The Federal Reserve System supervises nearly all banking in the United States and plays a substantial role in the domestic and global economies. Since its creation in 1913, the Federal Reserve’s Board of Governors has expanded its power, and its role in monetary policy has gone relatively unchecked. Given the impact that its policies can have on our economy, the Federal Reserve must be transparent and its leaders must be held accountable to the American people.
Enhancing the transparency of the Federal Reserve will improve the public’s understanding of the decisions the Federal Reserve Board makes, which have a profound impact on the American people and our economy. I am a cosponsor of the Federal Reserve Transparency Act, which would require a full audit of the Board of Governors within the Federal Reserve System and the Federal Reserve banks by the Comptroller General of the United States.
Until we can institute more transparent policies for the Federal Reserve, we must continue to provide rigorous congressional oversight. Last Wednesday, Federal Reserve Chair Janet Yellen testified before the House Financial Services Committee hearing entitled, “Monetary Policy and the State of the Economy.” I appreciate Chair Yellen’s testimony, particularly because I have serious concerns about Federal Reserve policies that make life more difficult for hardworking Americans and disproportionately diminish the ability of Main Street banks to provide vital capital in our rural communities.
I am particularly concerned by the Dodd-Frank Act’s negative impacts and costs for community banks, small businesses, and consumers. A newly released Harvard study articulates how the Dodd-Frank Act has actually given Wall Street an advantage over Main Street – the exact opposite of what its proponents said it would do. The study found that since the enactment of Dodd-Frank, community banks’ share of the market has decreased due to the pressure of increased regulation. This means that community banks are providing fewer mortgages to customers and fewer loans to small businesses on our Main Streets.
The study’s findings represent the impacts Fifth District Virginians have felt for years now. Though the Dodd-Frank Act was intended to rein in bad actors on Wall Street, instead, we have seen that it is disproportionately harming small Main Street banks, credit unions, and their customers by imposing one-size-fits-all regulatory schemes on community financial institutions. These regulatory impacts represent real costs and eliminate choices for consumers – both families and small businesses – on Main Streets from Chatham to Warrenton.
The Federal Reserve has an obligation to tailor regulatory policy to account for the differences between large multinational institutions and smaller financial institutions and the customers they serve. During the hearing, I pressed Chair Yellen to explain what the Federal Reserve is doing to ensure that its system of regulation is not unduly impacting small financial institutions and dragging down our local economies as a result.
I will continue to work with my colleagues on the Financial Services Committee to maintain robust congressional oversight of the Federal Reserve, and I remain committed to promoting policies that will incentivize economic growth to provide jobs and opportunities to all Fifth District Virginians.
If you need any additional information or if we may be of assistance to you, please visit my website at hurt.house.gov or call my Washington office: (202) 225-4711, Charlottesville office: (434) 973-9631, Danville office: (434) 791-2596, or Farmville office: (434) 395-0120.
Robert Hurt represents Virginia’s Fifth District in Congress.
Share
