II

104TH CONGRESS

1ST SESSION S. 663

To modernize the Federal Reserve System, to provide for a Federal Open

Market Advisory Committee, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 4 (legislative day, MARCH 27), 1995

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

to the Committee on Banking, Housing, and Urban Affairs

A BILL

To modernize the Federal Reserve System, to provide for

a Federal Open Market Advisory 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.

4 This Act may be cited as the ‘‘Federal Reserve Re5 form Act of 1995’’.

6 SEC. 2. MEMBERSHIP OF THE FEDERAL OPEN MARKET

7 ADVISORY COMMITTEE.

8 (a) IN GENERAL.—Section 12A(a) of the Federal

9 Reserve Act (12 U.S.C. 263(a)) is amended to read as

10 follows:
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1 ‘‘(a) ESTABLISHMENT OF ADVISORY COMMITTEE.—

2 ‘‘(1) IN GENERAL.—There is established a Fed3 eral Open Market Advisory Committee (hereafter in

4 this section referred to as the ‘Advisory Committee’),

5 which shall consist of the presidents of the Federal

6 Reserve banks.

7 ‘‘(2) CHAIRPERSON.—The president of the Fed8 eral Reserve Bank of New York shall serve as the

9 chairperson of the Advisory Committee.

10 ‘‘(3) MEETINGS.—The meetings of the Advisory

11 Committee shall be held in Washington, District of

12 Columbia, not less than 4 times each year upon the

13 call of the Board.

14 ‘‘(4) DUTIES.—The Advisory Committee shall

15 advise the Board on the conduct of open-market op16 erations.’’.

17 (b) CONFORMING AMENDMENTS.—

18 (1) FEDERAL RESERVE ACT.—The Federal Re19 serve Act (12 U.S.C. 221 et seq.) is amended—

20 (A) in section 2A (12 U.S.C. 225a)—

21 (i) by striking ‘‘and the Federal Open

22 Market Committee’’ each place it appears;

23 and

24 (ii) in the sixth sentence, by striking

25 ‘‘determine’’ and inserting ‘‘determines’’;
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1 (B) in the tenth undesignated paragraph

2 of section 10 (12 U.S.C. 247a)—

3 (i) by striking ‘‘and by the Federal

4 Open Market Committee’’; and

5 (ii) by striking ‘‘and the Committee’’;

6 (C) in section 12A (12 U.S.C. 263)—

7 (i) in subsection (b)—

8 (I) by striking ‘‘Committee’’ each

9 place it appears and inserting

10 ‘‘Board’’; and

11 (II) by inserting ‘‘REGULA12 TIONS.—’’ before ‘‘No Federal Re13 serve’’; and

14 (ii) in subsection (c), by inserting

15 ‘‘ACCOMMODATION OF COMMERCE AND

16 BUSINESS.—’’ before ‘‘The time’’; and

17 (D) in section 14(b)(2) (12 U.S.C.

18 355(2)), by striking ‘‘Federal Open Market

19 Committee’’ and inserting ‘‘Board’’.

20 (2) INTERNATIONAL LENDING SUPERVISION

21 ACT OF 1983.—Section 911(a)(3)(C) of the Inter22 national Lending Supervision Act of 1983 (12

23 U.S.C. 3910(a)(3)(C)) is amended by striking ‘‘Fed24 eral Open Market Committee’’ and inserting ‘‘Board

25 of Governors of the Federal Reserve System’’.
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1 SEC. 3. CONSULTATION BETWEEN THE BOARD OF GOV2 ERNORS AND THE SECRETARY OF THE

3 TREASURY, THE DIRECTOR OF THE OMB, AND

4 THE CHAIRMAN OF THE CEA.

5 Section 2A of the Federal Reserve Act (12 U.S.C.

6 225a) (as amended by section 2(b)(1)(A)) is amended—

7 (1) in the first sentence, by striking ‘‘The

8 Board of Governors’’ and inserting the following:

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

10 (2) by adding at the end the following new sub11 section:

12 ‘‘(b) CONSULTATION REQUIRED.—The Board of Gov13 ernors shall meet and consult with the Secretary of the

14 Treasury, the Director of the Office of Management and

15 Budget, and the chairman of the Council of Economic

16 Advisors—

17 ‘‘(1) during the 30-day period immediately pre18 ceding the date on which each report required under

