Fed Oversight Reform and Modernization Act of 2015

To amend the Federal Reserve Act to establish requirements for policy rules and blackout periods of the Federal Open Market Committee, to establish requirements for certain activities of the Board of Governors of the Federal Reserve System, and to amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited, and for other purposes. 1. Short title; table of contents (a) Short title This Act may be cited as the Fed Oversight Reform and Modernization Act of 2015 FORM Act of 2015 (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Requirements for policy rules of the Federal Open Market Committee. Sec. 3. Federal Open Market Committee blackout period. Sec. 4. Membership of Federal Open Market Committee. Sec. 5. Requirements for stress tests and supervisory letters for the Board of Governors of the Federal Reserve System. Sec. 6. Frequency of testimony of the Chairman of the Board of Governors of the Federal Reserve System to Congress. Sec. 7. Vice Chairman for Supervision report requirement. Sec. 8. Economic analysis of regulations of the Board of Governors of the Federal Reserve System. Sec. 9. Salaries, financial disclosures, and office staff of the Board of Governors of the Federal Reserve System. Sec. 10. Requirements for international processes. Sec. 11. Amendments to powers of the Board of Governors of the Federal Reserve System. Sec. 12. Interest rates on balances maintained at a Federal Reserve bank by depository institutions established by Federal Open Market Committee. Sec. 13. Audit reform and transparency for the Board of Governors of the Federal Reserve System. 2. Requirements for policy rules of the Federal Open Market Committee The Federal Reserve Act ( 12 U.S.C. 221 et seq. 2C. Directive Policy Rules of the Federal Open Market Committee (a) Definitions In this section the following definitions shall apply: (1) Appropriate congressional committees The term appropriate congressional committees (2) Directive Policy Rule The term Directive Policy Rule (3) GDP The term GDP (4) Intermediate Policy Input The term Intermediate Policy Input (A) may include any variable determined by the Federal Open Market Committee as a necessary input to guide open-market operations; (B) shall include an estimate of, and the method of calculation for, the current rate of inflation or current inflation expectations; and (C) shall include, specifying whether the variable or estimate is historical, current, or a forecast and the method of calculation, at least one of— (i) an estimate of real GDP, nominal GDP, or potential GDP; (ii) an estimate of the monetary aggregate compiled by the Board of Governors of the Federal Reserve System and Federal reserve banks; or (iii) an interactive variable or a net estimate composed of the estimates described in clauses (i) and (ii). (5) Legislative day The term legislative day (6) Open Market Operations Directive The term Open Market Operations Directive (7) Policy Instrument The term Policy Instrument (A) the nominal Federal funds rate; (B) the nominal rate of interest paid on nonborrowed reserves; or (C) the discount window primary credit interest rate most recently published on the Federal Reserve Statistical Release on selected interest rates (daily or weekly), commonly referred to as the H.15 release. (8) Policy Instrument Target The term Policy Instrument Target (9) Reference Policy Rule The term Reference Policy Rule (A) The rate of inflation over the previous four quarters. (B) One-half of the percentage deviation of the real GDP from an estimate of potential GDP. (C) One-half of the difference between the rate of inflation over the previous four quarters and two percent. (D) Two percent. (b) Submitting a Directive Policy Rule Not later than 48 hours after the end of a meeting of the Federal Open Market Committee, the Chairman of the Federal Open Market Committee shall submit to the appropriate congressional committees and the Comptroller General of the United States a Directive Policy Rule and a statement that identifies the members of the Federal Open Market Committee who voted in favor of the Rule. (c) Requirements for a Directive Policy Rule A Directive Policy Rule shall— (1) identify the Policy Instrument the Directive Policy Rule is designed to target; (2) describe the strategy or rule of the Federal Open Market Committee for the systematic quantitative adjustment of the Policy Instrument Target to respond to a change in the Intermediate Policy Inputs; (3) include a function that comprehensively models the interactive relationship between the Intermediate Policy Inputs; (4) include the coefficients of the Directive Policy Rule that generate the current Policy Instrument Target and a range of predicted future values for the Policy Instrument Target if changes occur in any Intermediate Policy Input; (5) describe the procedure for adjusting the supply of bank reserves to achieve the Policy Instrument Target; (6) include a statement as to whether the Directive Policy Rule substantially conforms to the Reference Policy Rule and, if applicable— (A) an explanation of the extent to which it departs from the Reference Policy Rule; (B) a detailed justification for that departure; and (C) a description of the circumstances under which the Directive Policy Rule may be amended in the future; (7) include a certification that such Rule is expected to support the economy in achieving stable prices and maximum natural employment over the long term; and (8) include a calculation that describes with mathematical precision the expected annual inflation rate over a 5-year period. (d) GAO report The Comptroller General of the United States shall compare the Directive Policy Rule submitted under subsection (b) with the rule that was most recently submitted to determine whether the Directive Policy Rule has materially changed. If the Directive Policy Rule has materially changed, the Comptroller General shall, not later than 7 days after each meeting of the Federal Open Market Committee, prepare and submit a compliance report to the appropriate congressional committees specifying whether the Directive Policy Rule submitted after that meeting and the Federal Open Market Committee are in compliance with this section. (e) Changing market conditions (1) Rule of construction Nothing in this Act shall be construed to require that the plans with respect to the systematic quantitative adjustment of the Policy Instrument Target described under subsection (c)(2) be implemented if the Federal Open Market Committee