SALT LAKE CITY –Sen. Mike Lee introduced legislation on March 28 that would make much needed reforms to the nation’s Federal Reserve System. The Federal Reserve Modernization Act will focus the Fed’s mission on price stability, require better reporting and make the organization more transparent to Americans.
“The Federal Reserve has experienced significant mission creep since its establishment in 1913, particularly in recent years where it has been involved in multi-trillion dollar bailouts and reckless easy money policies that created asset bubbles in the stock and real estate markets,” said Sen. Lee, a member of the Joint Economic Committee. “The Constitution grants Congress the power to oversee the implementation of sound monetary policy. It is an area that receives too little attention even though it has a great impact on our economy.”
Specifically, FRMA would:
- Replace the Fed’s dual mandate with a single mandate for achieving price stability;
- Make the Fed articulate its lender-of-last-resort policy;
- Extend permanent Federal Open Market Committee voting membership to all regional Federal Reserve Bank Presidents;
- Allow the Fed to release its meeting transcripts within three years to increase transparency;
- Require the Fed report on the impact of FOMC policies on the exchange rate value of the U.S. dollar;
- Have the Fed invest only in Treasuries, repos and reverse repos, except during emergencies; and
- Require the Consumer Financial Protection Bureau to be funded through regular Congressional appropriations.
Of 47 major countries, including all G-7 countries and OECD countries (those members of the Organisation for Economic Cooperation and Development), the U.S. is one of only two countries (Canada being the other) that do not have a single mandate for price stability or a primary mandate for price stability. Price stability is key to growth and jobs because it encourages employers to invest and create jobs.
Click here for more information on FRMA.