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Mr. VITTER. Mr. President, I come to the Senate floor to debate and oppose the two Federal Reserve nominees President Obama has sent to the Senate. First, let me say I think it is very important, very good, very healthy that we are having this debate and we are having these votes. That is how the Senate should operate, particularly on very important Presidential nominations, and these certainly fit into that category.
The Federal Reserve is an extremely important body for all sorts of reasons, but I will mention three in particular. First of all, it sets monetary policy, and that is a very important economic tool and set of economic policies. Right now this Federal Reserve, under Chairman Bernanke, has an unprecedented policy of zero-interest rates--easy money for an extended period of time--which is historically unprecedented.
Secondly, the Federal Reserve is the primary regulator of our Nation's biggest banks, including Bank of America, Citigroup, Wells Fargo, and another that has been in the news quite a bit in the last few weeks, JPMorgan Chase. Obviously, all of these entities were involved in the recent economic crisis, so, again, the Federal Reserve is extremely important as those megabanks' primary regulator. We should be talking about that.
Finally, the Federal Reserve has other important authority and responsibilities, including in situations where they have taken action to bail out these megabanks. They have that authority. They also have authority to issue regulations under Dodd-Frank. All of these points are reasons why these two nominations are extremely important. That is why I demanded this debate and these votes.
Fundamentally, I demanded this debate and these votes for two reasons. First of all, I oppose these nominations. I am voting no. There was a UC promulgated, and that UC, had it been accepted, would have meant a ``yes'' vote for me. I couldn't vote that way for the reasons I will explain.
Secondly, more broadly, I think it is important we have this debate and we have these votes, and this used to be the norm in the Senate. Between 1994 and 2000, all but two nominations to the Federal Reserve Board were voted on by the Senate. Yet since 2001 that has flipped, for some reason. Since 2001, only two nominees have received votes and 10 nominees were confirmed to the Board of Governors without a recorded vote.
I think that is unfortunate. I think this is the proper way for the Senate to do its business, particularly when such important issues are at stake.
Now let's talk about those issues.
First of all, monetary policy. The Federal Reserve's primary responsibility--one of its two huge mandates--is to set healthy, proper monetary policy for the United States. Personally, I think that should be its only mandate--there are efforts here in the Congress to move the law to that position--but it certainly is a major role of the Federal Reserve and is extremely important.
Once more, this Federal Reserve, under Chairman Bernanke, in this economy has set monetary policy in an unprecedented way, and that is not editorializing. That is a factual assessment, a factual description. Because this Federal Reserve has set essentially a zero-interest rate policy, an extremely easy money policy for an extended period of time, a very long period of time, without any end in sight, and that has never before happened.
There are many experts, economists, and commentators who think this is very dangerous policy, and I share their concerns. I do not pretend to be an expert, as they are. I do not pretend, quite frankly, to have the economic training and background of Chairman Bernanke and others. But many of those who do have grave concerns with this unprecedented easy money policy. Let me mention a few.
Dr. Allan Meltzer, a professor at Carnegie Mellon University, sees signs of this building up future inflation and a weakening dollar and believes the Fed did great harm in these categories with its Quantitative Easing 2, so-called QE2. Dr. Meltzer has read Fed minutes for years and has written the definitive ``History of the Federal Reserve'' and says the central problem is there is a lack of discussion of alternatives and consequences of their policies.
Federal Reserve Bank of Kansas City President Thomas Hoenig said the Fed's plan to push down long-term interest rates may produce very adverse accidental outcomes and policymakers risk creating real ``imbalances'' in the economy. He said:
I have real concerns about trying to fine-tune and micro-manage the economy when monetary policy is a blunt tool.
Richard Fisher of Dallas said he believes the Federal Reserve's monetary policy has yet to show evidence of working. He is the Federal Reserve Bank of Dallas president. He says in particular, the Fed's plan to buy $400 billion of long-term bonds while selling the same amount of short-term debt is benefiting financiers and not aiding job creation.
Philadelphia Fed President Charles Plosser, in a speech on economic outlook to the Business Leaders Forum at the Villanova School of Business, expressed extreme skepticism with that so-called Operation Twist, trading long-term debt for short-term debt, and he did not think it would encourage business investment or consumer spending. He said:
I dissented from these decisions because I believe that they will do little to improve the near-term prospects for economic growth or employment and they do pose risks.
So there are very legitimate, strong concerns which I share on the current monetary policy of this Federal Reserve, and it is very clear from the statements of these two nominees that these two nominees will support that policy, will support that direction for the foreseeable future, will not provide dissent, will not provide alternative viewpoints.
In addition, let me mention three other things about the Fed. As I mentioned, the Fed in general is the primary regulator of the megabanks, and, still, I believe we do not have adequate focus and adequate regulation in that category. I would only point to the recent disastrous announcement of JPMorgan Chase.
Also, the Fed, with five affirmative votes, passes regulations under Dodd-Frank under its authority. That process is ongoing right now.
Why are these two nominations significant in impacting the development of those Dodd-Frank regulations one way or the other? Well, it is pretty simple. Those Dodd-Frank regulations coming out of the Fed need five affirmative votes. Right now, there are five members of the Board of Governors, so they need to reach complete unanimity with regard to those regulations. When the possible negative impact of those regulations is such a threat, I think that required unanimity is actually very healthy and a real protection.
These two new members of the Fed change the map, change the requirement from needing five out of five to needing five out of seven. I think that will significantly push these regulations to the left, if you will, and require and therefore produce less consensus, which those with economic viewpoints such as mine wish to see continued.
In the same vein, the Fed is certainly significant in not only regulating the megabanks but, in instances like 2 years ago, bailing out the megabanks. They have that authority and they have that role. Just as with Dodd-Frank regulations, that requires five affirmative votes of the Fed Board. Again, right now, before these two confirmations, that would need five out of five. It would require unanimity. I think that is healthy, actually, with regard to such an extreme measure as huge taxpayer-funded bailouts, as we have seen in the last 3 years.
If these two new nominees to the Board are confirmed, that math, again, would change in exactly the same way: The requirement would move from five out of five to five out of seven. It would shift the outcome to the left, if you will. It would make it much more likely that the Fed would act sooner to bail out megabanks with taxpayer funds.
I have all of these concerns about these nominations. These two nominees are fine, decent men. They are smart. They are qualified in the professional sense. However, they clearly also support the current direction of Chairman Bernanke and the Fed. For that reason, I cannot support the nominations, and I have real concerns.
But, in closing, let me say that at least I think it is positive we are having this debate and we are voting. As I cited, that used to be the norm in the Senate, including with regard to Federal Reserve Board of Governors nominations. These are very important nominations because of monetary policy, because of their regulatory authority, because of bailouts, and Dodd-Frank, and all the rest. It is more important--now more than ever--because of the unprecedented nature of Chairman Bernanke's and the Fed's monetary policy and because of the history of the last 3 years.
We need this debate. We need these votes. I do not think spending about 2 hours on it on the floor of the Senate is too much to ask, so I am glad I asked for that. I am glad I demanded that. With that opportunity, I will be voting no.
Mr. President, I yield back my time.
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