II 

113TH CONGRESS 

1ST SESSION S. 238 

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 

FEBRUARY 7, 2013 

Mr. LEE (for himself, Mr. CORNYN, and Mr. RUBIO) 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 2013’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 


TKELLEY on DSK3SPTVN1PROD with BILLS
2 

•S 238 IS

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. 

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 tempoVerDate Mar 15 2010 22:28 Feb 19, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S238.IS S238

TKELLEY on DSK3SPTVN1PROD with BILLS
3 

•S 238 IS

1 rarily increase the level of employment through mon2 etary policy, but such efforts risk the possibility of 

3 price inflation and increased business cycle volatility 

4 in the future. However, the Federal Reserve can 

5 achieve price stability in the long term through mon6 etary policy. Price stability is desirable because both 

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

8 economy. Therefore, to maximize long-term economic 

9 growth and achieve the highest sustainable level of 

10 real output and employment, price stability should 

11 be the objective of monetary policy. 

12 (2) Countries whose central bank has a single 

13 mandate for price stability generally have a better 

14 record of achieving stable prices than countries 

15 whose central bank has a mandate that gives equal 

16 weight to other objectives such as maximum employ17 ment or low interest rates. 

18 (3) In general, an overly accommodative mone19 tary policy inflates both asset prices and prices for 

20 goods and services. However, an overly accommoda21 tive monetary policy may sometimes cause a 

22 misallocation of capital that inflates asset prices dis23 proportionately, creating unsustainable bubbles in 

24 asset prices, while price indices for goods and serv25 ices do not register significant price inflation. When 


TKELLEY on DSK3SPTVN1PROD with BILLS
4 

•S 238 IS

1 asset bubbles burst, many investments must be liq2 uidated at considerable cost to the U.S. economy in 

3 terms of lower real output and employment. 

4 (4) Price stability cannot always be measured 

5 solely through price indices for goods and services 

6 since such indices exclude changes in asset prices. 

7 Therefore, the Federal Reserve should monitor (A) 

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

9 asset classes (including equities, residential real es10 tate, commercial and industrial real estate, agricul11 tural real estate, gold and other commodities, cor12 porate bonds, U.S. Government bonds, State and 

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

14 the value of the U.S. dollar relative to other cur15 rencies, and (C) the value of the United States dol16 lar relative to gold, as metrics to determine whether 

17 the Federal Reserve’s monetary policy is consistent 

18 with long-term price stability. 

19 SEC. 102. PRICE STABILITY MANDATE. 

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

21 Act (12 U.S.C. 225a) is amended— 

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

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

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


TKELLEY on DSK3SPTVN1PROD with BILLS
5 

•S 238 IS

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

2 inserting the following: 

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

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

5 ‘‘(b) PRICE STABILITY METRICS.— 

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

7 the Federal Reserve System and the Federal Open 

8 Market Committee shall— 

9 ‘‘(A) define the term ‘long-term price sta10 bility’ for purposes of subsection (a); and 

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

12 the Committee will use to evaluate whether 

13 long-term price stability is being achieved. 

14 ‘‘(2) ESTABLISHMENT OF METRICS.—In estab15 lishing the metrics described under paragraph 

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

17 ‘‘(A) take into consideration price indices 

18 of goods and services; and 

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

20 ‘‘(i) whether such metrics are com21 prehensively reflecting price movements in 

22 the economy; and 

23 ‘‘(ii) whether any price movements not 

24 captured by the price indices of goods and 

25 services are causing a significant 


TKELLEY on DSK3SPTVN1PROD with BILLS
6 

•S 238 IS

1 misallocation of capital in the United 

2 States economy. 

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

4 Committee shall, with respect to the evaluation proc5 ess required pursuant to paragraph (2)(B), mon6 itor— 

7 ‘‘(A) the prices of, and the expected re8 turns from, major asset classes (including equi9 ties, residential real estate, commercial and in10 dustrial real estate, agricultural real estate, 

11 commodities, corporate bonds, State and local 

12 government bonds, and other securities) and 

13 the allocation of capital in financial markets 

14 and the broader economy; 

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

16 relative to other currencies; and 

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

18 relative to gold. 

