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114th Congress    }                                 {    Rept. 114-332
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                 {           Part 1

======================================================================



 
           FED OVERSIGHT REFORM AND MODERNIZATION ACT OF 2015

                                _______
                                

 November 16, 2015.--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

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3189]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3189) 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, 
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; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Fed Oversight Reform 
and Modernization Act of 2015'' or the ``FORM Act of 2015''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Requirements for policy rules of the Federal Open Market 
Committee.
Sec. 3. Federal Open Market Committee blackout period.
Sec. 4. Membership of Federal Open Market Committee.
Sec. 5. Requirements for stress tests and supervisory letters for the 
Board of Governors of the Federal Reserve System.
Sec. 6. Frequency of testimony of the Chairman of the Board of 
Governors of the Federal Reserve System to Congress.
Sec. 7. Vice Chairman for Supervision report requirement.
Sec. 8. Economic analysis of regulations of the Board of Governors of 
the Federal Reserve System.
Sec. 9. Salaries, financial disclosures, and office staff of the Board 
of Governors of the Federal Reserve System.
Sec. 10. Requirements for international processes.
Sec. 11. Amendments to powers of the Board of Governors of the Federal 
Reserve System.
Sec. 12. Interest rates on balances maintained at a Federal Reserve 
bank by depository institutions established by Federal Open Market 
Committee.
Sec. 13. Audit reform and transparency for the Board of Governors of 
the Federal Reserve System.

SEC. 2. REQUIREMENTS FOR POLICY RULES OF THE FEDERAL OPEN MARKET 
                    COMMITTEE.

  The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended by 
inserting after section 2B the following new section:

``SEC. 2C. DIRECTIVE POLICY RULES OF THE FEDERAL OPEN MARKET COMMITTEE.

  ``(a) Definitions.--In this section the following definitions shall 
apply:
          ``(1) Appropriate congressional committees.--The term 
        `appropriate congressional committees' means the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate.
          ``(2) Directive policy rule.--The term `Directive Policy 
        Rule' means a policy rule developed by the Federal Open Market 
        Committee that meets the requirements of subsection (c) and 
        that provides the basis for the Open Market Operations 
        Directive.
          ``(3) GDP.--The term `GDP' means the gross domestic product 
        of the United States as computed and published by the 
        Department of Commerce.
          ``(4) Intermediate policy input.--The term `Intermediate 
        Policy Input'--
                  ``(A) may include any variable determined by the 
                Federal Open Market Committee as a necessary input to 
                guide open-market operations;
                  ``(B) shall include an estimate of, and the method of 
                calculation for, the current rate of inflation or 
                current inflation expectations; and
                  ``(C) shall include, specifying whether the variable 
                or estimate is historical, current, or a forecast and 
                the method of calculation, at least one of--
                          ``(i) an estimate of real GDP, nominal GDP, 
                        or potential GDP;
                          ``(ii) an estimate of the monetary aggregate 
                        compiled by the Board of Governors of the 
                        Federal Reserve System and Federal reserve 
                        banks; or
                          ``(iii) an interactive variable or a net 
                        estimate composed of the estimates described in 
                        clauses (i) and (ii).
          ``(5) Legislative day.--The term `legislative day' means a 
        day on which either House of Congress is in session.
          ``(6) Open market operations directive.--The term `Open 
        Market Operations Directive' means an order to achieve a 
        specified Policy Instrument Target provided to the Federal 
        Reserve Bank of New York by the Federal Open Market Committee 
        pursuant to powers authorized under section 14 of this Act that 
        guide open-market operations.
          ``(7) Policy instrument.--The term `Policy Instrument' 
        means--
                  ``(A) the nominal Federal funds rate;
                  ``(B) the nominal rate of interest paid on 
                nonborrowed reserves; or
                  ``(C) the discount window primary credit interest 
                rate most recently published on the Federal Reserve 
                Statistical Release on selected interest rates (daily 
                or weekly), commonly referred to as the H.15 release.
          ``(8) Policy instrument target.--The term `Policy Instrument 
        Target' means the target for the Policy Instrument specified in 
        the Open Market Operations Directive.
          ``(9) Reference policy rule.--The term `Reference Policy 
        Rule' means a calculation of the nominal Federal funds rate as 
        equal to the sum of the following:
                  ``(A) The rate of inflation over the previous four 
                quarters.
                  ``(B) One-half of the percentage deviation of the 
                real GDP from an estimate of potential GDP.
                  ``(C) One-half of the difference between the rate of 
                inflation over the previous four quarters and two 
                percent.
                  ``(D) Two percent.
  ``(b) Submitting a Directive Policy Rule.--Not later than 48 hours 
after the end of a meeting of the Federal Open Market Committee, the 
Chairman of the Federal Open Market Committee shall submit to the 
appropriate congressional committees and the Comptroller General of the 
United States a Directive Policy Rule and a statement that identifies 
the members of the Federal Open Market Committee who voted in favor of 
the Rule.
  ``(c) Requirements for a Directive Policy Rule.--A Directive Policy 
Rule shall--
          ``(1) identify the Policy Instrument the Directive Policy 
        Rule is designed to target;
          ``(2) describe the strategy or rule of the Federal Open 
        Market Committee for the systematic quantitative adjustment of 
        the Policy Instrument Target to respond to a change in the 
        Intermediate Policy Inputs;
          ``(3) include a function that comprehensively models the 
        interactive relationship between the Intermediate Policy 
        Inputs;
          ``(4) include the coefficients of the Directive Policy Rule 
        that generate the current Policy Instrument Target and a range 
        of predicted future values for the Policy Instrument Target if 
        changes occur in any Intermediate Policy Input;
          ``(5) describe the procedure for adjusting the supply of bank 
        reserves to achieve the Policy Instrument Target;
          ``(6) include a statement as to whether the Directive Policy 
        Rule substantially conforms to the Reference Policy Rule and, 
        if applicable--
                  ``(A) an explanation of the extent to which it 
                departs from the Reference Policy Rule;
                  ``(B) a detailed justification for that departure; 
                and
                  ``(C) a description of the circumstances under which 
                the Directive Policy Rule may be amended in the future;
          ``(7) include a certification that such Rule is expected to 
        support the economy in achieving stable prices and maximum 
        natural employment over the long term; and
          ``(8) include a calculation that describes with mathematical 
        precision the expected annual inflation rate over a 5-year 
        period.
  ``(d) GAO Report.--The Comptroller General of the United States shall 
compare the Directive Policy Rule submitted under subsection (b) with 
the rule that was most recently submitted to determine whether the 
Directive Policy Rule has materially changed. If the Directive Policy 
Rule has materially changed, the Comptroller General shall, not later 
than 7 days after each meeting of the Federal Open Market Committee, 
prepare and submit a compliance report to the appropriate congressional 
committees specifying whether the Directive Policy Rule submitted after 
that meeting and the Federal Open Market Committee are in compliance 
with this section.
  ``(e) Changing Market Conditions.--
          ``(1) Rule of construction.--Nothing in this Act shall be 
        construed to require that the plans with respect to the 
        systematic quantitative adjustment of the Policy Instrument 
        Target described under subsection (c)(2) be implemented if the 
        Federal Open Market Committee determines that such plans cannot 
        or should not be achieved due to changing market conditions.
          ``(2) GAO approval of update.--Upon determining that plans 
        described in paragraph (1) cannot or should not be achieved, 
        the Federal Open Market Committee shall submit an explanation 
        for that determination and an updated version of the Directive 
        Policy Rule to the Comptroller General of the United States and 
        the appropriate congressional committees not later than 48 
        hours after making the determination. The Comptroller General 
        shall, not later than 48 hours after receiving such updated 
        version, prepare and submit to the appropriate congressional 
        committees a compliance report determining whether such updated 
        version and the Federal Open Market Committee are in compliance 
        with this section.
  ``(f) Directive Policy Rule and Federal Open Market Committee Not in 
Compliance.--
          ``(1) In general.--If the Comptroller General of the United 
        States determines that the Directive Policy Rule and the 
        Federal Open Market Committee are not in compliance with this 
        section in the report submitted pursuant to subsection (d), or 
        that the updated version of the Directive Policy Rule and the 
        Federal Open Market Committee are not in compliance with this 
        section in the report submitted pursuant to subsection (e)(2), 
        the Chairman of the Board of Governors of the Federal Reserve 
        System shall, if requested by the chairman of either of the 
        appropriate congressional committees, not later than 7 
        legislative days after such request, testify before such 
        committee as to why the Directive Policy Rule, the updated 
        version, or the Federal Open Market Committee is not in 
        compliance.
          ``(2) GAO audit.--Notwithstanding subsection (b) of section 
        714 of title 31, United States Code, upon submitting a report 
        of noncompliance pursuant to subsection (d) or subsection 
        (e)(2) and after the period of 7 legislative days described in 
        paragraph (1), the Comptroller General shall audit the conduct 
        of monetary policy by the Board of Governors of the Federal 
        Reserve System and the Federal Open Market Committee upon 
        request of the appropriate congressional committee. Such 
        committee may specify the parameters of such audit.
  ``(g) Congressional Hearings.--The Chairman of the Board of Governors 
of the Federal Reserve System shall, if requested by the chairman of 
either of the appropriate congressional committees and not later than 7 
legislative days after such request, appear before such committee to 
explain any change to the Directive Policy Rule.''.

SEC. 3. FEDERAL OPEN MARKET COMMITTEE BLACKOUT PERIOD.

  Section 12A of the Federal Reserve Act (12 U.S.C. 263) is amended by 
adding at the end the following new subsection:
  ``(d) Blackout Period.--
          ``(1) In general.--During a blackout period, the only public 
        communications that may be made by members and staff of the 
        Committee with respect to macroeconomic or financial 
        developments or about current or prospective monetary policy 
        issues are the following:
                  ``(A) The dissemination of published data, surveys, 
                and reports that have been cleared for publication by 
                the Board of Governors of the Federal Reserve System.
                  ``(B) Answers to technical questions specific to a 
                data release.
                  ``(C) Communications with respect to the prudential 
                or supervisory functions of the Board of Governors.
          ``(2) Blackout period defined.--For purposes of this 
        subsection, and with respect to a meeting of the Committee 
        described under subsection (a), the term `blackout period' 
        means the time period that--
                  ``(A) begins immediately after midnight on the day 
                that is one week prior to the date on which such 
                meeting takes place; and
                  ``(B) ends at midnight on the day after the date on 
                which such meeting takes place.
          ``(3) Exemption for chairman of the board of governors.--
        Nothing in this section shall prohibit the Chairman of the 
        Board of Governors of the Federal Reserve System from 
        participating in or issuing public communications.''.

SEC. 4. MEMBERSHIP OF FEDERAL OPEN MARKET COMMITTEE.

  Section 12A(a) of the Federal Reserve Act (12 U.S.C. 263(a)) is 
amended--
          (1) in the first sentence, by striking ``five'' and inserting 
        ``six'';
          (2) in the second sentence, by striking ``One by the board of 
        directors'' and all that follows through the period at the end 
        and inserting the following: ``One by the boards of directors 
        of the Federal Reserve Banks of New York and Boston; one by the 
        boards of directors of the Federal Reserve Banks of 
        Philadelphia and Cleveland; one by the boards of directors of 
        the Federal Reserve Banks of Richmond and Atlanta; one by the 
        boards of directors of the Federal Reserve Banks of Chicago and 
        St. Louis; one by the boards of directors of the Federal 
        Reserve Banks of Minneapolis and Kansas City; and one by the 
        boards of directors of the Federal Reserve Banks of Dallas and 
        San Francisco.''; and
          (3) by inserting after the second sentence the following: 
        ``In odd numbered calendar years, one representative shall be 
        elected from each of the Federal Reserve Banks of Boston, 
        Philadelphia, Richmond, Chicago, Minneapolis, and Dallas. In 
        even-numbered calendar years, one representative shall be 
        elected from each of the Federal Reserve Banks of New York, 
        Cleveland, Atlanta, St. Louis, Kansas City, and San 
        Francisco.''.

SEC. 5. REQUIREMENTS FOR STRESS TESTS AND SUPERVISORY LETTERS FOR THE 
                    BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

  (a) Stress Test Rulemaking, GAO Review, and Publication of Results.--
Section 165(i)(1)(B) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5365(i)(1)(B)) is amended--
          (1) by amending clause (i) to read as follows:
                          ``(i) shall--
                                  ``(I) issue regulations, after 
                                providing for public notice and 
                                comment, that provide for at least 3 
                                different sets of conditions under 
                                which the evaluation required by this 
                                subsection shall be conducted, 
                                including baseline, adverse, and 
                                severely adverse, and methodologies, 
                                including models used to estimate 
                                losses on certain assets; and
                                  ``(II) provide copies of such 
                                regulations to the Comptroller General 
                                of the United States and the Panel of 
                                Economic Advisors of the Congressional 
                                Budget Office before publishing such 
                                regulations;''; and
          (2) in clause (v), by inserting before the period the 
        following: ``, including any results of a resubmitted test''.
  (b) Application of CCAR.--Section 165(i)(1) of such Act is further 
amended by adding at the end the following new subparagraph:
                  ``(C) Application to ccar.--The requirements of 
                subparagraph (B) shall apply to all stress tests 
                performed under the Comprehensive Capital Analysis and 
                Review exercise established by the Board of 
                Governors.''.
  (c) Publication of the Number of Supervisory Letters Sent to the 
Largest Bank Holding Companies.--Section 165 of such Act is further 
amended by adding at the end the following new subsection:
  ``(l) Publication of Supervisory Letter Information.--The Board of 
Governors shall publicly disclose--
          ``(1) the aggregate number of supervisory letters sent to 
        bank holding companies described in subsection (a) since the 
        date of the enactment of this section, and keep such number 
        updated; and
          ``(2) the aggregate number of such letters that are 
        designated as `Matters Requiring Attention' and the aggregate 
        number of such letters that are designated as `Matters 
        Requiring Immediate Attention'.''.

SEC. 6. FREQUENCY OF TESTIMONY OF THE CHAIRMAN OF THE BOARD OF 
                    GOVERNORS OF THE FEDERAL RESERVE SYSTEM TO 
                    CONGRESS.

  (a) In General.--Section 2B of the Federal Reserve Act (12 U.S.C. 
225b) is amended--
          (1) by striking ``semi-annual'' each place it appears and 
        inserting ``quarterly''; and
          (2) in subsection (a)(2)--
                  (A) by inserting ``and October 20'' after ``July 20'' 
                each place it appears; and
                  (B) by inserting ``and May 20'' after ``February 20'' 
                each place it appears.
  (b) Conforming Amendment.--Paragraph (12) of section 10 of the 
Federal Reserve Act (12 U.S.C. 247b(12)) is amended by striking ``semi-
annual'' and inserting ``quarterly''.

SEC. 7. VICE CHAIRMAN FOR SUPERVISION REPORT REQUIREMENT.

  Paragraph (12) of section 10 of the Federal Reserve Act (12 U.S.C. 
247(b)) is amended--
          (1) by redesignating such paragraph as paragraph (11); and
          (2) in such paragraph, by adding at the end the following: 
        ``In each such appearance, the Vice Chairman for Supervision 
        shall provide written testimony that includes the status of all 
        pending and anticipated rulemakings that are being made by the 
        Board of Governors of the Federal Reserve System. If, at the 
        time of any appearance described in this paragraph, the 
        position of Vice Chairman for Supervision is vacant, the Vice 
        Chairman for the Board of Governors of the Federal Reserve 
        System (who has the responsibility to serve in the absence of 
        the Chairman) shall appear instead and provide the required 
        written testimony. If, at the time of any appearance described 
        in this paragraph, both Vice Chairman positions are vacant, the 
        Chairman of the Board of Governors of the Federal Reserve 
        System shall appear instead and provide the required written 
        testimony.''.

SEC. 8. ECONOMIC ANALYSIS OF REGULATIONS OF THE BOARD OF GOVERNORS OF 
                    THE FEDERAL RESERVE SYSTEM.

  (a) Amendment to Federal Reserve Act.--Section 11 of the Federal 
Reserve Act (12 U.S.C. 248) is amended by inserting after subsection 
(l) the following new subsection:
  ``(m) Consideration of Economic Impacts.--
          ``(1) In general.--Before issuing any regulation, the Board 
        of Governors of the Federal Reserve System shall--
                  ``(A) clearly identify the nature and source of the 
                problem that the proposed regulation is designed to 
                address and assess the significance of that problem;
                  ``(B) assess whether any new regulation is warranted 
                or, with respect to a proposed regulation that the 
                Board of Governors is required to issue by statute and 
                with respect to which the Board has the authority to 
                exempt certain persons from the application of such 
                regulation, compare--
                          ``(i) the costs and benefits of the proposed 
                        regulation; and
                          ``(ii) the costs and benefits of a regulation 
                        under which the Board exempts all persons from 
                        the application of the proposed regulation, to 
                        the extent the Board is able;
                  ``(C) assess the qualitative and quantitative costs 
                and benefits of the proposed regulation and propose or 
                adopt a regulation only on a reasoned determination 
                that the benefits of the proposed regulation outweigh 
                the costs of the regulation;
                  ``(D) identify and assess available alternatives to 
                the proposed regulation that were considered, including 
                any alternative offered by a member of the Board of 
                Governors of the Federal Reserve System or the Federal 
                Open Market Committee and including any modification of 
                an existing regulation, together with an explanation of 
                why the regulation meets the regulatory objectives more 
                effectively than the alternatives; and
                  ``(E) ensure that any proposed regulation is 
                accessible, consistent, written in plain language, and 
                easy to understand and shall measure, and seek to 
                improve, the actual results of regulatory requirements.
          ``(2) Considerations and actions.--
                  ``(A) Required actions.--In deciding whether and how 
                to regulate, the Board shall assess the costs and 
                benefits of available regulatory alternatives, 
                including the alternative of not regulating, and choose 
                the approach that maximizes net benefits. Specifically, 
                the Board shall--
                          ``(i) evaluate whether, consistent with 
                        achieving regulatory objectives, the regulation 
                        is tailored to impose the least impact on the 
                        availability of credit and economic growth and 
                        to impose the least burden on society, 
                        including market participants, individuals, 
                        businesses of different sizes, and other 
                        entities (including State and local 
                        governmental entities), taking into account, to 
                        the extent practicable, the cumulative costs of 
                        regulations;
                          ``(ii) evaluate whether the regulation is 
                        inconsistent, incompatible, or duplicative of 
                        other Federal regulations; and
                          ``(iii) with respect to a proposed regulation 
                        that the Board is required to issue by statute 
                        and with respect to which the Board has the 
                        authority to exempt certain persons from the 
                        application of such regulation, compare--
                                  ``(I) the costs and benefits of the 
                                proposed regulation; and
                                  ``(II) the costs and benefits of a 
                                regulation under which the Board 
                                exempts all persons from the 
                                application of the proposed regulation, 
                                to the extent the Board is able.
                  ``(B) Additional considerations.--In addition, in 
                making a reasoned determination of the costs and 
                benefits of a proposed regulation, the Board shall, to 
                the extent that each is relevant to the particular 
                proposed regulation, take into consideration the impact 
                of the regulation, including secondary costs such as an 
                increase in the cost or a reduction in the availability 
                of credit or investment services or products, on--
                          ``(i) the safety and soundness of the United 
                        States banking system;
                          ``(ii) market liquidity in securities 
                        markets;
                          ``(iii) small businesses;
                          ``(iv) community banks;
                          ``(v) economic growth;
                          ``(vi) cost and access to capital;
                          ``(vii) market stability;
                          ``(viii) global competitiveness;
                          ``(ix) job creation;
                          ``(x) the effectiveness of the monetary 
                        policy transmission mechanism; and
                          ``(xi) employment levels.
          ``(3) Explanation and comments.--The Board shall explain in 
        its final rule the nature of comments that it received and 
        shall provide a response to those comments in its final rule, 
        including an explanation of any changes that were made in 
        response to those comments and the reasons that the Board did 
        not incorporate concerns related to the potential costs or 
        benefits in the final rule.
          ``(4) Postadoption impact assessment.--
                  ``(A) In general.--Whenever the Board adopts or 
                amends a regulation designated as a `major rule' within 
                the meaning of section 804(2) of title 5, United States 
                Code, it shall state, in its adopting release, the 
                following:
                          ``(i) The purposes and intended consequences 
                        of the regulation.
                          ``(ii) The assessment plan that will be used, 
                        consistent with the requirements of 
                        subparagraph (B), to assess whether the 
                        regulation has achieved the stated purposes.
                          ``(iii) Appropriate postimplementation 
                        quantitative and qualitative metrics to measure 
                        the economic impact of the regulation and the 
                        extent to which the regulation has accomplished 
                        the stated purpose of the regulation.
                          ``(iv) Any reasonably foreseeable indirect 
                        effects that may result from the regulation.
                  ``(B) Requirements of assessment plan and report.--
                          ``(i) Requirements of plan.--The assessment 
                        plan required under this paragraph shall 
                        consider the costs, benefits, and intended and 
                        unintended consequences of the regulation. The 
                        plan shall specify the data to be collected, 
                        the methods for collection and analysis of the 
                        data, and a date for completion of the 
                        assessment. The assessment plan shall include 
                        an analysis of any jobs added or lost as a 
                        result of the regulation, differentiating 
                        between public and private sector jobs.
                          ``(ii) Submission and publication of 
                        report.--The Board shall, not later than 2 
                        years after the publication of the adopting 
                        release, publish the assessment plan in the 
                        Federal Register for notice and comment. If the 
                        Board determines, at least 90 days before the 
                        deadline for publication of the assessment 
                        plan, that an extension is necessary, the Board 
                        shall publish a notice of such extension and 
                        the specific reasons why the extension is 
                        necessary in the Federal Register. Any material 
                        modification of the assessment plan, as 
                        necessary to assess unforeseen aspects or 
                        consequences of the regulation, shall be 
                        promptly published in the Federal Register for 
                        notice and comment.
                          ``(iii) Data collection not subject to notice 
                        and comment requirements.--If the Board has 
                        published the assessment plan for notice and 
                        comment at least 30 days before the adoption of 
                        a regulation designated as a major rule, the 
                        collection of data under the assessment plan 
                        shall not be subject to the notice and comment 
                        requirements in section 3506(c) of title 44, 
                        United States Code (commonly referred to as the 
                        Paperwork Reduction Act). Any material 
                        modification of the plan that requires 
                        collection of data not previously published for 
                        notice and comment shall also be exempt from 
                        such requirements if the Board has published 
                        notice in the Federal Register for comment on 
                        the additional data to be collected, at least 
                        30 days before the initiation of data 
                        collection.
                          ``(iv) Final action.--Not later than 180 days 
                        after publication of the assessment plan in the 
                        Federal Register, the Board shall issue for 
                        notice and comment a proposal to amend or 
                        rescind the regulation, or shall publish a 
                        notice that the Board has determined that no 
                        action will be taken on the regulation. Such a 
                        notice will be deemed a final agency action.
          ``(5) Covered regulations and other actions.--Solely as used 
        in this subsection, the term `regulation'--
                  ``(A) means a statement of general applicability and 
                future effect that is designed to implement, interpret, 
                or prescribe law or policy, or to describe the 
                procedure or practice requirements of the Board of 
                Governors, including rules, orders of general 
                applicability, interpretive releases, and other 
                statements of general applicability that the Board of 
                Governors intends to have the force and effect of law; 
                and
                  ``(B) does not include--
                          ``(i) a regulation issued in accordance with 
                        the formal rulemaking provisions of section 556 
                        or 557 of title 5, United States Code;
                          ``(ii) a regulation that is limited to the 
                        organization, management, or personnel matters 
                        of the Board of Governors;
                          ``(iii) a regulation promulgated pursuant to 
                        statutory authority that expressly prohibits 
                        compliance with this provision; or
                          ``(iv) a regulation that is certified by the 
                        Board of Governors to be an emergency action, 
                        if such certification is published in the 
                        Federal Register.''.
  (b) Rule of Construction.--Nothing in this section shall apply to the 
requirements regarding the conduct of monetary policy described in 
section 2.

SEC. 9. SALARIES, FINANCIAL DISCLOSURES, AND OFFICE STAFF OF THE BOARD 
                    OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

  (a) In General.--Section 11 of the Federal Reserve Act (12 U.S.C. 
248) is amended--
          (1) by redesignating the second subsection (s) (relating to 
        ``Assessments, Fees, and Other Charges for Certain Companies'') 
        as subsection (t); and
          (2) by adding at the end the following new subsections:
  ``(u) Ethics Standards for Members and Employees.--
          ``(1) Prohibited and restricted financial interests and 
        transactions.--The members and employees of the Board of 
        Governors of the Federal Reserve System shall be subject to the 
        provisions under section 4401.102 of title 5, Code of Federal 
        Regulations, to the same extent as such provisions apply to an 
        employee of the Securities and Exchange Commission.
          ``(2) Treatment of brokerage accounts and availability of 
        account statements.--The members and employees of the Board of 
        Governors of the Federal Reserve System shall--
                  ``(A) disclose all brokerage accounts that they 
                maintain, as well as those in which they control 
                trading or have a financial interest (including managed 
                accounts, trust accounts, investment club accounts, and 
                the accounts of spouses or minor children who live with 
                the member or employee); and
                  ``(B) with respect to any securities account that the 
                member or employee is required to disclose to the Board 
                of Governors, authorize their brokers and dealers to 
                send duplicate account statements directly to Board of 
                Governors.
          ``(3) Prohibitions related to outside employment and 
        activities.--The members and employees of the Board of 
        Governors of the Federal Reserve System shall be subject to the 
        prohibitions related to outside employment and activities 
        described under section 4401.103(c) of title 5, Code of Federal 
        Regulations, to the same extent as such prohibitions apply to 
        an employee of the Securities and Exchange Commission.
          ``(4) Additional ethics standards.--The members and employees 
        of the Board of Governors of the Federal Reserve System shall 
        be subject to--
                  ``(A) the employee responsibilities and conduct 
                regulations of the Office of Personnel Management under 
                part 735 of title 5, Code of Federal Regulations;
                  ``(B) the canons of ethics contained in subpart C of 
                part 200 of title 17, Code of Federal Regulations, to 
                the same extent as such subpart applies to the 
                employees of the Securities and Exchange Commission; 
                and
                  ``(C) the regulations concerning the conduct of 
                members and employees and former members and employees 
                contained in subpart M of part 200 of title 17, Code of 
                Federal Regulations, to the same extent as such subpart 
                applies to the employees of the Securities and Exchange 
                Commission.
  ``(v) Disclosure of Staff Salaries and Financial Information.--The 
Board of Governors of the Federal Reserve System shall make publicly 
available, on the website of the Board of Governors, a searchable 
database that contains the names of all members, officers, and 
employees of the Board of Governors who receive an annual salary in 
excess of the annual rate of basic pay for GS-15 of the General 
Schedule, and--
          ``(1) the yearly salary information for such individuals, 
        along with any nonsalary compensation received by such 
        individuals; and
          ``(2) any financial disclosures required to be made by such 
        individuals.''.
  (b) Office Staff for Each Member of the Board of Governors.--
Subsection (l) of section 11 of the Federal Reserve Act (12 U.S.C. 248) 
is amended by adding at the end the following: ``Each member of the 
Board of Governors of the Federal Reserve System may employ, at a 
minimum, 2 individuals, with such individuals selected by such member 
and the salaries of such individuals set by such member. A member may 
employ additional individuals as determined necessary by the Board of 
Governors.''.

SEC. 10. REQUIREMENTS FOR INTERNATIONAL PROCESSES.

  (a) Board of Governors Requirements.--Section 11 of the Federal 
Reserve Act (12 U.S.C. 248), as amended by section 9 of this Act, is 
further amended by adding at the end the following new subsection:
  ``(w) International Processes.--
          ``(1) Notice of process; consultation.--At least 30 calendar 
        days before any member or employee of the Board of Governors of 
        the Federal Reserve System participates in a process of setting 
        financial standards as a part of any foreign or multinational 
        entity, the Board of Governors shall--
                  ``(A) issue a notice of the process, including the 
                subject matter, scope, and goals of the process, to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, Housing, 
                and Urban Affairs of the Senate;
                  ``(B) make such notice available to the public, 
                including on the website of the Board of Governors; and
                  ``(C) solicit public comment, and consult with the 
                committees described under subparagraph (A), with 
                respect to the subject matter, scope, and goals of the 
                process.
          ``(2) Public reports on process.--After the end of any 
        process described under paragraph (1), the Board of Governors 
        shall issue a public report on the topics that were discussed 
        during the process and any new or revised rulemakings or policy 
        changes that the Board of Governors believes should be 
        implemented as a result of the process.
          ``(3) Notice of agreements; consultation.--At least 90 
        calendar days before any member or employee of the Board of 
        Governors of the Federal Reserve System participates in a 
        process of setting financial standards as a part of any foreign 
        or multinational entity, the Board of Governors shall--
                  ``(A) issue a notice of agreement to the Committee on 
                Financial Services of the House of Representatives and 
                the Committee on Banking, Housing, and Urban Affairs of 
                the Senate;
                  ``(B) make such notice available to the public, 
                including on the website of the Board of Governors; and
                  ``(C) consult with the committees described under 
                subparagraph (A) with respect to the nature of the 
                agreement and any anticipated effects such agreement 
                will have on the economy.
          ``(4) Definition.--For purposes of this subsection, the term 
        `process' shall include any official proceeding or meeting on 
        financial regulation of a recognized international organization 
        with authority to set financial standards on a global or 
        regional level, including the Financial Stability Board, the 
        Basel Committee on Banking Supervision (or a similar 
        organization), and the International Association of Insurance 
        Supervisors (or a similar organization).''.
  (b) FDIC Requirements.--The Federal Deposit Insurance Act (12 U.S.C. 
1811 et seq.) is amended by adding at the end the following new 
section:

``SEC. 51. INTERNATIONAL PROCESSES.