determines that such plans cannot or should not be achieved due to changing market conditions. (2) GAO approval of update Upon determining that plans described in paragraph (1) cannot or should not be achieved, the Federal Open Market Committee shall submit an explanation for that determination and an updated version of the Directive Policy Rule to the Comptroller General of the United States and the appropriate congressional committees not later than 48 hours after making the determination. The Comptroller General shall, not later than 48 hours after receiving such updated version, prepare and submit to the appropriate congressional committees a compliance report determining whether such updated version and the Federal Open Market Committee are in compliance with this section. (f) Directive Policy Rule and Federal Open Market Committee not in compliance (1) In general If the Comptroller General of the United States determines that the Directive Policy Rule and the Federal Open Market Committee are not in compliance with this section in the report submitted pursuant to subsection (d), or that the updated version of the Directive Policy Rule and the Federal Open Market Committee are not in compliance with this section in the report submitted pursuant to subsection (e)(2), the Chairman of the Board of Governors of the Federal Reserve System shall, if requested by the chairman of either of the appropriate congressional committees, not later than 7 legislative days after such request, testify before such committee as to why the Directive Policy Rule, the updated version, or the Federal Open Market Committee is not in compliance. (2) GAO audit Notwithstanding subsection (b) of section 714 of title 31, United States Code, upon submitting a report of noncompliance pursuant to subsection (d) or subsection (e)(2) and after the period of 7 legislative days described in paragraph (1), the Comptroller General shall audit the conduct of monetary policy by the Board of Governors of the Federal Reserve System and the Federal Open Market Committee upon request of the appropriate congressional committee. Such committee may specify the parameters of such audit. (g) Congressional hearings The Chairman of the Board of Governors of the Federal Reserve System shall, if requested by the chairman of either of the appropriate congressional committees and not later than 7 legislative days after such request, appear before such committee to explain any change to the Directive Policy Rule. . 3. Federal Open Market Committee blackout period Section 12A of the Federal Reserve Act ( 12 U.S.C. 263 (d) Blackout period (1) In general During a blackout period, the only public communications that may be made by members and staff of the Committee with respect to macroeconomic or financial developments or about current or prospective monetary policy issues are the following: (A) The dissemination of published data, surveys, and reports that have been cleared for publication by the Board of Governors of the Federal Reserve System. (B) Answers to technical questions specific to a data release. (C) Communications with respect to the prudential or supervisory functions of the Board of Governors. (2) Blackout period defined For purposes of this subsection, and with respect to a meeting of the Committee described under subsection (a), the term blackout period (A) begins immediately after midnight on the day that is one week prior to the date on which such meeting takes place; and (B) ends at midnight on the day after the date on which such meeting takes place. (3) Exemption for Chairman of the Board of Governors Nothing in this section shall prohibit the Chairman of the Board of Governors of the Federal Reserve System from participating in or issuing public communications. . 4. Membership of Federal Open Market Committee Section 12A(a) of the Federal Reserve Act ( 12 U.S.C. 263(a) (1) in the first sentence, by striking five six (2) in the second sentence, by striking One by the board of directors One by the boards of directors of the Federal Reserve Banks of New York and Boston; one by the boards of directors of the Federal Reserve Banks of Philadelphia and Cleveland; one by the boards of directors of the Federal Reserve Banks of Richmond and Atlanta; one by the boards of directors of the Federal Reserve Banks of Chicago and St. Louis; one by the boards of directors of the Federal Reserve Banks of Minneapolis and Kansas City; and one by the boards of directors of the Federal Reserve Banks of Dallas and San Francisco. (3) by inserting after the second sentence the following: In odd numbered calendar years, one representative shall be elected from each of the Federal Reserve Banks of Boston, Philadelphia, Richmond, Chicago, Minneapolis, and Dallas. In even-numbered calendar years, one representative shall be elected from each of the Federal Reserve Banks of New York, Cleveland, Atlanta, St. Louis, Kansas City, and San Francisco. 5. Requirements for stress tests and supervisory letters for the Board of Governors of the Federal Reserve System (a) Stress test rulemaking, GAO review, and publication of results Section 165(i)(1)(B) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5365(i)(1)(B) (1) by amending clause (i) to read as follows: (i) shall— (I) issue regulations, after providing for public notice and comment, that provide for at least 3 different sets of conditions under which the evaluation required by this subsection shall be conducted, including baseline, adverse, and severely adverse, and methodologies, including models used to estimate losses on certain assets; and (II) provide copies of such regulations to the Comptroller General of the United States and the Panel of Economic Advisors of the Congressional Budget Office before publishing such regulations; ; and (2) in clause (v), by inserting before the period the following: , including any results of a resubmitted test (b) Application of CCAR Section 165(i)(1) of such Act is further amended by adding at the end the following new subparagraph: (C) Application to CCAR The requirements of subparagraph (B) shall apply to all stress tests performed under the Comprehensive Capital Analysis and Review exercise established by the Board of Governors. . (c) Publication of the number of supervisory letters sent to the largest bank holding companies Section 165 of such Act is further amended by adding at the end the following new subsection: (l) Publication of supervisory letter information The Board of Governors shall publicly disclose— (1) the aggregate number of supervisory letters sent to bank holding companies described in subsection (a) since the date of the enactment of this section, and keep such number updated; and (2) the aggregate number of such letters that are designated as Matters Requiring Attention Matters Requiring Immediate Attention . 