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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-980
======================================================================
FEDERAL RESERVE SUPERVISION TESTIMONY CLARIFICATION ACT
_______
September 26, 2018.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 4753]
The Committee on Financial Services, to whom was referred
the bill (H.R. 4753) to amend the Federal Reserve Act to
require the Vice Chairman for Supervision of the Board of
Governors of the Federal Reserve System to provide a written
report, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Federal Reserve Supervision Testimony
Clarification Act''.
SEC. 2. VICE CHAIRMAN FOR SUPERVISION REPORT REQUIREMENT.
Paragraph (12) of section 10 of the Federal Reserve Act (12 U.S.C.
247b) is amended--
(1) by redesignating such paragraph as paragraph (11); and
(2) in such paragraph--
(A) by striking ``shall appear'' and inserting
``shall provide written testimony and appear''; and
(B) by adding at the end the following: ``If, at the
time of any appearance described in this paragraph, the
position of Vice Chairman for Supervision is vacant,
the Chairman or their designee shall appear instead and
provide the required written testimony.''.
Purpose and Summary
On January 10, 2018, Representative Frank Lucas introduced
H.R. 4753, the ``Federal Reserve Supervision Testimony
Clarification Act'', which clarifies Section 1108 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act. This
legislation establishes procedures to fulfill Section 1108's
semi-annual testimony mandate for the Federal Reserve's Vice
Chairman for Supervision. The legislation establishes that the
Chairman of the Board of Governors of the Federal Reserve
System (Federal Reserve), or the Chairman's designee, will
fulfill the testimony requirement for the Federal Reserve's
Vice Chairman for Supervision if the United States Senate has
not confirmed an individual to serve as the Vice Chairman for
Supervision.
Background and Need for Legislation
Section 1108 of Dodd-Frank Wall Street Reform and Consumer
Protection Act (P.L. 111-203) amended Section 10 of the Federal
Reserve Act and created a new position at the Federal Reserve,
the Vice Chairman for Supervision. The Vice Chairman for
Supervision is a presidential appointee subject to the advice
and consent of the Senate. This amendment to the Federal
Reserve Act also requires the Vice Chairman for Supervision to
testify semi-annually before Committee on Financial Services of
the House of Representatives and the Committee on Banking,
Housing and Urban Affairs of the United States Senate. The
testimony, as mandated by the amendment to the Federal Reserve
Act, requires the Vice Chairman for Supervision to discuss
``the efforts, activities, objectives, and plans of the Board
with respect to the conduct of supervision and regulation of
depository institution holding companies and other financial
firms supervised by the Board.''
During his tenure as a Federal Reserve Board Governor,
Daniel Tarullo fulfilled this function in practice. However,
the Obama Administration never nominated him (or anybody else)
to formally serve as the Federal Reserve's Vice Chairman for
Supervision. The failure to nominate former Governor Tarullo or
any other person to the Vice Chairman for Supervision avoided
accountability measures that Congress established for that
position, including the requirement to appear before Congress.
During President Obama's administration, Financial Services
Committee Chairman Jeb Hensarling and former Senate Banking,
Housing and Urban Affairs Committee Chairman, Richard Shelby,
sent a letter on September 21, 2016 to former Federal Reserve
Chair Janet Yellen to ``appear semi-annually before both the
Senate Committee on Banking, Housing, and Urban Affairs, and
the House Committee on Financial Services to testify on the
matters specified in Section 1108 of the Dodd-Frank Act, until
the position of Vice Chairman for Supervision position is
filled.''
The Federal Reserve Supervision Testimony Clarification
Act, H.R. 4753, requires the Vice Chairman for Supervision to
provide as part of his or her statutorily required semi-annual
testimony a report on the status of proposed and anticipated
rulemakings. H.R. 4753 also requires that, if the Vice Chairman
for Supervision position is vacant, then the Chairman of the
Board of Governors or the Chairman's designee must fulfill the
statutory requirement for semi-annual testimony.
Hearings
The Subcommittee on Monetary Policy and Trade held a
hearing titled ``A Further Examination of Federal Reserve
Reform Proposals'' to consider matters relating to H.R. 4753 on
January 10, 2018.
Committee Consideration
The Committee on Financial Services met in open session on
September 13, 2018, and ordered H.R. 4753 to be reported
favorably to the House without amendment by a recorded vote of
49 yeas to 0 nays (recorded vote no. FC-203), a quorum being
present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the House without amendment. The
motion was agreed to by a recorded vote of 49 yeas to 0 nays
(Record vote no. FC-203), a quorum being present.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 4753
will strengthen Congress's ability to fulfill its statutory
mandate to effectively supervise the Federal Reserve System.