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

20 CONGRESS.—The Board and the Committee shall, 

21 with respect to the definition of long-term price sta22 bility and the establishment of metrics set pursuant 

23 to paragraph (1)— 


TKELLEY on DSK3SPTVN1PROD with BILLS
7 

•S 238 IS

1 ‘‘(A) make such definition and metrics 

2 available to the public on a website maintained 

3 by the Board or the Committee; and 

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

5 are set or revised, issue a report to the Con6 gress stating such definition and metrics.’’. 

7 (b) ADDITIONAL EVALUATIONS AND DETERMINA8 TIONS INCLUDED IN SEMI-ANNUAL REPORT TO CON9 GRESS.—Section 2B(b) of the Federal Reserve Act (12 

10 U.S.C. 225b(b)) is amended— 

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

12 inserting the following: 

13 ‘‘containing— 

14 ‘‘(1) a discussion’’; 

15 (2) by striking the period and inserting a semi16 colon; and 

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

18 ‘‘(2) the results of the evaluation process con19 ducted pursuant to section 2A(b)(2)(B); 

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

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

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

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

24 the Federal Open Market Committee will take to en25 sure that the goal is met in the future; 


TKELLEY on DSK3SPTVN1PROD with BILLS
8 

•S 238 IS

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

2 instruments used by the Board and the Federal 

3 Open Market Committee and a description of the 

4 strategy of the Board and the Committee with re5 spect to using such instruments to achieve the goal 

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

7 TITLE II—FINANCIAL STABILITY 

8 AND MORAL HAZARD MITIGA9 TION ACT 

10 SEC. 201. FINDINGS. 

11 The Congress finds the following: 

12 (1) The Federal Reserve performs an essential 

13 function for financial stability by serving as lender 

14 of last resort in order to— 

15 (A) prevent the unnecessary failures of 

16 otherwise solvent United States banks and 

17 other financial institutions; 

18 (B) reduce the likelihood of financial con19 tagion and disruptions in United States finan20 cial markets; and 

21 (C) minimize any adverse effects on real 

22 output and employment in the United States 

23 economy. 

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

25 Federal Reserve, may— 


TKELLEY on DSK3SPTVN1PROD with BILLS
9 

•S 238 IS

1 (A) buy debt securities at fair market 

2 value; or 

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

4 appropriate collateral in proper margin, to oth5 erwise solvent banks and other financial institu6 tions that encounter funding difficulties during 

7 a financial crisis. 

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

9 the Federal Reserve has never clearly articulated its 

10 lender-of-last-resort policy. 

11 (4) The absence of an official lender-of-last-re12 sort policy has led to— 

13 (A) increased economic uncertainty be14 cause no one knows with certainty how the Fed15 eral Reserve may behave; 

16 (B) financially distressed firms seeking po17 litical solutions in the form of pressure from 

18 Congress or the Administration being placed on 

19 the Federal Reserve to act to save them; and 

20 (C) a moral hazard problem from financial 

21 institutions taking greater risks and increasing 

22 leverage based upon assumptions of how the 

23 Federal Reserve will act, though there is no for24 mal statement assuring how the Federal Re25 serve will act. 


TKELLEY on DSK3SPTVN1PROD with BILLS
10 

•S 238 IS

1 (5) By establishing a formal lender-of-last-re2 sort policy, the Federal Reserve would decrease un3 certainty in the market during times of financial cri4 sis and mitigate the moral hazards created by recent 

5 bailouts. 

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

7 provide that once a financial crisis has dissipated, 

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

9 any debt securities that— 

10 (A) the Federal Reserve acquired acting as 

11 lender of last resort; and 

12 (B) the Federal Reserve does not normally 

13 own for its System Account. 

14 (7) Further, to reduce moral hazard, the Fed15 eral Reserve’s lender-of-last-resort policy should 

16 make clear that credit in any form will not be pro17 vided to insolvent banks or other financial institu18 tion. 

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

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

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

22 Act, the Board of Governors of the Federal Reserve Sys23 tem shall clearly articulate the Board’s lender-of-last-re24 sort policy. 