  ``(a) Notice of Process; Consultation.--At least 30 calendar days 
before the Board of Directors participates in a process of setting 
financial standards as a part of any foreign or multinational entity, 
the Board of Directors shall--
          ``(1) issue a notice of the process, including the subject 
        matter, scope, and goals of the process, to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate;
          ``(2) make such notice available to the public, including on 
        the website of the Corporation; and
          ``(3) solicit public comment, and consult with the committees 
        described under paragraph (1), with respect to the subject 
        matter, scope, and goals of the process.
  ``(b) Public Reports on Process.--After the end of any process 
described under subsection (a), the Board of Directors shall issue a 
public report on the topics that were discussed at the process and any 
new or revised rulemakings or policy changes that the Board of 
Directors believes should be implemented as a result of the process.
  ``(c) Notice of Agreements; Consultation.--At least 90 calendar days 
before the Board of Directors participates in a process of setting 
financial standards as a part of any foreign or multinational entity, 
the Board of Directors shall--
          ``(1) issue a notice of agreement to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate;
          ``(2) make such notice available to the public, including on 
        the website of the Corporation; and
          ``(3) consult with the committees described under paragraph 
        (1) with respect to the nature of the agreement and any 
        anticipated effects such agreement will have on the economy.
  ``(d) Definition.--For purposes of this section, the term `process' 
shall include any official proceeding or meeting on financial 
regulation of a recognized international organization with authority to 
set financial standards on a global or regional level, including the 
Financial Stability Board, the Basel Committee on Banking Supervision 
(or a similar organization), and the International Association of 
Insurance Supervisors (or a similar organization).''.
  (c) Treasury Requirements.--Section 325 of title 31, United States 
Code, is amended by adding at the end the following new subsection:
  ``(d) International Processes.--
          ``(1) Notice of process; consultation.--At least 30 calendar 
        days before the Secretary participates in a process of setting 
        financial standards as a part of any foreign or multinational 
        entity, the Secretary shall--
                  ``(A) issue a notice of the process, including the 
                subject matter, scope, and goals of the process, to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, Housing, 
                and Urban Affairs of the Senate;
                  ``(B) make such notice available to the public, 
                including on the website of the Department of the 
                Treasury; and
                  ``(C) solicit public comment, and consult with the 
                committees described under subparagraph (A), with 
                respect to the subject matter, scope, and goals of the 
                process.
          ``(2) Public reports on process.--After the end of any 
        process described under paragraph (1), the Secretary shall 
        issue a public report on the topics that were discussed at the 
        process and any new or revised rulemakings or policy changes 
        that the Secretary believes should be implemented as a result 
        of the process.
          ``(3) Notice of agreements; consultation.--At least 90 
        calendar days before the Secretary participates in a process of 
        setting financial standards as a part of any foreign or 
        multinational entity, the Secretary shall--
                  ``(A) issue a notice of agreement to the Committee on 
                Financial Services of the House of Representatives and 
                the Committee on Banking, Housing, and Urban Affairs of 
                the Senate;
                  ``(B) make such notice available to the public, 
                including on the website of the Department of the 
                Treasury; and
                  ``(C) consult with the committees described under 
                subparagraph (A) with respect to the nature of the 
                agreement and any anticipated effects such agreement 
                will have on the economy.
          ``(4) Definition.--For purposes of this subsection, the term 
        `process' shall include any official proceeding or meeting on 
        financial regulation of a recognized international organization 
        with authority to set financial standards on a global or 
        regional level, including the Financial Stability Board, the 
        Basel Committee on Banking Supervision (or a similar 
        organization), and the International Association of Insurance 
        Supervisors (or a similar organization).''.
  (d) OCC Requirements.--Chapter 1 of title LXII of the Revised 
Statutes of the United States (12 U.S.C. 21 et seq.) is amended--
          (1) by adding at the end the following new section:

``SEC. 5156B. INTERNATIONAL PROCESSES.

  ``(a) Notice of Process; Consultation.--At least 30 calendar days 
before the Comptroller of the Currency participates in a process of 
setting financial standards as a part of any foreign or multinational 
entity, the Comptroller of the Currency shall--
          ``(1) issue a notice of the process, including the subject 
        matter, scope, and goals of the process, to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate;
          ``(2) make such notice available to the public, including on 
        the website of the Office of the Comptroller of the Currency; 
        and
          ``(3) solicit public comment, and consult with the committees 
        described under paragraph (1), with respect to the subject 
        matter, scope, and goals of the process.
  ``(b) Public Reports on Process.--After the end of any process 
described under subsection (a), the Comptroller of the Currency shall 
issue a public report on the topics that were discussed at the process 
and any new or revised rulemakings or policy changes that the 
Comptroller of the Currency believes should be implemented as a result 
of the process.
  ``(c) Notice of Agreements; Consultation.--At least 90 calendar days 
before the Comptroller of the Currency participates in a process of 
setting financial standards as a part of any foreign or multinational 
entity, the Board of Directors shall--
          ``(1) issue a notice of agreement to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate;
          ``(2) make such notice available to the public, including on 
        the website of the Office of the Comptroller of the Currency; 
        and
          ``(3) consult with the committees described under paragraph 
        (1) with respect to the nature of the agreement and any 
        anticipated effects such agreement will have on the economy.
  ``(d) Definition.--For purposes of this section, the term `process' 
shall include any official proceeding or meeting on financial 
regulation of a recognized international organization with authority to 
set financial standards on a global or regional level, including the 
Financial Stability Board, the Basel Committee on Banking Supervision 
(or a similar organization), and the International Association of 
Insurance Supervisors (or a similar organization).''; and
          (2) in the table of contents for such chapter, by adding at 
        the end the following new item:

``5156B. International processes.''.

  (e) Securities and Exchange Commission Requirements.--Section 4 of 
the Securities Exchange Act of 1934 (15 U.S.C. 78d) is amended by 
adding at the end the following new subsection:
  ``(j) International Processes.--
          ``(1) Notice of process; consultation.--At least 30 calendar 
        days before the Commission participates in a process of setting 
        financial standards as a part of any foreign or multinational 
        entity, the Commission shall--
                  ``(A) issue a notice of the process, including the 
                subject matter, scope, and goals of the process, to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, Housing, 
                and Urban Affairs of the Senate;
                  ``(B) make such notice available to the public, 
                including on the website of the Commission; and
                  ``(C) solicit public comment, and consult with the 
                committees described under subparagraph (A), with 
                respect to the subject matter, scope, and goals of the 
                process.
          ``(2) Public reports on process.--After the end of any 
        process described under paragraph (1), the Commission shall 
        issue a public report on the topics that were discussed at the 
        process and any new or revised rulemakings or policy changes 
        that the Commission believes should be implemented as a result 
        of the process.
          ``(3) Notice of agreements; consultation.--At least 90 
        calendar days before the Commission participates in a process 
        of setting financial standards as a part of any foreign or 
        multinational entity, the Commission shall--
                  ``(A) issue a notice of agreement to the Committee on 
                Financial Services of the House of Representatives and 
                the Committee on Banking, Housing, and Urban Affairs of 
                the Senate;
                  ``(B) make such notice available to the public, 
                including on the website of the Commission; and
                  ``(C) consult with the committees described under 
                subparagraph (A) with respect to the nature of the 
                agreement and any anticipated effects such agreement 
                will have on the economy.
          ``(4) Definition.--For purposes of this subsection, the term 
        `process' shall include any official proceeding or meeting on 
        financial regulation of a recognized international organization 
        with authority to set financial standards on a global or 
        regional level, including the Financial Stability Board, the 
        Basel Committee on Banking Supervision (or a similar 
        organization), and the International Association of Insurance 
        Supervisors (or a similar organization).''.

SEC. 11. AMENDMENTS TO POWERS OF THE BOARD OF GOVERNORS OF THE FEDERAL 
                    RESERVE SYSTEM.

  (a) In General.--Section 13(3) of the Federal Reserve Act (12 U.S.C. 
343(3)) is amended--
          (1) in subparagraph (A)--
                  (A) by inserting ``that pose a threat to the 
                financial stability of the United States'' after 
                ``unusual and exigent circumstances''; and
                  (B) by inserting ``and by the affirmative vote of not 
                less than nine presidents of the Federal reserve 
                banks'' after ``five members'';
          (2) in subparagraph (B)--
                  (A) in clause (i), by inserting at the end the 
                following: ``Federal reserve banks may not accept 
                equity securities issued by the recipient of any loan 
                or other financial assistance under this paragraph as 
                collateral. Not later than 6 months after the date of 
                enactment of this sentence, the Board shall, by rule, 
                establish--
                                  ``(I) a method for determining the 
                                sufficiency of the collateral required 
                                under this paragraph;
                                  ``(II) acceptable classes of 
                                collateral;
                                  ``(III) the amount of any discount of 
                                such value that the Federal reserve 
                                banks will apply for purposes of 
                                calculating the sufficiency of 
                                collateral under this paragraph; and
                                  ``(IV) a method for obtaining 
                                independent appraisals of the value of 
                                collateral the Federal reserve banks 
                                receive.''; and
                  (B) in clause (ii)--
                          (i) by striking the second sentence; and
                          (ii) by inserting after the first sentence 
                        the following: ``A borrower shall not be 
                        eligible to borrow from any emergency lending 
                        program or facility unless the Board and all 
                        federal banking regulators with jurisdiction 
                        over the borrower certify that, at the time the 
                        borrower initially borrows under the program or 
                        facility, the borrower is not insolvent.'';
          (3) by inserting ``financial institution'' before 
        ``participant'' each place such term appears;
          (4) in subparagraph (D)(i), by inserting ``financial 
        institution'' before ``participants''; and
          (5) by adding at the end the following new subparagraphs:
                  ``(F) Penalty rate.--
                          ``(i) In general.--Not later than 6 months 
                        after the date of enactment of this 
                        subparagraph, the Board shall, with respect to 
                        a recipient of any loan or other financial 
                        assistance under this paragraph, establish by 
                        rule a minimum interest rate on the principal 
                        amount of any loan or other financial 
                        assistance.
                          ``(ii) Minimum interest rate defined.--In 
                        this subparagraph, the term `minimum interest 
                        rate' shall mean the sum of--
                                  ``(I) the average of the secondary 
                                discount rate of all Federal Reserve 
                                banks over the most recent 90-day 
                                period; and
                                  ``(II) the average of the difference 
                                between a distressed corporate bond 
                                yield index (as defined by rule of the 
                                Board) and a bond yield index of debt 
                                issued by the United States (as defined 
                                by rule of the Board) over the most 
                                recent 90-day period.
                  ``(G) Financial institution participant defined.--For 
                purposes of this paragraph, the term `financial 
                institution participant'--
                          ``(i) means a company that is predominantly 
                        engaged in financial activities (as defined in 
                        section 102(a) of the Dodd-Frank Wall Street 
                        Reform and Consumer Protection Act (12 U.S.C. 
                        5311(a))); and
                          ``(ii) does not include an agency described 
                        in subparagraph (W) of section 5312(a)(2) of 
                        title 31, United States Code, or an entity 
                        controlled or sponsored by such an agency.''.
  (b) Conforming Amendment.--Section 11(r)(2)(A) of such Act is 
amended--
          (1) in clause (ii)(IV), by striking ``; and'' and inserting a 
        semicolon;
          (2) in clause (iii), by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following new clause:
          ``(iv) the available members secure the affirmative vote of 
        not less than nine presidents of the Federal reserve banks.''.

SEC. 12. INTEREST RATES ON BALANCES MAINTAINED AT A FEDERAL RESERVE 
                    BANK BY DEPOSITORY INSTITUTIONS ESTABLISHED BY 
                    FEDERAL OPEN MARKET COMMITTEE.

  Subparagraph (A) of section 19(b)(12) of the Federal Reserve Act (12 
U.S.C. 461(b)(12)(A)) is amended by inserting ``established by the 
Federal Open Market Committee'' after ``rate or rates''.

SEC. 13. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF 
                    THE FEDERAL RESERVE SYSTEM.

  (a) In General.--Notwithstanding section 714 of title 31, United 
States Code, or any other provision of law, the Comptroller General of 
the United States shall complete an audit of the Board of Governors of 
the Federal Reserve System and the Federal reserve banks under 
subsection (b) of such section 714 within 12 months after the date of 
the enactment of this Act.
  (b) Report.--
          (1) In general.--Not later than 90 days after the audit 
        required pursuant to subsection (a) is completed, the 
        Comptroller General--
                  (A) shall submit to Congress a report on such audit; 
                and
                  (B) shall make such report available to the Speaker 
                of the House, the majority and minority leaders of the 
                House of Representatives, the majority and minority 
                leaders of the Senate, the Chairman and Ranking Member 
                of the committee and each subcommittee of jurisdiction 
                in the House of Representatives and the Senate, and any 
                other Member of Congress who requests the report.
          (2) Contents.--The report under paragraph (1) shall include a 
        detailed description of the findings and conclusion of the 
        Comptroller General with respect to the audit that is the 
        subject of the report, together with such recommendations for 
        legislative or administrative action as the Comptroller General 
        may determine to be appropriate.
  (c) Repeal of Certain Limitations.--Subsection (b) of section 714 of 
title 31, United States Code, is amended by striking the second 
sentence.
  (d) Technical and Conforming Amendments.--
          (1) In general.--Section 714 of title 31, United States Code, 
        is amended--
                  (A) in subsection (d)(3), by striking ``or (f)'' each 
                place such term appears;
                  (B) in subsection (e), by striking ``the third 
                undesignated paragraph of section 13'' and inserting 
                ``section 13(3)''; and
                  (C) by striking subsection (f).
          (2) Federal reserve act.--Subsection (s) (relating to 
        ``Federal Reserve Transparency and Release of Information'') of 
        section 11 of the Federal Reserve Act (12 U.S.C. 248) is 
        amended--
                  (A) in paragraph (4)(A), by striking ``has the same 
                meaning as in section 714(f)(1)(A) of title 31, United 
                States Code'' and inserting ``means a program or 
                facility, including any special purpose vehicle or 
                other entity established by or on behalf of the Board 
                of Governors of the Federal Reserve System or a Federal 
                reserve bank, authorized by the Board of Governors 
                under section 13(3), that is not subject to audit under 
                section 714(e) of title 31, United States Code'';
                  (B) in paragraph (6), by striking ``or in section 
                714(f)(3)(C) of title 31, United States Code, the 
                information described in paragraph (1) and information 
                concerning the transactions described in section 714(f) 
                of such title,'' and inserting ``the information 
                described in paragraph (1)''; and
                  (C) in paragraph (7), by striking ``and section 
                13(3)(C), section 714(f)(3)(C) of title 31, United 
                States Code, and'' and inserting ``, section 13(3)(C), 
                and''.

SEC. 14. REPORTING REQUIREMENT FOR EXPORT-IMPORT BANK.

  The Board of Governors of the Federal Reserve System shall include, 
as part of the monthly Federal Reserve statistical release titled 
``Industrial Production or Capacity Utilization'' (or any successor 
release), an analysis of--
          (1) the impact on the index described in the statistical 
        release due to the operation of the Export-Import Bank; and
          (2) the amount of foreign industrial production supported by 
        foreign export credit agencies, using the same method used to 
        measure industrial production in the statistical release and 
        scaled to be comparable to the industrial production 
        measurement for the United States.

SEC. 15. MEMBERSHIP OF BOARD OF DIRECTORS OF THE FEDERAL RESERVE BANKS.

  Section 4 of the Federal Reserve Act (12 U.S.C. 302) is amended--
          (1) in the eleventh undesignated paragraph (relating to Class 
        B), by striking ``and consumers'' and inserting ``consumers, 
        and traditionally underserved communities and populations''; 
        and
          (2) in the twelfth undesignated paragraph (relating to Class 
        C), by striking ``and consumers'' and inserting ``consumers, 
        and traditionally underserved communities and populations''.

                          Purpose and Summary

    Introduced by Representative Huizenga, H.R. 3189, the ``Fed 
Oversight Reform and Modernization Act of 2015,'' requires the 
Federal Reserve to clearly explain differences between the 
actual course of monetary policy and a reference policy rule.
    H.R. 3189 also requires the Federal Reserve to conduct 
cost-benefit analysis when it adopts new rules. The bill 
enhances the Federal Reserve's accountability to Congress in 
the conduct of regulatory policy and requires transparency 
about the Federal Reserve's bank stress tests and about 
international financial regulatory negotiations conducted by 
the Federal Reserve, the Treasury Department, the Office of the 
Comptroller of the Currency (OCC), the Securities and Exchange 
Commission (SEC), and the Federal Deposit Insurance Corporation 
(FDIC). The bill further requires the Federal Reserve to 
disclose the salaries of highly paid employees, provides for at 
least two staff positions to advise each member of the Board of 
Governors, and requires Fed employees to abide by the same 
ethical requirements as other federal financial regulators.
    H.R. 3189 reforms the ``blackout period'' governing when 
Federal Reserve Governors and employees may publicly speak on 
certain matters; alters the voting membership of the Federal 
Open Market Committee (FOMC); and reforms the Federal Reserve's 
emergency lending powers under Section 13(3) of the Federal 
Reserve Act. Finally, the bill requires that the FOMC set 
interest rates on balances maintained at a Federal Reserve Bank 
by a depository institution and enhances the Government 
Accountability Office's (GAO's) authority to audit Federal 
Reserve operations.

                  Background and Need for Legislation

    H.R. 3189 strengthens the Fed's ability to achieve monetary 
policy outcomes consistent with its statutory mandates; 
enhances the ability of Congress and others to assess the Fed's 
fidelity to those mandates; and protects the Fed from undue 
influence by the Executive Branch in setting monetary policy. 
The following provides background concerning each of the 
substantive sections of the bill.

Sec. 2. Requirements for policy rules of the Federal Open Market 
        Committee

    This section requires the Fed to generate a monetary policy 
rule to provide added transparency about the factors leading to 
a future rate recommendation, requires that the Fed compare its 
rule to the ``Taylor Rule'' and explain any differences, and 
requires that the GAO audit the Fed's rule to determine if it 
complies with the criteria set forth in the bill.
    A monetary policy rule is an equation that shows exactly 
why the Fed recommends a particular monetary policy course and 
allows the public to predict how the Fed will change course in 
the future depending on how the economy shifts. The Taylor 
Rule, developed by Professor John Taylor, a Stanford economist 
and former Undersecretary of the Treasury, is a popular example 
of a monetary policy rule. The Taylor Rule gives a precise 
interest rate recommendation based on changes in inflation and 
on the deviation of GDP growth from historical trends.
    If the Fed's submission does not meet the bill's 
requirements for a valid rule, the bill allows the Financial 
Services Committee or the Senate Banking Committee to instruct 
the GAO to conduct a one-time audit of the Fed's conduct of 
monetary policy along parameters specified by the requesting 
committee. Any time the Fed updates its rule, or if the GAO 
determines at any time that the rule does not comply with the 
statute, the bill requires the Fed Chairman to testify upon 
request of the Financial Services Committee or the Senate 
Banking Committee.
    In summary, this section establishes rules governing how 
the Fed communicates monetary policy in order to make such 
policy more transparent, but does not legislate any particular 
monetary policy course.

Transparency

    For some time, Fed Chair Janet Yellen has characterized 
monetary policy decisions as being ``data dependent'' and, in 
recent testimony before the Financial Services Committee, she 
observed that ``transparency is desirable'' and insisted that 
the Fed is operating in a transparent manner.
    Despite acknowledging that monetary policy is ``data 
dependent,'' the Fed has continued to operate in an opaque 
manner because it publicly communicates economic outlooks that 
are so general that almost no economic possibility can be 
dismissed. The Fed's monetary policy operations would be 
rendered significantly more transparent if the public knew how 
the Fed translated economic data into monetary policy.
    Economic opportunity deeply depends on how well the United 
States manages its monetary services. Investors and consumers 
are constantly looking for information about the integrity of 
those services. Understandably, they want to know whether 
dollar-prices of goods and services accurately reflect the real 
economic value of those goods and services. When that 
information is incomplete or biased, people have to guess about 
what is the best way to spend or invest their money. That 
guessing compromises consumption and investment decisions, and 
ultimately reduces economic opportunity.
    In recent testimony before the Committee, Chair Yellen 
affirmed the importance of transparent communication about 
monetary policy, stating that:

          Transparency concerning the Federal Reserve's conduct 
        of monetary policy is desirable, because better public 
        understanding enhances the effectiveness of policy.

    And in a Senate Banking Committee hearing earlier in 2015, 
the prominent Federal Reserve historian, Dr. Allan Meltzer, 
described how a monetary policy strategy (like that in Section 
2 of H.R. 3189) would effectively address Chair Yellen's desire 
for a ``better public understanding'' and thus more effective 
monetary policy:

          Congress has to fulfill its obligation to monitor the 
        Fed, and it cannot do that now because the Chairman of 
        the Fed can come in here, as Alan Greenspan has said on 
        occasion, Paul Volcker has said on occasion, and they 
        can tell you whatever it is they wish, and it is very 
        hard for you to contradict them. So you need a rule 
        which says, look, you said you were going to do this, 
        and you have not done it. That requires an answer, and 
        that I think is one of the most important reasons why 
        we need some kind of a rule.\1\
---------------------------------------------------------------------------
    \1\Senate Banking Committee Hearing Entitled ``Federal Reserve 
Accountability and Reform,'' March 3, 2015. Available at: http://
www.banking.senate.gov/public/index.cfm? 
FuseAction=Hearings.Hearing&Hearing;_ID=fbfdd8bb-2545-4243-b4c4-
0524b9ecdafd.

    The economist Alan Blinder has also advocated for more 
transparency, stating at an FOMC meeting during his tenure as 
Fed Vice Chairman in the mid-1990s, ``The public has a right to 
know more about what the Federal Reserve is doing and why it is 
doing it.''\2\
---------------------------------------------------------------------------
    \2\Meeting of the Federal Open Market Committee (Minutes), January 
31-February 1, 1995. Available at: http://www.federalreserve.gov/
monetarypolicy/files/FOMC19950201meeting.pdf.
---------------------------------------------------------------------------
    Under the FORM Act, the Fed may still determine whatever 
monetary policy course it deems appropriate, but it must give 
the public a greater accounting of its actions and, in 
Professor Blinder's words, explain ``why it is doing it.'' Put 
another way, the legislation requires the Fed to use a clear 
map of its own choosing to set the course of monetary policy, 
and share that map with the public. And as University of 
Chicago economist John Cochrane recently testified before the 
Subcommittee on Monetary Policy and Trade, this requirement 
would actually strengthen the Fed's independence:

          The Fed worries a lot about Congress looking over its 
        shoulder. So I think by establishing a structure, a set 
        of rules, what you expect from the Fed . . . that is 
        the kind of deal that allows them to exercise the 
        needed independence on some things and limits them from 
        going onto other things.\3\
---------------------------------------------------------------------------
    \3\Quoted from Dr. Cochrane's spoken testimony before the House 
Subcommittee on Monetary Policy and Trade, Committee on Financial 
Services, Washington, DC, Jul 22, 2015.

    Requiring the Fed to transparently explain differences 
between actual policy directives and a rigorously studied 
reference rule, according to Dr. Meltzer and others, would 
improve the public's understanding of monetary policy. That 
improvement can, in turn, help people get goods and services to 
those who value them the most. Section 2 of H.R. 3189 is 
intended to facilitate such enhanced transparency.

Sec. 3. Federal Open Market Committee blackout period

    This section clarifies that the blackout period associated 
with meetings of the FOMC--a Federal Reserve policy that 
prohibits Fed Governors and officials from speaking in public 
on any matter during the week prior to an FOMC meeting and 
immediately following an FOMC meeting--begins immediately after 
midnight on the day that is one week before the meeting and 
ends at midnight on the day after the meeting takes place. It 
also clarifies that the blackout period does not apply to 
answering technical questions specific to data releases or to 
testimony regarding the Fed's supervisory and prudential 
functions.
    Fed staff and employees have historically refused to 
testify or provide briefings and documents on matters unrelated 
to monetary policy during the blackout period. By clarifying 
that the Fed's blackout period does not apply to supervisory 
and regulatory activities, H.R. 3189 ensures that Congress may 
continue to conduct appropriate and timely oversight of such 
matters.

Sec. 4. Membership of Federal Open Market Committee

    This section reforms the FOMC's voting membership. Under 
the bill, voting members consist of the seven members of the 
Fed's Board of Governors and six of the twelve Fed District 
Bank Presidents on a rotating basis. Thus, each District Bank 
president would be a voting member of the FOMC every other 
year.
    Enhancing the representation of district bank presidents on 
the FOMC would promote a monetary policy that more strongly 
supports price stability. District presidents are nominated by 
their respective boards of directors, the members of which are 
in part elected by member bankers. These directors, as business 
leaders who make fixed rate loans, have a relatively strong 
interest in price stability.\4\
---------------------------------------------------------------------------
    \4\To succeed as a foundation for economic opportunity, money must 
serve as a store of value. Fortunately, our monetary authority's dual 
mandate includes the objective of long-run price stability. 
Unfortunately, the FOMC's judgment that two percent inflation is 
consistent with this mandate can put price stability and thus economic 
opportunity at risk.
    Savers appreciate the power of compounding interest--that is, 
setting aside a dollar today not only can earn interest, doing so can 
earn interest on interest and thus quicken the pace at which savings 
goals can be fulfilled. But individuals saving for a child's college 
education may be relatively worse off under the FOMC's two percent 
inflation goal. A dollar set aside today for education in the future 
will be worth only $0.70 by the time a newborn enters college. That 
represents a 30% loss in purchasing power, which appears inconsistent 
with the Fed's statutory mandate to maintain price stability over the 
long term.
---------------------------------------------------------------------------

Sec. 5. Requirements for stress tests and supervisory letters for the 
        Board of Governors of the Federal Reserve System

    This section requires the Fed to issue regulations, after 
providing for public notice and comment, for stress tests 
conducted under Section 165 of the Dodd-Frank Act. This section 
also requires the publication of the aggregate number of 
supervisory letters sent to large bank holding companies 
subject to Fed supervision pursuant to Section 165.
    Under the Dodd-Frank Act, certain large bank holding 
companies, state member banks, savings and loan holding 
companies, and nonbank financial companies designated as 
systemically significant undergo regular stress tests. Fed 
Governor Daniel Tarullo has described these exercises as a 
``key tool to ensure that financial companies have enough 
capital to weather a severe economic downturn without posing a 
risk to their communities, other financial institutions, or to 
the general economy.''\5\ Thus, stress tests are intended to 
``describe hypothetical baseline, adverse, and severely adverse 
conditions, with paths for key macroeconomic and financial 
variables.''\6\ The historical data on which the Fed bases its 
stress testing scenarios runs from 1976 to the present day.
---------------------------------------------------------------------------
    \5\Press Release, Fed. Reserve Sys., Federal Reserve Board 
Publishes Two Final Rules with Stress Testing Requirements for Certain 
Bank Holding Companies, State Member Banks, and Savings and Loan 
Holding Companies (Oct. 9, 2012), available at http://
www.federalreserve.gov/newsevents/press/bcreg/20121009a.htm.
    \6\Press Release, Fed. Reserve Sys., Federal Reserve Board 
Publishes Two Final Rules with Stress Testing Requirements for Certain 
Bank Holding Companies, State Member Banks, and Savings and Loan 
Holding Companies (Oct. 9, 2012), available at http://
www.federalreserve.gov/newsevents/press/bcreg/20121009a.htm.
---------------------------------------------------------------------------
    Recent reports indicate that the Fed's stress test process 
has become increasingly arbitrary, where a focus on 
unpredictable ``qualitative factors'' has been replacing the 
quantitative process, where Fed Board staff in Washington are 
arbitrarily overruling the Fed District bank examiners who 
conduct the initial tests, and where stress tests are replacing 
capital standards and other prudential measures as the primary 
tool of large bank supervision. In testimony before the 
Financial Services Committee on July 23, 2015, Columbia 
University Professor Charles Calomiris described the stress 
testing process as a ``Kafkaesque Kabuki drama in which 
regulators punish banks for failing to meet standards that are 
never stated.''\7\ By requiring the Fed to undertake a 
rulemaking relating to stress tests, H.R. 3189 will facilitate 
greater transparency regarding such stress tests.
---------------------------------------------------------------------------
    \7\http://financialservices.house.gov/uploadedfiles/hhrg-114-ba00-
wstate-ccalomiris-20150723.pdf.
---------------------------------------------------------------------------

Sec. 6. Frequency of testimony of the Chairman of the Board of 
        Governors of the Federal Reserve System to Congress

    This section requires the Fed Chairman to testify before 
the Financial Services Committee and the Senate Banking 
Committee on a quarterly basis (rather than semi-annually as 
provided under current law). By increasing the Chair's 
testimonial requirement, Congress may better ensure that the 
Fed is implementing monetary policy consistent with its 
statutory mandates. In addition, more frequent testimony will 
ensure that Congress remains on an equal footing with the 
Executive Branch for purposes of overseeing Fed operations. 
Currently, the Fed Chair meets with the Treasury Secretary on a 
frequent basis; those meetings far outnumber her formal 
appearances before the committees of jurisdiction and her 
informal discussions with Members of Congress.