New Budget Authority, Entitlement Authority, and Tax Expenditures
The Committee has not received an estimate of new budget
authority contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to Sec.
402 of the Congressional Budget Act of 1974. In compliance with
clause 3(c)(2) of rule XIII of the Rules of the House, the
Committee opines that H.R. 4753 will not establish any new
budget or entitlement authority or create any tax expenditures.
Congressional Budget Office Estimates
The cost estimate prepared by the Director of the
Congressional Budget Office pursuant to Sec. 402 of the
Congressional Budget Act of 1974 was not submitted timely to
the Committee.
Federal Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995. The Committee has
determined that the bill does not contain Federal mandates on
the private sector. The Committee has determined that the bill
does not impose a Federal intergovernmental mandate on State,
local, or tribal governments.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
Disclosure of Directed Rulemaking
Pursuant to section 3(i) of H. Res. 5, (115th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This Section cites H.R. 4753 as the Federal Reserve
Supervision Testimony Clarification Act.
Section 2. Vice Chairman for Supervision report requirement
This section provides for the Federal Reserve Board Chair,
or the Chair's designee, to appear before Congress, in the
event that the Vice Chairman for Supervision has not been
confirmed.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
FEDERAL RESERVE ACT
* * * * * * *
board of governors of the federal reserve system
Sec. 10. The Board of Governors of the Federal Reserve
System (hereinafter referred to as the ``Board'') shall be
composed of seven members, to be appointed by the President, by
and with the advice and consent of the Senate, after the date
of enactment of the Banking Act of 1935, for terms of fourteen
years except as hereinafter provided, but each appointive
member of the Federal Reserve Board in office on such date
shall continue to serve as a member of the Board until February
1, 1936, and the Secretary of the Treasury and the Comptroller
of the Currency shall continue to serve as members of the Board
until February 1, 1936. In selecting the members of the Board,
not more than one of whom shall be selected from any one
Federal Reserve district, the President shall have due regard
to a fair representation of the financial, agricultural,
industrial, and commercial interests, and geographical
divisions of the country. In selecting members of the Board,
the President shall appoint at least 1 member with demonstrated
primary experience working in or supervising community banks
having less than $10,000,000,000 in total assets. The members
of the Board shall devote their entire time to the business of
the Board and shall each receive and annual salary of $15,000,
payable monthly, together with actual necessary traveling
expenses.
The members of the Board shall be ineligible during the time
they are in office and for two years thereafter to hold any
office, position, or employment in any member bank, except that
this restriction shall not apply to a member who has served the
full term for which he was appointed. Upon the expiration of
the term of any appointive member of the Federal Reserve Board
in office on the date of enactment of the Banking Act of 1935,
the President shall fix the term of the successor to such
member at not to exceed fourteen years, as designated by the
President at the time of nomination, but in such manner as to
provide for the expiration of the term of not more than one
member in any two-year period, and thereafter each member shall
hold office for a term of fourteen years from the expiration of
the term of his predecessor, unless sooner removed for cause by
the President. Of the persons thus appointed, 1 shall be
designated by the President, by and with the advice and consent
of the Senate, to serve as Chairman of the Board for a term of
4 years, and 2 shall be designated by the President, by and
with the advice and consent of the Senate, to serve as Vice
Chairmen of the Board, each for a term of 4 years, 1 of whom
shall serve in the absence of the Chairman, as provided in the
fourth undesignated paragraph of this section, and 1 of whom
shall be designated Vice Chairman for Supervision. The Vice
Chairman for Supervision shall develop policy recommendations
for the Board regarding supervision and regulation of
depository institution holding companies and other financial
firms supervised by the Board, and shall oversee the
supervision and regulation of such firms. The chairman of the
Board, subject to its supervision, shall be its active
executive officer. Each member of the Board shall within
fifteen days after notice of appointment make and subscribe to
the oath of office. Upon the expiration of their terms of
office, members of the Board shall continue to serve until
their successors are appointed and have qualified. Any person
appointed as a member of the Board after the date of enactment
of the Banking Act of 1935 shall not be eligible for
reappointment as such member after he shall have served a full
term of fourteen years.
