WASHINGTON–Federal Reserve Chair Janet Yellen told Congress a proposed law would be a “grave mistake.”
In a letter to Congress Yellen said the Fed Oversight Reform and Modernization (FORM) Act could cause “millions of Americans to suffer” and would “politicize monetary policy.” The bill could be up for a vote in the House this week and would, in part, tie interest rate policy to a mathematical rule by moving interest rates up or down depending on certain economic indicators.
The legislation was introduced in July by Rep. Bill Huizenga (R-MI), whose description of the legislation states that its purpose is to amend the Federal Reserve Act to establish requirements for policy rules and blackout periods of the Federal Open Market Committee, to establish requirements for certain activities of the Board of Governors of the Federal Reserve System, and to amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited, and for other purposes.
Yellen is strongly opposed to the bill. “Unfortunately, the FORM Act attempts to increase transparency and accountability through misguided provisions that would expose the Federal Reserve to short-term political pressures,” wrote Yellen. “The bill would severely impair the Federal Reserve’s ability to carry out its congressional mandate and would be a grave mistake, detrimental to the economy and the American people.”
The bill is not expected to pass.