cation of capital that inflates asset prices dispropor-
tionately, creating unsustainable bubbles in asset 
prices, while price indices for goods and services do 
not register significant price inflation. When asset 
bubbles burst, many investments must be liquidated 
at considerable cost to the U.S. economy in terms of 
lower real output and employment. 
(4) Price stability cannot always be measured 
solely through price indices for goods and services 
since such indices exclude changes in asset prices. 
Therefore, the Federal Reserve should monitor (A) 
the prices of, and the expected returns from, major 
asset classes (including equities, residential real es-
tate, commercial and industrial real estate, agricul-
tural real estate, gold and other commodities, cor-
porate bonds, U.S. Government bonds, State and 
local government bonds, and other securities), (B) 
the value of the U.S. dollar relative to other cur-
rencies, and (C) the value of the United States dol-
lar relative to gold, as metrics to determine whether 
the Federal Reserve’s monetary policy is consistent 
with long-term price stability. 
SEC. 102. PRICE STABILITY MANDATE. 
(a) IN GENERAL.—Section 2A of the Federal Reserve 
Act is amended— 
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(1) by striking ‘‘maintain long run growth of 
the monetary and credit aggregates commensurate 
with the economy’s long run potential to increase 
production, so as to promote effectively the goals of 
maximum employment, stable prices, and moderate 
long-term interest rates’’ and inserting ‘‘pursue the 
goal of long-term price stability, in order to achieve 
the maximum sustainable rate of output growth and 
the maximum level of employment through time’’; 
(2) by striking ‘‘The Board of Governors’’ and 
inserting the following: 
‘‘(a) IN GENERAL.—The Board of Governors’’; and 
(3) by adding at the end the following: 
‘‘(b) PRICE STABILITY METRICS.— 
‘‘(1) IN GENERAL.—The Board of Governors of 
the Federal Reserve System and the Federal Open 
Market Committee shall— 
‘‘(A) define the term ‘long-term price sta-
bility’ for purposes of subsection (a); and 
‘‘(B) establish metrics that the Board and 
the Committee will use to evaluate whether 
long-term price stability is being achieved. 
‘‘(2) ESTABLISHMENT OF METRICS.—In estab-
lishing the metrics described under paragraph 
(1)(B), the Board and Committee shall— 
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‘‘(A) take into consideration price indices 
of goods and services; and 
‘‘(B) evaluate, on an ongoing basis— 
‘‘(i) whether such metrics are com-
prehensively reflecting price movements in 
the economy; and 
‘‘(ii) whether any price movements not 
captured by the price indices of goods and 
services are causing a significant misalloca-
tion of capital in the United States econ-
omy. 
‘‘(3) METRIC
EVALUATION.—The Board and 
Committee shall, with respect to the evaluation proc-
ess required pursuant to paragraph (2)(B), mon-
itor— 
‘‘(A) the prices of, and the expected re-
turns from, major asset classes (including equi-
ties, residential real estate, commercial and in-
dustrial real estate, agricultural real estate, 
commodities, corporate bonds, State and local 
government bonds, and other securities) and 
the allocation of capital in financial markets 
and the broader economy; 
‘‘(B) the value of the United States dollar 
relative to other currencies; and 
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‘‘(C) the value of the United States dollar 
relative to gold. 
‘‘(4) PUBLIC
DISCLOSURE; REPORT
TO
THE 
CONGRESS.—The Board and the Committee shall, 
with respect to the definition of long-term price sta-
bility and the establishment of metrics set pursuant 
to paragraph (1)— 
‘‘(A) make such definition and metrics 
available to the public on a website maintained 
by the Board or the Committee; and 
‘‘(B) each time such definition and metrics 
are set or revised, issue a report to the Con-
gress stating such definition and metrics.’’. 
(b) ADDITIONAL EVALUATIONS
AND DETERMINA-
TIONS INCLUDED
IN SEMI-ANNUAL REPORT
TO CON-
GRESS.—Section 2B(b) of the Federal Reserve Act is 
amended— 
(1) by striking ‘‘containing a discussion’’ and 
inserting the following: 
‘‘containing— 
‘‘(1) a discussion’’; 
(2) by striking the period and inserting a semi-
colon; and 
(3) by adding at the end the following: 
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‘‘(2) the results of the evaluation process con-
ducted pursuant to section 2A(b)(2)(B); 
‘‘(3) a determination of whether the goal of 
long-term price stability is being met and, if such 
goal is not being met, an explanation of why the goal 
is not being met and the steps that the Board and 
the Federal Open Market Committee will take to en-
sure that the goal is met in the future; and 
‘‘(4) a description of the main monetary policy 
instruments used by the Board and the Federal 
Open Market Committee and a description of the 
strategy of the Board and the Committee with re-
spect to using such instruments to achieve the goal 
of long-term price stability.’’. 