6. Frequency of testimony of the Chairman of the Board of Governors of the Federal Reserve System to Congress (a) In general Section 2B of the Federal Reserve Act ( 12 U.S.C. 225b (1) by striking semi-annual quarterly (2) in subsection (a)(2)— (A) by inserting and October 20 July 20 (B) by inserting and May 20 February 20 (b) Conforming amendment Paragraph (12) of section 10 of the Federal Reserve Act ( 12 U.S.C. 247b(12) semi-annual quarterly 7. Vice Chairman for Supervision report requirement Paragraph (12) of section 10 of the Federal Reserve Act ( 12 U.S.C. 247(b) (1) by redesignating such paragraph as paragraph (11); and (2) in such paragraph, by adding at the end the following: In each such appearance, the Vice Chairman for Supervision shall provide written testimony that includes the status of all pending and anticipated rulemakings that are being made by the Board of Governors of the Federal Reserve System. If, at the time of any appearance described in this paragraph, the position of Vice Chairman for Supervision is vacant, the Vice Chairman for the Board of Governors of the Federal Reserve System (who has the responsibility to serve in the absence of the Chairman) shall appear instead and provide the required written testimony. If, at the time of any appearance described in this paragraph, both Vice Chairman positions are vacant, the Chairman of the Board of Governors of the Federal Reserve System shall appear instead and provide the required written testimony. 8. Economic analysis of regulations of the Board of Governors of the Federal Reserve System (a) Amendment to Federal Reserve Act Section 11 of the Federal Reserve Act ( 12 U.S.C. 248 (m) Consideration of economic impacts (1) In general Before issuing any regulation, the Board of Governors of the Federal Reserve System shall— (A) clearly identify the nature and source of the problem that the proposed regulation is designed to address and assess the significance of that problem; (B) assess whether any new regulation is warranted or, with respect to a proposed regulation that the Board of Governors is required to issue by statute and with respect to which the Board has the authority to exempt certain persons from the application of such regulation, compare— (i) the costs and benefits of the proposed regulation; and (ii) the costs and benefits of a regulation under which the Board exempts all persons from the application of the proposed regulation, to the extent the Board is able; (C) assess the qualitative and quantitative costs and benefits of the proposed regulation and propose or adopt a regulation only on a reasoned determination that the benefits of the proposed regulation outweigh the costs of the regulation; (D) identify and assess available alternatives to the proposed regulation that were considered, including any alternative offered by a member of the Board of Governors of the Federal Reserve System or the Federal Open Market Committee and including any modification of an existing regulation, together with an explanation of why the regulation meets the regulatory objectives more effectively than the alternatives; and (E) ensure that any proposed regulation is accessible, consistent, written in plain language, and easy to understand and shall measure, and seek to improve, the actual results of regulatory requirements. (2) Considerations and actions (A) Required actions In deciding whether and how to regulate, the Board shall assess the costs and benefits of available regulatory alternatives, including the alternative of not regulating, and choose the approach that maximizes net benefits. Specifically, the Board shall— (i) evaluate whether, consistent with achieving regulatory objectives, the regulation is tailored to impose the least impact on the availability of credit and economic growth and to impose the least burden on society, including market participants, individuals, businesses of different sizes, and other entities (including State and local governmental entities), taking into account, to the extent practicable, the cumulative costs of regulations; (ii) evaluate whether the regulation is inconsistent, incompatible, or duplicative of other Federal regulations; and (iii) with respect to a proposed regulation that the Board is required to issue by statute and with respect to which the Board has the authority to exempt certain persons from the application of such regulation, compare— (I) the costs and benefits of the proposed regulation; and (II) the costs and benefits of a regulation under which the Board exempts all persons from the application of the proposed regulation, to the extent the Board is able. (B) Additional considerations In addition, in making a reasoned determination of the costs and benefits of a proposed regulation, the Board shall, to the extent that each is relevant to the particular proposed regulation, take into consideration the impact of the regulation, including secondary costs such as an increase in the cost or a reduction in the availability of credit or investment services or products, on— (i) the safety and soundness of the United States banking system; (ii) market liquidity in securities markets; (iii) small businesses; (iv) community banks; (v) economic growth; (vi) cost and access to capital; (vii) market stability; (viii) global competitiveness; (ix) job creation; (x) the effectiveness of the monetary policy transmission mechanism; and (xi) employment levels. (3) Explanation and comments The Board shall explain in its final rule the nature of comments that it received and shall provide a response to those comments in its final rule, including an explanation of any changes that were made in response to those comments and the reasons that the Board did not incorporate concerns related to the potential costs or benefits in the final rule. (4) Postadoption impact assessment (A) In general Whenever the Board adopts or amends a regulation designated as a major rule (i) The purposes and intended consequences of the regulation. (ii) The assessment plan that will be used, consistent with the requirements of subparagraph (B), to assess whether the regulation has achieved the stated purposes. (iii) Appropriate postimplementation quantitative and qualitative metrics to measure the economic