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Public Statements

Federal Reserve Transparency Act of 2012

Floor Speech

By:
Date:
Location: Washington, DC

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Mrs. MALONEY. This is an absolute terrible idea. Although I am in total agreement with Mr. Paul that transparency is a virtue, I also believe that the Federal Reserve must be free of any political influence, and I'm afraid this bill opens the door for precisely that to happen. I don't believe there is anyone in this Chamber that thinks that what the process needs is more politics.

Make no mistake, I agree that maximum transparency is necessary and desirable, and that's precisely why we included numerous transparency requirements in the financial reform bill, as well as numerous audit requirements. We authorized the GAO to audit the Fed's emergency lending facility. We authorized the GAO to audit any special facility created within the Fed. And we required the Fed to issue an assessment 2 years after institutions were granted access to the Fed's discount window.

We crafted those measures and more in a way that ensures transparency but still preserves the independence of the Federal Reserve in its decision-making process in the critical area of monetary policy. But this bill, as it now stands, would provide information without a proper context. That could have unintended consequences and have totally unwarranted effects on consumer confidence in our financial institutions.

If the individual members of the Open Markets Committee know that each one of their decisions are subject to potential political pressure, it would significantly alter that decision-making process. An open door to the Federal Open Markets Committee would invite political pressures. And having decisions that are driven by politics and polling data is not the path to sound monetary policy.

Decisions about monetary policy should never be based on the raw political needs of the moment but instead should always be based strictly on objective economic considerations and guided by the twin mandates of low inflation and full employment. The unintended consequences of this bill would be to open the Federal Reserve to political influence, and that would have a negative impact on the Fed's independence and its ability to produce sound economic policy. I urge a strong bipartisan ``no'' vote.

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