, document, 
paper, or other record of the United States to the ``Exchange 
Stabilization Fund'' shall be deemed a reference to the ``Special 
Drawing Rights Fund''.

SEC. 504. CONVERSION TO ALL-SDR FUND.

    (a) Funds Used To Reduce the Debt.--The Secretary of the Treasury 
shall liquidate all property in the Special Drawing Rights Fund (as so 
renamed under section 503), other than Special Drawing Rights, and use 
all such amounts to reduce the public debt.
    (b) Limitation on Fund.--Section 5302 of title 31, United States 
Code, is amended--
            (1) in subsection (a)(1)--
                    (A) by striking ``is available to carry out'' and 
                inserting ``is only available to carry out''; and
                    (B) by striking ``, and for investing in 
                obligations of the United States Government those 
                amounts in the fund the Secretary of the Treasury, with 
                the approval of the President, decides are not required 
                at the time to carry out this section. Proceeds of 
                sales and investments, earnings, and interest shall be 
                paid into the fund and are available to carry out this 
                section. However, the fund is not available to pay 
                administrative expenses''; and
            (2) by striking subsection (b) and inserting the following:
    ``(b) Fund Only To Hold Special Drawing Rights.--Notwithstanding 
any other provision of law, only Special Drawing Rights may be 
deposited into the Special Drawing Rights Fund.''.
    (c) Conforming Amendments.--
            (1) Bretton woods agreements act.--Section 18 of the 
        Bretton Woods Agreements Act (22 U.S.C. 286e-3) is hereby 
        repealed.
            (2) Support for east european democracy (seed) act of 
        1989.--The Support for East European Democracy (SEED) Act of 
        1989 (22 U.S.C. 5401 et seq.) is amended--
                    (A) in section 101(b)(1), by striking ``such as--'' 
                and all that follows through the end of the paragraph 
                and inserting ``such as the authority provided in 
                section 102(c) of this Act.''; and
                    (B) in section 102(a), by striking ``section 
                101(b)--'' and all that follows through the end of the 
                subsection and inserting ``section 101(b), should work 
                closely with the European Community and international 
                financial institutions to determine the extent of 
                emergency assistance required by Poland for the fourth 
                quarter of 1989.''.
    (d) Treatment of Certain Funds.--Funds that would otherwise have 
been deposited into the Special Drawing Rights Fund (as so renamed 
under subsection (a)), but for the amendments made by this section, 
shall instead be paid to the Secretary of the Treasury, and the 
Secretary of the Treasury shall use such funds to reduce the public 
debt.
    (e) Wind Down Period for Certain Transactions.--Notwithstanding any 
other provision of this section, during the 3-year period beginning on 
the date of the enactment of this Act, property other than Special 
Drawing Rights may be deposited, and maintained, in the Special Drawing 
Rights Fund as needed to fulfill any outstanding obligations on the 
Fund.

               TITLE VI--CREDIT ALLOCATION NEUTRALITY ACT

SEC. 601. FINDINGS.

    The Congress finds the following:
            (1) In conducting open market operations, the Federal Open 
        Market Committee should not allocate credit among households, 
        firms, and sectors of the United States economy.
            (2) To assure the credit allocation neutrality of open 
        market operations among households, firms, and sectors of the 
        United States economy, the Federal Open Market Committee should 
        conduct open market operations in United States Government 
        securities, and repurchase and reverse repurchase agreements 
        that have a term of 1 year or less, except in unusual and 
        exigent circumstances.

SEC. 602. LIMITATION ON CERTAIN NON-EMERGENCY SECURITY PURCHASES.