TKELLEY on DSK3SPTVN1PROD with BILLS
11 

•S 238 IS

1 (b) CONSULTATION.—In articulating the policy re2 quired under subsection (a), the Board of Governors shall 

3 consult with— 

4 (1) the Federal Reserve bank presidents; 

5 (2) the Comptroller of the Currency; 

6 (3) the Chairperson of the Federal Deposit In7 surance Corporation; 

8 (4) the Securities and Exchange Commission; 

9 (5) the Commodity Futures Trading Commis10 sion; and 

11 (6) such other persons with expertise in finan12 cial services regulation and monetary policy as the 

13 Board of Governors may determine appropriate. 

14 TITLE III—DIVERSIFYING THE 

15 FEDERAL OPEN MARKET 

16 COMMITTEE TO REFLECT A 

17 21ST CENTURY ECONOMY ACT 

18 SEC. 301. FINDINGS. 

19 The Congress finds the following: 

20 (1) The Federal Reserve Act delineates specific 

21 requirements for the seven governors charged with 

22 oversight of the Federal Reserve System. 

23 (2) In a reflection of the Federal Reserve Sys24 tem’s decentralized structure that broadly distrib25 utes power and responsibility across the Nation, the 


TKELLEY on DSK3SPTVN1PROD with BILLS
12 

•S 238 IS

1 Act mandates that the presidentially appointed gov2 ernors come from a wide range of geographic loca3 tions and professional backgrounds. Specifically, the 

4 first undesignated paragraph under section 10 of the 

5 Federal Reserve Act states that ‘‘In selecting the 

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

7 shall be selected from any one Federal Reserve Dis8 trict, the President shall have due regard to a fair 

9 representation of the financial, agricultural, indus10 trial, and commercial interests and geographical di11 visions of the country.’’. 

12 (3) The Federal Open Monetary Committee 

13 consists of members of the Board of Governors and 

14 the President or Vice President of the Federal Re15 serve Bank of New York on a permanent basis and 

16 rotates voting membership among the remaining Re17 gional Reserve Banks. 

18 (4) The existing structure of the Federal Open 

19 Market Committee places too much authority in the 

20 hands of Washington and New York at the expense 

21 of the remainder of the United States. 

22 (5) Monetary policy should be conducted in the 

23 interest of all Americans and that policy goal is best 

24 achieved by a Federal Open Market Committee that 

25 provides greater representation and voice in policy 


TKELLEY on DSK3SPTVN1PROD with BILLS
13 

•S 238 IS

1 decisions to the entire Nation as represented by the 

2 Regional Reserve Banks. This objective is best 

3 achieved by reforming the voting membership of the 

4 Federal Open Market Committee to include all Re5 gional Reserve Banks on a permanent basis. 

6 SEC. 302. FEDERAL OPEN MARKET COMMITTEE MEMBER7 SHIP. 

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

9 U.S.C. 263(a)) is amended— 

10 (1) by striking ‘‘five representatives of the Fed11 eral Reserve banks to be selected as hereinafter pro12 vided.’’ and inserting ‘‘1 representative from each of 

13 the Federal Reserve banks.’’; and 

14 (2) by striking ‘‘and, beginning with the elec15 tion for the term commencing March 1, 1943, shall 

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

17 directors of the Federal Reserve Bank of New York, 

18 one by the boards of directors of the Federal Re19 serve Banks of Boston, Philadelphia, and Richmond, 

20 one by the boards of directors of the Federal Re21 serve Banks of Cleveland and Chicago, one by the 

22 boards of directors of the Federal Reserve Banks of 

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

24 boards of directors of the Federal Reserve Banks of 

25 Minneapolis, Kansas City, and San Francisco. In 


TKELLEY on DSK3SPTVN1PROD with BILLS
14 

•S 238 IS

1 such elections each board of directors shall have one 

2 vote; and the details of such elections may be gov3 erned by regulations prescribed by the committee, 

4 which may be amended from time to time.’’ and in5 serting ‘‘and shall be elected by the board of direc6 tors of the Federal Reserve bank that they are to 

7 represent.’’. 

8 TITLE IV—DEMYSTIFICATION OF 

9 MONETARY POLICY DECI10 SIONS ACT 

11 SEC. 401. FINDINGS. 

12 The Congress finds the following: 

13 (1) A more efficient release of transcripts from 

14 the Federal Reserve would result in better guidance 

15 for market participants, and hence more economi16 cally efficient decision making. 