impact of the regulation and the extent to which the regulation has accomplished the stated purpose of the regulation. (iv) Any reasonably foreseeable indirect effects that may result from the regulation. (B) Requirements of assessment plan and report (i) Requirements of plan The assessment plan required under this paragraph shall consider the costs, benefits, and intended and unintended consequences of the regulation. The plan shall specify the data to be collected, the methods for collection and analysis of the data, and a date for completion of the assessment. The assessment plan shall include an analysis of any jobs added or lost as a result of the regulation, differentiating between public and private sector jobs. (ii) Submission and publication of report The Board shall, not later than 2 years after the publication of the adopting release, publish the assessment plan in the Federal Register for notice and comment. If the Board determines, at least 90 days before the deadline for publication of the assessment plan, that an extension is necessary, the Board shall publish a notice of such extension and the specific reasons why the extension is necessary in the Federal Register. Any material modification of the assessment plan, as necessary to assess unforeseen aspects or consequences of the regulation, shall be promptly published in the Federal Register for notice and comment. (iii) Data collection not subject to notice and comment requirements If the Board has published the assessment plan for notice and comment at least 30 days before the adoption of a regulation designated as a major rule, the collection of data under the assessment plan shall not be subject to the notice and comment requirements in section 3506(c) of title 44, United States Code (commonly referred to as the Paperwork Reduction Act). Any material modification of the plan that requires collection of data not previously published for notice and comment shall also be exempt from such requirements if the Board has published notice in the Federal Register for comment on the additional data to be collected, at least 30 days before the initiation of data collection. (iv) Final action Not later than 180 days after publication of the assessment plan in the Federal Register, the Board shall issue for notice and comment a proposal to amend or rescind the regulation, or shall publish a notice that the Board has determined that no action will be taken on the regulation. Such a notice will be deemed a final agency action. (5) Covered regulations and other actions Solely as used in this subsection, the term regulation (A) means a statement of general applicability and future effect that is designed to implement, interpret, or prescribe law or policy, or to describe the procedure or practice requirements of the Board of Governors, including rules, orders of general applicability, interpretive releases, and other statements of general applicability that the Board of Governors intends to have the force and effect of law; and (B) does not include— (i) a regulation issued in accordance with the formal rulemaking provisions of section 556 or 557 of title 5, United States Code; (ii) a regulation that is limited to the organization, management, or personnel matters of the Board of Governors; (iii) a regulation promulgated pursuant to statutory authority that expressly prohibits compliance with this provision; or (iv) a regulation that is certified by the Board of Governors to be an emergency action, if such certification is published in the Federal Register. . (b) Rule of construction Nothing in this section shall apply to the requirements regarding the conduct of monetary policy described in section 2. 9. Salaries, financial disclosures, and office staff of the Board of Governors of the Federal Reserve System (a) In general Section 11 of the Federal Reserve Act ( 12 U.S.C. 248 (1) by redesignating the second subsection (s) (relating to Assessments, Fees, and Other Charges for Certain Companies (2) by adding at the end the following new subsections: (u) Ethics standards for members and employees (1) Prohibited and restricted financial interests and transactions The members and employees of the Board of Governors of the Federal Reserve System shall be subject to the provisions under section 4401.102 of title 5, Code of Federal Regulations, to the same extent as such provisions apply to an employee of the Securities and Exchange Commission. (2) Treatment of brokerage accounts and availability of account statements The members and employees of the Board of Governors of the Federal Reserve System shall— (A) disclose all brokerage accounts that they maintain, as well as those in which they control trading or have a financial interest (including managed accounts, trust accounts, investment club accounts, and the accounts of spouses or minor children who live with the member or employee); and (B) with respect to any securities account that the member or employee is required to disclose to the Board of Governors, authorize their brokers and dealers to send duplicate account statements directly to Board of Governors. (3) Prohibitions related to outside employment and activities The members and employees of the Board of Governors of the Federal Reserve System shall be subject to the prohibitions related to outside employment and activities described under section 4401.103(c) of title 5, Code of Federal Regulations, to the same extent as such prohibitions apply to an employee of the Securities and Exchange Commission. (4) Additional ethics standards The members and employees of the Board of Governors of the Federal Reserve System shall be subject to— (A) the employee responsibilities and conduct regulations of the Office of Personnel Management under part 735 of title 5, Code of Federal Regulations; (B) the canons of ethics contained in subpart C of part 200 of title 17, Code of Federal Regulations, to the same extent as such subpart applies to the employees of the Securities and Exchange Commission; and (C) the regulations concerning the conduct of members and employees and former members and employees contained in subpart M of part 200 of title 17, Code of Federal Regulations, to the same extent as such subpart applies to the employees of the Securities and Exchange Commission. (v) Disclosure of staff salaries and financial information The Board of Governors of the Federal Reserve System shall make publicly available, on the website of the Board of Governors, a searchable database that contains the names of all members, officers, and employees of the Board of Governors who receive an annual salary in excess of the annual rate of basic pay for GS–15 of the General Schedule, and— (1) the yearly salary information for such individuals, along with any nonsalary compensation received by such individuals; and (2) any financial disclosures required to be made by such individuals. . (b) Office staff for each member of the Board of Governors Subsection (l) of section 11 of the Federal Reserve Act ( 12 U.S.C. 248 Each member of the Board of Governors of the Federal Reserve System may employ, at a minimum, 2 individuals, with such individuals selected by such member and the salaries of such individuals set by such member. A member may employ additional individuals as determined necessary by the Board of Governors. 