Sec. 7. Vice Chairman for Supervision report requirement

    This section requires the Fed Vice Chairman for Supervision 
to provide, as part of his statutorily required semi-annual 
testimony to the Financial Services and Senate Banking 
Committees, a report on the status of proposed and anticipated 
rulemakings. This section also requires that if the Vice 
Chairman for Supervision position is vacant, the Vice Chairman 
of the Board of Governors must fulfill the statutory 
requirement for semi-annual testimony.

Sec. 8. Economic analysis of regulations of the Board of Governors of 
        the Federal Reserve System

    This section requires cost-benefit analysis for all 
regulations promulgated by the Fed. Specifically, it identifies 
particular costs the Fed must take into account, such as the 
cost impact of new rules on the safety and soundness of the 
banking system, on market liquidity in securities markets, on 
small businesses, on community banks, on economic growth, on 
cost and access to capital, on market stability, on global 
competitiveness, on job creation, on the effectiveness of the 
monetary policy transmission mechanism, and on employment 
levels. This section also requires that major new rules must be 
accompanied by metrics which would indicate their success and 
requires a post-adoption study based on those metrics.
    Cost-benefit analysis can force agencies to consider the 
full consequences of their actions while increasing agencies' 
accountability to elected officials and the courts. The Fed 
does not have a statutory economic cost-benefit analysis 
requirement to guide its rulemaking. The Fed issued guidance in 
1979 that suggested it would follow cost-benefit analysis 
principles similar to those promulgated by the White House 
Office of Management and Budget.\8\ The Fed has not done so, 
however, and its rulemaking cannot be challenged on the grounds 
that the Fed failed to carry out a cost-benefit analysis in 
promulgating the rule.
---------------------------------------------------------------------------
    \8\See Hester Peirce, Economic Analysis by Federal Financial 
Regulators, Mercatus Center Working Paper No. 12-31, October 2012, at 
FN 125, citing Board of Governors of the Federal Reserve System, 
Statement of Policy Regarding Expanded Rulemaking Procedures, 44 Fed. 
Reg. 3957 (1979).
---------------------------------------------------------------------------

Sec. 9. Salaries, financial disclosures, and office staff of the Board 
        of Governors of the Federal Reserve System

    This section promotes transparency by requiring the Fed to 
post on a public website the annual salary and the benefits of 
any employee whose salary exceeds that of a GS-15 federal 
employee. It also ensures that Fed Governors have access to 
sound, unbiased expert counsel by providing for at least two 
staff positions to advise each Board member independent of the 
Chairman's influence. This section also promotes adherence to 
appropriate ethical requirements by subjecting Fed employees to 
the same ethical standards as SEC employees.

Sec. 10. Requirements for international processes

    This section requires the Fed, the FDIC, the Treasury 
Department, the OCC, and the SEC to release for notice and 
comment a public disclosure of any positions the regulators 
plan to take as part of international regulatory negotiations 
and to provide a public report on the negotiations at their 
conclusion. This section also requires a similar process for 
final agreements made pursuant to international negotiations.
    Recent Committee hearings suggest that the Fed and the 
Treasury Department have allowed decisions reached at the 
Financial Stability Board (FSB), an international group of 
central banks, government finance ministers, and financial 
regulators established by the G-20 after the financial crisis, 
to dictate domestic decision-making, including at the Financial 
Stability Oversight Council (on which both the Fed Chair and 
Treasury Secretary are voting members).
    To take one example, in July 2013, the FSB designated nine 
large insurance groups as Systemically Important Financial 
Institutions (SIFIs), including three from the United States--
American International Group (AIG), Inc.; MetLife, Inc.; and 
Prudential Financial, Inc.\9\ Also in July, the FSOC designated 
AIG and GE Capital Corporation as SIFIs, and followed the FSB's 
lead again in September by designating Prudential as a SIFI. 
MetLife's designation followed a year later.
---------------------------------------------------------------------------
    \9\Technically, the FSB designated these nine insurers as ``Global 
Systemically Important Insurers,'' or G-SIIs. Like SIFIs, however, G-
SIIs are subject to heightened prudential requirements and enhanced 
supervision.
---------------------------------------------------------------------------
    The Treasury Department, the Fed, and the SEC are members 
of the FSB. AEI scholar Peter Wallison has remarked, ``It is 
inconceivable that the designations of three U.S. insurers 
would have gotten through the FSB without the express approval 
of the Fed and the Treasury.'' In testimony before the 
Committee's Oversight and Investigations Subcommittee in March 
2014, Mr. Wallison elaborated that:

          The decision on Prudential seems to have been baked 
        in the cake before it was made by the FSOC. The fact 
        that the FSB, in the preceding in July, had already 
        determined that Prudential was a SIFI--with the 
        concurrence of the Treasury and the Fed--made it 
        inevitable that the FSOC would come to the same 
        conclusion.\10\
---------------------------------------------------------------------------
    \10\Peter J. Wallison, Statement before the House Financial 
Services Subcommittee on Oversight and Investigations, Hearing on ``The 
Growth of Financial Regulation and its Impact on International 
Competitiveness,'' March 5, 2014, available at http://
financialservices.house.gov/uploadedfiles/hhrg-113-ba09-wstate-
pwallison-20140305.pdf.

    To the extent that international negotiations have any 
influence at all in the formulation of domestic policy, such 
negotiations should be subject to increased scrutiny by 
Congress and the public. Accordingly, H.R. 3189 provides for 
greater transparency with respect to such negotiations.

Sec. 11. Amendments to the powers of the Board of Governors of the 
        Federal Reserve System

    This section amends Section 13(3) of the Federal Reserve 
Act to allow the Fed to invoke its emergency lending powers 
only upon a finding that ``unusual and exigent circumstances 
exist that pose a threat to the financial stability of the 
United States.'' In so doing, the bill creates a more stringent 
standard for the invocation of the Fed's emergency lending 
authorities; under current law, Section 13(3) powers may be 
utilized in ``unusual and exigent circumstances.'' This section 
also mandates that, in addition to the current requirement that 
five of seven Fed Board Governors approve of a 13(3) facility, 
nine of the 12 District Fed Bank Presidents must also approve 
of such a facility. Further, this section limits eligible 
recipients of 13(3) assistance to financial institutions, 
defined as those entities that derive 85 percent or more of 
their annual gross revenues from activities that are 
``financial in nature.'' Finally, this section places further 
limitations on discretionary lending under Section 13(3) by 
imposing requirements relating to collateral, solvency, and 
penalty lending rates.
    Section 13(3) of the Federal Reserve Act authorizes the Fed 
to lend to ``any individual, partnership or corporation'' in 
``unusual and exigent circumstances,'' provided the borrower 
``is unable to secure adequate credit accommodations from other 
banking institutions.'' The Fed utilized this emergency 
authority to bail out the creditors and counter-parties of non-
banks like Bear Stearns and AIG during the recent financial 
crisis. The Dodd-Frank Act purported to limit future bailouts 
under Section 13(3) by prohibiting the Fed from lending to 
insolvent institutions and requiring that any program under 
this section be broadly available to a number of institutions, 
but most commentators have concluded that the Dodd-Frank Act's 
constraints are largely illusory and will be easily 
circumvented in a future crisis.
    The Dodd-Frank Act required the Fed to adopt regulations 
``as soon as is practical'' to implement the restrictions on 
its 13(3) authority. It took three years before the Fed, at the 
Financial Services Committee's urging, published its proposed 
rules for public comment in December 2013. The text of the 
Fed's proposed rule, however, merely parrots that of the Dodd-
Frank Act and preserves maximum flexibility for the Fed to 
utilize Section 13(3) to bail out large financial institutions, 
which in turn promotes moral hazard and undermines market 
discipline. H.R. 3189 places substantive limits on this 
discretion and therefore reduces the likelihood of bailouts, 
helping to ensure that firms compete without some benefiting 
from the unfair advantage of an implicit government backstop.

Sec. 12. Interest rates on balances maintained at a Federal Reserve 
        Bank by depository institutions established by the Federal Open 
        Market Committee

    This section amends Section 19(b)(12)(A) of the Federal 
Reserve Act to specify that the FOMC, not the Fed Board of 
Governors, shall be responsible for setting the rate of 
interest paid on excess reserves.
    The Financial Services Regulatory Relief Act of 2006 
authorized the Federal Reserve Banks to pay interest on excess 
balances held by or on behalf of depository institutions at 
Reserve Banks, subject to regulations issued by the Board of 
Governors. This interest rate is determined by the Board of 
Governors and gives the Fed an additional tool for the conduct 
of monetary policy. According to the Policy Normalization 
Principles and Plans adopted by the FOMC on September 17, 
2014,\11\ during monetary policy normalization the Fed intends 
to move the federal funds rate into the target range set by the 
FOMC primarily by adjusting the interest rate it pays on excess 
reserve balances.
---------------------------------------------------------------------------
    \11\See http://www.federalreserve.gov/monetarypolicy/policy-
normalization.htm.
---------------------------------------------------------------------------
    Because the interest rate on excess reserves can be used as 
a tool of monetary policy, H.R. 3189 shifts responsibility for 
setting the rate from the Board of Governors to the FOMC, where 
the Federal District Bank Presidents are voting members and 
participate in the deliberations.

Sec. 13. Audit reform and transparency for the Board of Governors of 
        the Federal Reserve System

    This section directs the GAO to conduct an audit within 12 
months of the date of enactment of H.R. 3189, with a report to 
be delivered to Congress within 90 days of completion of the 
audit. The audit must include a detailed description of the 
findings of the audit with GAO's recommendations for 
legislative and administrative action. This section also 
removes the restrictions placed on the GAO's ability to audit 
the Fed contained in 31 U.S.C. section 714. Finally, it makes a 
technical correction to 31 U.S.C. 714 by removing language, 
included in the Dodd-Frank Act, which explicitly provided for 
the GAO's audit of the Fed's use of certain emergency 
authorities, because this language would be rendered redundant 
by passage of the H.R. 3189.
    Congress has, on several occasions, increased the scope of 
allowable GAO audits of Fed activities. From 1933 to 1978, GAO 
audits were restricted to examining how the Fed handles cash 
from the U.S. Treasury. In 1978, the Federal Banking Agency 
Audit Act (31 U.S.C 714) expanded the audit scope to include 
regulatory and payment system duties.
    The 1978 Act exempted from the scope of the GAO's authority 
the following matters related to monetary policy:
          (1) transactions for or with a foreign central bank, 
        government of a foreign country, or nonprivate 
        international financing organization;
          (2) deliberations, decisions, or actions on monetary 
        policy matters, including discount window operations, 
        reserves of member banks, securities credit, interest 
        on deposits, and open market operations;
          (3) transactions made under the direction of the 
        FOMC; or
          (4) a part of a discussion or communication among or 
        between members of the Federal Reserve Board and 
        officers and employees of the Federal Reserve System 
        related to the above clauses.
    The Dodd-Frank Act permitted the GAO to review the Fed's 
internal controls, policies on collateral, and use of 
contractors. The Dodd-Frank Act also provided for an audit of 
loans made under the Fed's Section 13(3) emergency lending 
authority during the financial crisis, as well as the 
identification of recipients of Section 13(3) assistance. It 
stopped short, however, of lifting or relaxing the prohibition 
on the GAO reviewing or evaluating monetary policy decisions 
(that is, it left undisturbed the exemptions imposed by the 
1978 Act).
    In the 112th Congress, the House passed H.R. 459, the 
``Federal Reserve Transparency Act of 2012,'' on a bipartisan 
basis. Introduced by Representative Paul, H.R. 459 would have 
permitted the GAO to audit matters related to the Fed's 
monetary policymaking. In the 113th Congress, the House again 
approved legislation on a bipartisan basis (H.R. 24) to remove 
constraints on the GAO's authority to audit monetary policy 
matters.
    Markets can impose more productive discipline on the Fed's 
decision-making, and consumers and investors can make better 
choices, when monetary policy processes are more transparent. 
Market prices could better reflect true value as a consequence, 
and thus fundamentally support both an increase and expansion 
of economic opportunity. A full audit of the Fed, such as that 
provided for under H.R. 3189, is intended to promote such 
transparency.

Sec. 14. Reporting requirement for Export-Import Bank

    This section provides that, in connection with preparing 
the monthly ``Industrial Production or Capacity Utilization'' 
statistical release, the Fed Board of Governors shall assess 
the impact on the index described in the release due to the 
operation of the U.S. Export-Import Bank as well as the amount 
of foreign industrial production supported by non-U.S. export 
credit agencies.

Sec. 15. Membership of Board of Directors of the Federal Reserve Banks

    This section amends Section 4 of the Federal Reserve Act to 
require, with respect to the selection of certain directors of 
the Federal Reserve Banks, that due consideration be given to 
the interests of traditionally underserved communities and 
populations.

                                Hearings

    The Subcommittee on Monetary Policy and Trade held a 
hearing examining matters relating to H.R. 3189 titled 
``Examining Federal Reserve Reform Proposals'' on July 22, 
2015.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 28, 2015 and July 29, 2015, and ordered H.R. 3189 as 
amended to be reported to the House with a favorable 
recommendation by a recorded vote of 33-25 (FC-53), a quorum 
being present. Amendments offered by Mr. Huizenga, Mr. Heck, 
and Ms. Waters were each agreed to by voice votes.

                            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 record vote in committee was a motion by Chairman 
Hensarling to report the bill favorably to the House as 
amended. The motion was agreed to by a recorded vote of 33-25 
(FC-53), 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. 3189 
will make the Federal Reserves' monetary policy and financial 
regulatory decisions easier to anticipate and understand so 
that households and businesses can make better choices about 
how to spend and invest their earnings; provide for a more 
equal representation of regional economic perspectives in 
monetary policy decisions; strengthen assurances that financial 
regulations and supervisory activities benefit households in 
general instead of favoring some at a greater expense to 
others; restrict the Fed's lender of last resort authority to 
legitimate emergencies while preventing ``backdoor bailouts''; 
and establish a framework for institutionalizing a monetary 
policy that consistently supports the robust expansion of 
economic opportunities.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 13, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3189, the Fed 
Oversight Reform and Modernization Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Nate Frentz.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 3189--Fed Oversight Reform and Modernization Act of 2015

    Summary: H.R. 3189 would make a number of changes to the 
operations of the Federal Reserve System. The changes would 
include requiring new regulations issued by the Board of 
Governors of the Federal Reserve to include a cost-benefit 
analysis that takes into account specified factors; requiring 
employees of the Board of Governors to follow a system of 
ethics standards currently applied to employees of the 
Securities and Exchange Commission; requiring the Federal Open 
Market Committee to generate and provide to the Congress a 
monetary policy rule that meets certain requirements, and 
requiring the Government Accountability Office (GAO) to assess 
any changes to the rule for compliance with those requirements; 
restricting the powers of the Board of Governors to conduct 
emergency lending to firms other than banks; requiring a GAO 
audit of the Federal Reserve; and requiring the Federal Reserve 
to include an analysis of the Export-Import Bank in a regularly 
published statistical release.
    CBO estimates that enacting H.R. 3189 would reduce revenues 
by $109 million over the 2016-2025 period. CBO also estimates 
that the bill would result in an insignificant increase in 
direct spending. Because the bill affects revenues and direct 
spending, pay-as-you-go procedures apply. Further, CBO 
estimates that the bill would increase discretionary spending 
by $7 million over the 2016-2020 period, assuming appropriation 
of the necessary amounts.
    CBO estimates that enacting H.R. 3189 would not increase 
net direct spending or on-budget deficits by more than $5 
billion in any of the four consecutive 10-year periods 
beginning in 2026.
    H.R. 3189 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 3189 is shown in the following table.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  CHANGES IN REVENUESa
 
Regulatory Cost-Benefit Analysis..................      -3      -5      -6      -6      -6      -6      -7      -7      -7      -8        -26        -61
Ethics Standards..................................      -1      -2      -2      -2      -3      -3      -3      -3      -3      -3        -11        -25
Monetary Policy Rule..............................      -1      -1      -1      -1      -1      -1      -2      -2      -2      -2         -6        -14
Analysis of Export-Import Bank....................       *       *       *      -1      -1      -1      -1      -1      -1      -1         -2         -5
GAO Audit.........................................       *       *       *       *       *       *       *       *       *       *         -1         -3
Total Change in Revenues..........................      -6     -10     -10     -11     -11     -11     -12     -12     -13     -13        -48      -109
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office.
Notes: The bill would also have discretionary costs of $7 million over the 2016-2020 period for administrative expenses at GAO, the Department of the
  Treasury, and the Securities and Exchange Commission. The bill would also result in insignificant increases in mandatory spending for the Federal
  Deposit Insurance Corporation and the Office of the Comptroller of the Currency.
Amounts may not sum to totals because of rounding.
* = between -$500,000 and $500,000.
aNegative numbers indicate a reduction in revenues.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted in the first part of calendar year 2016.

Revenues

    The bill would directly affect revenues through the 
operations of the Federal Reserve System, which remits its net 
earnings to the Treasury; those remittances are classified as 
revenues in the federal budget. Based on information provided 
by the Board of Governors of the Federal Reserve System, CBO 
estimates that enacting the bill would increase the costs of 
Federal Reserve operations and thus reduce its remittances by 
$48 million over the 2016-2020 period, and by $109 million over 
the 2016-2025 period.
    The provisions with the most significant effects on 
revenues would:
     Require the Federal Reserve, before issuing many 
new regulations, to undertake a cost-benefit analysis that 
would take into account factors such as the effects on economic 
growth and availability of credit. The Federal Reserve would 
also be required to compare the costs and benefits of each 
proposed regulation with certain alternatives. In addition, for 
regulations it issues in which the effect on the economy 
exceeds a certain threshold, the Federal Reserve would be 
required to undertake a post-adoption assessment of the actual 
effects.
     Make the employees and members of the Board of 
Governors subject to additional ethics standards and financial 
disclosure rules. The ethics standards would follow those that 
apply to employees of the Securities and Exchange Commission.
     Require the Federal Open Market Committee to 
develop a monetary policy rule that specifies an interest rate 
target and how that target rate would be adjusted for changes 
in certain economic variables. The rule would be provided to 
both GAO, which would assess any changes to the rule for 
compliance with the requirements of the bill, and to the 
Congress.
     Restrict the authority of the Board of Governors 
to conduct emergency lending under Section 13(3) of the Federal 
Reserve Act, which provides the Federal Reserve with broad 
discretion to make loans to banks and nonbanks under unusual 
and exigent circumstances. The changes would include limiting 
eligibility to firms predominantly engaged in financial 
activities, requiring that a minimum interest rate be charged, 
disallowing equity securities to be pledged as collateral, and 
requiring independent appraisals of collateral.
     Make a number of other changes, including 
requiring the Federal Reserve to regularly analyze certain 
economic effects of the Export-Import Bank; requiring GAO to 
prepare, within 12 months of enactment, an audit of the Board 
of Governors of the Federal Reserve System and the Federal 
Reserve banks, including the conduct of monetary policy; 
restricting certain public communications by the Federal Open 
Market Committee (FOMC); changing the membership of the FOMC; 
and requiring the Board of Governors to issue certain 
regulations on stress testing of financial institutions.
    The largest component of the estimated effects on 
remittances would result from the additional Federal Reserve 
staff required for the additional regulatory cost-benefit 
analyses. CBO estimates that those analyses would reduce 
remittances by $61 million over the 2016-2025 period. In 
addition, CBO estimates that the additional ethics requirements 
would require additional Federal Reserve staff and reduce 
remittances by $25 million over the 2016-2025 period. Smaller 
reductions in revenues over the 2016-2025 period would result 
from the requirements of the bill related to the monetary 
policy rule ($14 million), from the analysis of the Export-
Import Bank ($5 million), and from other provisions ($3 
million).
    CBO has no basis for estimating the effects on revenues 
from the provisions of the bill that would restrict the Federal 
Reserve's emergency lending authority. Based on its own 
analysis of historical lending and information provided by the 
Federal Reserve, CBO estimates that the amount of any emergency 
lending that would occur in the future would likely be reduced 
by the bill, partly due to restrictions on eligible firms, but 
mostly as a result of the new required minimum interest rate. 
That lower amount of lending, at a higher rate, could either 
increase or decrease the Federal Reserve's earnings and thereby 
its remittances. Any such effects would be significantly 
discounted given the low probability of any emergency lending 
occurring over the next 10 years. To the extent that Federal 
Reserve emergency lending has effects on the broader economy, a 
reduction in the amount or types of emergency lending could 
have budgetary effects that are much larger than any effect on 
Federal Reserve remittances.

Direct Spending

    The bill would require the Federal Deposit Insurance 
Corporation and the Office of the Comptroller of the Currency 
to provide advance notice and solicit comment before it 
participates in a process of setting financial standards as 
part of any multinational entity. CBO estimates that those 
requirements would result in an insignificant increase in 
direct spending; those agencies can eventually recover 
additional costs through assessments.

Spending Subject to Appropriation

    CBO estimates that the bill would increase spending subject 
to appropriation by $7 million over the 2016-2020 period. The 
largest costs would result from the requirement that GAO 
prepare, within 12 months of enactment, an audit of the Board 
of Governors of the Federal Reserve System and the Federal 
Reserve banks, including the conduct of monetary policy. Based 
on information from GAO regarding the amount of effort required 
for its previous audit of the Federal Reserve, which was 
required by the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Public Law 111-203), CBO estimates a new audit 
would increase spending by $5 million over the 2016-2020 
period, assuming appropriation of the necessary amounts. That 
cost would cover the full-time and part-time GAO employees plus 
administrative expenses necessary to prepare the audit required 
by the bill as well as future oversight and analysis that CBO 
expects would result from the enactment of the requirement.
    In addition, the bill would require GAO to prepare a 
compliance report on any changes in the monetary policy rule 
initiated by the Federal Open Market Committee. CBO expects 
that implementing the provision would cost less than $500,000 
annually and about $2 million over the 2016-2020 period, 
assuming the availability of appropriated funds. Furthermore, 
CBO estimates that requirements on the Department of the 
Treasury and the Securities and Exchange Commission (SEC) for 
notice and comments related to multinational entities would 
cost less than $500,000 over the 2016-2020 period, assuming the 
availability of appropriated funds. Under current law, the SEC 
is authorized to collect fees sufficient to offset its annual 
appropriation; therefore, we estimate that the net cost to the 
SEC would be negligible.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

         CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3189, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON JULY 29, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2015-2020  2015-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Effects...................       6      10      10      11      11      11      12      12      13      13         48        109
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long term direct spending and deficits: CBO 
estimates that enacting H.R. 3189 would not increase net direct 
spending or on-budget deficits by more than $5 billion in any 
of the four consecutive 10-year periods beginning in 2026.
    Intergovernmental and private-sector impact: H.R. 3189 
contains no intergovernmental or private-sector mandates as 
defined in UMRA, and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal revenues: Nathaniel Frentz; 
Impact on state, local, and tribal governments: Melissa 
Merrell; Impact on the private sector: Logan Smith.
    Estimate approved by: David Weiner, Assistant Director for 
Tax Analysis; Theresa Gullo, Assistant Director for Budget 
Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      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

    H.R. 3189 specifies the ethical duties that apply to 
Federal Reserve employees; the bill does not apply such duties 
to congressional employees because such employees are subject 
to independent ethical standards administered by the House 
Committee on Ethics. Otherwise, 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

    H.R. 3189 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 3189 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), 
the Committee estimates that H.R. 3189 requires one directed 
rulemaking as defined by H. Res. 5.

             Section-by-Section Analysis of the Legislation


Sec. 1. Short title; Table of contents

    This section cites H.R. 3189 as ``The Fed Oversight Reform 
and Modernization Act of 2015'' or the ``FORM Act of 2015''

Sec. 2 Requirements for policy rules of the Federal Open Market 
        Committee

    This section requires the Fed to generate a monetary policy 
rule to provide added transparency about the factors leading to 
a future rate recommendation, requires the Fed to compare its 
rule to the ``Taylor Rule'' and explain any differences between 
the two, and requires the Government Accountability Office 
(GAO) to audit the rule to determine if it complies with the 
statute. The section further provides that, if the Fed's 
submission does not meet the statute's requirements for a valid 
rule, the Financial Services or Senate Banking Committees may 
instruct the GAO to conduct a one-time audit of the Fed's 
conduct of monetary policy. Finally, under this section, any 
time the Fed updates its rule, or if the GAO determines at any 
time that the rule does not comply with the statute, the Fed 
Chairman must testify upon request of the Financial Services 
Committee or the Senate Banking Committee.

Sec. 3. Federal Open Market Committee blackout period

    This section provides that the Federal Open Market 
Committee (FOMC) blackout period begins immediately after 
midnight on the day that is one week before an FOMC meeting and 
ends at midnight on the day after the meeting takes place. This 
section also establishes that the blackout period does not 
apply to answering technical questions specific to data 
releases or to testimony regarding the Fed's supervisory and 
prudential functions.

Sec. 4. Membership of Federal Open Market Committee

    This section provides that the membership of the FOMC will 
consist of the seven members of the Federal Reserve Board of 
Governors and six representatives of the District Federal 
Reserve Bank Presidents, with each president rotating onto the 
FOMC every other year.

Sec. 5. Requirements for stress tests and supervisory letters for the 
        Board of Governors of the Federal Reserve System

    This section requires the Federal Reserve to issue 
regulations, after providing for public notice and comment, 
relating to stress test scenarios required under Section 165 of 
the Dodd-Frank Act. This section further requires the 
publication of aggregate data relating to supervisory letters 
sent by the Federal Reserve.

Sec. 6. Frequency of testimony of the Chairman of the Board of 
        Governors of the Federal Reserve System

    This section requires the Federal Reserve Chairman to 
testify before the Financial Services Committee and the Senate 
Banking Committee concerning the conduct of monetary policy on 
a quarterly basis in place of the current semi-annual 
requirement.

Sec. 7. Vice Chairman for Supervision Report requirement

    This section requires the Federal Reserve's Vice Chairman 
for Supervision to provide, as part of their testimony before 
the Financial Services and Senate Banking Committees, a report 
on the status of proposed and anticipated rulemakings. This 
section further requires that if the Vice Chairman for 
Supervision position is vacant, the Vice Chairman of the Board 
of Governors must fulfill the statutory requirement for semi-
annual testimony.

Sec. 8. Economic analysis of regulations of the Board of Governors of 
        the Federal Reserve System

    This section requires cost-benefit analysis for all 
regulations issued by the Federal Reserve and further provides 
that major new rules must be accompanied by metrics which would 
indicate their success and requires a post-adoption study based 
on those metrics.

Sec. 9. Salaries, financial disclosures, and office staff of the Board 
        of Governors of the Federal Reserve System

    This section requires the Federal Reserve to post on a 
public website the annual salary and the benefits of any 
employees whose salary exceeds that of a GS-15 federal 
employee. The section further provides for at least two staff 
positions to advise each member of the Board of Governors. 
Finally, this section subjects Fed employees to the same 
ethical standards as Securities and Exchange Commission 
employees.

Sec. 10. Requirements for international processes

    This section requires the Federal Reserve, Federal Deposit 
Insurance Corporation (FDIC), the Treasury Department, the 
Office of the Comptroller of the Currency (OCC), and the SEC to 
release for notice and comment a public disclosure of any 
positions the regulators intend to take as part of 
international regulatory negotiations and to provide a public 
report on the negotiations at their conclusion. This section 
additionally requires that the regulators undertake a similar 
process for final agreements made pursuant to international 
negotiations.