TITLE II—FINANCIAL STABILITY 
AND MORAL HAZARD MITIGA-
TION ACT 
SEC. 201. FINDINGS. 
The Congress finds the following: 
(1) The Federal Reserve performs an essential 
function for financial stability by serving as lender 
of last resort in order to— 
(A) prevent the unnecessary failures of 
otherwise solvent United States banks and 
other financial institutions; 
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(B) reduce the likelihood of financial con-
tagion and disruptions in United States finan-
cial markets; and 
(C) minimize any adverse effects on real 
output and employment in the United States 
economy. 
(2) In acting as the lender of last resort, the 
Federal Reserve, may— 
(A) buy debt securities at fair market 
value; or 
(B) provide short-term credit, secured by 
appropriate collateral in proper margin, to oth-
erwise solvent banks and other financial institu-
tions that encounter funding difficulties during 
a financial crisis. 
(3) Nevertheless, in its nearly 100-year history, 
the Federal Reserve has never clearly articulated its 
lender-of-last-resort policy. 
(4) The absence of an official lender-of-last-re-
sort policy has led to— 
(A) increased economic uncertainty be-
cause no one knows with certainty how the Fed-
eral Reserve may behave; 
(B) financially distressed firms seeking po-
litical solutions in the form of pressure from 
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Congress or the Administration being placed on 
the Federal Reserve to act to save them; and 
(C) a moral hazard problem from financial 
institutions taking greater risks and increasing 
leverage based upon assumptions of how the 
Federal Reserve will act, though there is no for-
mal statement assuring how the Federal Re-
serve will act. 
(5) By establishing a formal lender-of-last-re-
sort policy, the Federal Reserve would decrease un-
certainty in the market during times of financial cri-
sis and mitigate the moral hazards created by recent 
bailouts. 
(6) An official lender-of-last-resort policy should 
provide that once a financial crisis has dissipated, 
the Federal Reserve should, in an orderly way, sell 
any debt securities that— 
(A) the Federal Reserve acquired acting as 
lender of last resort; and 
(B) the Federal Reserve does not normally 
own for its System Account. 
(7) Further, to reduce moral hazard, the Fed-
eral Reserve’s lender-of-last-resort policy should 
make clear that credit in any form will not be pro-
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vided to insolvent banks or other financial institu-
tion. 
SEC. 202. LENDER-OF-LAST-RESORT POLICY. 
(a) IN GENERAL.—Not later than the end of the 1- 
year period beginning on the date of the enactment of this 
Act, the Board of Governors of the Federal Reserve Sys-
tem shall clearly articulate the Board’s lender-of-last-re-
sort policy. 
(b) CONSULTATION.—In articulating the policy re-
quired under subsection (a), the Board of Governors shall 
consult with— 
(1) the Federal Reserve bank presidents; 
(2) the Comptroller of the Currency; 
(3) the Chairperson of the Federal Deposit In-
surance Corporation; 
(4) the Securities and Exchange Commission; 
(5) the Commodity Futures Trading Commis-
sion; and 
(6) such other persons with expertise in finan-
cial services regulation and monetary policy as the 
Board of Governors may determine appropriate. 
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TITLE 
III—DIVERSIFYING 
THE 
FEDERAL 
OPEN 
MARKET 
COMMITTEE TO REFLECT A 
21ST CENTURY ECONOMY ACT 
SEC. 301. FINDINGS. 
The Congress finds the following: 
(1) The Federal Reserve Act delineates specific 
requirements for the seven governors charged with 
oversight of the Federal Reserve System. 
(2) In a reflection of the Federal Reserve Sys-
tem’s decentralized structure that broadly distrib-
utes power and responsibility across the Nation, the 
Act mandates that the presidentially appointed gov-
ernors come from a wide range of geographic loca-
tions and professional backgrounds. Specifically, the 
first undesignated paragraph under section 10 of the 
Federal Reserve Act states that ‘‘In selecting the 
members of the Board, not more than one of whom 
shall be selected from any one Federal Reserve Dis-
trict, the President shall have due regard to a fair 
representation of the financial, agricultural, indus-
trial, and commercial interests and geographical di-
visions of the country.’’. 
(3) The Federal Open Monetary Committee 
consists of members of the Board of Governors and 
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the President or Vice President of the Federal Re-
serve Bank of New York on a permanent basis and 
rotates voting membership among the remaining Re-
gional Reserve Banks. 