10. Requirements for international processes (a) Board of Governors requirements Section 11 of the Federal Reserve Act ( 12 U.S.C. 248 (w) International processes (1) Notice of process; consultation At least 30 calendar days before any member or employee of the Board of Governors of the Federal Reserve System participates in a process of setting financial standards as a part of any foreign or multinational entity, the Board of Governors shall— (A) issue a notice of the process, including the subject matter, scope, and goals of the process, to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (B) make such notice available to the public, including on the website of the Board of Governors; and (C) solicit public comment, and consult with the committees described under subparagraph (A), with respect to the subject matter, scope, and goals of the process. (2) Public reports on process After the end of any process described under paragraph (1), the Board of Governors shall issue a public report on the topics that were discussed during the process and any new or revised rulemakings or policy changes that the Board of Governors believes should be implemented as a result of the process. (3) Notice of agreements; consultation At least 90 calendar days before any member or employee of the Board of Governors of the Federal Reserve System participates in a process of setting financial standards as a part of any foreign or multinational entity, the Board of Governors shall— (A) issue a notice of agreement to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (B) make such notice available to the public, including on the website of the Board of Governors; and (C) consult with the committees described under subparagraph (A) with respect to the nature of the agreement and any anticipated effects such agreement will have on the economy. (4) Definition For purposes of this subsection, the term process . (b) FDIC requirements The Federal Deposit Insurance Act ( 12 U.S.C. 1811 et seq. 51. International processes (a) Notice of process; consultation At least 30 calendar days before the Board of Directors participates in a process of setting financial standards as a part of any foreign or multinational entity, the Board of Directors shall— (1) issue a notice of the process, including the subject matter, scope, and goals of the process, to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (2) make such notice available to the public, including on the website of the Corporation; and (3) solicit public comment, and consult with the committees described under paragraph (1), with respect to the subject matter, scope, and goals of the process. (b) Public reports on process After the end of any process described under subsection (a), the Board of Directors shall issue a public report on the topics that were discussed at the process and any new or revised rulemakings or policy changes that the Board of Directors believes should be implemented as a result of the process. (c) Notice of agreements; consultation At least 90 calendar days before the Board of Directors participates in a process of setting financial standards as a part of any foreign or multinational entity, the Board of Directors shall— (1) issue a notice of agreement to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (2) make such notice available to the public, including on the website of the Corporation; and (3) consult with the committees described under paragraph (1) with respect to the nature of the agreement and any anticipated effects such agreement will have on the economy. (d) Definition For purposes of this section, the term process . (c) Treasury requirements Section 325 of title 31, United States Code, is amended by adding at the end the following new subsection: (d) International processes (1) Notice of process; consultation At least 30 calendar days before the Secretary participates in a process of setting financial standards as a part of any foreign or multinational entity, the Secretary shall— (A) issue a notice of the process, including the subject matter, scope, and goals of the process, to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (B) make such notice available to the public, including on the website of the Department of the Treasury; and (C) solicit public comment, and consult with the committees described under subparagraph (A), with respect to the subject matter, scope, and goals of the process. (2) Public reports on process After the end of any process described under paragraph (1), the Secretary shall issue a public report on the topics that were discussed at the process and any new or revised rulemakings or policy changes that the Secretary believes should be implemented as a result of the process. (3) Notice of agreements; consultation At least 90 calendar days before the Secretary participates in a process of setting financial standards as a part of any foreign or multinational entity, the Secretary shall— (A) issue a notice of agreement to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (B) make such notice available to the public, including on the website of the Department of the Treasury; and (C) consult with the committees described under subparagraph (A) with respect to the nature of the agreement and any anticipated effects such agreement will have on the economy. (4) Definition For purposes of this subsection, the term process . (d) OCC requirements Chapter 1 of title LXII of the Revised Statutes of the United States ( 12 U.S.C. 21 et seq. (1) by adding at the end the following new section: 5156B. International processes (a) Notice of process; consultation At least 30 calendar days before the Comptroller of the Currency participates in a process of setting financial standards as a part of any foreign or multinational