Van Hollen Statement on H.R. 459, The Federal Reserve Transparency Act
Washington,
Jul 25, 2012 -
Mr. Speaker, the Federal Reserve is by charter and design an independent central bank. At the same time, because ours is a system of checks and balances, the Federal Reserve’s operations are governed by congressional mandate and subject to strict accountability and oversight.
Specifically, the Federal Reserve has for many years been audited by the Government Accountability Office (GAO), as well as independent, third-party firms. Additionally, pursuant to the Humphrey-Hawkins Act, the Chairman of the Federal Reserve testifies before both chambers of Congress twice a year. Minutes of the Federal Reserve’s Open Market Committee are made public six weeks after its meetings occur, and the Fed publishes updated balance sheets on its website weekly. Moreover, the recently enacted Dodd-Frank Wall Street Reform law further enhanced the Federal Reserve’s transparency by expanding the types of audits GAO must conduct and by mandating disclosure of transactions at the Federal Reserve’s discount window.
In light of these facts, the issue in HR 459 is not whether the Fed should be audited. It already is. Instead, what is at issue in this legislation is whether the Fed’s internal deliberations concerning the formation of monetary policy should be made public. This is the equivalent of asking whether Supreme Court justices’ pre-decisional debate should be made public — and it is a bad idea for the same reason. It would have a predictably counterproductive and chilling effect on that debate and ultimately undermine the Fed’s independence. Time and time again, history has shown that central banks whose decision-making falls under the influence of short-term political considerations quickly lose all credibility with the public and with the credit markets. This cannot be allowed to happen.
It’s ironic that most, if not all, of the information proponents of this legislation cite to justify its enactment is in the public domain because of the transparency measures that are already in place. Indeed, many advocates of HR 459 are avowedly less interested in striking the right balance between independence and accountability at the Federal Reserve than they are in abolishing the Federal Reserve altogether – or in ending the Federal Reserve’s dual mandate to achieve both stable prices and maximum employment.
I am in neither camp. I support an independent Federal Reserve pursuing its congressionally directed dual mandate, subject to strict oversight and accountability – and that is why I oppose this bill.
I yield back the balance of my time.
Congressman Chris Van Hollen
