Reyes to constituent: Non-committal on Paul bill to reform the Fed
For context on this item, check this posting, U.S. Rep. Ron Paul pushing to open up the Fed, claims majority support in Congress.
Thank you for contacting me about the Federal Reserve. I appreciate knowing your thoughts on this issue, and thank you for taking an interest in your government.
Since 1913, the Federal Reserve System has served as the central bank for the United States and acts as a lender to financial institutions during times of economic crisis. As you know, in the fall of 2008, the ability to access funds from capital markets was restricted for many financial institutions, causing a “liquidity crunch” and sharpened the economic downtown. To ensure banking operations across the country continued, the Federal Reserve expanded its balance sheet by purchasing assets from private financial institutions and added over one trillion dollars to the financial system.
Deciding the appropriate level of oversight for the Federal Reserve has long been a matter of debate among policymakers. Though this institution controls a considerable amount of public funds, there is limited day-to-day oversight by Congress. To increase transparency, my colleagues introduced H.R. 1207, the Federal Reserve Transparency Act 2009, which would allow for an audit of the Federal Reserve’s balance sheets. However, I believe we must be careful to strike an appropriate balance between effective oversight and political autonomy. The Federal Reserve’s ability to make monetary policy free of political influence is an important element in maintaining a healthy financial system.
You may be interested to know that the recently enacted Helping Families Save Their Homes Act of 2009 includes provisions which allow the Government Accountability Office to audits a number of Federal Reserve emergency activities. Chairman Ben Bernanke has also begun issuing a series of reports in response to a budget amendment requiring greater transparency offered by Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs. These monthly reports on the Federal Reserve’s balance sheet aim to make their efforts to stabilize the financial system more accessible for review.
Again, I appreciate your taking the time to share your concerns with me. Please contact me or my staff if I can be of further assistance. Also, please visit my website, http://www.reyes.house.gov, to sign up for my email newsletter, learn about my recent activities, and obtain information on federal programs.
Member of Congress