Date: 2015-11-18
Speaker: MAXINE WATERS (democrat)
Chamber: H
State: California

Mr. Chairman. I yield myself 6 minutes. Mr. Chairman. I rise today in strong opposition to H.R. 3189. a bill that would undermine the Federal Reserves monetary policy independence. politicize its decisionmaking. curtail its ability to respond to a wide range of dynamic economic data. and weaken its ability to effectively carry out its regulatory responsibilities to promote the safety and soundness of our financial system. Mr. Chairman. H.R. 3189. the Fed Oversight Reform and Modernization Act. should more appropriately be called the Eliminate the Federal Reserves Ability to Support the American Economy and Promote Full Employment Act. While no Federal agency is perfect and should be reflectively shielded from reform. this bill does not reflect a good faith effort to strengthen the Federal Reserve or hold it accountable to its mission. to keep inflation low and stable. and to promote full employment. Rather. this bill is designed to put monetary policy on autopilot under a strict. rulesbased approach subject to reviews and audits by the GAO. This approach seeks to discourage monetary policymakers from considering the wide range of everchanging economic data that is relevant to effective decisionmaking and would discourage the Fed from engaging in the types of bold and forceful actions that have been so critical to our economys recovery over the past 6 years. As the largest economy in the world that is increasingly interconnected to a vast and complex global economy. the notion that we should be putting blinders on our central bank strikes me as a recipe for disaster. In fact. had the Federal Reserve taken the approach called for in the underlying bill during and in response to the recent financial crisis. economic performance would have been substantially worse. As Federal Reserve Chair Janet Yellen put it in a letter to congressional leadership earlier this week. had the FOMC been compelled to operate under a simple policy rule for the past 6 years. the unemployment experience of that period would have been substantially more painful than it already was and inflation would have been even further below the FOMCs 2 percent objective. But the straitjacket approach to monetary policy isnt the only reason to oppose this bill. H.R. 3189 includes a host of provisions that represent the latest Republican effort to block financial regulators from fulfilling their responsibility to promote the safety and soundness of our financial system as part of the DoddFrank Act. In particular. this bill would impose unworkable costbenefit analysis requirements that are designed to slow new rulemaking to a screeching halt and ensure the few that do get issued are tied up in court. The bill also requires the Federal Reserve to make public and solicit comments on its stress test scenarios. a move that. while popular with the biggest banks. would undermine the effectiveness of the test. turning this valuable regulatory tool for assessing the health of the financial system into a useless exercise. Finally. the Rules Committee print adds to the end of H.R. 3189 the text of H.R. 2912. a bill that would establish a partisan commission. with twice as many Republicans as Democrats. to review the Federal Reserves conduct of monetary policy and recommend changes to its mandate as well as the specific instruments and operational regime to be used in achieving it. The fact is. the Federal Reserves current dual mandate and operational monetary policy independence have served the economy well. Such independence ensures that policy decisions are empirically driven rather than motivated by shortterm political pressures while its clear objectives allow Congress to hold it accountable. Operating under the current model. the Federal Reserve played a major role in ending the panic that gripped the financial sector in 2008 and. through its sustained efforts. has supported the creation of more than 13.3 million private sector jobs and cut the unemployment rate in half since the height of the crisis. all while keeping inflation well below the target. Frankly. I think it is a terrible idea to put those who thought shutting down the government was a good idea and who thought fiscal austerity would grow the economy in a position to micromanage our monetary policy. also. Finally. I would be remiss if I failed to note that the Congressional Budget Office estimates that this bill will cost $109 million over 10 years by forcing the Federal Reserve to jump through new rulemaking and administrative hoops. To pay for this cost. the Rules Committee adopted an amendment that would raid $60 billion from the Federal Reserves surplus account. a buffer that inspires confidence in the central bank itself. Ironically. this is the very same fund that Republicans voted to eliminate just 2 weeks ago. For all of these reasons. I would urge Members to join me in opposing this terrible legislation that would do enormous damage to our economy and the American people. I cant believe this bill is before us. Mr. Chairman. I reserve the balance of my time.