    (a) In General.--The Federal Reserve Act is amended--
            (1) in section 12A, by adding at the end the following:
    ``(d) Emergency Purchasing Authority.--
            ``(1) In general.--In unusual and exigent circumstances, 
        the Committee, by the affirmative vote of at least \2/3\ of the 
        members of the Committee, may authorize any Federal Reserve 
        bank, during such period as the Committee may determine--
                    ``(A) to buy and sell, at home or abroad, bills, 
                notes, revenue bonds, and warrants with a maturity from 
                date of purchase of not exceeding six months, issued in 
                anticipation of the collection of taxes or in 
                anticipation of the receipt of assured revenues by any 
                State, county, district, political subdivision, or 
                municipality in the continental United States, 
                including irrigation, drainage and reclamation 
                districts, and obligations of, or fully guaranteed as 
                to principal and interest by, a foreign government or 
                agency thereof; and
                    ``(B) to buy and sell in the open market, under the 
                direction and regulations of the Committee, any 
                obligation which is a direct obligation of, or fully 
                guaranteed as to principal and interest by, any agency 
                of the United States.
            ``(2) Maximum holding period.--Any bond, bill, note, 
        revenue bond, warrant, or other obligation purchased by a 
        Federal Reserve bank pursuant to paragraph (1) shall be 
        disposed of before the end of the 5-year period beginning on 
        the end of the period determined by the Committee under 
        paragraph (1).
            ``(3) Report.--The Committee shall provide to the Committee 
        on Banking, Housing, and Urban Affairs of the Senate and the 
        Committee on Financial Services of the House of 
        Representatives, not later than 7 days after the Committee 
        makes an authorization under this subsection, a report that 
        includes--
                    ``(A) the justification for the exercise of 
                authority to provide;
                    ``(B) the identity of the person to or from which 
                purchases or sales were made;
                    ``(C) the date and amount of the purchases or 
                sales; and
                    ``(D) the material terms of the purchases or 
                sales.''; and
            (2) in section 14(b)--
                    (A) in paragraph (1), by striking ``bonds issued 
                under the provisions of subsection (c) of section 4 of 
                the Home Owners' Loan Act of 1933, as amended, and 
                having maturities from date of purchase of not 
                exceeding six months, and bills, notes, revenue bonds, 
                and warrants with a maturity from date of purchase of 
                not exceeding six months, issued in anticipation of the 
                collection of taxes or in anticipation of the receipt 
                of assured revenues by any State, county, district, 
                political subdivision, or municipality in the 
                continental United States, including irrigation, 
                drainage and reclamation districts, and obligations of, 
                or fully guaranteed as to principal and interest by, a 
                foreign government or agency thereof,''; and
                    (B) by amending paragraph (2) to read as follows:
            ``(2) To enter into security repurchase agreements and 
        reverse repurchase agreements that have a term of 1 year or 
        less, in accordance with rules and regulations prescribed by 
        the Board of Governors of the Federal Reserve System.''.
    (b) Transition Provision.--Each Federal Reserve bank that holds 
bonds, bills, notes, revenue bonds, warrants, or other obligations 
purchased under the authority granted by a provision struck under 
subsection (a)(2) shall dispose of such obligations not later than the 
end of the 5-year period beginning on the date of the enactment of this 
Act.

     TITLE VII--BUREAU OF CONSUMER FINANCIAL PROTECTION FUNDING ACT

SEC. 701. FINDINGS.

    The Congress finds the following:
            (1) As our Nation's central bank, the Federal Reserve 
        conducts United States monetary policy and necessarily 
        exercises broad oversight responsibility to ensure the safety, 
        soundness, and smooth functioning of the Nation's banking and 
        payments systems.
            (2) There exists a broad consensus among policymakers, 
        academics, and most informed commentators that central bank 
        independence is necessary to the proper and effective conduct 
        of monetary policy and those regulatory activities necessary 
        for the implementation of such monetary policy.
            (3) In order to preserve the independence of its 
        activities, the Federal Reserve should remain operationally and 
        financially autonomous within the United States Government.
            (4) However, those activities that do not relate to the 
        functions listed in paragraph (1) should not occur outside of 
        the constitutionally granted authority of Congress to authorize 
        and oversee the expenditure of public funds.
            (5) Therefore, the Bureau of Consumer Financial Protection 
        should be subject to the Federal appropriations process to 
        ensure effective Congressional oversight over its activities 
        and use of public funds.

SEC. 702. BUREAU OF CONSUMER FINANCIAL PROTECTION FUNDING.

    (a) In General.--Section 1017 of the Consumer Financial Protection 
Act of 2010 is amended--
            (1) in subsection (a)--
                    (A) by amending the heading of such subsection to 
                read as follows: ``Budget, Financial Management, and 
                Audit.--'';
                    (B) by striking paragraphs (1), (2), and (3);
                    (C) by redesignating paragraphs (4) and (5) as 
                paragraphs (1) and (2), respectively; and
                    (D) in paragraph (1), as so redesignated--
                            (i) by striking subparagraph (E); and
                            (ii) by redesignating subparagraph (F) as 
                        subparagraph (E);
            (2) by striking subsections (b) and (c);
            (3) by redesignating subsections (d) and (e) as subsections 
        (b) and (c), respectively; and
            (4) in subsection (c), as so redesignated--
                    (A) by striking paragraphs (1), (2), and (3) and 
                inserting the following:
            ``(1) Authorization of appropriations.--There is authorized 
        to be appropriated such funds as may be necessary to carry out 
        this title.''; and
                    (B) by redesignating paragraph (4) as paragraph 
                (2).
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2012.
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