Director of Legislation, Tim Shoemaker and Vice President of Policy, Norm Singleton will be live blogging the House Financial Services Committee Hearing on the Federal Reserve this morning. You can watch the hearing here. Be sure to hit refresh!
10:12 am Tim: H.R. 24 is currently assigned to two committees in the House, Financial Services, chaired by Jeb Hensarling, and Oversight and Government Reform, chaired by Darrell Issa.
10:13 am Norm: Hensarling just mentioned HR 24 but said it is under Oversight and Investigations Committee but it is actually been referred to both O and I and Financial Services.
10:15 am Norm: Maxine Waters thinks requiring agencies to do cost-benefit analysis is a burden, she also thinks the Fed has nothing to do with the 2008 meltdown.
10:15 am Tim: “Latest Major Action: 1/3/2013 Referred to House committee. Status: Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.” http://thomas.loc.gov/cgi-bin/
10:16 am Norm: She may be right about cost-benefit analyses being a waste of time but that is because all regulations distort the market and thus damage our prosperity and liberty, not because regulations are so wonderful.
10:22 am Norm: Wish they would get it right about the joint referral, also not sure HR 5018 and HR 24 are compatible since HR 5018 uses an audit to get the Fed to adopt their rule.
10:24 am Norm: Carolyn Maloney just said oversight of the Fed is good. So why hasn’t she cosponsored Audit the Fed?
Witnesses are reading opening remarks. The witnesses for this hearing are:
- Dr. John B. Taylor, Mary and Robert Raymond Professor of Economics, Stanford University
- Dr. Mark A. Calabria, Director, Financial Regulation Studies, Cato Institute
- Ms. Hester Peirce, Senior Research Fellow, Mercatus Center, George Mason University
- Dr. Simon Johnson, Professor of Economics, Massachusetts Institute of Technology
10:44 am Tim: Having the Fed Chair appear quarterly before Congress would be a helpful transparency effort, but Congress needs more information on the Fed to make those hearings substantive – info that H.R. 24 would provide.
10:45 am Norm: None of the witnesses are talking about the Audit. John Taylor is the only one who talked about monetary policy and talked about the need for a rule.
10:50 am Norm: Witness just asked “Do we feel comfortable with the Fed overriding private decision makers” in discussing Fed’s regulatory role, answer is no but the same question can and should be asked about the Fed's role in monetary policy and the answer is the same.
10:51 am Tim: Dr. Johnson’s objections to the GAO “audit” provision of H.R. 5018 is what we were concerned about. It plays into the hands of Fed transparency opponents by making the audit punitive, not informative.
10:53 am Norm: Hensarling just said nothing in this bill would have stopped the Fed’s actions over the past few years. Interesting so what is the goal of the bill?
11:09 am Tim: Rep. John Campbell is getting worked up, and rightly so. Dr. Johnson’s comparison of a GAO audit to a “police state” was certainly hyperbolic, especially while the government is exercising so many police state actions on the American people through the IRS, the EPA, TSA, NSA, etc., etc.
11:16 am Norm: Huizenga right. Too many members are willing to abandon their oversight responsibilities. Congressman Huizenga just mentioned that his son studied oversight in his AP Government class. Maybe his son can teach Congress something about oversight.
11:18 am Norm: Huizenga just admitted that (under his bill) the Fed can avoid an audit by submitting a rule to Congress.
11:21 am Norm: Inflation targeting means Fed and Congress decide how much inflation is “acceptable”
11:33 am Norm: Witnesses just admitted “rules-based” policy could lead to higher interest rates, which makes sense since part of the rule is "inflation targeting” that is setting monetary policy to achieve a certain rate of inflation.
11:34 am Norm: Congressman Cleaver concerned that if Fed was “restrained” in 2008 they would not have been able to do what they have done since the crash….because QE 1,2,3, etc. has worked out so well.
11:44 am Norm: Mark Calabria from CATO makes a good point about ending the revolving door between White House, Treasury, and Fed and how that shows that Fed is not an apolitical “independent” institution.
11:45 am Tim: There most certainly is price inflation occurring since the Fed’s easing policies, despite Rep. Foster’s claim otherwise. Some members of Congress and the Fed choose to remain willfully ignorant of it by only looking at the CPI, which doesn’t include oil, or food, etc.
11:54 am Norm: Brad Sherman is right. We should not blame the Fed for the slow recovery, we should blame them for the lack of a recovery.
11:57 am Norm: Sherman thinks the Fed is undemocratic, but would making it democratic make it better or worse? Campaign for Liberty not Campaign for Democracy.
12:25 pm Norm: Hester Peirce said Fed cannot adopt the same lack of transparency to its role as regulator as it uses in monetary policy. True so why not make the Fed transparency in all its functions?
12:26 pm Tim: If there is any truth to the claim of the Fed’s need for independence, it ought to be independent from the Treasury and the Executive Branch, not Congress.
12:28 pm Norm: It would be nice if Congress spent more time worrying about protecting our independence from the Fed.
12:32 pm Norm: Simon Johnson, the only witness actively hostile to an audit claims monetary policy, played a small role in the 2008 financial crisis.
12:40 pm Tim: As a creation of Congress, they have a responsibility to conduct rigorous oversight & regulation, up to and including abolishing the Fed!
Thanks for following along today, please be sure to sign your petition to House leadership and your senators urging them to pass Audit the Fed now!
Tags: Audit the Fed