Sec. 11. Amendments to powers of the Board of Governors of the Federal 
        Reserve System

    This section amends Section 13(3) of the Federal Reserve 
Act to allow the Federal Reserve to invoke its emergency 
lending powers under such section only upon a finding that 
``unusual and exigent circumstances exist that pose a threat to 
the financial stability of the United States.'' This section 
additionally mandates that, in addition to the current 
requirement that five of seven Federal Reserve Board Governors 
approve of any facility under Section 13(3), nine of the 12 
Federal Reserve District Bank Presidents must also approve the 
facility. This section limits eligible recipients of Section 
13(3) assistance to financial institutions that derive 85 
percent or more of their annual gross revenues from activities 
that are financial in nature. Finally, this section further 
discourages discretionary lending through the following 
amendments to Section 13(3):
    Adequate collateral. Directs the Federal Reserve to adopt a 
rule, within 6 months of the date of enactment, specifying the 
method it will use to determine the sufficiency of collateral 
pledged to secure 13(3) lending, including which classes of 
collateral it will accept, as well as a ``method for obtaining 
independent appraisals of the collateral [the Fed] receives.'' 
In no event may the Federal Reserve accept equity securities 
issued by the recipient of 13(3) assistance as collateral.
    Solvent borrower. Requires that for any entity regulated by 
the OCC, SEC, Commodity Futures Trading Commission, or FDIC, 
that regulator must certify in writing to the Federal Reserve 
that the entity is not insolvent before it can be eligible for 
assistance under Section 13(3).
    At penalty rates. Directs the Federal Reserve to adopt a 
rule, within 6 months of the date of enactment, establishing a 
minimum interest rate on the principal amount of any loan or 
financial assistance extended pursuant to Section 13(3). The 
applicable minimum interest rate shall be calculated as a 
trailing 90-day average of all Federal Reserve banks' secondary 
discount rate plus a 90-day trailing average of the spread 
between a distressed corporate bond yield index specified by 
this rule and a bond yield index of debt issued by the United 
States specified by this rule.

Sec. 12. Interest rates on balances maintained at a Federal Reserve 
        bank by depository institutions established by Federal Open 
        Market Committee

    This section amends the Federal Reserve Act to require that 
the FOMC shall be responsible for setting the rate of interest 
paid on excess reserves.

Sec. 13. Audit reform and transparency for the Board of Governors of 
        the Federal Reserve System

    This section directs the GAO to conduct an audit of the Fed 
and report the audit's findings and recommendations for 
legislative and administrative action to Congress. This section 
also removes certain restrictions relating to the GAO's ability 
to audit the Federal Reserve.

Sec. 14. Reporting requirement for Ex-Im Bank

    This section requires the Federal Reserve to report monthly 
on how the U.S. Export-Import Bank affected American industrial 
production, as well as how foreign industrial production has 
been affected by non-U.S. export credit agencies.

Sec. 15. Board Membership for Fed District Banks

    This section requires that, with respect to the election or 
designation of Class B and C directors of Federal Reserve 
District Banks, due consideration be given to the interests of 
traditionally underserved communities and populations.

         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

           *       *       *       *       *       *       *



SEC. 2B. APPEARANCES BEFORE AND REPORTS TO THE CONGRESS.

  (a) Appearances Before the Congress.--
          (1) In general.--The Chairman of the Board shall 
        appear before the Congress at [semi-annual] quarterly 
        hearings, as specified in paragraph (2), regarding--
                  (A) the efforts, activities, objectives and 
                plans of the Board and the Federal Open Market 
                Committee with respect to the conduct of 
                monetary policy; and
                  (B) economic developments and prospects for 
                the future described in the report required in 
                subsection (b).
          (2) Schedule.--The Chairman of the Board shall 
        appear--
                  (A) before the Committee on Banking and 
                Financial Services of the House of 
                Representatives on or about February 20 and May 
                20 of even numbered calendar years and on or 
                about July 20 and October 20 of odd numbered 
                calendar years;
                  (B) before the Committee on Banking, Housing, 
                and Urban Affairs of the Senate on or about 
                July 20 and October 20 of even numbered 
                calendar years and on or about February 20 and 
                May 20 of odd numbered calendar years; and
                  (C) before either Committee referred to in 
                subparagraph (A) or (B), upon request, 
                following the scheduled appearance of the 
                Chairman before the other Committee under 
                subparagraph (A) or (B).
  (b) Congressional Report.--The Board shall, concurrent with 
each [semi-annual] quarterly hearing required by this section, 
submit a written report to the Committee on Banking, Housing, 
and Urban Affairs of the Senate and the Committee on Banking 
and Financial Services of the House of Representatives, 
containing a discussion of the conduct of monetary policy and 
economic developments and prospects for the future, taking into 
account past and prospective developments in employment, 
unemployment, production, investment, real income, 
productivity, exchange rates, international trade and payments, 
and prices.
  (c) Public Access to Information.--The Board shall place on 
its home Internet website, a link entitled ``Audit'', which 
shall link to a webpage that shall serve as a repository of 
information made available to the public for a reasonable 
period of time, not less than 6 months following the date of 
release of the relevant information, including--
          (1) the reports prepared by the Comptroller General 
        under section 714 of title 31, United States Code;
          (2) the annual financial statements prepared by an 
        independent auditor for the Board in accordance with 
        section 11B;
          (3) the reports to the Committee on Banking, Housing, 
        and Urban Affairs of the Senate required under section 
        13(3) (relating to emergency lending authority); and
          (4) such other information as the Board reasonably 
        believes is necessary or helpful to the public in 
        understanding the accounting, financial reporting, and 
        internal controls of the Board and the Federal reserve 
        banks.

SEC. 2C. DIRECTIVE POLICY RULES OF THE FEDERAL OPEN MARKET COMMITTEE.

  (a) Definitions.--In this section the following definitions 
shall apply:
          (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the 
        Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate.
          (2) Directive policy rule.--The term ``Directive 
        Policy Rule'' means a policy rule developed by the 
        Federal Open Market Committee that meets the 
        requirements of subsection (c) and that provides the 
        basis for the Open Market Operations Directive.
          (3) GDP.--The term ``GDP'' means the gross domestic 
        product of the United States as computed and published 
        by the Department of Commerce.
          (4) Intermediate policy input.--The term 
        ``Intermediate Policy Input''--
                  (A) may include any variable determined by 
                the Federal Open Market Committee as a 
                necessary input to guide open-market 
                operations;
                  (B) shall include an estimate of, and the 
                method of calculation for, the current rate of 
                inflation or current inflation expectations; 
                and
                  (C) shall include, specifying whether the 
                variable or estimate is historical, current, or 
                a forecast and the method of calculation, at 
                least one of--
                          (i) an estimate of real GDP, nominal 
                        GDP, or potential GDP;
                          (ii) an estimate of the monetary 
                        aggregate compiled by the Board of 
                        Governors of the Federal Reserve System 
                        and Federal reserve banks; or
                          (iii) an interactive variable or a 
                        net estimate composed of the estimates 
                        described in clauses (i) and (ii).
          (5) Legislative day.--The term ``legislative day'' 
        means a day on which either House of Congress is in 
        session.
          (6) Open market operations directive.--The term 
        ``Open Market Operations Directive'' means an order to 
        achieve a specified Policy Instrument Target provided 
        to the Federal Reserve Bank of New York by the Federal 
        Open Market Committee pursuant to powers authorized 
        under section 14 of this Act that guide open-market 
        operations.
          (7) Policy instrument.--The term ``Policy 
        Instrument'' means--
                  (A) the nominal Federal funds rate;
                  (B) the nominal rate of interest paid on 
                nonborrowed reserves; or
                  (C) the discount window primary credit 
                interest rate most recently published on the 
                Federal Reserve Statistical Release on selected 
                interest rates (daily or weekly), commonly 
                referred to as the H.15 release.
          (8) Policy instrument target.--The term ``Policy 
        Instrument Target'' means the target for the Policy 
        Instrument specified in the Open Market Operations 
        Directive.
          (9) Reference policy rule.--The term ``Reference 
        Policy Rule'' means a calculation of the nominal 
        Federal funds rate as equal to the sum of the 
        following:
                  (A) The rate of inflation over the previous 
                four quarters.
                  (B) One-half of the percentage deviation of 
                the real GDP from an estimate of potential GDP.
                  (C) One-half of the difference between the 
                rate of inflation over the previous four 
                quarters and two percent.
                  (D) Two percent.
  (b) Submitting a Directive Policy Rule.--Not later than 48 
hours after the end of a meeting of the Federal Open Market 
Committee, the Chairman of the Federal Open Market Committee 
shall submit to the appropriate congressional committees and 
the Comptroller General of the United States a Directive Policy 
Rule and a statement that identifies the members of the Federal 
Open Market Committee who voted in favor of the Rule.
  (c) Requirements for a Directive Policy Rule.--A Directive 
Policy Rule shall--
          (1) identify the Policy Instrument the Directive 
        Policy Rule is designed to target;
          (2) describe the strategy or rule of the Federal Open 
        Market Committee for the systematic quantitative 
        adjustment of the Policy Instrument Target to respond 
        to a change in the Intermediate Policy Inputs;
          (3) include a function that comprehensively models 
        the interactive relationship between the Intermediate 
        Policy Inputs;
          (4) include the coefficients of the Directive Policy 
        Rule that generate the current Policy Instrument Target 
        and a range of predicted future values for the Policy 
        Instrument Target if changes occur in any Intermediate 
        Policy Input;
          (5) describe the procedure for adjusting the supply 
        of bank reserves to achieve the Policy Instrument 
        Target;
          (6) include a statement as to whether the Directive 
        Policy Rule substantially conforms to the Reference 
        Policy Rule and, if applicable--
                  (A) an explanation of the extent to which it 
                departs from the Reference Policy Rule;
                  (B) a detailed justification for that 
                departure; and
                  (C) a description of the circumstances under 
                which the Directive Policy Rule may be amended 
                in the future;
          (7) include a certification that such Rule is 
        expected to support the economy in achieving stable 
        prices and maximum natural employment over the long 
        term; and
          (8) include a calculation that describes with 
        mathematical precision the expected annual inflation 
        rate over a 5-year period.
  (d) GAO Report.--The Comptroller General of the United States 
shall compare the Directive Policy Rule submitted under 
subsection (b) with the rule that was most recently submitted 
to determine whether the Directive Policy Rule has materially 
changed. If the Directive Policy Rule has materially changed, 
the Comptroller General shall, not later than 7 days after each 
meeting of the Federal Open Market Committee, prepare and 
submit a compliance report to the appropriate congressional 
committees specifying whether the Directive Policy Rule 
submitted after that meeting and the Federal Open Market 
Committee are in compliance with this section.
  (e) Changing Market Conditions.--
          (1) Rule of construction.--Nothing in this Act shall 
        be construed to require that the plans with respect to 
        the systematic quantitative adjustment of the Policy 
        Instrument Target described under subsection (c)(2) be 
        implemented if the Federal Open Market Committee 
        determines that such plans cannot or should not be 
        achieved due to changing market conditions.
          (2) GAO approval of update.--Upon determining that 
        plans described in paragraph (1) cannot or should not 
        be achieved, the Federal Open Market Committee shall 
        submit an explanation for that determination and an 
        updated version of the Directive Policy Rule to the 
        Comptroller General of the United States and the 
        appropriate congressional committees not later than 48 
        hours after making the determination. The Comptroller 
        General shall, not later than 48 hours after receiving 
        such updated version, prepare and submit to the 
        appropriate congressional committees a compliance 
        report determining whether such updated version and the 
        Federal Open Market Committee are in compliance with 
        this section.
  (f) Directive Policy Rule and Federal Open Market Committee 
Not in Compliance.--
          (1) In general.--If the Comptroller General of the 
        United States determines that the Directive Policy Rule 
        and the Federal Open Market Committee are not in 
        compliance with this section in the report submitted 
        pursuant to subsection (d), or that the updated version 
        of the Directive Policy Rule and the Federal Open 
        Market Committee are not in compliance with this 
        section in the report submitted pursuant to subsection 
        (e)(2), the Chairman of the Board of Governors of the 
        Federal Reserve System shall, if requested by the 
        chairman of either of the appropriate congressional 
        committees, not later than 7 legislative days after 
        such request, testify before such committee as to why 
        the Directive Policy Rule, the updated version, or the 
        Federal Open Market Committee is not in compliance.
          (2) GAO audit.--Notwithstanding subsection (b) of 
        section 714 of title 31, United States Code, upon 
        submitting a report of noncompliance pursuant to 
        subsection (d) or subsection (e)(2) and after the 
        period of 7 legislative days described in paragraph 
        (1), the Comptroller General shall audit the conduct of 
        monetary policy by the Board of Governors of the 
        Federal Reserve System and the Federal Open Market 
        Committee upon request of the appropriate congressional 
        committee. Such committee may specify the parameters of 
        such audit.
  (g) Congressional Hearings.--The Chairman of the Board of 
Governors of the Federal Reserve System shall, if requested by 
the chairman of either of the appropriate congressional 
committees and not later than 7 legislative days after such 
request, appear before such committee to explain any change to 
the Directive Policy Rule.

           *       *       *       *       *       *       *


                         federal reserve banks.

  Sec. 4. When the organization committee shall have 
established Federal reserve districts as provided in section 
two of this Act, a certificate shall be filed with the 
Comptroller of the Currency showing the geographical limits of 
such districts and the Federal reserve city designated in each 
of such districts. The Comptroller of the Currency shall 
thereupon cause to be forwarded to each national bank located 
in each district, and to such other banks declared to be 
eligible by the organization committee which may apply 
therefor, an application blank in form to be approved by the 
organization committee, which blank shall contain a resolution 
to be adopted by the board of directors of each bank executing 
such application, authorizing a subscription to the capital 
stock of the Federal reserve bank organizing in that district 
in accordance with the provisions of this Act.
   When the minimum amount of capital stock prescribed by this 
Act for the organization of any Federal reserve bank shall have 
been subscribed and allotted, the organization committee shall 
designate any five banks of those whose applications have been 
received, to execute a certificate of organization, and 
thereupon the banks so designated shall, under their seals, 
make an organization certificate which shall specifically state 
the name of such Federal reserve bank, the territorial extent 
of the district over which the operations of such Federal 
reserve bank are to be carried on, the city and State in which 
said bank is to be located, the amount of capital stock and the 
number of shares into which the same is divided, the name and 
place of doing business of each bank executing such 
certificate, and of all banks which have subscribed to the 
capital stock of such Federal reserve bank and the number of 
shares subscribed by each, and the fact that the certificate is 
made to enable those banks executing same, and all banks which 
have subscribed or may thereafter subscribe to the capital 
stock of such Federal reserve bank, to avail themselves of the 
advantages of this Act.
   The said organization certificate shall be acknowledged 
before a judge of some court of record or notary public; and 
shall be, together with the acknowledgment thereof, 
authenticated by the seal of such court, or notary, transmitted 
to the Comptroller of the Currency, who shall file, record and 
carefully preserve the same in his office.
   Upon the filing of such certificate with the Comptroller of 
the Currency as aforesaid, the said Federal reserve bank shall 
become a body corporate and as such, and in the name designated 
in such organization certificate, shall have power--
   First. To adopt and use a corporate seal.
   Second. To have succession after the approval of this Act 
until dissolved by Act of Congress or until forfeiture of 
franchise for violation of law.
   Third. To make contracts.
   Fourth. To sue and be sued, complain and defend, in any 
court of law or equity.
   Fifth. To appoint by its board of directors a president, 
vice presidents, and such officers and employees as are not 
otherwise provided for in this Act, to define their duties, 
require bonds for them and fix the penalty thereof, and to 
dismiss at pleasure such officers or employees. The president 
shall be the chief executive officer of the bank and shall be 
appointed by the Class B and Class C directors of the bank, 
with the approval of the Board of Governors of the Federal 
Reserve System, for a term of 5 years; and all other executive 
officers and all employees of the bank shall be directly 
responsible to the president. The first vice president of the 
bank shall be appointed in the same manner and for the same 
term as the president, and shall, in the absence or disability 
of the president or during a vacancy in the office of 
president, serve as chief executive officer of the bank. 
Whenever a vacancy shall occur in the office of the president 
or the first vice president, it shall be filled in the manner 
provided for original appointments; and the person so appointed 
shall hold office until the expiration of the term of his 
predecessor.
   Sixth. To prescribe by its board of directors, by-laws not 
inconsistent with law, regulating the manner in which its 
general business may be conducted, and the privileges granted 
to it by law may be exercised and enjoyed.
   Seventh. To exercise by its board of directors, or duly 
authorized officers or agents, all powers specifically granted 
by the provisions of this Act and such incidental powers as 
shall be necessary to carry on the business of banking within 
the limitations prescribed by this Act.
   Eighth. Upon deposit with the Treasurer of the United States 
of any bonds of the United States in the manner provided by 
existing law relating to national banks, to receive from the 
Secretary of the Treasury circulating notes in blank, 
registered and countersigned as provided by law, equal in 
amount to the par value of the bonds so deposited, such notes 
to be issued under the same conditions and provisions of law as 
relate to the issue of circulating notes of national banks 
secured by bonds of the United States bearing the circulating 
privilege, except that the issue of such notes shall not be 
limited to the capital stock of such Federal reserve bank.
   But no Federal reserve bank shall transact any business 
except such as is incidental and necessarily preliminary to its 
organization until it has been authorized by the Comptroller of 
the Currency to commence business under the provisions of this 
Act.
   Every Federal reserve bank shall be conducted under the 
supervision and control of a board of directors.
   The board of directors shall perform the duties usually 
appertaining to the office of directors of banking associations 
and all such duties as are prescribed by law.
   Said board of directors shall administer the affairs of said 
bank fairly and impartially and without discrimination in favor 
of or against any member bank or banks and may, subject to the 
provisions of law and the orders of the Board of Governors of 
the Federal Reserve System, extend to each member bank such 
discounts, advancements, and accommodations as may be safely 
and reasonably made with due regard for the claims and demands 
of other member banks, the maintenance of sound credit 
conditions, and the accommodation of commerce, industry, and 
agriculture. The Board of Governors of the Federal Reserve 
System may prescribe regulations further defining within the 
limitations of this Act the conditions under which discounts, 
advancements, and the accommodations may be extended to member 
banks. Each Federal reserve bank shall keep itself informed of 
the general character and amount of the loans and investments 
of its member banks with a view to ascertaining whether undue 
use is being made of bank credit for the speculative carrying 
of or trading in securities, real estate, or commodities, or 
for any other purpose inconsistent with the maintenance of 
sound credit conditions; and, in determining whether to grant 
or refuse advances, rediscounts or other credit accommodations, 
the Federal reserve bank shall give consideration to such 
information. The chairman of the Federal reserve bank shall 
report to the Board of Governors of the Federal Reserve System 
any such undue use of bank credit by any member bank, together 
with his recommendation. Whenever, in the judgment of the Board 
of Governors of the Federal Reserve System, any member bank is 
making such undue use of bank credit, the Board may, in its 
discretion, after reasonable notice and an opportunity for a 
hearing, suspend such bank from the use of the credit 
facilities of the Federal Reserve System and may terminate such 
suspension or may renew it from time to time.
   Such board of directors shall be selected as hereinafter 
specified and shall consist of nine members, holding office for 
three years, and divided into three classes, designated as 
classes A, B, and C.
   Class A shall consist of three members, without 
discrimination on the basis of race, creed, color, sex, or 
national origin, who shall be chosen by and be representative 
of the stock-holding banks.
   Class B shall consist of three members, who shall represent 
the public and shall be elected without discrimination on the 
basis of race, creed, color, sex, or national origin, and with 
due but not exclusive consideration to the interests of 
agriculture, commerce, industry, services, labor, [and 
consumers] consumers, and traditionally underserved communities 
and populations.
   Class C shall consist of three members who shall be 
designated by the Board of Governors of the Federal Reserve 
System. They shall be elected to represent the public, without 
discrimination on the basis of race, creed, color, sex, or 
national origin, and with due but not exclusive consideration 
to the interests of agriculture, commerce, industry, services, 
labor, [and consumers] consumers, and traditionally underserved 
communities and populations. When the necessary subscriptions 
to the capital stock have been obtained for the organization of 
any Federal reserve bank, the Board of Governors of the Federal 
Reserve System shall appoint the class C directors and shall 
designate one of such directors as chairman of the board to be 
selected. Pending the designation of such chairman, the 
organization committee shall exercise the powers and duties 
appertaining to the office of chairman in the organization of 
such Federal reserve bank.
   No Senator or Representative in Congress shall be a member 
of the Board of Governors of the Federal Reserve System or an 
officer or a director of a Federal reserve bank.
   No director of class B shall be an officer, director, or 
employee of any bank.
   No director of class C shall be an officer, director, 
employee, or stockholder of any bank.
   Directors of Class A and Class B shall be chosen in the 
following manner:
   The Board of Governors of the Federal Reserve System shall 
classify the member banks of the district into three general 
groups or divisions, designating each group by number. Each 
group shall consist as nearly as may be of banks of similar 
capitalization. Each member bank shall be permitted to nominate 
to the chairman of the board of directors of the Federal 
reserve bank of the district one candidate for director of 
Class A and one candidate for director of Class B. The 
candidates so nominated shall be listed by the chairman, 
indicating by whom nominated, and a copy of said list shall, 
within fifteen days after its completion, be furnished by the 
chairman to each member bank. Each member bank by a resolution 
of the board or by an amendment to its by-laws shall authorize 
its president, cashier, or some other to cast the vote of the 
member bank in the elections of Class A and Class B directors: 
Provided, That whenever any member banks within the same 
Federal Reserve district are subsidiaries of the same bank 
holding company within the meaning of the Bank Holding Company 
Act of 1956, participation in any such nomination or election 
by such member banks, including such bank holding company if it 
is also a member bank, shall be confined to one of such banks, 
which may be designated for the purpose by such holding 
company.
   Within fifteen days after receipt of the list of candidates 
the duly authorized officer of a member bank shall certify to 
the chairman his first, second, and other choices for director 
of Class A and Class B, respectively, upon a preferential 
ballot upon a form furnished by the Chairman of the Board of 
directors of the Federal reserve bank of the district. Each 
such officer shall make a cross opposite the name of the first 
second, and other choices for a director of Class A and for a 
director of Class B, but shall not vote more than one choice 
for any one candidate. No officer or director of a member bank 
shall be eligible to serve as a Class A director unless 
nominated and elected by banks which are members of the same 
group as the member bank of which he is an officer or director.
   Any person who is an officer or director of more than one 
member bank shall not be eligible for nominations as a Class A 
director except by banks in the same group as the bank having 
the largest aggregate resources of any of those of which such 
person is an officer or director.
   Any candidate having a majority of all votes cast in the 
column of first choice shall be declared elected. If no 
candidate have a majority of all the votes in the first column, 
then there shall be added together the votes cast by the 
electors for such candidates in the second column and the votes 
cast for the several candidates in the first column. The 
candidate then having a majority of the electors voting and the 
highest number of combined votes shall be declared elected. If 
no candidate have a majority of electors voting and the highest 
number of votes when the first and second choices shall have 
been added, then the votes cast in the third column for other 
choices shall be added together in like manner, and the 
candidate then having the highest number of votes shall be 
declared elected. An immediate report of election shall be 
declared.
   Class C directors shall be appointed by the Board of 
Governors of the Federal Reserve System. They shall have been 
for at least two years residents of the district for which they 
are appointed, one of whom shall be designated by said board as 
chairman of the board of directors of the Federal reserve bank 
and as ``Federal reserve agent.'' He shall be a person of 
tested banking experience, and in addition to his duties as 
chairman of the board of directors of the Federal reserve bank 
he shall be required to maintain, under regulations to be 
established by the Board of Governors of the Federal Reserve 
System, a local office of said board on the premises of the 
Federal reserve bank. He shall make regular reports to the 
Board of Governors of the Federal Reserve System and shall act 
as its official representative for the performance of the 
functions conferred upon it by this Act. He shall receive an 
annual compensation to be fixed by the Board of Governors of 
the Federal Reserve System and paid monthly by the Federal 
reserve bank to which he is designated. One of the directors of 
class C shall be appointed by the Board of Governors of the 
Federal Reserve System as deputy chairman to exercise the 
powers of the chairman of the board when necessary. In case of 
the absence of the chairman and deputy chairman, the third 
class C director shall preside at meetings of the board.
   Subject to the approval of the Board of Governors of the 
Federal Reserve System, the Federal reserve agent shall appoint 
one or more assistants. Such assistants, who shall be persons 
of tested banking experience, shall assist the Federal reserve 
agent in the performance of his duties and shall also have 
power to act in his name and stead during his absence or 
disability. The Board of Governors of the Federal Reserve 
System shall require such bonds of the assistant Federal 
reserve agents as it may deem necessary for the protection of 
the United States. Assistants to the Federal reserve agent 
shall receive an annual compensation, to be fixed and paid in 
the same manner as that of the Federal reserve agent.
   Directors of Federal reserve banks shall receive, in 
addition to any compensation otherwise provided, a reasonable 
allowance for necessary expenses in attending meetings of their 
respective boards, which amounts shall be paid by the 
respective Federal reserve banks. Any compensation that may be 
provided by boards of directors of Federal reserve banks for 
directors, officers or employees shall be subject to the 
approval of the Board of Governors of the Federal Reserve 
System.
   The Reserve Bank Organization Committee may, in organizing 
Federal reserve banks, call such meetings of bank directors in 
the several districts as may be necessary to carry out the 
purposes of this Act, and may exercise the functions herein 
conferred upon the chairman of the board of directors of each 
Federal reserve bank pending the complete organization of such 
bank.
   At the first meeting of the full board of directors of each 
Federal reserve bank, it shall be the duty of the directors of 
classes A, B and C, respectively, to designate one of the 
members of each class whose term of office shall expire in one 
year from the first of January nearest to date of such meeting, 
one whose term of office shall expire at the end of two years 
from said date, and one whose term of office shall expire at 
the end of three years from said date. Thereafter every 
director of a Federal reserve bank chosen as hereinbefore 
provided shall hold office for a term of three years. 
Vancancies that may occur in the several classes of directors 
of Federal reserve banks may be filled in the manner provided 
for the original selection of such directors, such appointees 
to hold office for the unexpired terms of their predecessors.

           *       *       *       *       *       *       *


            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 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] quarterly 
        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. In each such appearance, the Vice 
        Chairman for Supervision shall provide written 
        testimony that includes the status of all pending and 
        anticipated rulemakings that are being made by the 
        Board of Governors of the Federal Reserve System. If, 
        at the time of any appearance described in this 
        paragraph, the position of Vice Chairman for 
        Supervision is vacant, the Vice Chairman for the Board 
        of Governors of the Federal Reserve System (who has the 
        responsibility to serve in the absence of the Chairman) 
        shall appear instead and provide the required written 
        testimony. If, at the time of any appearance described 
        in this paragraph, both Vice Chairman positions are 
        vacant, the Chairman of the Board of Governors of the 
        Federal Reserve System shall appear instead and provide 
        the required written testimony.