entity, the Comptroller of the Currency shall— (1) issue a notice of the process, including the subject matter, scope, and goals of the process, to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (2) make such notice available to the public, including on the website of the Office of the Comptroller of the Currency; and (3) solicit public comment, and consult with the committees described under paragraph (1), with respect to the subject matter, scope, and goals of the process. (b) Public reports on process After the end of any process described under subsection (a), the Comptroller of the Currency shall issue a public report on the topics that were discussed at the process and any new or revised rulemakings or policy changes that the Comptroller of the Currency believes should be implemented as a result of the process. (c) Notice of agreements; consultation At least 90 calendar days before the Comptroller of the Currency participates in a process of setting financial standards as a part of any foreign or multinational entity, the Board of Directors shall— (1) issue a notice of agreement to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (2) make such notice available to the public, including on the website of the Office of the Comptroller of the Currency; and (3) consult with the committees described under paragraph (1) with respect to the nature of the agreement and any anticipated effects such agreement will have on the economy. (d) Definition For purposes of this section, the term process ; and (2) in the table of contents for such chapter, by adding at the end the following new item: 5156B. International processes. . (e) Securities and Exchange Commission requirements Section 4 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78d (j) International processes (1) Notice of process; consultation At least 30 calendar days before the Commission participates in a process of setting financial standards as a part of any foreign or multinational entity, the Commission shall— (A) issue a notice of the process, including the subject matter, scope, and goals of the process, to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (B) make such notice available to the public, including on the website of the Commission; and (C) solicit public comment, and consult with the committees described under subparagraph (A), with respect to the subject matter, scope, and goals of the process. (2) Public reports on process After the end of any process described under paragraph (1), the Commission shall issue a public report on the topics that were discussed at the process and any new or revised rulemakings or policy changes that the Commission believes should be implemented as a result of the process. (3) Notice of agreements; consultation At least 90 calendar days before the Commission participates in a process of setting financial standards as a part of any foreign or multinational entity, the Commission shall— (A) issue a notice of agreement to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate; (B) make such notice available to the public, including on the website of the Commission; and (C) consult with the committees described under subparagraph (A) with respect to the nature of the agreement and any anticipated effects such agreement will have on the economy. (4) Definition For purposes of this subsection, the term process . 11. Amendments to powers of the Board of Governors of the Federal Reserve System (a) In general Section 13(3) of the Federal Reserve Act ( 12 U.S.C. 343(3) (1) in subparagraph (A)— (A) by inserting that pose a threat to the financial stability of the United States unusual and exigent circumstances (B) by inserting and by the affirmative vote of not less than nine presidents of the Federal reserve banks five members (2) in subparagraph (B)— (A) in clause (i), by inserting at the end the following: Federal reserve banks may not accept equity securities issued by the recipient of any loan or other financial assistance under this paragraph as collateral. Not later than 6 months after the date of enactment of this sentence, the Board shall, by rule, establish— (I) a method for determining the sufficiency of the collateral required under this paragraph; (II) acceptable classes of collateral; (III) the amount of any discount of such value that the Federal reserve banks will apply for purposes of calculating the sufficiency of collateral under this paragraph; and (IV) a method for obtaining independent appraisals of the value of collateral the Federal reserve banks receive. ; and (B) in clause (ii)— (i) by striking the second sentence; and (ii) by inserting after the first sentence the following: A borrower shall not be eligible to borrow from any emergency lending program or facility unless the Board and all federal banking regulators with jurisdiction over the borrower certify that, at the time the borrower initially borrows under the program or facility, the borrower is not insolvent. (3) by inserting financial institution participant (4) in subparagraph (D)(i), by inserting financial institution participants (5) by adding at the end the following new subparagraphs: (F) Penalty rate (i) In general Not later than 6 months after the date of enactment of this subparagraph, the Board shall, with respect to a recipient of any loan or other financial assistance under this paragraph, establish by rule a minimum interest rate on the principal amount of any loan or other financial assistance. (ii) Minimum interest rate defined In this subparagraph, the term minimum interest rate (I) the average of the secondary discount rate of all Federal Reserve banks over the most recent 90-day period; and (II) the average of the difference between a distressed corporate bond yield index (as defined by rule of the Board) and a bond yield index of debt issued by the United States (as defined by rule of the Board) over the most recent 90-day period. (G) Financial institution participant defined For purposes of this paragraph, the term financial institution participant (i) means a company that is predominantly engaged in financial activities (as defined in section 102(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5311(a) (ii) does not include an agency described in subparagraph (W) of section 5312(a)(2) of title 31, United States Code, or an entity controlled or sponsored by such an agency. . (b) Conforming amendment Section 11(r)(2)(A) of such Act is amended— (1) in clause (ii)(IV), by striking ; and (2) in clause (iii), by striking the period at the end and inserting ; and (3) by adding at the end the following new clause: (iv) the available members secure the affirmative vote of not less than nine presidents of the Federal reserve banks. . 