Today, Congressman Gary Palmer (R-AL), supported H.R. 3189, The Fed Oversight Reform and Modernization (FORM) Act. This bill increases transparency at the Federal Reserve, requiring the organization to explain its decisions, while protecting it from excessive politicization. It would also place tighter controls on the Federal Reserve's ability to conduct bailouts.
"Our government is founded on the idea of checks and balances," Palmer said. "Under the Obama Administration, the Federal Reserve has gained additional powers without additional checks. This bill would increase checks and balances on the Federal Reserve and ensure it works in a less arbitrary fashion, creating more predictability and more transparency, while still allowing for a monetary policy that is not unduly influenced by politics."
Among other things, this bill would require the Federal Reserve to generate a monetary policy rule that would show why a particular monetary policy is being adopted. This would provide greater predictability and understanding among the public. It would also reform emergency lending powers (a.k.a. "bailouts") by limiting them to when an "unusual and exigent circumstances exist that pose a threat to the financial stability of the United States," which is stricter than the current standard. It also requires five out of seven members of the Federal Reserve Board of Governors, and nine out of twelve District Federal Reserve Bank Presidents, approve of an action before authorizing any emergency lending.