           *       *       *       *       *       *       *

  Sec.  11. The Board of Governors of the Federal Reserve 
System shall be authorized and empowered:
  (a)(1) To examine at its discretion the accounts, books and 
affairs of each Federal reserve bank and of each member bank 
and to require such statements and reports as it may deem 
necessary. The said board shall publish once each week a 
statement showing the condition of each Federal reserve bank 
and a consolidated statement for all Federal reserve banks. 
Such statements shall show in detail the assets and liabilities 
of the Federal reserve banks, single and combined, and shall 
furnish full information regarding the character of the money 
held as reserve and the amount, nature and maturities of the 
paper and other investments owned or held by Federal reserve 
banks.
  (2) To require any depository institution specified in this 
paragraph to make, at such intervals as the Board may 
prescribe, such reports of its liabilities and assets as the 
Board may determine to be necessary or desirable to enable the 
Board to discharge its responsibility to monitor and control 
monetary and credit aggregates. Such reports shall be made (A) 
directly to the Board in the case of member banks and in the 
case of other depository institutions whose reserve 
requirements under section 19 of this Act exceed zero, and (B) 
for all other reports to the Board through the (i) Federal 
Deposit Insurance Corporation in the case of insured State 
savings associations that are insured depository institutions 
(as defined in section 3 of the Federal Deposit Insurance Act), 
State nonmember banks, savings banks, and mutual savings banks, 
(ii) National Credit Union Administration Board in the case of 
insured credit unions, (iii) the Comptroller of the Currency in 
the case of any Federal savings association which is an insured 
depository institution (as defined in section 3 of the Federal 
Deposit Insurance Act) or which is a member as defined in 
section 2 of the Federal Home Loan Bank Act, and (iv) such 
State officer or agency as the Board may designate in the case 
of any other type of bank, savings association, or credit 
union. The Board shall endeavor to avoid the imposition of 
unnecessary burdens on reporting institutions and the 
duplication of other reporting requirements. Except as 
otherwise required by law, any data provided to any department, 
agency, or instrumentality of the United States pursuant to 
other reporting requirements shall be made available to the 
Board. The Board may classify depository institutions for the 
purposes of this paragraph and may impose different 
requirements on each such class.
  (b) To permit, or, on the affirmative vote of at least five 
members of the Board of Governors of the Federal Reserve System 
to require Federal reserve banks to rediscount the discounted 
paper of other Federal reserve banks at rates of interest to be 
fixed by the Board of Governors of the Federal Reserve System.
  (c) To suspend for a period not exceeding thirty days, and 
from time to time to renew such suspension for periods not 
exceeding fifteen days, any reserve requirements specified in 
this Act.
  (d) To supervise and regulate through the Secretary of the 
Treasury the issue and retirement of Federal reserve notes, 
except for the cancellation and destruction, and accounting 
with respect to such cancellation and destruction, of notes 
unfit for circulation, and to prescribe rules and regulations 
under which such notes may be delivered by the Secretary of the 
Treasury to the Federal reserve agents applying therefor.
  (e) To add to the number of cities classified as Reserve 
cities under existing law in which national banking 
associations are subject to the Reserve requirements set forth 
in section twenty of this Act; or to reclassify existing 
Reserve cities or to terminate their designation as such.
  (f) To suspend or remove any officer or director of any 
Federal reserve bank, the cause of such removal to be forthwith 
communicated in writing by the Board of Governors of the 
Federal Reserve System to the removed officer or director and 
to said bank.
  (g) To require the writing off of doubtful or worthless 
assets upon the books and balance sheets of Federal reserve 
banks.
  (h) To suspend, for the violation of any of the provisions of 
this Act, the operations of any Federal reserve bank, to take 
possession thereof, administer the same during the period of 
suspension, and, when deemed advisable, to liquidate or 
reorganize such bank.
  (i) To require bonds of Federal reserve agents, to make 
regulations for the safeguarding of all collateral, bonds, 
Federal reserve notes, money or property of any kind deposited 
in the hands of such agents, and said board shall perform the 
duties, functions, or services specified in this Act, and make 
all rules and regulations necessary to enable said board 
effectively to perform the same.
  (j) To exercise general supervision over said Federal reserve 
banks.
  (k) To delegate, by published order or rule and subject to 
the Administrative Procedure Act, any of its functions, other 
than those relating to rulemaking or pertaining principally to 
monetary and credit policies, to one or more administrative law 
judges, members or employees of the Board, or Federal Reserve 
banks. The assignment of responsibility for the performance of 
any function that the Board determines to delegate shall be a 
function of the Chairman. The Board shall, upon the vote of one 
member, review action taken at a delegated level within such 
time and in such manner as the Board shall by rule prescribe. 
The Board of Governors may not delegate to a Federal reserve 
bank its functions for the establishment of policies for the 
supervision and regulation of depository institution holding 
companies and other financial firms supervised by the Board of 
Governors.
  (l) To employ such attorneys, experts, assistants, clerks, or 
other employees as may be deemed necessary to conduct the 
business of the board. All salaries and fees shall be fixed in 
advance by said board and shall be paid in the same manner as 
the salaries of the members of said board. All such attorneys, 
experts, assistants, clerks, and other employees shall be 
appointed without regard to the provisions of the Act of 
January sixteenth, eighteen hundred and eighty-three (volume 
twenty-two, United States Statutes at Large, page four hundred 
and three), and amendments thereto, or any rule or regulation 
made in pursuance thereof: Provided, That nothing herein shall 
prevent the President from placing said employees in the 
classified service. Each member of the Board of Governors of 
the Federal Reserve System may employ, at a minimum, 2 
individuals, with such individuals selected by such member and 
the salaries of such individuals set by such member. A member 
may employ additional individuals as determined necessary by 
the Board of Governors.
  (m) Consideration of Economic Impacts.--
          (1) In general.--Before issuing any regulation, the 
        Board of Governors of the Federal Reserve System 
        shall--
                  (A) clearly identify the nature and source of 
                the problem that the proposed regulation is 
                designed to address and assess the significance 
                of that problem;
                  (B) assess whether any new regulation is 
                warranted or, with respect to a proposed 
                regulation that the Board of Governors is 
                required to issue by statute and with respect 
                to which the Board has the authority to exempt 
                certain persons from the application of such 
                regulation, compare--
                          (i) the costs and benefits of the 
                        proposed regulation; and
                          (ii) the costs and benefits of a 
                        regulation under which the Board 
                        exempts all persons from the 
                        application of the proposed regulation, 
                        to the extent the Board is able;
                  (C) assess the qualitative and quantitative 
                costs and benefits of the proposed regulation 
                and propose or adopt a regulation only on a 
                reasoned determination that the benefits of the 
                proposed regulation outweigh the costs of the 
                regulation;
                  (D) identify and assess available 
                alternatives to the proposed regulation that 
                were considered, including any alternative 
                offered by a member of the Board of Governors 
                of the Federal Reserve System or the Federal 
                Open Market Committee and including any 
                modification of an existing regulation, 
                together with an explanation of why the 
                regulation meets the regulatory objectives more 
                effectively than the alternatives; and
                  (E) ensure that any proposed regulation is 
                accessible, consistent, written in plain 
                language, and easy to understand and shall 
                measure, and seek to improve, the actual 
                results of regulatory requirements.
          (2) Considerations and actions.--
                  (A) Required actions.--In deciding whether 
                and how to regulate, the Board shall assess the 
                costs and benefits of available regulatory 
                alternatives, including the alternative of not 
                regulating, and choose the approach that 
                maximizes net benefits. Specifically, the Board 
                shall--
                          (i) evaluate whether, consistent with 
                        achieving regulatory objectives, the 
                        regulation is tailored to impose the 
                        least impact on the availability of 
                        credit and economic growth and to 
                        impose the least burden on society, 
                        including market participants, 
                        individuals, businesses of different 
                        sizes, and other entities (including 
                        State and local governmental entities), 
                        taking into account, to the extent 
                        practicable, the cumulative costs of 
                        regulations;
                          (ii) evaluate whether the regulation 
                        is inconsistent, incompatible, or 
                        duplicative of other Federal 
                        regulations; and
                          (iii) with respect to a proposed 
                        regulation that the Board is required 
                        to issue by statute and with respect to 
                        which the Board has the authority to 
                        exempt certain persons from the 
                        application of such regulation, 
                        compare--
                                  (I) the costs and benefits of 
                                the proposed regulation; and
                                  (II) the costs and benefits 
                                of a regulation under which the 
                                Board exempts all persons from 
                                the application of the proposed 
                                regulation, to the extent the 
                                Board is able.
                  (B) Additional considerations.--In addition, 
                in making a reasoned determination of the costs 
                and benefits of a proposed regulation, the 
                Board shall, to the extent that each is 
                relevant to the particular proposed regulation, 
                take into consideration the impact of the 
                regulation, including secondary costs such as 
                an increase in the cost or a reduction in the 
                availability of credit or investment services 
                or products, on--
                          (i) the safety and soundness of the 
                        United States banking system;
                          (ii) market liquidity in securities 
                        markets;
                          (iii) small businesses;
                          (iv) community banks;
                          (v) economic growth;
                          (vi) cost and access to capital;
                          (vii) market stability;
                          (viii) global competitiveness;
                          (ix) job creation;
                          (x) the effectiveness of the monetary 
                        policy transmission mechanism; and
                          (xi) employment levels.
          (3) Explanation and comments.--The Board shall 
        explain in its final rule the nature of comments that 
        it received and shall provide a response to those 
        comments in its final rule, including an explanation of 
        any changes that were made in response to those 
        comments and the reasons that the Board did not 
        incorporate concerns related to the potential costs or 
        benefits in the final rule.
          (4) Postadoption impact assessment.--
                  (A) In general.--Whenever the Board adopts or 
                amends a regulation designated as a ``major 
                rule'' within the meaning of section 804(2) of 
                title 5, United States Code, it shall state, in 
                its adopting release, the following:
                          (i) The purposes and intended 
                        consequences of the regulation.
                          (ii) The assessment plan that will be 
                        used, consistent with the requirements 
                        of subparagraph (B), to assess whether 
                        the regulation has achieved the stated 
                        purposes.
                          (iii) Appropriate postimplementation 
                        quantitative and qualitative metrics to 
                        measure the economic impact of the 
                        regulation and the extent to which the 
                        regulation has accomplished the stated 
                        purpose of the regulation.
                          (iv) Any reasonably foreseeable 
                        indirect effects that may result from 
                        the regulation.
                  (B) Requirements of assessment plan and 
                report.--
                          (i) Requirements of plan.--The 
                        assessment plan required under this 
                        paragraph shall consider the costs, 
                        benefits, and intended and unintended 
                        consequences of the regulation. The 
                        plan shall specify the data to be 
                        collected, the methods for collection 
                        and analysis of the data, and a date 
                        for completion of the assessment. The 
                        assessment plan shall include an 
                        analysis of any jobs added or lost as a 
                        result of the regulation, 
                        differentiating between public and 
                        private sector jobs.
                          (ii) Submission and publication of 
                        report.--The Board shall, not later 
                        than 2 years after the publication of 
                        the adopting release, publish the 
                        assessment plan in the Federal Register 
                        for notice and comment. If the Board 
                        determines, at least 90 days before the 
                        deadline for publication of the 
                        assessment plan, that an extension is 
                        necessary, the Board shall publish a 
                        notice of such extension and the 
                        specific reasons why the extension is 
                        necessary in the Federal Register. Any 
                        material modification of the assessment 
                        plan, as necessary to assess unforeseen 
                        aspects or consequences of the 
                        regulation, shall be promptly published 
                        in the Federal Register for notice and 
                        comment.
                          (iii) Data collection not subject to 
                        notice and comment requirements.--If 
                        the Board has published the assessment 
                        plan for notice and comment at least 30 
                        days before the adoption of a 
                        regulation designated as a major rule, 
                        the collection of data under the 
                        assessment plan shall not be subject to 
                        the notice and comment requirements in 
                        section 3506(c) of title 44, United 
                        States Code (commonly referred to as 
                        the Paperwork Reduction Act). Any 
                        material modification of the plan that 
                        requires collection of data not 
                        previously published for notice and 
                        comment shall also be exempt from such 
                        requirements if the Board has published 
                        notice in the Federal Register for 
                        comment on the additional data to be 
                        collected, at least 30 days before the 
                        initiation of data collection.
                          (iv) Final action.--Not later than 
                        180 days after publication of the 
                        assessment plan in the Federal 
                        Register, the Board shall issue for 
                        notice and comment a proposal to amend 
                        or rescind the regulation, or shall 
                        publish a notice that the Board has 
                        determined that no action will be taken 
                        on the regulation. Such a notice will 
                        be deemed a final agency action.
          (5) Covered regulations and other actions.--Solely as 
        used in this subsection, the term ``regulation''--
                  (A) means a statement of general 
                applicability and future effect that is 
                designed to implement, interpret, or prescribe 
                law or policy, or to describe the procedure or 
                practice requirements of the Board of 
                Governors, including rules, orders of general 
                applicability, interpretive releases, and other 
                statements of general applicability that the 
                Board of Governors intends to have the force 
                and effect of law; and
                  (B) does not include--
                          (i) a regulation issued in accordance 
                        with the formal rulemaking provisions 
                        of section 556 or 557 of title 5, 
                        United States Code;
                          (ii) a regulation that is limited to 
                        the organization, management, or 
                        personnel matters of the Board of 
                        Governors;
                          (iii) a regulation promulgated 
                        pursuant to statutory authority that 
                        expressly prohibits compliance with 
                        this provision; or
                          (iv) a regulation that is certified 
                        by the Board of Governors to be an 
                        emergency action, if such certification 
                        is published in the Federal Register.
  (n) To examine, at the Board's discretion, any depository 
institution, and any affiliate of such depository institution, 
in connection with any advance to, any discount of any 
instrument for, or any request for any such advance or discount 
by, such depository institution under this Act.
  (o) Authority To Appoint Conservator or Receiver.--The Board 
may appoint the Federal Deposit Insurance Corporation as 
conservator or receiver for a State member bank under section 
11(c)(9) of the Federal Deposit Insurance Act.
  (p) Authority.--The Board may act in its own name and through 
its own attorneys in enforcing any provision of this title, 
regulations promulgated hereunder, or any other law or 
regulation, or in any action, suit, or proceeding to which the 
Board is a party and which involves the Board's regulation or 
supervision of any bank, bank holding company (as defined in 
section 2 of the Bank Holding Company Act of 1956), or other 
entity, or the administration of its operations.
  (q) Uniform Protection Authority for Federal Reserve 
Facilities.--
          (1) Notwithstanding any other provision of law, to 
        authorize personnel to act as law enforcement officers 
        to protect and safeguard the premises, grounds, 
        property, personnel, including members of the Board, of 
        the Board, or any Federal reserve bank, and operations 
        conducted by or on behalf of the Board or a reserve 
        bank.
          (2) The Board may, subject to the regulations 
        prescribed under paragraph (5), delegate authority to a 
        Federal reserve bank to authorize personnel to act as 
        law enforcement officers to protect and safeguard the 
        bank's premises, grounds, property, personnel, and 
        operations conducted by or on behalf of the bank.
          (3) Law enforcement officers designated or authorized 
        by the Board or a reserve bank under paragraph (1) or 
        (2) are authorized while on duty to carry firearms and 
        make arrests without warrants for any offense against 
        the United States committed in their presence, or for 
        any felony cognizable under the laws of the United 
        States committed or being committed within the 
        buildings and grounds of the Board or a reserve bank if 
        they have reasonable grounds to believe that the person 
        to be arrested has committed or is committing such a 
        felony. Such officers shall have access to law 
        enforcement information that may be necessary for the 
        protection of the property or personnel of the Board or 
        a reserve bank.
          (4) For purposes of this subsection, the term ``law 
        enforcement officers'' means personnel who have 
        successfully completed law enforcement training and are 
        authorized to carry firearms and make arrests pursuant 
        to this subsection.
          (5) The law enforcement authorities provided for in 
        this subsection may be exercised only pursuant to 
        regulations prescribed by the Board and approved by the 
        Attorney General.
  (r)(1) Any action that this Act provides may be taken only 
upon the affirmative vote of 5 members of the Board may be 
taken upon the unanimous vote of all members then in office if 
there are fewer than 5 members in office at the time of the 
action.
  (2)(A) Any action that the Board is otherwise authorized to 
take under section 13(3) may be taken upon the unanimous vote 
of all available members then in office, if--
          (i) at least 2 members are available and all 
        available members participate in the action;
          (ii) the available members unanimously determine 
        that--
                  (I) unusual and exigent circumstances exist 
                and the borrower is unable to secure adequate 
                credit accommodations from other sources;
                  (II) action on the matter is necessary to 
                prevent, correct, or mitigate serious harm to 
                the economy or the stability of the financial 
                system of the United States;
                  (III) despite the use of all means available 
                (including all available telephonic, 
                telegraphic, and other electronic means), the 
                other members of the Board have not been able 
                to be contacted on the matter; and
                  (IV) action on the matter is required before 
                the number of Board members otherwise required 
                to vote on the matter can be contacted through 
                any available means (including all available 
                telephonic, telegraphic, and other electronic 
                means)[; and];
          (iii) any credit extended by a Federal reserve bank 
        pursuant to such action is payable upon demand of the 
        Board[.]; and
          (iv) the available members secure the affirmative 
        vote of not less than nine presidents of the Federal 
        reserve banks.
  (B) The available members of the Board shall document in 
writing the determinations required by subparagraph (A)(ii), 
and such written findings shall be included in the record of 
the action and in the official minutes of the Board, and copies 
of such record shall be provided as soon as practicable to the 
members of the Board who were not available to participate in 
the action and to the Chairman of the Committee on Banking, 
Housing, and Urban Affairs of the Senate and to the Chairman of 
the Committee on Financial Services of the House of 
Representatives.
  (s) Federal Reserve Transparency and Release of 
Information.--

                             In general.--

          (1) In order to ensure the disclosure in a timely 
        manner consistent with the purposes of this Act of 
        information concerning the borrowers and counterparties 
        participating in emergency credit facilities, discount 
        window lending programs, and open market operations 
        authorized or conducted by the Board or a Federal 
        reserve bank, the Board of Governors shall disclose, as 
        provided in paragraph (2)--
                  (A) the names and identifying details of each 
                borrower, participant, or counterparty in any 
                credit facility or covered transaction;
                  (B) the amount borrowed by or transferred by 
                or to a specific borrower, participant, or 
                counterparty in any credit facility or covered 
                transaction;
                  (C) the interest rate or discount paid by 
                each borrower, participant, or counterparty in 
                any credit facility or covered transaction; and
                  (D) information identifying the types and 
                amounts of collateral pledged or assets 
                transferred in connection with participation in 
                any credit facility or covered transaction.
          (2) Mandatory release date.--In the case of--
                  (A) a credit facility, the Board shall 
                disclose the information described in paragraph 
                (1) on the date that is 1 year after the 
                effective date of the termination by the Board 
                of the authorization of the credit facility; 
                and
                  (B) a covered transaction, the Board shall 
                disclose the information described in paragraph 
                (1) on the last day of the eighth calendar 
                quarter following the calendar quarter in which 
                the covered transaction was conducted.
          (3) Earlier release date authorized.--The Chairman of 
        the Board may publicly release the information 
        described in paragraph (1) before the relevant date 
        specified in paragraph (2), if the Chairman determines 
        that such disclosure would be in the public interest 
        and would not harm the effectiveness of the relevant 
        credit facility or the purpose or conduct of covered 
        transactions.
          (4) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:

                           Credit facility.--

                  (A) The term ``credit facility'' [has the 
                same meaning as in section 714(f)(1)(A) of 
                title 31, United States Code] means a program 
                or facility, including any special purpose 
                vehicle or other entity established by or on 
                behalf of the Board of Governors of the Federal 
                Reserve System or a Federal reserve bank, 
                authorized by the Board of Governors under 
                section 13(3), that is not subject to audit 
                under section 714(e) of title 31, United States 
                Code.
                  (B) Covered transaction.--The term ``covered 
                transaction'' means--
                          (i) any open market transaction with 
                        a nongovernmental third party conducted 
                        under the first undesignated paragraph 
                        of section 14 or subparagraph (a), (b), 
                        or (c) of the 2nd undesignated 
                        paragraph of such section, after the 
                        date of enactment of the Dodd-Frank 
                        Wall Street Reform and Consumer 
                        Protection Act; and
                          (ii) any advance made under section 
                        10B after the date of enactment of that 
                        Act.
          (5) Termination of credit facility by operation of 
        law.--A credit facility shall be deemed to have 
        terminated as of the end of the 24-month period 
        beginning on the date on which the credit facility 
        ceases to make extensions of credit and loans, unless 
        the credit facility is otherwise terminated by the 
        Board before such date.
          (6) Consistent treatment of information.--Except as 
        provided in this subsection or section 13(3)(D), [or in 
        section 714(f)(3)(C) of title 31, United States Code, 
        the information described in paragraph (1) and 
        information concerning the transactions described in 
        section 714(f) of such title,] the information 
        described in paragraph (1) shall be confidential, 
        including for purposes of section 552(b)(3) of title 5 
        of such Code, until the relevant mandatory release date 
        described in paragraph (2), unless the Chairman of the 
        Board determines that earlier disclosure of such 
        information would be in the public interest and would 
        not harm the effectiveness of the relevant credit 
        facility or the purpose of conduct of the relevant 
        transactions.
          (7) Protection of personal privacy.--This subsection 
        [and section 13(3)(C), section 714(f)(3)(C) of title 
        31, United States Code, and], section 13(3)(C), and 
        subsection (a) or (c) of section 1109 of the Dodd-Frank 
        Wall Street Reform and Consumer Protection Act shall 
        not be construed as requiring any disclosure of 
        nonpublic personal information (as defined for purposes 
        of section 502 of the Gramm-Leach-Bliley Act (12 U.S.C. 
        6802)) concerning any individual who is referenced in 
        collateral pledged or assets transferred in connection 
        with a credit facility or covered transaction, unless 
        the person is a borrower, participant, or counterparty 
        under the credit facility or covered transaction.
          (8) Study of foia exemption impact.--
                  (A) Study.--The Inspector General of the 
                Board of Governors of the Federal Reserve 
                System shall--
                          (i) conduct a study on the impact 
                        that the exemption from section 
                        552(b)(3) of title 5 (known as the 
                        Freedom of Information Act) established 
                        under paragraph (6) has had on the 
                        ability of the public to access 
                        information about the administration by 
                        the Board of Governors of emergency 
                        credit facilities, discount window 
                        lending programs, and open market 
                        operations; and
                          (ii) make any recommendations on 
                        whether the exemption described in 
                        clause (i) should remain in effect.
                  (B) Report.--Not later than 30 months after 
                the date of enactment of this section, the 
                Inspector General of the Board of Governors of 
                the Federal Reserve System shall submit a 
                report on the findings of the study required 
                under subparagraph (A) to the Committee on 
                Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services 
                of the House of Representatives, and publish 
                the report on the website of the Board.
          (9) Rule of construction.--Nothing in this section is 
        meant to affect any pending litigation or lawsuit filed 
        under section 552 of title 5, United States Code 
        (popularly known as the Freedom of Information Act), on 
        or before the date of enactment of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act.
  [(s)] (t) Assessments, Fees, and Other Charges for Certain 
Companies.--
          (1) In general.--The Board shall collect a total 
        amount of assessments, fees, or other charges from the 
        companies described in paragraph (2) that is equal to 
        the total expenses the Board estimates are necessary or 
        appropriate to carry out the supervisory and regulatory 
        responsibilities of the Board with respect to such 
        companies.
          (2) Companies.--The companies described in this 
        paragraph are--
                  (A) all bank holding companies having total 
                consolidated assets of $50,000,000,000 or more;
                  (B) all savings and loan holding companies 
                having total consolidated assets of 
                $50,000,000,000 or more; and
                  (C) all nonbank financial companies 
                supervised by the Board under section 113 of 
                the Dodd-Frank Wall Street Reform and Consumer 
                Protection Act.
  (u) Ethics Standards for Members and Employees.--
          (1) Prohibited and restricted financial interests and 
        transactions.--The members and employees of the Board 
        of Governors of the Federal Reserve System shall be 
        subject to the provisions under section 4401.102 of 
        title 5, Code of Federal Regulations, to the same 
        extent as such provisions apply to an employee of the 
        Securities and Exchange Commission.
          (2) Treatment of brokerage accounts and availability 
        of account statements.--The members and employees of 
        the Board of Governors of the Federal Reserve System 
        shall--
                  (A) disclose all brokerage accounts that they 
                maintain, as well as those in which they 
                control trading or have a financial interest 
                (including managed accounts, trust accounts, 
                investment club accounts, and the accounts of 
                spouses or minor children who live with the 
                member or employee); and
                  (B) with respect to any securities account 
                that the member or employee is required to 
                disclose to the Board of Governors, authorize 
                their brokers and dealers to send duplicate 
                account statements directly to Board of 
                Governors.
          (3) Prohibitions related to outside employment and 
        activities.--The members and employees of the Board of 
        Governors of the Federal Reserve System shall be 
        subject to the prohibitions related to outside 
        employment and activities described under section 
        4401.103(c) of title 5, Code of Federal Regulations, to 
        the same extent as such prohibitions apply to an 
        employee of the Securities and Exchange Commission.
          (4) Additional ethics standards.--The members and 
        employees of the Board of Governors of the Federal 
        Reserve System shall be subject to--
                  (A) the employee responsibilities and conduct 
                regulations of the Office of Personnel 
                Management under part 735 of title 5, Code of 
                Federal Regulations;
                  (B) the canons of ethics contained in subpart 
                C of part 200 of title 17, Code of Federal 
                Regulations, to the same extent as such subpart 
                applies to the employees of the Securities and 
                Exchange Commission; and
                  (C) the regulations concerning the conduct of 
                members and employees and former members and 
                employees contained in subpart M of part 200 of 
                title 17, Code of Federal Regulations, to the 
                same extent as such subpart applies to the 
                employees of the Securities and Exchange 
                Commission.
  (v) Disclosure of Staff Salaries and Financial Information.--
The Board of Governors of the Federal Reserve System shall make 
publicly available, on the website of the Board of Governors, a 
searchable database that contains the names of all members, 
officers, and employees of the Board of Governors who receive 
an annual salary in excess of the annual rate of basic pay for 
GS-15 of the General Schedule, and--
          (1) the yearly salary information for such 
        individuals, along with any nonsalary compensation 
        received by such individuals; and
          (2) any financial disclosures required to be made by 
        such individuals.
  (w) International Processes.--
          (1) Notice of process; consultation.--At least 30 
        calendar days before any member or employee of the 
        Board of Governors of the Federal Reserve System 
        participates in a process of setting financial 
        standards as a part of any foreign or multinational 
        entity, the Board of Governors shall--
                  (A) issue a notice of the process, including 
                the subject matter, scope, and goals of the 
                process, to the Committee on Financial Services 
                of the House of Representatives and the 
                Committee on Banking, Housing, and Urban 
                Affairs of the Senate;
                  (B) make such notice available to the public, 
                including on the website of the Board of 
                Governors; and
                  (C) solicit public comment, and consult with 
                the committees described under subparagraph 
                (A), with respect to the subject matter, scope, 
                and goals of the process.
          (2) Public reports on process.--After the end of any 
        process described under paragraph (1), the Board of 
        Governors shall issue a public report on the topics 
        that were discussed during the process and any new or 
        revised rulemakings or policy changes that the Board of 
        Governors believes should be implemented as a result of 
        the process.
          (3) Notice of agreements; consultation.--At least 90 
        calendar days before any member or employee of the 
        Board of Governors of the Federal Reserve System 
        participates in a process of setting financial 
        standards as a part of any foreign or multinational 
        entity, the Board of Governors shall--
                  (A) issue a notice of agreement to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, 
                Housing, and Urban Affairs of the Senate;
                  (B) make such notice available to the public, 
                including on the website of the Board of 
                Governors; and
                  (C) consult with the committees described 
                under subparagraph (A) with respect to the 
                nature of the agreement and any anticipated 
                effects such agreement will have on the 
                economy.
          (4) Definition.--For purposes of this subsection, the 
        term ``process'' shall include any official proceeding 
        or meeting on financial regulation of a recognized 
        international organization with authority to set 
        financial standards on a global or regional level, 
        including the Financial Stability Board, the Basel 
        Committee on Banking Supervision (or a similar 
        organization), and the International Association of 
        Insurance Supervisors (or a similar organization).

           *       *       *       *       *       *       *

  Sec. 12A. (a) There is hereby created a Federal Open Market 
Committee (hereinafter referred to as the ``Committee''), which 
shall consist of the members of the Board of Governors of the 
Federal Reserve System and [five] six representatives of the 
Federal Reserve banks to be selected as hereinafter provided. 
Such representatives shall be presidents or first vice 
presidents of Federal Reserve banks and, beginning with the 
election for the term commencing March 1, 1943, shall be 
elected annually as follows: [One by the board of directors of 
the Federal Reserve Bank of New York, one by the boards of 
directors of the Federal Reserve Banks of Boston, Philadelphia, 
and Richmond, one by the boards of directors of the Federal 
Reserve Banks of Cleveland and Chicago, one by the boards of 
directors of the Federal Reserve Banks of Atlanta, Dallas, and 
St. Louis, and one by the boards of directors of the Federal 
Reserve Banks of Minneapolis, Kansas City, and San Francisco.] 
One by the boards of directors of the Federal Reserve Banks of 
New York and Boston; one by the boards of directors of the 
Federal Reserve Banks of Philadelphia and Cleveland; one by the 
boards of directors of the Federal Reserve Banks of Richmond 
and Atlanta; one by the boards of directors of the Federal 
Reserve Banks of Chicago and St. Louis; one by the boards of 
directors of the Federal Reserve Banks of Minneapolis and 
Kansas City; and one by the boards of directors of the Federal 
Reserve Banks of Dallas and San Francisco. In odd numbered 
calendar years, one representative shall be elected from each 
of the Federal Reserve Banks of Boston, Philadelphia, Richmond, 
Chicago, Minneapolis, and Dallas. In even-numbered calendar 
years, one representative shall be elected from each of the 
Federal Reserve Banks of New York, Cleveland, Atlanta, St. 
Louis, Kansas City, and San Francisco. In such elections each 
board of directors shall have one vote; and the details of such 
elections may be governed by regulations prescribed by the 
committee, which may be amended from time to time. An alternate 
to serve in the absence of each such representative shall 
likewise be a president or first vice president of a Federal 
Reserve bank and shall be elected annually in the same manner. 
The meetings of said Committee shall be held at Washington, 
District of Columbia, at least four times each year upon the 
call of the chairman of the Board of Governors of the Federal 
Reserve System or at the request of any three members of the 
Committee.
  (b) No Federal Reserve bank shall engage or decline to engage 
in open-market operations under section 14 of this Act except 
in accordance with the direction of and regulations adopted by 
the Committee. The Committee shall consider, adopt, and 
transmit to the several Federal Reserve banks, regulations 
relating to the open-market transactions of such banks.
  (c) The time, character, and volume of all purchases and 
sales of paper described in section 14 of this Act as eligible 
for open-market operations shall be governed with a view to 
accommodating commerce and business and with regard to their 
bearing upon the general credit situation of the country.
  (d) Blackout Period.--
          (1) In general.--During a blackout period, the only 
        public communications that may be made by members and 
        staff of the Committee with respect to macroeconomic or 
        financial developments or about current or prospective 
        monetary policy issues are the following:
                  (A) The dissemination of published data, 
                surveys, and reports that have been cleared for 
                publication by the Board of Governors of the 
                Federal Reserve System.
                  (B) Answers to technical questions specific 
                to a data release.
                  (C) Communications with respect to the 
                prudential or supervisory functions of the 
                Board of Governors.
          (2) Blackout period defined.--For purposes of this 
        subsection, and with respect to a meeting of the 
        Committee described under subsection (a), the term 
        ``blackout period'' means the time period that--
                  (A) begins immediately after midnight on the 
                day that is one week prior to the date on which 
                such meeting takes place; and
                  (B) ends at midnight on the day after the 
                date on which such meeting takes place.
          (3) Exemption for chairman of the board of 
        governors.--Nothing in this section shall prohibit the 
        Chairman of the Board of Governors of the Federal 
        Reserve System from participating in or issuing public 
        communications.

                    powers of federal reserve banks.