12. Interest rates on balances maintained at a Federal Reserve bank by depository institutions established by Federal Open Market Committee Subparagraph (A) of section 19(b)(12) of the Federal Reserve Act ( 12 U.S.C. 461(b)(12)(A) established by the Federal Open Market Committee rate or rates 13. Audit reform and transparency for the Board of Governors of the Federal Reserve System (a) In general Notwithstanding section 714 of title 31, United States Code, or any other provision of law, the Comptroller General of the United States shall complete an audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks under subsection (b) of such section 714 within 12 months after the date of the enactment of this Act. (b) Report (1) In general Not later than 90 days after the audit required pursuant to subsection (a) is completed, the Comptroller General— (A) shall submit to Congress a report on such audit; and (B) shall make such report available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each subcommittee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests the report. (2) Contents The report under paragraph (1) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate. (c) Repeal of certain limitations Subsection (b) of section 714 of title 31, United States Code, is amended by striking the second sentence. (d) Technical and conforming amendments (1) In general Section 714 of title 31, United States Code, is amended— (A) in subsection (d)(3), by striking or (f) (B) in subsection (e), by striking the third undesignated paragraph of section 13 section 13(3) (C) by striking subsection (f). (2) Federal Reserve Act Subsection (s) (relating to Federal Reserve Transparency and Release of Information 12 U.S.C. 248 (A) in paragraph (4)(A), by striking has the same meaning as in section 714(f)(1)(A) of title 31, United States Code means a program or facility, including any special purpose vehicle or other entity established by or on behalf of the Board of Governors of the Federal Reserve System or a Federal reserve bank, authorized by the Board of Governors under section 13(3), that is not subject to audit under section 714(e) of title 31, United States Code (B) in paragraph (6), by striking or in section 714(f)(3)(C) of title 31, United States Code, the information described in paragraph (1) and information concerning the transactions described in section 714(f) of such title, the information described in paragraph (1) (C) in paragraph (7), by striking and section 13(3)(C), section 714(f)(3)(C) of title 31, United States Code, and , section 13(3)(C), and 14. Reporting requirement for Export-Import Bank The Board of Governors of the Federal Reserve System shall include, as part of the monthly Federal Reserve statistical release titled Industrial Production or Capacity Utilization (1) the impact on the index described in the statistical release due to the operation of the Export-Import Bank; and (2) the amount of foreign industrial production supported by foreign export credit agencies, using the same method used to measure industrial production in the statistical release and scaled to be comparable to the industrial production measurement for the United States. 15. Membership of Board of Directors of the Federal reserve banks Section 4 of the Federal Reserve Act ( 12 U.S.C. 302 (1) in the eleventh undesignated paragraph (relating to Class B), by striking and consumers consumers, and traditionally underserved communities and populations (2) in the twelfth undesignated paragraph (relating to Class C), by striking and consumers consumers, and traditionally underserved communities and populations November 16, 2015 Reported from the Committee on Financial Services November 16, 2015 The Committee on Oversight and Government Reform

Summary: Fed Oversight Reform and Modernization Act of 2015 or the FORM Act of 2015 (Sec. 1) This bill amends the Federal Reserve Act to require the Chairman of the Federal Open Market Committee (FOMC), within 48 hours after the end of a FOMC meeting, to submit to the appropriate congressional committees and the Government Accountability Office (GAO) a Directive Policy Rule, meeting specified criteria, accompanied by a statement identifying the FOMC members voting in its favor. A Directive Policy Rule shall describe the FOMC strategy or rule for the systematic quantitative adjustment of a Policy Instrument Target to: respond to a change in specified Intermediate Policy Inputs, and provide the basis for an Open Market Operations Directive to achieve a specified Policy Instrument Target presented by the FOMC to the Federal Reserve Bank of New York to guide open-market operations. The GAO shall determine if a Directive Policy Rule has materially changed from the rule most recently submitted, and the Chairman of the Board of Governors of the Federal Reserve System (Board) must testify within seven legislative days before certain congressional committees as to why any noncompliance exists. The GAO must also, upon congressional request, audit the conduct of monetary policy by the Board and the FOMC. (Sec. 2) A blackout period shall take place starting one week before an FOMC meeting and ending midnight of the day of its completion. During the black-out period only specified public communications are permissible by members and FOMC staff with respect to either macroeconomic or financial developments or about current or prospective monetary policy issues. (Sec. 4) FMOC membership shall increase from five to six representatives of the Federal Reserve Banks. The selection process for representatives is revised, in part to divide elections from different Banks into odd-numbered and even-numbered calendar years. (Sec. 5) The Dodd-Frank Wall Street Reform and Consumer Protection Act is amended to require the Board, before adopting sets of conditions for stress tests of nonbank financial companies it supervises and bank holding companies, to: (1) first issue regulations for them, subject to public notice and comment, which shall include methodologies and models used to estimate losses on certain assets; and (2) before publishing them submit copies of such regulations to the GAO and the Panel of Economic Advisors of the Congressional Budget Office. Stress test requirements used by the Board shall apply to all stress tests performed under the Comprehensive Capital Analysis and Review exercise. The