Tuesday, May 24, 2016

Legislation About the Federal Reserve

On May 19, 2016 the Congressional Research Service released a report entitled Federal Reserve: Legislation in the 114th Congress by Marc Labonte, Specialist in Macroeconomic Policy. Labonte breaks the bills about the Federal Reserve (Fed) into four categories:
  1. Changes to Fed governance -  "change the Fed's institutional structure."
  2. Changes to oversight and disclosure - increase "congressional oversight or require the Fed to disclose more information to Congress and the public."
  3. Changes involving the Taylor Rule - "require the Fed to compare its monetary policy decisions to those prescribed by a Taylor Rule and report those findings to Congress." According to the Federal Reserve, "Taylor rules are simple monetary policy rules that prescribe how a central bank should adjust its interest rate policy instrument in a systematic manner in response to developments in inflation and macroeconomic activity.
  4. Changes to the Fed's emergency lending powers - "reduce the Fed's discretion to make emergency loans under Section 13(3) of the Federal Reserve Act."
The report covers bills that have seen committee or floor action. Labonte analyses the above provisions and the policy debate about them.