  Sec. 13. Any Federal reserve bank may receive from any of its 
member banks or other depository institutions, and from the 
United States, deposits of current funds in lawful money, 
national-bank notes, Federal reserve notes, or checks, and 
drafts, payable upon presentation or other items, and also, for 
collection, maturing notes and bills; or, solely for purposes 
of exchange or of collection, may receive from other Federal 
reserve banks deposits of current funds in lawful money, 
national-bank notes, or checks upon other Federal reserve 
banks, and checks and drafts, payable upon presentation within 
its district or other items, and maturing notes and bills 
payable within its district; or, solely for the purposes of 
exchange or of collection, may receive from any nonmember bank 
or trust company or other depository institution deposits of 
current funds in lawful money, national-bank notes, Federal 
reserve notes, checks and drafts payable upon presentation or 
other items, or maturing notes and bills: Provided, Such 
nonmember bank or trust company or other depository institution 
maintains with the Federal reserve bank of its district a 
balance in such amount as the Board determines taking into 
account items in transit, services provided by the Federal 
Reserve bank, and other factors as the Board may deem 
appropriate: Provided further, That nothing in this or any 
other section of this Act shall be construed as prohibiting a 
member or nonmember bank or other depository institution from 
making reasonable charges, to be determined and regulated by 
the Board of Governors of the Federal Reserve System, but in no 
case to exceed 10 cents per $100 or fraction thereof, based on 
the total of checks and drafts presented at any one time, for 
collection or payment of checks and drafts and remission 
therefor by exchange or otherwise; but no such charges shall be 
made against the Federal reserve banks.
   Upon the indorsement of any of its member banks, which shall 
be deemed a waiver of demand, notice and protest by such bank 
as to its own indorsement exclusively, any Federal reserve bank 
may discount notes, drafts, and bills of exchange arising out 
of actual commercial transactions; that is, notes, drafts, and 
bills of exchange issued or drawn for agricultural, industrial, 
or commercial purposes, or the proceeds of which have been 
used, or are to be used, for such purposes, the Board of 
Governors of the Federal Reserve System to have the right to 
determine or define the character of the paper thus eligible 
for discount, within the meaning of this Act. Nothing in this 
Act contained shall be construed to prohibit such notes, 
drafts, and bills of exchange, secured by staple agricultural 
products, or other goods, wares, or merchandise from being 
eligible for such discount, and the notes, drafts, and bills of 
exchange of factors issued as such making advances exclusively 
to producers of staple agricultural products in their raw state 
shall be eligible for such discount; but such definition shall 
not include notes, drafts, or bills covering merely investments 
or issued or drawn for the purpose of carrying or trading in 
stocks, bonds, or other investment securities, except bonds and 
notes of the Government of the United States. Notes, drafts, 
and bills admitted to discount under the terms of this 
paragraph must have a maturity at the time of discount of not 
more than 90 days, exclusive of grace.



  (3)(A) In unusual and exigent circumstances that pose a 
threat to the financial stability of the United States, the 
Board of Governors of the Federal Reserve System, by the 
affirmative vote of not less than five members and by the 
affirmative vote of not less than nine presidents of the 
Federal reserve banks, may authorize any Federal reserve bank, 
during such periods as the said board may determine, at rates 
established in accordance with the provisions of section 14, 
subdivision (d), of this Act, to discount for any financial 
institution participant in any program or facility with broad-
based eligibility, notes, drafts, and bills of exchange when 
such notes, drafts, and bills of exchange are indorsed or 
otherwise secured to the satisfaction of the Federal Reserve 
bank: Provided, That before discounting any such note, draft, 
or bill of exchange, the Federal reserve bank shall obtain 
evidence that such financial institution participant in any 
program or facility with broad-based eligibility is unable to 
secure adequate credit accommodations from other banking 
institutions. All such discounts for any financial institution 
participant in any program or facility with broad-based 
eligibility shall be subject to such limitations, restrictions, 
and regulations as the Board of Governors of the Federal 
Reserve System may prescribe.
          (B)(i) As soon as is practicable after the date of 
        enactment of this subparagraph, the Board shall 
        establish, by regulation, in consultation with the 
        Secretary of the Treasury, the policies and procedures 
        governing emergency lending under this paragraph. Such 
        policies and procedures shall be designed to ensure 
        that any emergency lending program or facility is for 
        the purpose of providing liquidity to the financial 
        system, and not to aid a failing financial company, and 
        that the security for emergency loans is sufficient to 
        protect taxpayers from losses and that any such program 
        is terminated in a timely and orderly fashion. The 
        policies and procedures established by the Board shall 
        require that a Federal reserve bank assign, consistent 
        with sound risk management practices and to ensure 
        protection for the taxpayer, a lendable value to all 
        collateral for a loan executed by a Federal reserve 
        bank under this paragraph in determining whether the 
        loan is secured satisfactorily for purposes of this 
        paragraph. Federal reserve banks may not accept equity 
        securities issued by the recipient of any loan or other 
        financial assistance under this paragraph as 
        collateral. Not later than 6 months after the date of 
        enactment of this sentence, the Board shall, by rule, 
        establish--
                          (I) a method for determining the 
                        sufficiency of the collateral required 
                        under this paragraph;
                          (II) acceptable classes of 
                        collateral;
                          (III) the amount of any discount of 
                        such value that the Federal reserve 
                        banks will apply for purposes of 
                        calculating the sufficiency of 
                        collateral under this paragraph; and
                          (IV) a method for obtaining 
                        independent appraisals of the value of 
                        collateral the Federal reserve banks 
                        receive.
                  (ii) The Board shall establish procedures to 
                prohibit borrowing from programs and facilities 
                by borrowers that are insolvent. [Such 
                procedures may include a certification from the 
                chief executive officer (or other authorized 
                officer) of the borrower, at the time the 
                borrower initially borrows under the program or 
                facility (with a duty by the borrower to update 
                the certification if the information in the 
                certification materially changes), that the 
                borrower is not insolvent.] A borrower shall 
                not be eligible to borrow from any emergency 
                lending program or facility unless the Board 
                and all federal banking regulators with 
                jurisdiction over the borrower certify that, at 
                the time the borrower initially borrows under 
                the program or facility, the borrower is not 
                insolvent. A borrower shall be considered 
                insolvent for purposes of this subparagraph, if 
                the borrower is in bankruptcy, resolution under 
                title II of the Dodd-Frank Wall Street Reform 
                and Consumer Protection Act, or any other 
                Federal or State insolvency proceeding.
                  (iii) A program or facility that is 
                structured to remove assets from the balance 
                sheet of a single and specific company, or that 
                is established for the purpose of assisting a 
                single and specific company avoid bankruptcy, 
                resolution under title II of the Dodd-Frank 
                Wall Street Reform and Consumer Protection Act, 
                or any other Federal or State insolvency 
                proceeding, shall not be considered a program 
                or facility with broad-based eligibility.
                  (iv) The Board may not establish any program 
                or facility under this paragraph without the 
                prior approval of the Secretary of the 
                Treasury.
          (C) The Board shall provide to the Committee on 
        Banking, Housing, and Urban Affairs of the Senate and 
        the Committee on Financial Services of the House of 
        Representatives--
                  (i) not later than 7 days after the Board 
                authorizes any loan or other financial 
                assistance under this paragraph, a report that 
                includes--
                          (I) the justification for the 
                        exercise of authority to provide such 
                        assistance;
                          (II) the identity of the recipients 
                        of such assistance;
                          (III) the date and amount of the 
                        assistance, and form in which the 
                        assistance was provided; and
                          (IV) the material terms of the 
                        assistance, including--
                                  (aa) duration;
                                  (bb) collateral pledged and 
                                the value thereof;
                                  (cc) all interest, fees, and 
                                other revenue or items of value 
                                to be received in exchange for 
                                the assistance;
                                  (dd) any requirements imposed 
                                on the recipient with respect 
                                to employee compensation, 
                                distribution of dividends, or 
                                any other corporate decision in 
                                exchange for the assistance; 
                                and
                                  (ee) the expected costs to 
                                the taxpayers of such 
                                assistance; and
                  (ii) once every 30 days, with respect to any 
                outstanding loan or other financial assistance 
                under this paragraph, written updates on--
                          (I) the value of collateral;
                          (II) the amount of interest, fees, 
                        and other revenue or items of value 
                        received in exchange for the 
                        assistance; and
                          (III) the expected or final cost to 
                        the taxpayers of such assistance.
          (D) The information required to be submitted to 
        Congress under subparagraph (C) related to--
                  (i) the identity of the financial institution 
                participants in an emergency lending program or 
                facility commenced under this paragraph;
                  (ii) the amounts borrowed by each financial 
                institution participant in any such program or 
                facility;
                  (iii) identifying details concerning the 
                assets or collateral held by, under, or in 
                connection with such a program or facility,
                shall be kept confidential, upon the written 
                request of the Chairman of the Board, in which 
                case such information shall be made available 
                only to the Chairpersons or Ranking Members of 
                the Committees described in subparagraph (C).
          (E) If an entity to which a Federal reserve bank has 
        provided a loan under this paragraph becomes a covered 
        financial company, as defined in section 201 of the 
        Dodd-Frank Wall Street Reform and Consumer Protection 
        Act, at any time while such loan is outstanding, and 
        the Federal reserve bank incurs a realized net loss on 
        the loan, then the Federal reserve bank shall have a 
        claim equal to the amount of the net realized loss 
        against the covered entity, with the same priority as 
        an obligation to the Secretary of the Treasury under 
        section 210(b) of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act.
          (F) Penalty rate.--
                  (i) In general.--Not later than 6 months 
                after the date of enactment of this 
                subparagraph, the Board shall, with respect to 
                a recipient of any loan or other financial 
                assistance under this paragraph, establish by 
                rule a minimum interest rate on the principal 
                amount of any loan or other financial 
                assistance.
                  (ii) Minimum interest rate defined.--In this 
                subparagraph, the term ``minimum interest 
                rate'' shall mean the sum of--
                          (I) the average of the secondary 
                        discount rate of all Federal Reserve 
                        banks over the most recent 90-day 
                        period; and
                          (II) the average of the difference 
                        between a distressed corporate bond 
                        yield index (as defined by rule of the 
                        Board) and a bond yield index of debt 
                        issued by the United States (as defined 
                        by rule of the Board) over the most 
                        recent 90-day period.
          (G) Financial institution participant defined.--For 
        purposes of this paragraph, the term ``financial 
        institution participant''--
                  (i) means a company that is predominantly 
                engaged in financial activities (as defined in 
                section 102(a) of the Dodd-Frank Wall Street 
                Reform and Consumer Protection Act (12 U.S.C. 
                5311(a))); and
                  (ii) does not include an agency described in 
                subparagraph (W) of section 5312(a)(2) of title 
                31, United States Code, or an entity controlled 
                or sponsored by such an agency.
   Upon the indorsement of any of its member banks, which shall 
be deemed a waiver of demand, notice, and protest by such bank 
as to its own indorsement exclusively, and subject to 
regulations and limitations to be prescribed by the Board of 
Governors of the Federal Reserve System, any Federal reserve 
bank may discount or purchase bills of exchange payable at 
sight or on demand which grow out of the domestic shipment or 
the exportation of nonperishable, readily marketable 
agricultural and other staples and are secured by bills of 
lading or other shipping documents conveying or securing title 
to such staples: Provided, That all such bills of exchange 
shall be forwarded promptly for collection, and demand for 
payment shall be made with reasonable promptness after the 
arrival of such staples at their destination: Provided further, 
That no such bill shall in any event be held by or for the 
account of a Federal reserve bank for a period in excess of 
ninety days. In discounting such bills Federal reserve banks 
may compute the interest to be deducted on the basis of the 
estimated life of each bill and adjust the discount after 
payment of such bills to conform to the actual life thereof.
   The aggregate of notes, drafts, and bills upon which any 
person, copartnership, association, or corporation is liable as 
maker, acceptor, indorser, drawer, or guarantor, rediscounted 
for any member bank, shall at no time exceed the amount for 
which such person, copartnership, association, or corporation 
may lawfully become liable to a national banking association 
under the terms of section 5200 of the Revised Statutes, as 
amended: Provided, however, That nothing in this paragraph 
shall be construed to change the character or class of paper 
now eligible for rediscount by Federal reserve banks.
   Any Federal reserve bank may discount acceptances of the 
kinds hereinafter described, which have a maturity at the time 
of discount of not more than 90 days' sight, exclusive of days 
of grace, and which are indorsed by at least one member bank: 
Provided, That such acceptances if drawn for an agricultural 
purpose and secured at the time of acceptance by warehouse 
receipts or other such documents conveying or securing title 
covering readily marketable staples may be discounted with a 
maturity at the time of discount of not more than six months' 
sight exclusive of days of grace.
  (7)(A) Any member bank and any Federal or State branch or 
agency of a foreign bank subject to reserve requirements under 
section 7 of the International Banking Act of 1978 (hereinafter 
in this paragraph referred to as ``institutions''), may accept 
drafts or bills of exchange drawn upon it having not more than 
six months' sight to run, exclusive of days of grace--
          (i) which grow out of transactions involving the 
        importation or exportation of goods;
          (ii) which grow out of transactions involving the 
        domestic shipment of goods; or
          (iii) which are secured at the time of acceptance by 
        a warehouse receipt or other such document conveying or 
        securing title covering readily marketable staples.
  (B) Except as provided in subparagraph (C), no institution 
shall accept such bills, or be obligated for a participation 
share in such bills, in an amount equal at any time in the 
aggregate to more than 150 per centum of its paid up and 
unimpaired capital stock and surplus or, in the case of a 
United States branch or agency of a foreign bank, its dollar 
equivalent as determined by the Board under subparagraph (H).
  (C) The Board, under such conditions as it may prescribe, may 
authorize, by regulation or order, any institution to accept 
such bills, or be obligated for a participation share in such 
bills, in an amount not exceeding at any time in the aggregate 
200 per centum of its paid up and unimpaired capital stock and 
surplus or, in the case of a United States branch or agency of 
a foreign bank, its dollar equivalent as determined by the 
Board under subparagraph (H).
  (D) Notwithstanding subparagraphs (B) and (C), with respect 
to any institution, the aggregate acceptances, including 
obligations for a participation share in such acceptances, 
growing out of domestic transactions shall not exceed 50 per 
centum of the aggregate of all acceptances, including 
obligations for a participation share in such acceptances, 
authorized for such institution under this paragraph.
  (E) No institution shall accept bills, or be obligated for a 
participation share in such bills, whether in a foreign or 
domestic transaction, for any one person, partnership, 
corporation, association or other entity in an amount equal at 
any time in the aggregate to more than 10 per centum of its 
paid up and unimpaired capital stock and surplus, or, in the 
case of a United States branch or agency of a foreign bank, its 
dollar equivalent as determined by the Board under subparagraph 
(H), unless the institution is secured either by attached 
documents or by some other actual security growing out of the 
same transaction as the acceptance.
  (F) With respect to an institution which issues an 
acceptance, the limitations contained in this paragraph shall 
not apply to that portion of an acceptance which is issued by 
such institution and which is covered by a participation 
agreement sold to another institution.
  (G) In order to carry out the purposes of this paragraph, the 
Board may define any of the terms used in this paragraph, and, 
with respect to institutions which do not have capital or 
capital stock, the Board shall define an equivalent measure to 
which the limitations contained in this paragraph shall apply.
  (H) Any limitation or restriction in this paragraph based on 
paid-up and unimpaired capital stock and surplus of an 
institution shall be deemed to refer, with respect to a United 
States branch or agency of a foreign bank, to the dollar 
equivalent of the paid-up capital stock and surplus of the 
foreign bank, as determined by the Board, and if the foreign 
bank has more than one United States branch or agency, the 
business transacted by all such branches and agencies shall be 
aggregated in determining compliance with the limitation or 
restriction.
  Any Federal reserve bank may make advances for periods not 
exceeding fifteen days to its member banks on their promissory 
notes secured by the deposit or pledge of bonds, notes, 
certificates of indebtedness or Treasury bills of the United 
States, or by the deposit or pledge of debentures or other such 
obligations of Federal intermediate credit banks which are 
eligible for purchase by Federal reserve banks under section 13 
(a) of this Act, or by the deposit or pledge of bonds issued 
under the provisions of subsection (c) of section 4 of the Home 
Owners' Loan Act of 1933, as amended; and any Federal reserve 
bank may make advances for periods not exceeding ninety days to 
its member banks on their promissory notes secured by such 
notes, drafts, bills of exchange, or bankers' acceptances as 
are eligible for rediscount or for purchase by Federal reserve 
banks under the provisions of this Act, or secured by such 
obligations as are eligible for purchase under section 14(b) of 
this Act. All such advances shall be made at rates to be 
established by such Federal reserve banks, such rates to be 
subject to the review and determination of the Board of 
Governors of the Federal Reserve System. If any member bank to 
which any such advance has been made shall, during the life or 
continuance of such advance, and despite an official warning of 
the reserve bank of the district or of the Board of Governors 
of the Federal Reserve System to the contrary, increase its 
outstanding loans secured by collateral in the form of stocks, 
bonds, debentures, or other such obligations, or loans made to 
members of any organized stock exchange, investment house, or 
dealer in securities, upon any obligation, note, or bill, 
secured or unsecured, for the purpose of purchasing and/or 
carrying stocks, bonds, or other investment securities (except 
obligations of the United States) such advance shall be deemed 
immediately due and payable, and such member bank shall be 
ineligible as a borrower at the reserve bank of the district 
under the provisions of this paragraph for such period as the 
Board of Governors of the Federal Reserve System shall 
determine: Provided, That no temporary carrying or clearance 
loans made solely for the purpose of facilitating the purchase 
or delivery of securities offered for public subscription shall 
be included in the loans referred to in this paragraph.
  The discount and rediscount and the purchase and sale by any 
Federal reserve bank of any bills receivable and of domestic 
and foreign bills of exchange, and of acceptances authorized by 
this Act, shall be subject to such restrictions, limitations, 
and regulations as may be imposed by the Board of Governors of 
the Federal Reserve System.
  That in addition to the powers not vested by law in national 
banking associations organized under the laws of the United 
States any such association located and doing business in any 
place the population of which does not exceed five thousand 
inhabitants, as shown by the last preceding decennial census, 
may, under such rules and regulations as may be prescribed by 
the Comptroller of the Currency, act as the agent for any fire, 
life, or other insurance company authorized by the authorities 
of the State in which said bank is located to do business in 
said State, by soliciting and selling insurance and collecting 
premiums on policies issued by such company; and may receive 
for services so rendered such fees or commissions as may be 
agreed upon between the said association and the insurance 
company for which it may act as agent: Provided, however, That 
no such bank shall in any case assume or guarantee the payment 
of any premium on insurance policies issued through its agency 
by its principal: And provided further, That the bank shall not 
guarantee the truth of any statement made by an assured in 
filing his application for insurance.
  Any member bank may accept drafts or bills of exchange drawn 
upon it having not more than three months' sight to run, 
exclusive of days of grace, drawn under regulations to be 
prescribed by the Board of Governors of the Federal Reserve 
System by banks or bankers in foreign countries or dependencies 
or insular possessions of the United States for the purpose of 
furnishing dollar exchange as required by the usages of trade 
in the respective countries, dependencies, or insular 
possessions. Such drafts or bills may be acquired by Federal 
reserve banks in such amounts and subject to such regulations, 
restrictions, and limitations as may be prescribed by the Board 
of Governors of the Federal Reserve System: Provided, however, 
That no member bank shall accept such drafts or bills of 
exchange referred to this paragraph for any one bank to an 
amount exceeding in the aggregate ten per centum of the paid-up 
and unimpaired capital and surplus of the accepting bank unless 
the draft or bill of exchange is accompanied by documents 
conveying or securing title or by some other adequate security: 
Provided further, That no member bank shall accept such drafts 
or bills in an amount exceeding at any time the aggregate of 
one-half of its paid-up and unimpaired capital and surplus.
  Subject to such limitations, restrictions and regulations as 
the Board of Governors of the Federal Reserve System may 
prescribe, any Federal reserve bank may make advances to any 
individual, partnership or corporation on the promissory notes 
of such individual, partnership or corporation secured by 
direct obligations of the United States or by any obligation 
which is a direct obligation of, or fully guaranteed as to 
principal and interest by, any agency of the United States. 
Such advances shall be made for periods not exceeding 90 days 
and shall bear interest at rates fixed from time to time by the 
Federal reserve bank, subject to the review and determination 
of the Board of Governors of the Federal Reserve System.
  Subject to such restrictions, limitations, and regulations as 
may be imposed by the Board of Governors of the Federal Reserve 
System, each Federal Reserve bank may receive deposits from, 
discount paper endorsed by, and make advances to any branch or 
agency of a foreign bank in the same manner and to the same 
extent that it may exercise such powers with respect to a 
member bank if such branch or agency is maintaining reserves 
with such Reserve bank pursuant to section 7 of the 
International Banking Act of 1978. In exercising any such 
powers with respect to any such branch or agency, each Federal 
Reserve bank shall give due regard to account balances being 
maintained by such branch or agency with such Reserve bank and 
the proportion of the assets of such branch or agency being 
held as reserves under section 7 of the International Banking 
Act of 1978. For the purposes of this paragraph, the terms 
``branch,''``agency,'' and ``foreign bank'' shall have the same 
meanings assigned to them in section 1 of the International 
Banking Act of 1978.

