GOP lawmaker looks to shine light on Fed rule-making

A top-ranking House Republican is looking to make the Federal Reserve's regulatory work more transparent.

Rep. Scott Garrett (R-N.J.) wrote in an editorial in The Wall Street Journal that the central bank’s work watching Wall Street has for too long been done behind closed doors. A high-ranking member of both the Budget and Financial Services committees, Garrett said he plans to unveil a bill soon that would “help open up the often opaque workings of the central bank.”

“Congress is all that stands today between the central bank's exercise of power over the financial system and the American people,” he wrote. “So it is vital to ensure that the Fed is accountable to the people's representatives.”

Garrett’s bill would implement a host of new requirements on the Fed, which he argues would make it more accessible, and accountable, to the public.

Garrett noted that in the last two years, the Fed has held just five open meetings on financial regulatory matters, even as the central bank works with other regulators on a workload broadly expanded by the Dodd-Frank financial reform law.

He also chided the institution for “unacceptable” delays in response to congressional inquiries. He noted that it took the Fed six months to respond to written questions from the Financial Services Committee after a hearing last spring, and over four months after an earlier hearing.

Garrett is also pushing to make the Fed fall in line with requirements subjected to other regulators. He noted that the Fed is exempted from a requirement to conduct cost-benefit analysis when drafting new rules and that its employees do not have to comply with conflict-of-interest and financial disclosure rules other regulators do. His bill would change both of those to bring the Fed in line with other regulators.

Garrett also criticized the Fed for leaving vacant a position created by Dodd-Frank specifically devoted to banking regulation. Ever since the law was enacted in 2010, the Fed position of vice chair of supervision has remained empty, as the White House has failed to put forward a nominee for the position. Instead, existing Fed officials have taken lead roles on the regulatory front, most recently by Fed board member Daniel Tarullo.

Under Garrett’s bill, the Fed’s vice chair would automatically assumed the lead role on supervision if no person is specifically named to the position.

The push to overhaul the Fed comes as House Republicans have vowed to take on a top-to-bottom dissection of the institution, now entering its 100th year of existence. GOP lawmakers are currently endeavoring a yearlong project to examine the Fed and its operations, in what they are vowing is the most comprehensive review of the central bank’s policies and practices in its history.