Board shall also publish: the aggregate number of supervisory letters sent since the enactment of this Act to bank holding companies with total consolidated assets of $50 billion or more, and keep this number updated; as well as the aggregate numbers designated "Matters Requiring Attention" and "Matters Requiring Immediate Attention." (Sec. 6) The Federal Reserve Act is further amended to increase from semiannual to quarterly the Board Chairman’s appearances before Congress. (Sec. 7) The Board's Vice Chairman for Supervision, as part of Board testimony before specified congressional committees, shall report on the status of proposed and anticipated rulemakings. If the Vice Chairman for Supervision position is vacant, the Board's Vice Chairman shall fulfill the statutory requirement for semi-annual testimony. (Sec. 8) Before issuing any regulation the Board must consider specified economic impacts. When deciding whether to regulate, the Board must: assess the costs and benefits of available regulatory alternatives, and consider a regulation's impact upon certain areas of economic activity. In its final rule the Board must: (1) explain the nature of comments that it received together with a response to them; and (2) make a postadoption impact assessment of the costs, benefits, and intended and unintended consequences of any "major rule" adopted or amended. (Sec. 9) Board members and employees shall be subject to the same ethics standards, prohibitions, and restrictions as apply to employees of the Securities and Exchange Commission (SEC) with respect to financial interests, transactions, outside employment and activities, and Office of Personnel Management employee responsibilities and conduct regulations. The Board shall make publicly available on its website a searchable database of all Board members, officers, and employees who receive an annual salary above the annual rate of basic pay for GS-15 of the General Schedule, including yearly salary information and any nonsalary compensation such staff receive. Each Board member may employ at least two individuals. (Sec. 10) Both the Federal Reserve Act and the Federal Deposit Insurance Act are revised to require the Federal Reserve Board and the Federal Deposit Insurance Corporation Board, respectively, in the process of setting financial standards as a part of any foreign or multinational entity, to solicit public comment and issue public reports, including a notice of agreement. The Department of the Treasury, the Comptroller of the Currency, and the SEC shall likewise be subject to these same requirements for their participation in similar processes. (Sec. 11) The authority of the Federal Reserve Board to discount notes, drafts, and bills of exchange secured to a Federal Reserve Bank's satisfaction in unusual and exigent circumstances shall be limited to only those circumstances posing a threat to U.S. financial stability. The affirmative vote of at least nine presidents of the Federal Reserve Banks shall be necessary for a discount decision, in addition to (as under current law) the affirmative vote of five Board members. Federal Reserve Banks may not accept as collateral for an emergency loan any equity securities issued by the recipient of the loan or of other financial assistance. No applicant shall be eligible to borrow from any emergency lending program or facility unless the Board and all applicable federal banking regulators certify that the applicant is not insolvent. The Board, within six months of the enactment of this Act, shall adopt a rule: establishing a method for determining the sufficiency of collateral pledged to secure lending, acceptable classes of collateral, the amount of any discount of the lendable value of collateral for a loan that the Federal Reserve Banks will apply to calculate the sufficiency of the collateral, and a method for obtaining independent appraisals of the collateral the Federal Reserve Banks receive. The Board, also within six months of the enactment of this Act, shall by rule establish a minimum interest rate on the principal amount of any emergency loan or financial assistance to a recipient. The applicable minimum interest rate shall be the sum of: the most recent 90-day average of the secondary discount rate of all Federal Reserve Banks; plus the most recent 90-day average of the difference between a distressed corporate bond yield index and a bond yield index of debt issued by the United States. The bill limits discounts under the lending program to participants that are financial institutions, excluding federal, state, and local government agencies. (Sec. 12) The FOMC shall determine the interest rates on balances maintained at a Federal Reserve Bank by or on behalf of a depository institution. (Sec. 13) The GAO shall audit annually both the Federal Reserve Board and the Federal Reserve Banks within 12 months after enactment of this Act. (Sec. 14) The Board, shall, as part of its monthly "Industrial Production or Capacity Utilization" statistical release (or any successor release), analyze: the impact on the index described in the statistical release because of the operation of the Export-Import Bank; and the amount of foreign industrial production supported by foreign export credit agencies, using the same method used to measure industrial production in the statistical release and scaled to be comparable to the industrial production measurement for the United States. (Sec. 15) The Federal Reserve Act is amended to require that, with respect to the election or designation of Class B and C directors of Federal Reserve District Banks, due consideration be given to the interests of traditionally underserved communities and populations. (Sec. 16) Centennial Monetary Commission Act of 2015 The bill establishes a Centennial Monetary Commission to examine how U.S. monetary policy since the creation of the Board in 1913 has affected the performance of the U.S. economy in terms of output, employment, prices, and financial stability over time. (Sec. 17) The Federal Reserve Act is amended to state that the portion of net earnings of each Federal Reserve Bank which remains after dividend claims have been fully met shall no longer be deposited in the Bank's surplus fund but shall be transferred to the Board for transfer to the Treasury general fund. The Federal Reserve Banks shall also transfer all their current surplus funds to the Board for transfer to the Treasury general fund. (Sec. 18) The FOMC shall record and make available to the public the full transcript of all of its meetings.