           *       *       *       *       *       *       *

  Sec. 19. (a) The Board is authorized for the purposes of this 
section to define the terms used in this section, to determine 
what shall be deemed a payment of interest, to determine what 
types of obligations, whether issued directly by a member bank 
or indirectly by an affiliate of a member bank or by other 
means, and regardless of the use of the proceeds, shall be 
deemed a deposit, and to prescribe such regulations as it may 
deem necessary to effectuate the purposes of this section and 
to prevent evasions thereof.
  (b) Reserve Requirements.--
          (1) Definitions.--The following definitions and rules 
        apply to this subsection, subsection (c), section 11A, 
        the first paragraph of section 13, and the second, 
        thirteenth, and fourteenth paragraphs of section 16:
                  (A) The term ``depository institution'' 
                means--
                          (i) any insured bank as defined in 
                        section 3 of the Federal Deposit 
                        Insurance Act or any bank which is 
                        eligible to make application to become 
                        an insured bank under section 5 of such 
                        Act;
                          (ii) any mutual savings bank as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act or any bank which 
                        is eligible to make application to 
                        become an insured bank under section 5 
                        of such Act;
                          (iii) any savings bank as defined in 
                        section 3 of the Federal Deposit 
                        Insurance Act or any bank which is 
                        eligible to make application to become 
                        an insured bank under section 5 of such 
                        Act;
                          (iv) any insured credit union as 
                        defined in section 101 of the Federal 
                        Credit Union Act or any credit union 
                        which is eligible to make application 
                        to become an insured credit union 
                        pursuant to section 201 of such Act;
                          (v) any member as defined in section 
                        2 of the Federal Home Loan Bank Act;
                          (vi) any savings association (as 
                        defined in section 3 of the Federal 
                        Deposit Insurance Act) which is an 
                        insured depository institution (as 
                        defined in such Act) or is eligible to 
                        apply to become an insured depository 
                        institution under the Federal Deposit 
                        Insurance Act; and
                          (vii) for the purpose of section 13 
                        and the fourteenth paragraph of section 
                        16, any association or entity which is 
                        wholly owned by or which consists only 
                        of institutions referred to in clauses 
                        (i) through (vi).
                  (B) The term ``bank'' means any insured or 
                noninsured bank, as defined in section 3 of the 
                Federal Deposit Insurance Act, other than a 
                mutual savings bank or a savings bank as 
                defined in such section.
                  (C) The term ``transaction account'' means a 
                deposit or account on which the depositor or 
                account holder is permitted to make withdrawals 
                by negotiable or transferable instrument, 
                payment orders of withdrawal, telephone 
                transfers, or other similar items for the 
                purpose of making payments or transfers to 
                third persons or others. Such term includes 
                demand deposits, negotiable order of withdrawal 
                accounts, savings deposits subject to automatic 
                transfers, and share draft accounts.
                  (D) The term ``nonpersonal time deposits'' 
                means a transferable time deposit or account or 
                a time deposit or account representing funds 
                deposited to the credit of, or in which any 
                beneficial interest is held by, a depositor who 
                is not a natural person.
                  (E) The term ``reservable liabilities'' means 
                transaction accounts, nonpersonal time 
                deposits, and all net balances, loans, assets, 
                and obligations which are, or may be, subject 
                to reserve requirements under paragraph (5).
                  (F) In order to prevent evasions of the 
                reserve requirements imposed by this 
                subsection, after consultation with the Board 
                of Directors of the Federal Deposit Insurance 
                Corporation, the Comptroller of the Currency, 
                and the National Credit Union Administration 
                Board, the Board of Governors of the Federal 
                Reserve System is authorized to determine, by 
                regulation or order, that an account or deposit 
                is a transaction account if such account or 
                deposit may be used to provide funds directly 
                or indirectly for the purpose of making 
                payments or transfers to third persons or 
                others.
          (2) Reserve requirements.--(A) Each depository 
        institution shall maintain reserves against its 
        transaction accounts as the Board may prescribe by 
        regulation solely for the purpose of implementing 
        monetary policy--
                  (i) in a ratio of not greater than 3 percent 
                (and which may be zero) for that portion of its 
                total transaction accounts of $25,000,000 or 
                less, subject to subparagraph (C); and
                  (ii) in the ratio of 12 per centum, or in 
                such other ratio as the Board may prescribe not 
                greater than 14 per centum (and which may be 
                zero), for that portion of its total 
                transaction accounts in excess of $25,000,000, 
                subject to subparagraph (C).
          (B) Each depository institution shall maintain 
        reserves against its nonpersonal time deposits in the 
        ratio of 3 per centum, or in such other ratio not 
        greater than 9 per centum and not less than zero per 
        centum as the Board may prescribe by regulation solely 
        for the purpose of implementing monetary policy.
          (C) Beginning in 1981, not later than December 31 of 
        each year the Board shall issue a regulation increasing 
        for the next succeeding calendar year the dollar amount 
        which is contained in subparagraph (A) or which was 
        last determined pursuant to this subparagraph for the 
        purpose of such subparagraph, by an amount obtained by 
        multiplying such dollar amount by 80 per centum of the 
        percentage increase in the total transaction accounts 
        of all depository institutions. The increase in such 
        transaction accounts shall be determined by subtracting 
        the amount of such accounts on June 30 of the preceding 
        calendar year from the amount of such accounts on June 
        30 of the calendar year involved. In the case of any 
        such 12-month period in which there has been a decrease 
        in the total transaction accounts of all depository 
        institutions, the Board shall issue such a regulation 
        decreasing for the next succeeding calendar year such 
        dollar amount by an amount obtained by multiplying such 
        dollar amount by 80 per centum of the percentage 
        decrease in the total transaction accounts of all 
        depository institutions. The decrease in such 
        transaction accounts shall be determined by subtracting 
        the amount of such accounts on June 30 of the calendar 
        year involved from the amount of such accounts on June 
        30 of the previous calendar year.
          (D) Any reserve requirement imposed under this 
        subsection shall be uniformly applied to all 
        transaction accounts at all depository institutions. 
        Reserve requirements imposed under this subsection 
        shall be uniformly applied to nonpersonal time deposits 
        at all depository institutions, except that such 
        requirements may vary by the maturity of such deposits.
          (3) Waiver of ratio limits in extraordinary 
        circumstances.--Upon a finding by at least 5 members of 
        the Board that extraordinary circumstances require such 
        action, the Board, after consultation with the 
        appropriate committees of the Congress, may impose, 
        with respect to any liability of depository 
        institutions, reserve requirements outside the 
        limitations as to ratios and as to types of liabilities 
        otherwise prescribed by paragraph (2) for a period not 
        exceeding 180 days, and for further periods not 
        exceeding 180 days each by affirmative action by at 
        least 5 members of the Board in each instance. The 
        Board shall promptly transmit to the Congress a report 
        of any exercise of its authority under this paragraph 
        and the reasons for such exercise of authority.
          (4) Supplemental reserves.--(A) The Board may, upon 
        the affirmative vote of not less than 5 members, impose 
        a supplemental reserve requirement on every depository 
        institution of not more than 4 per centum of its total 
        transaction accounts. Such supplemental reserve 
        requirement may be imposed only if--
                  (i) the sole purpose of such requirement is 
                to increase the amount of reserves maintained 
                to a level essential for the conduct of 
                monetary policy;
                  (ii) such requirement is not imposed for the 
                purpose of reducing the cost burdens resulting 
                from the imposition of the reserve requirements 
                pursuant to paragraph (2);
                  (iii) such requirement is not imposed for the 
                purpose of increasing the amount of balances 
                needed for clearing purposes; and
                  (iv) on the date on which the supplemental 
                reserve requirement is imposed, except as 
                provided in paragraph (11), the total amount of 
                reserves required pursuant to paragraph (2) is 
                not less than the amount of reserves that would 
                be required if the initial ratios specified in 
                paragraph (2) were in effect.
          (B) The Board may require the supplemental reserve 
        authorized under subparagraph (A) only after 
        consultation with the Board of Directors of the Federal 
        Deposit Insurance Corporation, the Comptroller of the 
        Currency, and the National Credit Union Administration 
        Board. The Board shall promptly transmit to the 
        Congress a report with respect to any exercise of its 
        authority to require supplemental reserves under 
        subparagraph (A) and such report shall state the basis 
        for the determination to exercise such authority.
          (C) If a supplemental reserve under subparagraph (A) 
        has been required of depository institutions for a 
        period of one year or more, the Board shall review and 
        determine the need for continued maintenance of 
        supplemental reserves and shall transmit annual reports 
        to the Congress regarding the need, if any, for 
        continuing the supplemental reserve.
          (D) Any supplemental reserve imposed under 
        subparagraph (A) shall terminate at the close of the 
        first 90-day period after such requirement is imposed 
        during which the average amount of reserves required 
        under paragraph (2) are less than the amount of 
        reserves which would be required during such period if 
        the initial ratios specified in paragraph (2) were in 
        effect.
          (5) Reserves related to foreign obligations or 
        assets.--Foreign branches, subsidiaries, and 
        international banking facilities of nonmember 
        depository institutions shall maintain reserves to the 
        same extent required by the Board of foreign branches, 
        subsidiaries, and international banking facilities of 
        member banks. In addition to any reserves otherwise 
        required to be maintained pursuant to this subsection, 
        any depository institution shall maintain reserves in 
        such ratios as the Board may prescribe against--
                  (A) net balances owed by domestic offices of 
                such depository institution in the United 
                States to its directly related foreign offices 
                and to foreign offices of nonrelated depository 
                institutions;
                  (B) loans to United States residents made by 
                overseas offices of such depository institution 
                if such depository institution has one or more 
                offices in the United States; and
                  (C) assets (including participations) held by 
                foreign offices of a depository institution in 
                the United States which were acquired from its 
                domestic offices.
          (6) Exemption for certain deposits.--The requirements 
        imposed under paragraph (2) shall not apply to deposits 
        payable only outside the States of the United States 
        and the District of Columbia, except that nothing in 
        this subsection limits the authority of the Board to 
        impose conditions and requirements on member banks 
        under section 25 of this Act or the authority of the 
        Board under section 7 of the International Banking Act 
        of 1978
          (7) Discount and borrowing.--Any depository 
        institution in which transaction accounts or 
        nonpersonal time deposits are held shall be entitled to 
        the same discount and borrowing privileges as member 
        banks. In the administration of discount and borrowing 
        privileges, the Board and the Federal Reserve banks 
        shall take into consideration the special needs of 
        savings and other depository institutions for access to 
        discount and borrowing facilities consistent with their 
        long-term asset portfolios and the sensitivity of such 
        institutions to trends in the national money markets.
          (8) Transitional adjustments.--
                  (A) Any depository institution required to 
                maintain reserves under this subsection which 
                was engaged in business on July 1, 1979, but 
                was not a member of the Federal Reserve System 
                on or after that date, shall maintain reserves 
                against its deposits during the first twelve-
                month period following the effective date of 
                this paragraph in amounts equal to one-eighth 
                of those otherwise required by this subsection, 
                during the second such twelve-month period in 
                amounts equal to one-fourth of those otherwise 
                required, during the third such twelve-month 
                period in amounts equal to three-eighths of 
                those otherwise required, during the fourth 
                twelve-month period in amounts equal to one-
                half of those otherwise required, and during 
                the fifth twelve-month period in amounts equal 
                to five-eighths of those otherwise required, 
                during the sixth twelve-month period in amounts 
                equal to three-fourths of those otherwise 
                required, and during the seventh twelve-month 
                period in amounts equal to seven-eighths of 
                those otherwise required. This subparagraph 
                does not apply to any category of deposits or 
                accounts which are first authorized pursuant to 
                Federal law in any State after April 1, 1980.
                  (B) With respect to any bank which was a 
                member of the Federal Reserve System during the 
                entire period beginning on July 1, 1979, and 
                ending on the effective date of the Monetary 
                Control Act of 1980, the amount of required 
                reserves imposed pursuant to this subsection on 
                and after the effective date of such Act that 
                exceeds the amount of reserves which would have 
                been required of such bank if the reserve 
                ratios in effect during the reserve computation 
                period immediately preceding such effective 
                date were applied may, at the discretion of the 
                Board and in accordance with such rules and 
                regulations as it may adopt, be reduced by 75 
                per centum during the first year which begins 
                after such effective date, 50 per centum during 
                the second year, and 25 per centum during the 
                third year.
                  (C)(i) With respect to any bank which is a 
                member of the Federal Reserve System on the 
                effective date of the Monetary Control Act of 
                1980, the amount of reserves which would have 
                been required of such bank if the reserve 
                ratios in effect during the reserve computation 
                period immediately preceding such effective 
                date were applied that exceeds the amount of 
                required reserves imposed pursuant to this 
                subsection shall, in accordance with such rules 
                and regulations as the Board may adopt, be 
                reduced by 25 per centum during the first year 
                which begins after such effective date, 50 per 
                centum during the second year, and 75 per 
                centum during the third year.
                  (ii) If a bank becomes a member bank during 
                the four-year period beginning on the effective 
                date of the Monetary Control Act of 1980, and 
                if the amount of reserves which would have been 
                required of such bank, determined as if the 
                reserve ratios in effect during the reserve 
                computation period immediately preceding such 
                effective date were applied, and as if such 
                bank had been a member during such period, 
                exceeds the amount of reserves required 
                pursuant to this subsection, the amount of 
                reserves required to be maintained by such bank 
                beginning on the date on which such bank 
                becomes a member of the Federal Reserve System 
                shall be the amount of reserves which would 
                have been required of such bank if it had been 
                a member on the day before such effective date, 
                except that the amount of such excess shall, in 
                accordance with such rules and regulations as 
                the Board may adopt, be reduced by 25 per 
                centum during the first year which begins after 
                such effective date, 50 per centum during the 
                second year, and 75 per centum during the third 
                year.
                  (D)(i) Any bank which was a member bank on 
                July 1, 1979, and which withdrew from 
                membership in the Federal Reserve System during 
                the period beginning on July 1, 1979, and 
                ending on March 31, 1980, shall maintain 
                reserves during the first twelve-month period 
                beginning on the date of enactment of this 
                clause in amounts equal to one-half of those 
                otherwise required by this subsection, during 
                the second such twelve-month period in amounts 
                equal to two-thirds of those otherwise 
                required, and during the third such twelve-
                month period in amounts equal to five-sixths of 
                those otherwise required.
                  (ii) Any bank which withdraws from membership 
                in the Federal Reserve System on or after the 
                date of enactment of the Depository 
                Institutions Deregulation and Monetary Control 
                Act of 1980 shall maintain reserves in the same 
                amount as member banks are required to maintain 
                under this subsection, pursuant to 
                subparagraphs (B) and (C)(i).
                  (E) This subparagraph applies to any 
                depository institution that, on August 1, 1978, 
                (i) was engaged in business as a depository 
                institution in a State outside the continental 
                limits of the United States, and (ii) was not a 
                member of the Federal Reserve System at any 
                time on or after such date. Such a depository 
                institution shall not be required to maintain 
                reserves against such deposits held or 
                maintained at its offices located in a State 
                outside the continental limits of the United 
                States until the first day of the sixth 
                calendar year which begins after the effective 
                date of the Monetary Control Act of 1980. Such 
                a depository institution shall maintain 
                reserves against such deposits during the sixth 
                calendar year which begins after such effective 
                date in an amount equal to one-eighth of that 
                otherwise required by paragraph (2), during the 
                seventh such year in an amount equal to one-
                fourth of that otherwise required, during the 
                eighth such year in an amount equal to three-
                eighths of that otherwise required, during the 
                ninth such year in an amount equal to one-half 
                of that otherwise required, during the tenth 
                such year in an amount equal to five-eighths of 
                that otherwise required, during the eleventh 
                such year in an amount equal to three-fourths 
                of that otherwise required, and during the 
                twelth such year in an amount equal to seven-
                eighths of that otherwise required.
          (9) Exemption.--This subsection shall not apply with 
        respect to any financial institution which--
                  (A) is organized solely to do business with 
                other financial institutions;
                  (B) is owned primarily by the financial 
                institutions with which it does business; and
                  (C) does not do business with the general 
                public.
          (10) Waivers.--In individual cases, where a Federal 
        supervisory authority waives a liquidity requirement, 
        or waives the penalty for failing to satisfy a 
        liquidity requirement, the Board shall waive the 
        reserve requirement, or waive the penalty for failing 
        to satisfy a reserve requirement, imposed pursuant to 
        this subsection for the depository institution involved 
        when requested by the Federal supervisory authority 
        involved.
          (11) Additional exemptions.--(A)(i) Notwithstanding 
        the reserve requirement ratios established under 
        paragraphs (2) and (5) of this subsection, a reserve 
        ratio of zero per centum shall apply to any combination 
        of reservable liabilities, which do not exceed 
        $2,000,000 (as adjusted under subparagraph (B)), of 
        each depository institution.
          (ii) Each depository institution may designate, in 
        accordance with such rules and regulations as the Board 
        shall prescribe, the types and amounts of reservable 
        liabilities to which the reserve ratio of zero per 
        centum shall apply, except that transaction accounts 
        which are designated to be subject to a reserve ratio 
        of zero per centum shall be accounts which would 
        otherwise be subject to a reserve ratio of 3 per centum 
        under paragraph (2).
          (iii) The Board shall minimize the reporting 
        necessary to determine whether depository institutions 
        have total reservable liabilities of less than 
        $2,000,000 (as adjusted under subparagraph (B)). 
        Consistent with the Board's responsibility to monitor 
        and control monetary and credit aggregates, depository 
        institutions which have reserve requirements under this 
        subsection equal to zero per centum shall be subject to 
        less overall reporting requirements than depository 
        institutions which have a reserve requirement under 
        this subsection that exceeds zero per centum.
          (B)(i) Beginning in 1982, not later than December 31 
        of each year, the Board shall issue a regulation 
        increasing for the next succeeding calendar year the 
        dollar amount specified in subparagraph (A), as 
        previously adjusted under this subparagraph, by an 
        amount obtained by multiplying such dollar amount by 80 
        per centum of the percentage increase in the total 
        reservable liabilities of all depository institutions.
          (ii) The increase in total reservable liabilities 
        shall be determined by subtracting the amount of total 
        reservable liabilities on June 30 of the preceding 
        calendar year from the amount of total reservable 
        liabilities on June 30 of the calendar year involved. 
        In the case of any such twelve-month period in which 
        there has been a decrease in the total reservable 
        liabilities of all depository institutions, no 
        adjustment shall be made. A decrease in total 
        reservable liabilities shall be determined by 
        subtracting the amount of total reservable liabilities 
        on June 30 of the calendar year involved from the 
        amount of total reservable liabilities on June 30 of 
        the previous calendar year.
          (12) Earnings on balances.--
                  (A) In general.--Balances maintained at a 
                Federal Reserve bank by or on behalf of a 
                depository institution may receive earnings to 
                be paid by the Federal Reserve bank at least 
                once each calendar quarter, at a rate or rates 
                established by the Federal Open Market 
                Committee not to exceed the general level of 
                short-term interest rates.
                  (B) Regulations relating to payments and 
                distributions.--The Board may prescribe 
                regulations concerning--
                          (i) the payment of earnings in 
                        accordance with this paragraph;
                          (ii) the distribution of such 
                        earnings to the depository institutions 
                        which maintain balances at such banks, 
                        or on whose behalf such balances are 
                        maintained; and
                          (iii) the responsibilities of 
                        depository institutions, Federal Home 
                        Loan Banks, and the National Credit 
                        Union Administration Central Liquidity 
                        Facility with respect to the crediting 
                        and distribution of earnings 
                        attributable to balances maintained, in 
                        accordance with subsection (c)(1)(A), 
                        in a Federal Reserve bank by any such 
                        entity on behalf of depository 
                        institutions.
                  (C) Depository institutions defined.--For 
                purposes of this paragraph, the term 
                ``depository institution'', in addition to the 
                institutions described in paragraph (1)(A), 
                includes any trust company, corporation 
                organized under section 25A or having an 
                agreement with the Board under section 25, or 
                any branch or agency of a foreign bank (as 
                defined in section 1(b) of the International 
                Banking Act of 1978).
  (c)(1) Reserves held by a depository institution to meet the 
requirements imposed pursuant to subsection (b) shall, subject 
to such rules and regulations as the Board shall prescribe, be 
in the form of--
          (A) balances maintained for such purposes by such 
        depository institution in the Federal Reserve bank of 
        which it is a member or at which it maintains an 
        account, except that (i) the Board may, by regulation 
        or order, permit depository institutions to maintain 
        all or a portion of their required reserves in the form 
        of vault cash, except that any portion so permitted 
        shall be identical for all depository institutions, and 
        (ii) vault cash may be used to satisfy any supplemental 
        reserve requirement imposed pursuant to subsection 
        (b)(4), except that all such vault cash shall be 
        excluded from any computation of earnings pursuant to 
        subsection (b); and
          (B) balances maintained by a depository institution 
        in a depository institution which maintains required 
        reserve balances at a Federal Reserve bank, in a 
        Federal Home Loan Bank, or in the National Credit Union 
        Administration Central Liquidity Facility, if such 
        depository institution, Federal Home Loan Bank, or 
        National Credit Union Administration Central Liquidity 
        Facility maintains such funds in the form of balances 
        in a Federal Reserve bank of which it is a member or at 
        which it maintains an account. Balances received by a 
        depository institution from a second depository 
        institution and used to satisfy the reserve requirement 
        imposed on such second depository institution by this 
        section shall not be subject to the reserve 
        requirements of this section imposed on such first 
        depository institution, and shall not be subject to 
        assessments or reserves imposed on such first 
        depository institution pursuant to section 7 of the 
        Federal Deposit Insurance Act (12 U.S.C. 1817), section 
        404 of the National Housing Act (12 U.S.C. 1727), or 
        section 202 of the Federal Credit Union Act (12 U.S.C. 
        1782).
  (2) The balances maintained to meet the reserve requirements 
of subsection (b) by a depository institution in a Federal 
Reserve bank or passed through a Federal Home Loan Bank or the 
National Credit Union Administration Central Liquidity Facility 
or another depository institution to a Federal Reserve bank may 
be used to satisfy liquidity requirements which may be imposed 
under other provisions of Federal or State law.
  (d) No member bank shall act as the medium or agent of any 
nonbanking corporation, partnership, association, business 
trust, or individual in making loans on the security of stocks, 
bonds, and other investment securities to brokers or dealers in 
stocks, bonds, and other investment securities. Every violation 
of this provision by any member bank shall be punishable by a 
fine of not more than $100 per day during the continuance of 
such violation; and such fine may be collected, by suit or 
otherwise, by the Federal reserve bank of the district in which 
such member bank is located.
  (e) No member bank shall keep on deposit with any depository 
institution which is not authorized to have access to Federal 
Reserve advances under section 10(b) of this Act a sum in 
excess of 10 per centum of its own paid-up capital and surplus. 
No member bank shall act as the medium or agent of a nonmember 
bank in applying for or receiving discounts from a Federal 
reserve bank under the provisions of this Act, except by 
permission of the Board of Governors of the Federal Reserve 
System.
  (f) The required balance carried by a member bank with a 
Federal reserve bank may, under the regulations and subject to 
such penalties as may be prescribed by the Board of Governors 
of the Federal Reserve System, be checked against and withdrawn 
by such member bank for the purpose of meeting existing 
liabilities.
  (g) In estimating the reserve balances required by this Act, 
member banks may deduct from the amount of their gross demand 
deposits the amounts of balances due from other banks (except 
Federal Reserve banks and foreign banks) and cash items in 
process of collection payable immediately upon presentation in 
the United States, within the meaning of these terms as defined 
by the Board of Governors of the Federal Reserve System.
  (h) National banks, or banks organized under local laws, 
located in a dependency or insular posssession or any part of 
the United States outside the continental United States may 
remain nonmember banks, and shall in that event maintain 
reserves and comply with all the conditions now provided by law 
regulating them; or said banks may, with the consent of the 
Board of Governors of the Federal Reserve System, become member 
banks of any one of the reserve districts, and shall in that 
event take stock, maintain reserves, and be subject to all the 
other provisions of this Act.
  (j) The Board may from time to time, after consulting with 
the Board of Directors of the Federal Deposit Insurance 
Corporation and the Director of the Office of Thrift 
Supervision, prescribe rules governing the payment and 
advertisement of interest on deposits, including limitations on 
the rates of interest which may be paid by member banks on time 
and savings deposits. The Board may prescribe different rate 
limitations for different classes of deposits, for deposits of 
different amounts or with different maturities or subject to 
different conditions regarding withdrawal or repayment, 
according to the nature or location of member banks or their 
depositors, or according to such other reasonable bases as the 
Board may deem desirable in the public interest. No member bank 
shall pay any time deposit before its maturity except upon such 
conditions and in accordance with such rules and regulations as 
may be prescribed by the said Board, or waive any requirement 
of notice before payment of any savings deposit except as to 
all savings deposits having the same requirement: Provided, 
That the provisions of this paragraph shall not apply to any 
deposit which is payable only at an office of a member bank 
located outside of the States of the United States and the 
District of Columbia. During the period commencing on October 
15, 1962, and ending on October 15, 1968, the provisions of 
this paragraph shall not apply to the rate of interest which 
may be paid by member banks on time deposits of foreign 
governments, monetary and financial authorities of foreign 
governments when acting as such, or international financial 
institutions of which the United States is a member.
  (k) No member bank or affiliate thereof, or any successor or 
assignee of such member bank or affiliate or any endorser, 
guarantor, or surety of such member bank or affiliate may 
plead, raise, or claim directly or by counterclaim, setoff, or 
otherwise, with respect to any deposit or obligation of such 
member bank or affiliate, any defense, right, or benefit under 
any provision of a statute or constitution of a State or of a 
territory of the United States, or of any law of the District 
of Columbia, regulating or limiting the rate of interest which 
may be charged, taken, received, or reserved, and any such 
provision is hereby preempted, and no civil or criminal penalty 
which would otherwise be applicable under such provision shall 
apply to such member bank or affiliate or to any other person.
  (l) Civil Money Penalty.--
          (1) First tier.--Any member bank which, and any 
        institution-affiliated party (within the meaning of 
        section 3(u) of the Federal Deposit Insurance Act) with 
        respect to such member bank who, violates any provision 
        of this section, or any regulation issued pursuant 
        thereto, shall forfeit and pay a civil penalty of not 
        more than $5,000 for each day during which such 
        violation continues.
          (2) Second tier.--Notwithstanding paragraph (1), any 
        member bank which, and any institution-affiliated party 
        (within the meaning of section 3(u) of the Federal 
        Deposit Insurance Act) with respect to such member bank 
        who--
                  (A)(i) commits any violation described in 
                paragraph (1);
                  (ii) recklessly engages in an unsafe or 
                unsound practice in conducting the affairs of 
                such member bank; or
                  (iii) breaches any fiduciary duty;
                  (B) which violation, practice, or breach--
                          (i) is part of a pattern of 
                        misconduct;
                          (ii) causes or is likely to cause 
                        more than a minimal loss to such member 
                        bank; or
                          (iii) results in pecuniary gain or 
                        other benefit to such party,
                shall forfeit and pay a civil penalty of not 
                more than $25,000 for each day during which 
                such violation, practice, or breach continues.
                  (3) Third tier.--Notwithstanding paragraphs 
                (1) and (2), any member bank which, and any 
                institution-affiliated party (within the 
                meaning of section 3(u) of the Federal Deposit 
                Insurance Act) with respect to such member bank 
                who--
                          (A) knowingly--
                                  (i) commits any violation 
                                described in paragraph (1);
                                  (ii) engages in any unsafe or 
                                unsound practice in conducting 
                                the affairs of such member 
                                bank; or
                                  (iii) breaches any fiduciary 
                                duty; and
                          (B) knowingly or recklessly causes a 
                        substantial loss to such member bank or 
                        a substantial pecuniary gain or other 
                        benefit to such party by reason of such 
                        violation, practice, or breach,
        shall forfeit and pay a civil penalty in an amount not 
        to exceed the applicable maximum amount determined 
        under paragraph (4) for each day during which such 
        violation, practice, or breach continues.
          (4) Maximum amounts of penalties for any violation 
        described in paragraph (3).--The maximum daily amount 
        of any civil penalty which may be assessed pursuant to 
        paragraph (3) for any violation, practice, or breach 
        described in such paragraph is--
                  (A) in the case of any person other than a 
                member bank, an amount not to exceed 
                $1,000,000; and
                  (B) in the case of a member bank, an amount 
                not to exceed the lesser of--
                          (i) $1,000,000; or
                          (ii) 1 percent of the total assets of 
                        such member bank.
          (5) Assessment; etc.--Any penalty imposed under 
        paragraph (1), (2), or (3) may be assessed and 
        collected by the Board in the manner provided in 
        subparagraphs (E), (F), (G), and (I) of section 8(i)(2) 
        of the Federal Deposit Insurance Act for penalties 
        imposed (under such section) and any such assessment 
        shall be subject to the provisions of such section.
          (6) Hearing.--The member bank or other person against 
        whom any penalty is assessed under this subsection 
        shall be afforded an agency hearing if such member bank 
        or person submits a request for such hearing within 20 
        days after the issuance of the notice of assessment. 
        Section 8(h) of the Federal Deposit Insurance Act shall 
        apply to any proceeding under this subsection.
          (7) Disbursement.--All penalties collected under 
        authority of this subsection shall be deposited into 
        the Treasury.
          (8) Violate defined.--For purposes of this section, 
        the term ``violate'' includes any action (alone or with 
        another or others) for or toward causing, bringing 
        about, participating in, counseling, or aiding or 
        abetting a violation.
          (9) Regulations.--The Board shall prescribe 
        regulations establishing such procedures as may be 
        necessary to carry out this subsection.
  (m) Notice Under This Section After Separation From 
Service.--The resignation, termination of employment or 
participation, or separation of an institution-affiliated party 
(within the meaning of section 3(u) of the Federal Deposit 
Insurance Act) with respect to a member bank (including a 
separation caused by the closing of such a bank) shall not 
affect the jurisdiction and authority of the Board to issue any 
notice and proceed under this section against any such party, 
if such notice is served before the end of the 6-year period 
beginning on the date such party ceased to be such a party with 
respect to such bank (whether such date occurs before, on, or 
after the date of the enactment of this subsection).

           *       *       *       *       *       *       *

                              ----------                              


DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT

           *       *       *       *       *       *       *



TITLE I--FINANCIAL STABILITY

           *       *       *       *       *       *       *


Subtitle C--Additional Board of Governors Authority for Certain Nonbank 
Financial Companies and Bank Holding Companies

           *       *       *       *       *       *       *


SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK 
                    FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF 
                    GOVERNORS AND CERTAIN BANK HOLDING COMPANIES.