17 (2) According to Federal Reserve Chairman 

18 Ben Bernanke, ‘‘when the monetary policy com19 mittee regularly provides information about objec20 tives, economic outlook, and policy plans, two bene21 fits result: (1) markets will price assets more effi22 ciently, and (2) a closer alignment between market 

23 participants’ expectations about the course of future 

24 short-term interest rates and’’ the views of policy25 makers. 


TKELLEY on DSK3SPTVN1PROD with BILLS
15 

•S 238 IS

1 (3) The Federal Reserve is able to release tran2 scripts more efficiently without compromising their 

3 decision making process. 

4 SEC. 402. RELEASE OF TRANSCRIPTS. 

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

6 U.S.C. 263(a)) is amended by adding at the end the fol7 lowing: 

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

9 shall release meeting transcripts to the public not later 

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

11 TITLE V—EXCHANGE RATE 

12 RESPONSIBILITY ACT 

13 SEC. 501. FINDINGS. 

14 The Congress finds as follows: 

15 (1) The Board of Governors of the Federal Re16 serve System and the Federal Open Market Com17 mittee exercise control over the supply of U.S. dol18 lars, which is a major factor affecting the foreign ex19 change rate value of the United States dollar. There20 fore, the Board of Governors and Federal Open 

21 Market Committee should report to Congress on the 

22 impact of monetary policy on the foreign exchange 

23 rate value of the United States dollar. 

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

25 the Treasury have repeatedly used the Exchange 


TKELLEY on DSK3SPTVN1PROD with BILLS
16 

•S 238 IS

1 Stabilization Fund for purposes that were not envi2 sioned by Congress. To prevent further abuses, the 

3 Exchange Stabilization Fund should be renamed as 

4 the Special Drawing Rights Fund. The Special 

5 Drawing Rights Fund should hold the Special Draw6 ing Rights that the International Monetary Fund 

7 provided to the United States. Any other assets cur8 rently in the Exchange Stabilization Fund should be 

9 liquidated, and the proceeds used to reduce the pub10 lic debt. 

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

12 POLICY. 

13 Section 2B(b) of the Federal Reserve Act, as amend14 ed by section 102(b), is further amended by adding at the 

15 end the following: 

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

17 Board and the Federal Open Market Committee are 

18 affecting the foreign exchange rate value of the 

19 United States dollar.’’. 

20 SEC. 503. RENAMING OF EXCHANGE STABILIZATION FUND. 

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

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

23 each place such term appears and inserting ‘‘Special 

24 Drawing Rights Fund’’. 

25 (b) CONFORMING AMENDMENTS.— 


TKELLEY on DSK3SPTVN1PROD with BILLS
17 

•S 238 IS

1 (1) BALANCED BUDGET AND EMERGENCY DEF2 ICIT CONTROL ACT OF 1985.—Section 255(g)(1)(A) 

3 of the Balanced Budget and Emergency Deficit Con4 trol Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended 

5 by striking ‘‘Exchange Stabilization Fund’’ and in6 serting ‘‘Special Drawing Rights Fund’’. 

7 (2) EMERGENCY ECONOMIC STABILIZATION ACT

8 OF 2008.—The Emergency Economic Stabilization 

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

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

11 Stabilization Fund’’ each place such term ap12 pears in headings and text and inserting ‘‘Spe13 cial Drawing Rights Fund’’; and 

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

15 the table of contents of such Act, by striking 

16 ‘‘Exchange Stabilization Fund’’ and inserting 

17 ‘‘Special Drawing Rights Fund’’. 

18 (3) INTERNATIONAL FINANCIAL INSTITUTIONS

19 ACT.—Section 1704 of the International Financial 

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

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

22 appears and inserting ‘‘Special Drawing Rights 

23 Fund’’. 

24 (4) SPECIAL DRAWING RIGHTS ACT.—The Spe25 cial Drawing Rights Act (22 U.S.C. 286n et seq.) is 


TKELLEY on DSK3SPTVN1PROD with BILLS
18 

•S 238 IS

1 amended by striking ‘‘Exchange Stabilization Fund’’ 

2 each place such term appears and inserting ‘‘Special 

3 Drawing Rights Fund’’. 

4 (c) REFERENCES.—Any reference in a law, regula5 tion, document, paper, or other record of the United 

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

7 deemed a reference to the ‘‘Special Drawing Rights 

8 Fund’’. 

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

10 (a) FUNDS USED TO REDUCE THE DEBT.—The Sec11 retary of the Treasury shall liquidate all property in the 

12 Special Drawing Rights Fund (as so renamed under sec13 tion 503), other than Special Drawing Rights, and use all 

14 such amounts to reduce the public debt. 