(4) The existing structure of the Federal Open 
Market Committee places too much authority in the 
hands of Washington and New York at the expense 
of the remainder of the United States. 
(5) Monetary policy should be conducted in the 
interest of all Americans and that policy goal is best 
achieved by a Federal Open Market Committee that 
provides greater representation and voice in policy 
decisions to the entire Nation as represented by the 
Regional Reserve Banks. This objective is best 
achieved by reforming the voting membership of the 
Federal Open Market Committee to include all Re-
gional Reserve Banks on a permanent basis. 
SEC. 302. FEDERAL OPEN MARKET COMMITTEE MEMBER-
SHIP. 
Section 12A(a) of the Federal Reserve Act (12 
U.S.C. 263(a)) is amended— 
(1) by striking ‘‘five representatives of the Fed-
eral Reserve banks to be selected as hereinafter pro-
vided.’’ and inserting ‘‘1 representative from each of 
the Federal Reserve banks.’’; and 
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(2) by striking ‘‘and, beginning with the elec-
tion for the term commencing March 1, 1943, shall 
be elected annually as follows: One by the board of 
directors of the Federal Reserve Bank of New York, 
one by the boards of directors of the Federal Re-
serve Banks of Boston, Philadelphia, and Richmond, 
one by the boards of directors of the Federal Re-
serve Banks of Cleveland and Chicago, one by the 
boards of directors of the Federal Reserve Banks of 
Atlanta, Dallas, and St. Louis, and one by the 
boards of directors of the Federal Reserve Banks of 
Minneapolis, Kansas City, and San Francisco. In 
such elections each board of directors shall have one 
vote; and the details of such elections may be gov-
erned by regulations prescribed by the committee, 
which may be amended from time to time.’’ and in-
serting ‘‘and shall be elected by the board of direc-
tors of the Federal Reserve bank that they are to 
represent.’’. 
TITLE IV—DEMYSTIFICATION OF 
MONETARY 
POLICY 
DECI-
SIONS ACT 
SEC. 401. FINDINGS. 
The Congress finds the following: 
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(1) A more efficient release of transcripts from 
the Federal Reserve would result in better guidance 
for market participants, and hence more economi-
cally efficient decisionmaking. 
(2) According to Federal Reserve Chairman 
Ben Bernanke, ‘‘when the monetary policy com-
mittee regularly provides information about objec-
tives, economic outlook, and policy plans, two bene-
fits result: (1) markets will price assets more effi-
ciently, and (2) a closer alignment between market 
participants’ expectations about the course of future 
short-term interest rates and’’ the views of policy-
makers. 
(3) The Federal Reserve is able to release tran-
scripts more efficiently without compromising their 
decisionmaking process. 
SEC. 402. RELEASE OF TRANSCRIPTS. 
Section 12A(a) of the Federal Reserve Act (12 
U.S.C. 263(a)) is amended by adding at the end the fol-
lowing: 
‘‘(d) RELEASE OF TRANSCRIPTS.—The Committee 
shall release meeting transcripts to the public not later 
than the end of the 3-year period following each meeting.’’. 
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TITLE V—EXCHANGE RATE 
RESPONSIBILITY ACT 
SEC. 501. FINDINGS. 
The Congress finds as follows: 
(1) The Board of Governors of the Federal Re-
serve System and the Federal Open Market Com-
mittee exercise control over the supply of U.S. dol-
lars, which is a major factor affecting the foreign ex-
change rate value of the United States dollar. There-
fore, the Board of Governors and Federal Open 
Market Committee should report to Congress on the 
impact of monetary policy on the foreign exchange 
rate value of the United States dollar. 
(2) Over the last several decades, Secretaries of 
the Treasury have repeatedly used the Exchange 
Stabilization Fund for purposes that were not envi-
sioned by Congress. To prevent further abuses, the 
Exchange Stabilization Fund should be renamed as 
the Special Drawing Rights Fund. The Special 
Drawing Rights Fund should hold the Special Draw-
ing Rights that the International Monetary Fund 
provided to the United States. Any other assets cur-
rently in the Exchange Stabilization Fund should be 
liquidated, and the proceeds used to reduce the pub-
lic debt. 
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SEC. 502. REPORT ON THE EFFECT OF EXCHANGE RATE 
POLICY. 
Section 2B(b) of the Federal Reserve Act, as amend-
ed by section 102(b), is further amended by adding at the 
end the following: 
‘‘(5) an analysis of how the policies of the 
Board and the Federal Open Market Committee are 
affecting the foreign exchange rate value of the 
United States dollar.’’. 
SEC. 503. RENAMING OF EXCHANGE STABILIZATION FUND. 
