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Thursday, November 19, 2015 - 12:22

US Speaker Ryan Applauds House Passage of Fed Overhaul Bill


--House Speaker Says Bill Boosts 'Transparency' of Fed
--House Approves Fed Overhaul Bill, 241 to 185
--House Bill Faces Uncertain Fate in Senate, Obama Veto

WASHINGTON (MNI) - House Speaker Paul Ryan Thursday applauded lawmakers for passing legislation that revamps the Federal Reserve Board after the House passed the bill on mostly party lines by a 241-to-185 vote.

"If the Federal Reserve explained to the public how it made its decisions, the American people would have greater confidence in them," Ryan said in a statement.

"Families could better plan for the future, invest their money wisely, and create opportunity for all of us," he said, calling it "commonsense" legislation.

The House bill faces a highly uncertain fate in the Senate and a threatened veto by President Barack Obama.

Both Obama and Federal Reserve Board Chair Janet Yellen strongly oppose the House Republican's Fed bill.

The Fed Oversight Modernization and Reform Act, or FORM, has been drafted by House Financial Services Committee Chairman Jeb Hensarling and the chairman of the panel's monetary Policy and trade subcommittee, Rep. Bill Huizenga.

The bill requires the Fed to choose a monetary policy strategy and communicate that strategy to the public when it makes decisions regarding interest rates and the nation's money supply.

The FORM Act requires the Federal Reserve to conduct cost-benefit analysis when it adopts new rules.

It requires the Fed to provide more information about the central bank's bank stress tests and about international financial regulatory negotiations conducted by the Federal Reserve, Treasury Department, Office of the Comptroller of the Currency, Securities and Exchange Commission, and Federal Deposit Insurance Corporation.

The bill require Fed employees to abide by the same ethical requirements as other federal financial regulators.

It clarifies the "blackout period" governing when Federal Reserve Governors and employees may publicly speak on certain matters.

It seeks to limit the Fed's emergency lending powers so they are used only in emergencies.

It require the full FOMC to decide policy rates on excess balances maintained at a Federal Reserve Bank by a depository institution.

In remarks on the House floor, Hensarling said the Fed bill is needed to reign in the central bank that has "morphed into a government institution whose unconventional activities and vastly expanded powers would be hardly recognized by those who drafted the original act" to create the Fed.

Hensarling insisted the FORM bill would not alter the Fed's monetary policy independence. He said the legislation is needed to limit the power and reach of the Fed.

--MNI Washington Bureau; tel: +1 202-371-2121; email: john.shaw@mni-news.com

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