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

16 United States Code, is amended— 

17 (1) in subsection (a)(1)— 

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

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

20 and 

21 (B) by striking ‘‘, and for investing in obli22 gations of the United States Government those 

23 amounts in the fund the Secretary of the Treas24 ury, with the approval of the President, decides 

25 are not required at the time to carry out this 


TKELLEY on DSK3SPTVN1PROD with BILLS
19 

•S 238 IS

1 section. Proceeds of sales and investments, 

2 earnings, and interest shall be paid into the 

3 fund and are available to carry out this section. 

4 However, the fund is not available to pay ad5 ministrative expenses’’; and 

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

7 following: 

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

9 RIGHTS.—Notwithstanding any other provision of law, 

10 only Special Drawing Rights may be deposited into the 

11 Special Drawing Rights Fund.’’. 

12 (c) CONFORMING AMENDMENTS.— 

13 (1) BRETTON WOODS AGREEMENTS ACT.—Sec14 tion 18 of the Bretton Woods Agreements Act (22 

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

16 (2) SUPPORT FOR EAST EUROPEAN DEMOCRACY

17 (SEED) ACT OF 1989.—The Support for East Euro18 pean Democracy (SEED) Act of 1989 (22 U.S.C. 

19 5401 et seq.) is amended— 

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

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

22 the paragraph and inserting ‘‘such as the au23 thority provided in section 102(c) of this Act.’’; 

24 and 


TKELLEY on DSK3SPTVN1PROD with BILLS
20 

•S 238 IS

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

2 101(b)—’’ and all that follows through the end 

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

4 should work closely with the European Commu5 nity and international financial institutions to 

6 determine the extent of emergency assistance 

7 required by Poland for the fourth quarter of 

8 1989.’’. 

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

10 would otherwise have been deposited into the Special 

11 Drawing Rights Fund (as so renamed under subsection 

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

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

14 Secretary of the Treasury shall use such funds to reduce 

15 the public debt. 

16 (e) WIND DOWN PERIOD FOR CERTAIN TRANS17 ACTIONS.—Notwithstanding any other provision of this 

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

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

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

21 Special Drawing Rights Fund as needed to fulfill any out22 standing obligations on the Fund. 


TKELLEY on DSK3SPTVN1PROD with BILLS
21 

•S 238 IS

1 TITLE VI—CREDIT ALLOCATION 

2 NEUTRALITY ACT 

3 SEC. 601. FINDINGS. 

4 The Congress finds the following: 

5 (1) In conducting open market operations, the 

6 Federal Open Market Committee should not allocate 

7 credit among households, firms, and sectors of the 

8 United States economy. 

9 (2) To assure the credit allocation neutrality of 

10 open market operations among households, firms, 

11 and sectors of the United States economy, the Fed12 eral Open Market Committee should conduct open 

13 market operations in United States Government se14 curities, and repurchase and reverse repurchase 

15 agreements that have a term of 1 year or less, ex16 cept in unusual and exigent circumstances. 

17 SEC. 602. LIMITATION ON CERTAIN NON-EMERGENCY SECU18 RITY PURCHASES. 

19 (a) IN GENERAL.—The Federal Reserve Act (12 

20 U.S.C. 221 et seq.) is amended— 

21 (1) in section 12A, by adding at the end the fol22 lowing: 

23 ‘‘(d) EMERGENCY PURCHASING AUTHORITY.— 

24 ‘‘(1) IN GENERAL.—In unusual and exigent cir25 cumstances, the Committee, by the affirmative vote 


TKELLEY on DSK3SPTVN1PROD with BILLS
22 

•S 238 IS

of at least 2 1 ⁄3 of the members of the Committee, may 

2 authorize any Federal Reserve bank, during such pe3 riod as the Committee may determine— 

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

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

6 maturity from date of purchase of not exceed7 ing six months, issued in anticipation of the col8 lection of taxes or in anticipation of the receipt 

9 of assured revenues by any State, county, dis10 trict, political subdivision, or municipality in the 

11 continental United States, including irrigation, 

12 drainage and reclamation districts, and obliga13 tions of, or fully guaranteed as to principal and 

14 interest by, a foreign government or agency 

15 thereof; and 

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

17 under the direction and regulations of the Com18 mittee, any obligation which is a direct obliga19 tion of, or fully guaranteed as to principal and 

20 interest by, any agency of the United States. 