19 the second sentence of subsection (a) is submitted to

20 the Congress by the Board of Governors; and

21 ‘‘(2) during the 30-day period beginning on the

22 date which is 100 days immediately preceding the

23 date by which the President is required to submit

24 the budget under section 1105(a) of title 31, United

25 States Code.’’.
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1 SEC. 4. APPOINTMENT OF THE CHAIRMAN AND VICE

2 CHAIRMAN.

3 (a) APPOINTMENT OF THE CHAIRMAN AND VICE

4 CHAIRMAN.—The second undesignated paragraph of sec5 tion 10 of the Federal Reserve Act (12 U.S.C. 242) is

6 amended by striking the third sentence and inserting the

7 following: ‘‘The President shall appoint, by and with the

8 advice and consent of the Senate, one member of the

9 Board to serve as Chairman. The term of such member

10 as Chairman shall expire on January 31 of the first cal11 endar year beginning after the end of the term of the

12 President who appointed such member as Chairman. If

13 a member appointed as Chairman does not complete the

14 term of such office as established in the preceding sen15 tence, the President shall appoint, by and with the advice

16 and consent of the Senate, another member to complete

17 the unexpired portion of such term. The President shall

18 also appoint, by and with the advice and consent of the

19 Senate, one member of the Board to serve as Vice Chair20 man for a term of 4 years. The Chairman and the Vice

21 Chairman may each serve after the end of their respective

22 terms until a successor has taken office.’’.

23 (b) PERFORMANCE OF DUTIES.—The second undes24 ignated paragraph of section 10 of the Federal Reserve

25 Act (12 U.S.C. 242) (as amended by subsection (a) of this

26 section) is amended by inserting after the seventh sentence
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1 the following: ‘‘In the event of the absence or unavail2 ability of the Chairman, the Vice Chairman or (in the Vice

3 Chairman’s absence) another member of the Board may

4 be designated by the Chairman to perform the duties of

5 the office of the Chairman. If a vacancy occurs in the of6 fice of the Chairman, the Vice Chairman shall perform the

7 duties of the Chairman until a successor takes office. If

8 a vacancy occurs in the office of the Vice Chairman while

9 the office of the Chairman is vacant, the member of the

10 Board with the most years of service on the Board shall

11 perform the duties of the Chairman until a successor takes

12 office.’’.

13 (c) EFFECTIVE DATE.—

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by this section

16 shall take effect on the date of enactment of this

17 Act.

18 (2) CURRENT CHAIRMAN TO COMPLETE

19 TERM.—Notwithstanding the amendment made by

20 subsection (a), any member who holds the office of

21 Chairman of the Board of Governors of the Federal

22 Reserve System on the date of enactment of this Act

23 shall continue in such office during the remainder of

24 the term to which such member was appointed.
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1 SEC. 5. DISCLOSURE OF INTERMEDIATE TARGETS.

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

3 U.S.C. 263(b)) (as amended by section 2(b)(1)(C)(i)) is

4 amended by adding at the end the following: ‘‘Notwith5 standing any other provision of law, each change, of any

6 nature whatsoever, in the intermediate targets for mone7 tary policy, which change is adopted by the Board, shall

8 be disclosed to the public on the date on which such

9 change is adopted. For purposes of this subsection, the

10 term ‘intermediate targets’ means any policy objectives re11 garding monetary aggregates, credit aggregates, prices,

12 interest rates, or bank reserves.’’.

13 SEC. 6. AUDIT OF FINANCIAL TRANSACTIONS BY COMP14 TROLLER GENERAL.

15 Section 714(b) of title 31, United States Code, is

16 amended—

17 (1) in paragraph (1), by inserting ‘‘or’’ at the

18 end; and

19 (2) by striking paragraphs (2) through (4) and

20 inserting the following:

21 ‘‘(2) memoranda, letters, or other written com22 munications between or among members of the

23 Board of Governors of the Federal Reserve System

24 or officers or employees of the Federal Reserve Sys25 tem relating to any transaction described in para26 graph (1).’’.
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1 SEC. 7. BOARD SUBJECT TO BUDGET PROCESS.

2 Section 1105 of title 31, United States Code, is

3 amended by adding at the end the following new sub4 section:

5 ‘‘(h) FEDERAL RESERVE BOARD BUDGET TREAT6 MENT.—Not later than October 16 of each year, the esti7 mated receipts and proposed expenditures of the Board

8 of Governors of the Federal Reserve System and all Fed9 eral Reserve banks for the current year and the next 2

10 succeeding years shall be transmitted by the Board to the

11 President. The President shall transmit to the Congress

12 the information received in accordance with this sub13 section, without change, together with the budget trans14 mitted to the Congress under subsection (a).’’.

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