The recent House passage of H.R. 3189, the Fed Oversight Reform and Modernization (FORM) Act, was praised by U.S. Rep. Peter Roskam (R-IL).
The act, which would increase transparency and accountability at the Federal Reserve, was introduced by Rep. Bill Huizenga (R-MI).
“Since its creation over 100 years ago, the Federal Reserve’s power over the U.S. economy has dramatically increased,” Roskam said. “That’s why the House acted today to put in place long overdue reforms to strengthen transparency and accountability at our nation’s central bank. ?This legislation will require the Fed to adopt a monetary policy strategy that serves the American people rather than government bureaucrats. In addition, it enables the Government Accountability Office to more easily audit the bank—another critical and overdue reform necessary to rein in this institution.”
The FORM Act requires the chairman of the Federal Open Market Committee (FOMC) to submit to the Government Accountability Office (GAO) and the appropriate congressional committees,, within 48 hours of the end of a FOMC meeting, a Directive Policy Rule that meets specific criteria and is accompanied by a statement that identifies FOMC members voting in its favor.
The GAO will then determine if the Directive Policy Rule materially changes from the rule most recently submitted. The chairman of the Board of Governors of the Federal Reserve System must then testify within seven legislative days before certain congressional committees at to why any noncompliance exists.
Additionally, upon congressional request, the GAO must audit the conduct of monetary policy by the Board of Governors and the FOMC under the recently passed legislation.