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

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

23 purchased by a Federal Reserve bank pursuant to 

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


TKELLEY on DSK3SPTVN1PROD with BILLS
23 

•S 238 IS

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

2 determined by the Committee under paragraph (1). 

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

4 the Committee on Banking, Housing, and Urban Af5 fairs of the Senate and the Committee on Financial 

6 Services of the House of Representatives, not later 

7 than 7 days after the Committee makes an author8 ization under this subsection, a report that in9 cludes— 

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

11 authority to provide; 

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

13 which purchases or sales were made; 

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

15 or sales; and 

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

17 or sales.’’; and 

18 (2) in section 14(b)— 

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

20 issued under the provisions of subsection (c) of 

21 section 4 of the Home Owners’ Loan Act of 

22 1933, as amended, and having maturities from 

23 date of purchase of not exceeding six months, 

24 and bills, notes, revenue bonds, and warrants 

25 with a maturity from date of purchase of not 


TKELLEY on DSK3SPTVN1PROD with BILLS
24 

•S 238 IS

1 exceeding six months, issued in anticipation of 

2 the collection of taxes or in anticipation of the 

3 receipt of assured revenues by any State, coun4 ty, district, political subdivision, or municipality 

5 in the continental United States, including irri6 gation, drainage and reclamation districts, and 

7 obligations of, or fully guaranteed as to prin8 cipal and interest by, a foreign government or 

9 agency thereof,’’; and 

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

11 follows: 

12 ‘‘(2) To enter into security repurchase agree13 ments and reverse repurchase agreements that have 

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

15 and regulations prescribed by the Board of Gov16 ernors of the Federal Reserve System.’’. 

17 (b) TRANSITION PROVISION.—Each Federal Reserve 

18 bank that holds bonds, bills, notes, revenue bonds, war19 rants, or other obligations purchased under the authority 

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

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

22 5-year period beginning on the date of the enactment of 

23 this Act. 


TKELLEY on DSK3SPTVN1PROD with BILLS
25 

•S 238 IS

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

4 SEC. 701. FINDINGS. 

5 The Congress finds the following: 

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

7 Reserve conducts United States monetary policy and 

8 necessarily exercises broad oversight responsibility to 

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

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

17 for the implementation of such monetary policy. 

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

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

21 United States Government. 

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

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

24 occur outside of the constitutionally granted authorVerDate Mar 15 2010 22:28 Feb 19, 2013 Jkt 029200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S238.IS S238

TKELLEY on DSK3SPTVN1PROD with BILLS
26 

•S 238 IS

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

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

7 funds. 

8 SEC. 702. BUREAU OF CONSUMER FINANCIAL PROTECTION 

9 FUNDING. 

10 (a) IN GENERAL.—Section 1017 of the Consumer Fi11 nancial Protection Act of 2010 (12 U.S.C. 5497) is 

12 amended— 

13 (1) in subsection (a)— 

14 (A) by amending the heading of such sub15 section to read as follows: ‘‘BUDGET, FINAN16 CIAL MANAGEMENT, AND AUDIT.—’’; 

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

18 (3); 

19 (C) by redesignating paragraphs (4) and 

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

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

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

23 (ii) by redesignating subparagraph 

24 (F) as subparagraph (E); 

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


TKELLEY on DSK3SPTVN1PROD with BILLS
27 

•S 238 IS

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

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

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

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

5 (3) and inserting the following: 

6 ‘‘(1) AUTHORIZATION OF APPROPRIATIONS.— 

7 There is authorized to be appropriated such funds as 

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

9 (B) by redesignating paragraph (4) as 

10 paragraph (2). 

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

12 this section shall take effect on October 1, 2013. 

Æ 


TKELLEY on DSK3SPTVN1PROD with BILLS