The Board of Governors of the Federal Reserve System shall
have power to levy semiannually upon the Federal reserve banks,
in proportion to their capital stock and surplus, an assessment
sufficient to pay its estimated expenses and the salaries of
its members and employees for the half year succeeding the
levying of such assessment, together with any deficit carried
forward from the preceding half year, and such assessments may
include amounts sufficient to provide for the acquisition by
the Board in its own name of such site or building in the
District of Columbia as in its judgment alone shall be
necessary for the purpose of providing suitable and adequate
quarters for the performance of its functions. After September
1, 2000, the Board may also use such assessments to acquire, in
its own name, a site or building (in addition to the facilities
existing on such date) to provide for the performance of the
functions of the Board. After approving such plans, estimates,
and specifications as it shall have caused to be prepared, the
Board may, notwithstanding any other provision of law, cause to
be constructed on any site so acquired by it a building or
buildings suitable and adequate in its judgment for its
purposes and proceed to take all such steps as it may deem
necessary or appropriate in connection with the construction,
equipment, and furnishing of such building or buildings. The
Board may maintain, enlarge, or remodel any building or
buildings so acquired or constructed and shall have sole
control of such building or buildings and space therein.
The principal offices of the Board shall be in the District
of Columbia. At meetings of the Board the chairman shall
preside, and, in his absence, the vice chairman shall preside.
In the absence of the chairman and the vice chairman, the Board
shall elect a member to act as chairman pro tempore. The Board
shall determine and prescribe the manner in which its
obligations shall be incurred and its disbursements and
expenses allowed and paid, and may leave on deposit in the
Federal Reserve banks the proceeds of assessments levied upon
them to defray its estimated expenses and the salaries of its
members and employees, whose employment, compensation, leave,
and expenses shall be governed solely by the provisions of this
Act, specific amendments thereof, and rules and regulations of
the Board not inconsistent therewith; and funds derived from
such assessments shall not be construed to be Government funds
or appropriated moneys. No member of the Board of Governors of
the Federal Reserve System shall be an officer or director of
any bank, banking institution, trust company, or Federal
Reserve bank or hold stock in any bank, banking institution, or
trust company; and before entering upon his duties as a member
of the Board of Governors of the Federal Reserve System he
shall certify under oath that he has complied with this
requirement, and such certification shall be filed with the
secretary of the Board. Whenever a vacancy shall occur, other
than by expiration of term, among the six members of the Board
of Governors of the Federal Reserve System appointed by the
President as above provided, a successor shall be appointed by
the President, by and with the advice and consent of the
Senate, to fill such vacancy, and when appointed he shall hold
office for the unexpired term of his predecessor.
The President shall have power to fill all vacancies that
may happen on the Board of Governors of the Federal Reserve
System during the recess of the Senate by granting commissions
which shall expire with the next session of the Senate.
Nothing in this Act contained shall be construed as taking
away any powers heretofore vested by law in the Secretary of
the Treasury which relate to the supervision, management, and
control of the Treasury Department and bureaus under such
department, and wherever any power vested by this Act in the
Board of Governors of the Federal Reserve System or the Federal
reserve agent appears to conflict with the powers of the
Secretary of the Treasury, such powers shall be exercised
subject to the supervision and control of the Secretary.
The Board of Governors of the Federal Reserve System shall
annually make a full report of its operations to the Speaker of
the House of Representatives, who shall cause the same to be
printed for the information of the Congress. The report
required under this paragraph shall include the reports
required under section 707 of the Equal Credit Opportunity Act,
section 18(f)(7) of the Federal Trade Commission Act, section
114 of the Truth in Lending Act, and the tenth undesignated
paragraph of this section.
No Federal Reserve bank may authorize the acquisition or
construction of any branch building, or enter into any contract
or other obligation for the acquisition or construction of any
branch building, without the approval of the Board.
The Board of Governors of the Federal Reserve System shall
keep a complete record of the action taken by the Board and by
the Federal Open Market Committee upon all questions of policy
relating to open-market operations and shall record therein the
votes taken in connection with the determination of open-market
policies and the reasons underlying the action of the Board and
the Committee in each instance. The Board shall keep a similar
record with respect to all questions of policy determined by
the Board, and shall include in its annual report to the
Congress a full account of the action so taken during the
preceding year with respect to open-market policies and
operations and with respect to the policies determined by it
and shall include in such report a copy of the records required
to be kept under the provisions of this paragraph.
[(12)] (11) Appearances before congress.--The Vice
Chairman for Supervision [shall appear] shall provide
written testimony and appear before the Committee on
Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of
Representatives and at semi-annual hearings regarding
the efforts, activities, objectives, and plans of the
Board with respect to the conduct of supervision and
regulation of depository institution holding companies
and other financial firms supervised by the Board. If,
at the time of any appearance described in this
paragraph, the position of Vice Chairman for
Supervision is vacant, the Chairman or their designee
shall appear instead and provide the required written
testimony.
* * * * * * *
[all]
