GOP bills calls for centennial review of Fed

Sen. John CornynJohn CornynHow the White House got rolled on the Saudi-9/11 bill GOP leaders express reservations a day after 9/11 veto override McConnell opens door to changing 9/11 bill MORE (R-Texas) on Monday introduced legislation that would task a new commission with recommending changes to the Federal Reserve.

Cornyn's bill, S. 1895, would create a Centennial Monetary Commission to review the central bank and examine how the Fed has affected the performance of the economy since its creation in 1913. It would examine how Fed policy affects output, employment, prices and financial stability.

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The commission would be tasked with making recommendations for a new mandate for the Fed, and would propose legislation to make it happen.

The bill comes at a time of heightened criticism and worry about the Fed's actions. In response to the financial crisis of 2008, the Fed bought up federal housing debt, and started buying long-term Treasury debt in 2009 in order to help keep interest rates low to spur consumption and growth.

In 2010, the Fed bought another $600 billion in Treasury debt, and more than doubled those purchases in 2011 and 2012.

In late 2012, the Fed started buying $40 billion worth of mortgage-backed securities each month, and then started buying $45 billion a month in long-term Treasury debt. And just last month, the Fed said it would slow its bond buying program by $10 billion a month, the first sign of the long-anticipated "tapering" of the Fed's quantitative easing program.

Many Republicans have accused the Fed of dramatically increasing the money supply in order to jolt the economy — effectively favoring its mandate to ensure maximum employment over its other mandate to ensure price stability. Congress assigned this dual mandate to the Fed in 1977, but the creation of Cornyn's Commission raises the prospect of altering that mandate.

Under the bill, the Commission would have to submit a report to Congress on its findings by the end of this June, along with any recommendations for altering the Fed policies.

Six members of the Commission would be comprised of current members of key congressional committees. They would be the chair and ranking members of the Joint Economic Committee, the House Financial Services Committee, and the Senate Banking Committee.

Six others would be appointed — two by Speaker John BoehnerJohn Boehner3 ways the next president can succeed on immigration reform Republican Study Committee elders back Harris for chairman Dems to GOP: Help us fix ObamaCare MORE (R-Ohio), one by Minority Leader Nancy Pelosi (D-Calif.), two by Senate Majority Leader Harry ReidHarry ReidThe missed opportunity of JASTA States urged to bolster election security How the White House got rolled on the Saudi-9/11 bill MORE (D-Nev.), and one by Senate Minority Leader Mitch McConnellMitch McConnell9/11 bill is a global blunder that will weaken US efforts abroad States urged to bolster election security How the White House got rolled on the Saudi-9/11 bill MORE (R-Ky.).

Two other non-voting members would be appointed by the Secretary of the Treasury, and the Federal Reserve Board Chair.