By Brandon Moseley
Alabama Political Reporter
Thursday, November 19, Congressman Gary Palmer (R-Hoover), supported HR3189, The Fed Oversight Reform and Modernization (FORM) Act. This bill increases transparency at the Federal Reserve, requiring the organization to explain its decisions, while protecting it from excessive politicization. It would also place tighter controls on the Federal Reserve’s ability to conduct bailouts.
US Representative Palmer said in a statement, “Our government is founded on the idea of checks and balances. Under the Obama Administration, the Federal Reserve has gained additional powers without additional checks. This bill would increase checks and balances on the Federal Reserve and ensure it works in a less arbitrary fashion, creating more predictability and more transparency, while still allowing for a monetary policy that is not unduly influenced by politics.”
The bill would require the Federal Reserve to generate a monetary policy rule that would show why a particular monetary policy is being adopted. Supporter say that this would provide greater predictability and understanding among the public. It would also reform emergency lending powers (a.k.a. “bailouts”) by limiting them to when an “unusual and exigent circumstances exist that pose a threat to the financial stability of the United States,” which is stricter than the current standard. It also requires five out of seven members of the Federal Reserve Board of Governors, and nine out of twelve District Federal Reserve Bank Presidents, to approve of an action before authorizing any emergency lending.
HR3189, the Fed Oversight Reform and Modernization (FORM) Act was introduced by Congressman Bill Huizenga (R from Michigan). Huizenga said in a statement: “With the Federal Reserve having more power and responsibility than ever before, it is imperative the Fed changes its opaque structure and becomes more transparent and accountable to the American people. The Fed’s recent high degree of discretion and its lack of transparency in how it conducts monetary policy demonstrate that not only are reforms needed, but more importantly that reforms are necessary. We need to modernize the Federal Reserve and bring it into the 21st Century.”
Huizenga said, “By passing the FORM Act, the House has taken a strong step forward in restoring accountability and transparency at the Federal Reserve. The FORM Act provides the Fed with the flexibility necessary to conduct monetary policy but holds the Fed accountable by requiring it to communicate its policy to Congress and the American people.”
The FORM Act passed the US House by a vote of 241 to 185.
Congressman Gary Palmer represents Alabama’s Sixth Congressional District.