WASHINGTON, DC – Tuesday, February 24, 2015 – U.S. Senator Richard Shelby (R-Ala.), Chairman of the United States Senate Committee on Banking, Housing, and Urban Affairs, today delivered the following opening remarks during a full committee hearing on the Federal Reserve’s Semiannual Monetary Policy Report to Congress.
The text of Chairman Shelby’s remarks, as prepared, is below.
“Today, the Committee will receive testimony from Federal Reserve Chair Yellen, as has been required by statute since 1978.
“Although the Federal Reserve Chair has been using this venue for decades to communicate directly to Congress and the American people, I and many of my colleagues have been calling for greater accountability and more effective disclosure for years.
“In response, we have heard the chorus of current and former Federal Reserve officials who have lined up to defend the structure and degree of transparency of the Fed.
“Further accountability to Congress, some have argued, is not needed.
“I am interested to hear whether the current Chair shares this view, and whether she believes the Fed should be immune from any reforms.
“As far as monetary policy is concerned, many question whether the Fed can rein in inflation and avoid destabilizing asset prices when the time comes to unwind its massive $4.5 trillion balance sheet.
“The minutes posted online do little to answer the questions of when and how this will be done and the most recent FOMC transcript available to the public is from 2008, over seven years ago.
“Even though the Fed has several monetary policy tools at its disposal, an action of this magnitude has never been undertaken.
“The Federal Open Market Committee continues to report that it can be “patient” in keeping the federal funds rate near zero. Too much delay, however, could lead to a more painful correction down the road.
"What the FOMC is thinking and how they are analyzing this very difficult problem set remains a mystery, however. And yet, some continue to dismiss calls for change or more transparency.
“I would argue, however, that there is an even greater need now for additional oversight by Congress and further reforms.
“Our central bank has expanded its influence over households, businesses and markets in recent years.
“Not only has it pushed the boundaries of traditional monetary policy, but it has also consolidated unmatched authority as a financial regulator. As the Fed grows larger and more powerful, much of this authority has become more concentrated in Washington, DC and New York.
“The Fed emerged from the financial crisis as a super-regulator, with unprecedented power over entities that it had not previously overseen.
“With such a delegation of authority comes a heightened responsibility for Congress to know the impact these new requirements place on our economy as a whole.
“The role of Congress is not to serve on the Federal Open Market Committee. But, it is to provide strong oversight and, when times demand it, bring about structural reforms.
“As part of this process, the Committee will be holding another hearing next week to discuss options for enhanced oversight and reforming the Fed. Thank you.”