(a) IN GENERAL.—Section 5302 of title 31, United 
States Code, is amended by striking ‘‘stabilization fund’’ 
each place such term appears and inserting ‘‘Special 
Drawing Rights Fund’’. 
(b) CONFORMING AMENDMENTS.— 
(1) BALANCED BUDGET AND EMERGENCY DEF-
ICIT CONTROL ACT OF 1985.—Section 255(g)(1)(A) 
of the Balanced Budget and Emergency Deficit Con-
trol Act of 1985 (2 U.S.C. 905(g)(1)(A)) is amended 
by striking ‘‘Exchange Stabilization Fund’’ and in-
serting ‘‘Special Drawing Rights Fund’’. 
(2) EMERGENCY ECONOMIC STABILIZATION ACT 
OF
2008.—The Emergency Economic Stabilization 
Act of 2008 (12 U.S.C. 5211 et seq.) is amended— 
(A) in section 131, by striking ‘‘Exchange 
Stabilization Fund’’ each place such term ap-
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pears in headings and text and inserting ‘‘Spe-
cial Drawing Rights Fund’’; and 
(B) in the item relating to section 131 in 
the table of contents of such Act, by striking 
‘‘Exchange Stabilization Fund’’ and inserting 
‘‘Special Drawing Rights Fund’’. 
(3) INTERNATIONAL FINANCIAL INSTITUTIONS 
ACT.—Section 1704 of the International Financial 
Institutions Act (22 U.S.C. 262r–3) is amended by 
striking ‘‘stabilization fund’’ each place such term 
appears and inserting ‘‘Special Drawing Rights 
Fund’’. 
(4) SPECIAL DRAWING RIGHTS ACT.—The Spe-
cial Drawing Rights Act (22 U.S.C. 286n et seq.) is 
amended by striking ‘‘Exchange Stabilization Fund’’ 
each place such term appears and inserting ‘‘Special 
Drawing Rights Fund’’. 
(c) REFERENCES.—Any reference in a law, regula-
tion, document, paper, or other record of the United 
States to the ‘‘Exchange Stabilization Fund’’ shall be 
deemed a reference to the ‘‘Special Drawing Rights 
Fund’’. 
SEC. 504. CONVERSION TO ALL-SDR FUND. 
(a) FUNDS USED TO REDUCE THE DEBT.—The Sec-
retary of the Treasury shall liquidate all property in the 
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Special Drawing Rights Fund (as so renamed under sec-
tion 503), other than Special Drawing Rights, and use all 
such amounts to reduce the public debt. 
(b) LIMITATION ON FUND.—Section 5302 of title 31, 
United States Code, is amended— 
(1) in subsection (a)(1)— 
(A) by striking ‘‘is available to carry out’’ 
and inserting ‘‘is only available to carry out’’; 
and 
(B) by striking ‘‘, and for investing in obli-
gations of the United States Government those 
amounts in the fund the Secretary of the Treas-
ury, with the approval of the President, decides 
are not required at the time to carry out this 
section. Proceeds of sales and investments, 
earnings, and interest shall be paid into the 
fund and are available to carry out this section. 
However, the fund is not available to pay ad-
ministrative expenses’’; and 
(2) by striking subsection (b) and inserting the 
following: 
‘‘(b) FUND ONLY TO HOLD SPECIAL DRAWING 
RIGHTS.—Notwithstanding any other provision of law, 
only Special Drawing Rights may be deposited into the 
Special Drawing Rights Fund.’’. 
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(c) CONFORMING AMENDMENTS.— 
(1) BRETTON WOODS AGREEMENTS ACT.—Sec-
tion 18 of the Bretton Woods Agreements Act (22 
U.S.C. 286e–3) is hereby repealed. 
(2) SUPPORT FOR EAST EUROPEAN DEMOCRACY 
(SEED) ACT OF 1989.—The Support for East Euro-
pean Democracy (SEED) Act of 1989 (22 U.S.C. 
5401 et seq.) is amended— 
(A) in section 101(b)(1), by striking ‘‘such 
as—’’ and all that follows through the end of 
the paragraph and inserting ‘‘such as the au-
thority provided in section 102(c) of this Act.’’; 
and 
(B) in section 102(a), by striking ‘‘section 
101(b)—’’ and all that follows through the end 
of the subsection and inserting ‘‘section 101(b), 
should work closely with the European Commu-
nity and international financial institutions to 
determine the extent of emergency assistance 
required by Poland for the fourth quarter of 
1989.’’. 
(d) TREATMENT OF CERTAIN FUNDS.—Funds that 
would otherwise have been deposited into the Special 
Drawing Rights Fund (as so renamed under subsection 
(a)), but for the amendments made by this section, shall 
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