  (a) In General.--
          (1) Purpose.--In order to prevent or mitigate risks 
        to the financial stability of the United States that 
        could arise from the material financial distress or 
        failure, or ongoing activities, of large, 
        interconnected financial institutions, the Board of 
        Governors shall, on its own or pursuant to 
        recommendations by the Council under section 115, 
        establish prudential standards for nonbank financial 
        companies supervised by the Board of Governors and bank 
        holding companies with total consolidated assets equal 
        to or greater than $50,000,000,000 that--
                  (A) are more stringent than the standards and 
                requirements applicable to nonbank financial 
                companies and bank holding companies that do 
                not present similar risks to the financial 
                stability of the United States; and
                  (B) increase in stringency, based on the 
                considerations identified in subsection (b)(3).
          (2) Tailored application.--
                  (A) In general.--In prescribing more 
                stringent prudential standards under this 
                section, the Board of Governors may, on its own 
                or pursuant to a recommendation by the Council 
                in accordance with section 115, differentiate 
                among companies on an individual basis or by 
                category, taking into consideration their 
                capital structure, riskiness, complexity, 
                financial activities (including the financial 
                activities of their subsidiaries), size, and 
                any other risk-related factors that the Board 
                of Governors deems appropriate.
                  (B) Adjustment of threshold for application 
                of certain standards.--The Board of Governors 
                may, pursuant to a recommendation by the 
                Council in accordance with section 115, 
                establish an asset threshold above 
                $50,000,000,000 for the application of any 
                standard established under subsections (c) 
                through (g).
  (b) Development of Prudential Standards.--
          (1) In general.--
                  (A) Required standards.--The Board of 
                Governors shall establish prudential standards 
                for nonbank financial companies supervised by 
                the Board of Governors and bank holding 
                companies described in subsection (a), that 
                shall include--
                          (i) risk-based capital requirements 
                        and leverage limits, unless the Board 
                        of Governors, in consultation with the 
                        Council, determines that such 
                        requirements are not appropriate for a 
                        company subject to more stringent 
                        prudential standards because of the 
                        activities of such company (such as 
                        investment company activities or assets 
                        under management) or structure, in 
                        which case, the Board of Governors 
                        shall apply other standards that result 
                        in similarly stringent risk controls;
                          (ii) liquidity requirements;
                          (iii) overall risk management 
                        requirements;
                          (iv) resolution plan and credit 
                        exposure report requirements; and
                          (v) concentration limits.
                  (B) Additional standards authorized.--The 
                Board of Governors may establish additional 
                prudential standards for nonbank financial 
                companies supervised by the Board of Governors 
                and bank holding companies described in 
                subsection (a), that include--
                          (i) a contingent capital requirement;
                          (ii) enhanced public disclosures;
                          (iii) short-term debt limits; and
                          (iv) such other prudential standards 
                        as the Board or Governors, on its own 
                        or pursuant to a recommendation made by 
                        the Council in accordance with section 
                        115, determines are appropriate.
          (2) Standards for foreign financial companies.--In 
        applying the standards set forth in paragraph (1) to 
        any foreign nonbank financial company supervised by the 
        Board of Governors or foreign-based bank holding 
        company, the Board of Governors shall--
                  (A) give due regard to the principle of 
                national treatment and equality of competitive 
                opportunity; and
                  (B) take into account the extent to which the 
                foreign financial company is subject on a 
                consolidated basis to home country standards 
                that are comparable to those applied to 
                financial companies in the United States.
          (3) Considerations.--In prescribing prudential 
        standards under paragraph (1), the Board of Governors 
        shall--
                  (A) take into account differences among 
                nonbank financial companies supervised by the 
                Board of Governors and bank holding companies 
                described in subsection (a), based on--
                          (i) the factors described in 
                        subsections (a) and (b) of section 113;
                          (ii) whether the company owns an 
                        insured depository institution;
                          (iii) nonfinancial activities and 
                        affiliations of the company; and
                          (iv) any other risk-related factors 
                        that the Board of Governors determines 
                        appropriate;
                  (B) to the extent possible, ensure that small 
                changes in the factors listed in subsections 
                (a) and (b) of section 113 would not result in 
                sharp, discontinuous changes in the prudential 
                standards established under paragraph (1) of 
                this subsection;
                  (C) take into account any recommendations of 
                the Council under section 115; and
                  (D) adapt the required standards as 
                appropriate in light of any predominant line of 
                business of such company, including assets 
                under management or other activities for which 
                particular standards may not be appropriate.
          (4) Consultation.--Before imposing prudential 
        standards or any other requirements pursuant to this 
        section, including notices of deficiencies in 
        resolution plans and more stringent requirements or 
        divestiture orders resulting from such notices, that 
        are likely to have a significant impact on a 
        functionally regulated subsidiary or depository 
        institution subsidiary of a nonbank financial company 
        supervised by the Board of Governors or a bank holding 
        company described in subsection (a), the Board of 
        Governors shall consult with each Council member that 
        primarily supervises any such subsidiary with respect 
        to any such standard or requirement.
          (5) Report.--The Board of Governors shall submit an 
        annual report to Congress regarding the implementation 
        of the prudential standards required pursuant to 
        paragraph (1), including the use of such standards to 
        mitigate risks to the financial stability of the United 
        States.
  (c) Contingent Capital.--
          (1) In general.--Subsequent to submission by the 
        Council of a report to Congress under section 115(c), 
        the Board of Governors may issue regulations that 
        require each nonbank financial company supervised by 
        the Board of Governors and bank holding companies 
        described in subsection (a) to maintain a minimum 
        amount of contingent capital that is convertible to 
        equity in times of financial stress.
          (2) Factors to consider.--In issuing regulations 
        under this subsection, the Board of Governors shall 
        consider--
                  (A) the results of the study undertaken by 
                the Council, and any recommendations of the 
                Council, under section 115(c);
                  (B) an appropriate transition period for 
                implementation of contingent capital under this 
                subsection;
                  (C) the factors described in subsection 
                (b)(3)(A);
                  (D) capital requirements applicable to the 
                nonbank financial company supervised by the 
                Board of Governors or a bank holding company 
                described in subsection (a), and subsidiaries 
                thereof; and
                  (E) any other factor that the Board of 
                Governors deems appropriate.
  (d) Resolution Plan and Credit Exposure Reports.--
          (1) Resolution plan.--The Board of Governors shall 
        require each nonbank financial company supervised by 
        the Board of Governors and bank holding companies 
        described in subsection (a) to report periodically to 
        the Board of Governors, the Council, and the 
        Corporation the plan of such company for rapid and 
        orderly resolution in the event of material financial 
        distress or failure, which shall include--
                  (A) information regarding the manner and 
                extent to which any insured depository 
                institution affiliated with the company is 
                adequately protected from risks arising from 
                the activities of any nonbank subsidiaries of 
                the company;
                  (B) full descriptions of the ownership 
                structure, assets, liabilities, and contractual 
                obligations of the company;
                  (C) identification of the cross-guarantees 
                tied to different securities, identification of 
                major counterparties, and a process for 
                determining to whom the collateral of the 
                company is pledged; and
                  (D) any other information that the Board of 
                Governors and the Corporation jointly require 
                by rule or order.
          (2) Credit exposure report.--The Board of Governors 
        shall require each nonbank financial company supervised 
        by the Board of Governors and bank holding companies 
        described in subsection (a) to report periodically to 
        the Board of Governors, the Council, and the 
        Corporation on--
                  (A) the nature and extent to which the 
                company has credit exposure to other 
                significant nonbank financial companies and 
                significant bank holding companies; and
                  (B) the nature and extent to which other 
                significant nonbank financial companies and 
                significant bank holding companies have credit 
                exposure to that company.
          (3) Review.--The Board of Governors and the 
        Corporation shall review the information provided in 
        accordance with this subsection by each nonbank 
        financial company supervised by the Board of Governors 
        and bank holding company described in subsection (a).
          (4) Notice of deficiencies.--If the Board of 
        Governors and the Corporation jointly determine, based 
        on their review under paragraph (3), that the 
        resolution plan of a nonbank financial company 
        supervised by the Board of Governors or a bank holding 
        company described in subsection (a) is not credible or 
        would not facilitate an orderly resolution of the 
        company under title 11, United States Code--
                  (A) the Board of Governors and the 
                Corporation shall notify the company of the 
                deficiencies in the resolution plan; and
                  (B) the company shall resubmit the resolution 
                plan within a timeframe determined by the Board 
                of Governors and the Corporation, with 
                revisions demonstrating that the plan is 
                credible and would result in an orderly 
                resolution under title 11, United States Code, 
                including any proposed changes in business 
                operations and corporate structure to 
                facilitate implementation of the plan.
          (5) Failure to resubmit credible plan.--
                  (A) In general.--If a nonbank financial 
                company supervised by the Board of Governors or 
                a bank holding company described in subsection 
                (a) fails to timely resubmit the resolution 
                plan as required under paragraph (4), with such 
                revisions as are required under subparagraph 
                (B), the Board of Governors and the Corporation 
                may jointly impose more stringent capital, 
                leverage, or liquidity requirements, or 
                restrictions on the growth, activities, or 
                operations of the company, or any subsidiary 
                thereof, until such time as the company 
                resubmits a plan that remedies the 
                deficiencies.
                  (B) Divestiture.--The Board of Governors and 
                the Corporation, in consultation with the 
                Council, may jointly direct a nonbank financial 
                company supervised by the Board of Governors or 
                a bank holding company described in subsection 
                (a), by order, to divest certain assets or 
                operations identified by the Board of Governors 
                and the Corporation, to facilitate an orderly 
                resolution of such company under title 11, 
                United States Code, in the event of the failure 
                of such company, in any case in which--
                          (i) the Board of Governors and the 
                        Corporation have jointly imposed more 
                        stringent requirements on the company 
                        pursuant to subparagraph (A); and
                          (ii) the company has failed, within 
                        the 2-year period beginning on the date 
                        of the imposition of such requirements 
                        under subparagraph (A), to resubmit the 
                        resolution plan with such revisions as 
                        were required under paragraph (4)(B).
          (6) No limiting effect.--A resolution plan submitted 
        in accordance with this subsection shall not be binding 
        on a bankruptcy court, a receiver appointed under title 
        II, or any other authority that is authorized or 
        required to resolve the nonbank financial company 
        supervised by the Board, any bank holding company, or 
        any subsidiary or affiliate of the foregoing.
          (7) No private right of action.--No private right of 
        action may be based on any resolution plan submitted in 
        accordance with this subsection.
          (8) Rules.--Not later than 18 months after the date 
        of enactment of this Act, the Board of Governors and 
        the Corporation shall jointly issue final rules 
        implementing this subsection.
  (e) Concentration Limits.--
          (1) Standards.--In order to limit the risks that the 
        failure of any individual company could pose to a 
        nonbank financial company supervised by the Board of 
        Governors or a bank holding company described in 
        subsection (a), the Board of Governors, by regulation, 
        shall prescribe standards that limit such risks.
          (2) Limitation on credit exposure.--The regulations 
        prescribed by the Board of Governors under paragraph 
        (1) shall prohibit each nonbank financial company 
        supervised by the Board of Governors and bank holding 
        company described in subsection (a) from having credit 
        exposure to any unaffiliated company that exceeds 25 
        percent of the capital stock and surplus (or such lower 
        amount as the Board of Governors may determine by 
        regulation to be necessary to mitigate risks to the 
        financial stability of the United States) of the 
        company.
          (3) Credit exposure.--For purposes of paragraph (2), 
        ``credit exposure'' to a company means--
                  (A) all extensions of credit to the company, 
                including loans, deposits, and lines of credit;
                  (B) all repurchase agreements and reverse 
                repurchase agreements with the company, and all 
                securities borrowing and lending transactions 
                with the company, to the extent that such 
                transactions create credit exposure for the 
                nonbank financial company supervised by the 
                Board of Governors or a bank holding company 
                described in subsection (a);
                  (C) all guarantees, acceptances, or letters 
                of credit (including endorsement or standby 
                letters of credit) issued on behalf of the 
                company;
                  (D) all purchases of or investment in 
                securities issued by the company;
                  (E) counterparty credit exposure to the 
                company in connection with a derivative 
                transaction between the nonbank financial 
                company supervised by the Board of Governors or 
                a bank holding company described in subsection 
                (a) and the company; and
                  (F) any other similar transactions that the 
                Board of Governors, by regulation, determines 
                to be a credit exposure for purposes of this 
                section.
          (4) Attribution rule.--For purposes of this 
        subsection, any transaction by a nonbank financial 
        company supervised by the Board of Governors or a bank 
        holding company described in subsection (a) with any 
        person is a transaction with a company, to the extent 
        that the proceeds of the transaction are used for the 
        benefit of, or transferred to, that company.
          (5) Rulemaking.--The Board of Governors may issue 
        such regulations and orders, including definitions 
        consistent with this section, as may be necessary to 
        administer and carry out this subsection.
          (6) Exemptions.--This subsection shall not apply to 
        any Federal home loan bank. The Board of Governors may, 
        by regulation or order, exempt transactions, in whole 
        or in part, from the definition of the term ``credit 
        exposure'' for purposes of this subsection, if the 
        Board of Governors finds that the exemption is in the 
        public interest and is consistent with the purpose of 
        this subsection.
          (7) Transition period.--
                  (A) In general.--This subsection and any 
                regulations and orders of the Board of 
                Governors under this subsection shall not be 
                effective until 3 years after the date of 
                enactment of this Act.
                  (B) Extension authorized.--The Board of 
                Governors may extend the period specified in 
                subparagraph (A) for not longer than an 
                additional 2 years.
  (f) Enhanced Public Disclosures.--The Board of Governors may 
prescribe, by regulation, periodic public disclosures by 
nonbank financial companies supervised by the Board of 
Governors and bank holding companies described in subsection 
(a) in order to support market evaluation of the risk profile, 
capital adequacy, and risk management capabilities thereof.
  (g) Short-term Debt Limits.--
          (1) In general.--In order to mitigate the risks that 
        an over-accumulation of short-term debt could pose to 
        financial companies and to the stability of the United 
        States financial system, the Board of Governors may, by 
        regulation, prescribe a limit on the amount of short-
        term debt, including off-balance sheet exposures, that 
        may be accumulated by any bank holding company 
        described in subsection (a) and any nonbank financial 
        company supervised by the Board of Governors.
          (2) Basis of limit.--Any limit prescribed under 
        paragraph (1) shall be based on the short-term debt of 
        the company described in paragraph (1) as a percentage 
        of capital stock and surplus of the company or on such 
        other measure as the Board of Governors considers 
        appropriate.
          (3) Short-term debt defined.--For purposes of this 
        subsection, the term ``short-term debt'' means such 
        liabilities with short-dated maturity that the Board of 
        Governors identifies, by regulation, except that such 
        term does not include insured deposits.
          (4) Rulemaking authority.--In addition to prescribing 
        regulations under paragraphs (1) and (3), the Board of 
        Governors may prescribe such regulations, including 
        definitions consistent with this subsection, and issue 
        such orders, as may be necessary to carry out this 
        subsection.
          (5) Authority to issue exemptions and adjustments.--
        Notwithstanding the Bank Holding Company Act of 1956 
        (12 U.S.C. 1841 et seq.), the Board of Governors may, 
        if it determines such action is necessary to ensure 
        appropriate heightened prudential supervision, with 
        respect to a company described in paragraph (1) that 
        does not control an insured depository institution, 
        issue to such company an exemption from or adjustment 
        to the limit prescribed under paragraph (1).
  (h) Risk Committee.--
          (1) Nonbank financial companies supervised by the 
        board of governors.--The Board of Governors shall 
        require each nonbank financial company supervised by 
        the Board of Governors that is a publicly traded 
        company to establish a risk committee, as set forth in 
        paragraph (3), not later than 1 year after the date of 
        receipt of a notice of final determination under 
        section 113(e)(3) with respect to such nonbank 
        financial company supervised by the Board of Governors.
          (2) Certain bank holding companies.--
                  (A) Mandatory regulations.--The Board of 
                Governors shall issue regulations requiring 
                each bank holding company that is a publicly 
                traded company and that has total consolidated 
                assets of not less than $10,000,000,000 to 
                establish a risk committee, as set forth in 
                paragraph (3).
                  (B) Permissive regulations.--The Board of 
                Governors may require each bank holding company 
                that is a publicly traded company and that has 
                total consolidated assets of less than 
                $10,000,000,000 to establish a risk committee, 
                as set forth in paragraph (3), as determined 
                necessary or appropriate by the Board of 
                Governors to promote sound risk management 
                practices.
          (3) Risk committee.--A risk committee required by 
        this subsection shall--
                  (A) be responsible for the oversight of the 
                enterprise-wide risk management practices of 
                the nonbank financial company supervised by the 
                Board of Governors or bank holding company 
                described in subsection (a), as applicable;
                  (B) include such number of independent 
                directors as the Board of Governors may 
                determine appropriate, based on the nature of 
                operations, size of assets, and other 
                appropriate criteria related to the nonbank 
                financial company supervised by the Board of 
                Governors or a bank holding company described 
                in subsection (a), as applicable; and
                  (C) include at least 1 risk management expert 
                having experience in identifying, assessing, 
                and managing risk exposures of large, complex 
                firms.
          (4) Rulemaking.--The Board of Governors shall issue 
        final rules to carry out this subsection, not later 
        than 1 year after the transfer date, to take effect not 
        later than 15 months after the transfer date.
  (i) Stress Tests.--
          (1) By the board of governors.--
                  (A) Annual tests required.--The Board of 
                Governors, in coordination with the appropriate 
                primary financial regulatory agencies and the 
                Federal Insurance Office, shall conduct annual 
                analyses in which nonbank financial companies 
                supervised by the Board of Governors and bank 
                holding companies described in subsection (a) 
                are subject to evaluation of whether such 
                companies have the capital, on a total 
                consolidated basis, necessary to absorb losses 
                as a result of adverse economic conditions.
                  (B) Test parameters and consequences.--The 
                Board of Governors--
                          [(i) shall provide for at least 3 
                        different sets of conditions under 
                        which the evaluation required by this 
                        subsection shall be conducted, 
                        including baseline, adverse, and 
                        severely adverse;]
                          (i) shall--
                                  (I) issue regulations, after 
                                providing for public notice and 
                                comment, that provide for at 
                                least 3 different sets of 
                                conditions under which the 
                                evaluation required by this 
                                subsection shall be conducted, 
                                including baseline, adverse, 
                                and severely adverse, and 
                                methodologies, including models 
                                used to estimate losses on 
                                certain assets; and
                                  (II) provide copies of such 
                                regulations to the Comptroller 
                                General of the United States 
                                and the Panel of Economic 
                                Advisors of the Congressional 
                                Budget Office before publishing 
                                such regulations;
                          (ii) may require the tests described 
                        in subparagraph (A) at bank holding 
                        companies and nonbank financial 
                        companies, in addition to those for 
                        which annual tests are required under 
                        subparagraph (A);
                          (iii) may develop and apply such 
                        other analytic techniques as are 
                        necessary to identify, measure, and 
                        monitor risks to the financial 
                        stability of the United States;
                          (iv) shall require the companies 
                        described in subparagraph (A) to update 
                        their resolution plans required under 
                        subsection (d)(1), as the Board of 
                        Governors determines appropriate, based 
                        on the results of the analyses; and
                          (v) shall publish a summary of the 
                        results of the tests required under 
                        subparagraph (A) or clause (ii) of this 
                        subparagraph, including any results of 
                        a resubmitted test.
                  (C) Application to ccar.--The requirements of 
                subparagraph (B) shall apply to all stress 
                tests performed under the Comprehensive Capital 
                Analysis and Review exercise established by the 
                Board of Governors.
          (2) By the company.--
                  (A) Requirement.--A nonbank financial company 
                supervised by the Board of Governors and a bank 
                holding company described in subsection (a) 
                shall conduct semiannual stress tests. All 
                other financial companies that have total 
                consolidated assets of more than 
                $10,000,000,000 and are regulated by a primary 
                Federal financial regulatory agency shall 
                conduct annual stress tests. The tests required 
                under this subparagraph shall be conducted in 
                accordance with the regulations prescribed 
                under subparagraph (C).
                  (B) Report.--A company required to conduct 
                stress tests under subparagraph (A) shall 
                submit a report to the Board of Governors and 
                to its primary financial regulatory agency at 
                such time, in such form, and containing such 
                information as the primary financial regulatory 
                agency shall require.
                  (C) Regulations.--Each Federal primary 
                financial regulatory agency, in coordination 
                with the Board of Governors and the Federal 
                Insurance Office, shall issue consistent and 
                comparable regulations to implement this 
                paragraph that shall--
                          (i) define the term ``stress test'' 
                        for purposes of this paragraph;
                          (ii) establish methodologies for the 
                        conduct of stress tests required by 
                        this paragraph that shall provide for 
                        at least 3 different sets of 
                        conditions, including baseline, 
                        adverse, and severely adverse;
                          (iii) establish the form and content 
                        of the report required by subparagraph 
                        (B); and
                          (iv) require companies subject to 
                        this paragraph to publish a summary of 
                        the results of the required stress 
                        tests.
  (j) Leverage Limitation.--
          (1) Requirement.--The Board of Governors shall 
        require a bank holding company with total consolidated 
        assets equal to or greater than $50,000,000,000 or a 
        nonbank financial company supervised by the Board of 
        Governors to maintain a debt to equity ratio of no more 
        than 15 to 1, upon a determination by the Council that 
        such company poses a grave threat to the financial 
        stability of the United States and that the imposition 
        of such requirement is necessary to mitigate the risk 
        that such company poses to the financial stability of 
        the United States. Nothing in this paragraph shall 
        apply to a Federal home loan bank.
          (2) Considerations.--In making a determination under 
        this subsection, the Council shall consider the factors 
        described in subsections (a) and (b) of section 113 and 
        any other risk-related factors that the Council deems 
        appropriate.
          (3) Regulations.--The Board of Governors shall 
        promulgate regulations to establish procedures and 
        timelines for complying with the requirements of this 
        subsection.
  (k) Inclusion of Off-balance-sheet Activities in Computing 
Capital Requirements.--
          (1) In general.--In the case of any bank holding 
        company described in subsection (a) or nonbank 
        financial company supervised by the Board of Governors, 
        the computation of capital for purposes of meeting 
        capital requirements shall take into account any off-
        balance-sheet activities of the company.
          (2) Exemptions.--If the Board of Governors determines 
        that an exemption from the requirement under paragraph 
        (1) is appropriate, the Board of Governors may exempt a 
        company, or any transaction or transactions engaged in 
        by such company, from the requirements of paragraph 
        (1).
          (3) Off-balance-sheet activities defined.--For 
        purposes of this subsection, the term ``off-balance-
        sheet activities'' means an existing liability of a 
        company that is not currently a balance sheet 
        liability, but may become one upon the happening of 
        some future event, including the following 
        transactions, to the extent that they may create a 
        liability:
                  (A) Direct credit substitutes in which a bank 
                substitutes its own credit for a third party, 
                including standby letters of credit.
                  (B) Irrevocable letters of credit that 
                guarantee repayment of commercial paper or tax-
                exempt securities.
                  (C) Risk participations in bankers' 
                acceptances.
                  (D) Sale and repurchase agreements.
                  (E) Asset sales with recourse against the 
                seller.
                  (F) Interest rate swaps.
                  (G) Credit swaps.
                  (H) Commodities contracts.
                  (I) Forward contracts.
                  (J) Securities contracts.
                  (K) Such other activities or transactions as 
                the Board of Governors may, by rule, define.
  (l) Publication of Supervisory Letter Information.--The Board 
of Governors shall publicly disclose--
          (1) the aggregate number of supervisory letters sent 
        to bank holding companies described in subsection (a) 
        since the date of the enactment of this section, and 
        keep such number updated; and
          (2) the aggregate number of such letters that are 
        designated as ``Matters Requiring Attention'' and the 
        aggregate number of such letters that are designated as 
        ``Matters Requiring Immediate Attention''.

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FEDERAL DEPOSIT INSURANCE ACT

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SEC. 51. INTERNATIONAL PROCESSES.

  (a) Notice of Process; Consultation.--At least 30 calendar 
days before the Board of Directors participates in a process of 
setting financial standards as a part of any foreign or 
multinational entity, the Board of Directors shall--
          (1) issue a notice of the process, including the 
        subject matter, scope, and goals of the process, to the 
        Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate;
          (2) make such notice available to the public, 
        including on the website of the Corporation; and
          (3) solicit public comment, and consult with the 
        committees described under paragraph (1), with respect 
        to the subject matter, scope, and goals of the process.
  (b) Public Reports on Process.--After the end of any process 
described under subsection (a), the Board of Directors shall 
issue a public report on the topics that were discussed at the 
process and any new or revised rulemakings or policy changes 
that the Board of Directors believes should be implemented as a 
result of the process.
  (c) Notice of Agreements; Consultation.--At least 90 calendar 
days before the Board of Directors participates in a process of 
setting financial standards as a part of any foreign or 
multinational entity, the Board of Directors shall--
          (1) issue a notice of agreement to the Committee on 
        Financial Services of the House of Representatives and 
        the Committee on Banking, Housing, and Urban Affairs of 
        the Senate;
          (2) make such notice available to the public, 
        including on the website of the Corporation; and
          (3) consult with the committees described under 
        paragraph (1) with respect to the nature of the 
        agreement and any anticipated effects such agreement 
        will have on the economy.
  (d) Definition.--For purposes of this section, the term 
``process'' shall include any official proceeding or meeting on 
financial regulation of a recognized international organization 
with authority to set financial standards on a global or 
regional level, including the Financial Stability Board, the 
Basel Committee on Banking Supervision (or a similar 
organization), and the International Association of Insurance 
Supervisors (or a similar organization).
                              ----------                              


TITLE 31, UNITED STATES CODE

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SUBTITLE I--GENERAL

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CHAPTER 3--DEPARTMENT OF THE TREASURY

           *       *       *       *       *       *       *



SUBCHAPTER II--ADMINISTRATIVE

           *       *       *       *       *       *       *



Sec. 325. International affairs authorization

  (a) Under regulations prescribed by the Secretary of the 
Treasury, the Secretary may provide officers and employees of 
the Department of the Treasury carrying out international 
affairs duties and powers of the Department with allowances and 
benefits comparable to those provided under chapter 9 of title 
I of the Foreign Service Act of 1980 (22 U.S.C. 4081 et seq.).
  (b) The following amounts may be appropriated to the 
Secretary for the fiscal year ending September 30, 1982:
          (1) not more than $22,896,000 to carry out the 
        international affairs duties and powers of the 
        Department (including amounts for official functions 
        and reception and representation expenses).
          (2) not more than $1,000,000 for increases in--
                  (A) pay, under section 5382(c) and subchapter 
                I of chapter 53 of title 5 (except section 
                5305, or corresponding prior provision of such 
                title), of officers and employees carrying out 
                the duties and powers referred to in clause (1) 
                of this subsection;
                  (B) departmental contributions attributable 
                to those pay increases; and
                  (C) allowances and benefits, because of cost 
                of living increases, provided under subsection 
                (a) of this section.
  (c) Necessary amounts may be appropriated to the Secretary 
for each fiscal year beginning after September 30, 1982--
          (1) to carry out the international affairs duties and 
        powers of the Department (including amounts for 
        official functions and reception and representation 
        expenses);
          (2) for increases in--
                  (A) pay, under section 5382(c) and subchapter 
                I of chapter 53 of title 5 (except section 
                5303), of officers and employees carrying out 
                the duties and powers referred to in clause (1) 
                of this subsection;
                  (B) departmental contributions attributable 
                to those pay increases; and
                  (C) allowances and benefits, because of cost 
                of living increases, provided under subsection 
                (a) of this section.
  (d) International Processes.--
          (1) Notice of process; consultation.--At least 30 
        calendar days before the Secretary participates in a 
        process of setting financial standards as a part of any 
        foreign or multinational entity, the Secretary shall--
                  (A) issue a notice of the process, including 
                the subject matter, scope, and goals of the 
                process, to the Committee on Financial Services 
                of the House of Representatives and the 
                Committee on Banking, Housing, and Urban 
                Affairs of the Senate;
                  (B) make such notice available to the public, 
                including on the website of the Department of 
                the Treasury; and
                  (C) solicit public comment, and consult with 
                the committees described under subparagraph 
                (A), with respect to the subject matter, scope, 
                and goals of the process.
          (2) Public reports on process.--After the end of any 
        process described under paragraph (1), the Secretary 
        shall issue a public report on the topics that were 
        discussed at the process and any new or revised 
        rulemakings or policy changes that the Secretary 
        believes should be implemented as a result of the 
        process.
          (3) Notice of agreements; consultation.--At least 90 
        calendar days before the Secretary participates in a 
        process of setting financial standards as a part of any 
        foreign or multinational entity, the Secretary shall--
                  (A) issue a notice of agreement to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, 
                Housing, and Urban Affairs of the Senate;
                  (B) make such notice available to the public, 
                including on the website of the Department of 
                the Treasury; and
                  (C) consult with the committees described 
                under subparagraph (A) with respect to the 
                nature of the agreement and any anticipated 
                effects such agreement will have on the 
                economy.
          (4) Definition.--For purposes of this subsection, the 
        term ``process'' shall include any official proceeding 
        or meeting on financial regulation of a recognized 
        international organization with authority to set 
        financial standards on a global or regional level, 
        including the Financial Stability Board, the Basel 
        Committee on Banking Supervision (or a similar 
        organization), and the International Association of 
        Insurance Supervisors (or a similar organization).

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CHAPTER 7--GOVERNMENT ACCOUNTABILITY OFFICE

           *       *       *       *       *       *       *



SUBCHAPTER II--GENERAL DUTIES AND POWERS

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Sec. 714. Audit of Financial Institutions Examination Council, Federal 
                    Reserve Board, Federal reserve banks, Federal 
                    Deposit Insurance Corporation, and Office of 
                    Comptroller of the Currency

  (a) In this section, ``agency'' means the Financial 
Institutions Examination Council, the Board of Governors of the 
Federal Reserve System (in this section referred to as the 
``Board''), Federal reserve banks, the Federal Deposit 
Insurance Corporation, and the Office of the Comptroller of the 
Currency.
  (b) Under regulations of the Comptroller General, the 
Comptroller General shall audit an agency, but may carry out an 
onsite examination of an open insured bank or bank holding 
company only if the appropriate agency has consented in 
writing. [Audits of the Board and Federal reserve banks may not 
include--]
          [(1) transactions for or with a foreign central bank, 
        government of a foreign country, or nonprivate 
        international financing organization;
          [(2) deliberations, decisions, or actions on monetary 
        policy matters, including discount window operations, 
        reserves of member banks, securities credit, interest 
        on deposits, and open market operations;
          [(3) transactions made under the direction of the 
        Federal Open Market Committee; or
          [(4) a part of a discussion or communication among or 
        between members of the Board and officers and employees 
        of the Federal Reserve System related to clauses (1)-
        (3) of this subsection.]
  (c)(1) Except as provided in this subsection, an officer or 
employee of the Government Accountability Office may not 
disclose information identifying an open bank, an open bank 
holding company, or a customer of an open or closed bank or 
bank holding company. The Comptroller General may disclose 
information related to the affairs of a closed bank or closed 
bank holding company identifying a customer of the closed bank 
or closed bank holding company only if the Comptroller General 
believes the customer had a controlling influence in the 
management of the closed bank or closed bank holding company or 
was related to or affiliated with a person or group having a 
controlling influence.
  (2) An officer or employee of the Office may discuss a 
customer, bank, or bank holding company with an official of an 
agency and may report an apparent criminal violation to an 
appropriate law enforcement authority of the United States 
Government or a State.
  (3) Except as provided under paragraph (4), an officer or 
employee of the Government Accountability Office may not 
disclose to any person outside the Government Accountability 
Office information obtained in audits or examinations conducted 
under subsection (e) and maintained as confidential by the 
Board or the Federal reserve banks.
  (4) This subsection shall not--
          (A) authorize an officer or employee of an agency to 
        withhold information from any committee or subcommittee 
        of jurisdiction of Congress, or any member of such 
        committee or subcommittee; or
          (B) limit any disclosure by the Government 
        Accountability Office to any committee or subcommittee 
        of jurisdiction of Congress, or any member of such 
        committee or subcommittee.
  (d)(1) To carry out this section, all records and property of 
or used by an agency, including samples of reports of 
examinations of a bank or bank holding company the Comptroller 
General considers statistically meaningful and workpapers and 
correspondence related to the reports shall be made available 
to the Comptroller General. The Comptroller General shall have 
access to the officers, employees, contractors, and other 
agents and representatives of an agency and any entity 
established by an agency at any reasonable time as the 
Comptroller General may request. The Comptroller General may 
make and retain copies of such books, accounts, and other 
records as the Comptroller General determines appropriate. The 
Comptroller General shall give an agency a current list of 
officers and employees to whom, with proper identification, 
records and property may be made available, and who may make 
notes or copies necessary to carry out an audit.
  (2) The Comptroller General shall prevent unauthorized access 
to records, copies of any record, or property of or used by an 
agency or any person or entity described in paragraph (3)(A) 
that the Comptroller General obtains during an audit.
  (3)(A) For purposes of conducting audits and examinations 
under subsection (e) [or (f)], the Comptroller General shall 
have access, upon request, to any information, data, schedules, 
books, accounts, financial records, reports, files, electronic 
communications, or other papers, things or property belonging 
to or in use by--
          (i) any entity established by any action taken by the 
        Board or the Federal Reserve banks described under 
        subsection (e) [or (f)];
          (ii) any entity participating in or receiving 
        assistance from any action taken by the Board or the 
        Federal Reserve banks described under subsection (e) 
        [or (f)], to the extent that the access and request 
        relates to that assistance; and
          (iii) the officers, directors, employees, independent 
        public accountants, financial advisors and any and all 
        representatives of any entity described under clause 
        (i) or (ii); to the extent that the access and request 
        relates to that assistance;
  (B) The Comptroller General shall have access as provided 
under subparagraph (A) at such time as the Comptroller General 
may request. The Comptroller General may make and retain copies 
of books, accounts, and other records provided under 
subparagraph (A) as the Comptroller General deems appropriate. 
The Comptroller General shall provide to any person or entity 
described in subparagraph (A) a current list of officers and 
employees to whom, with proper identification, records and 
property may be made available, and who may make notes or 
copies necessary to carry out a audit or examination under this 
subsection.
  (C) Each contract, term sheet, or other agreement between the 
Board or any Federal reserve bank (or any entity established by 
the Board or any Federal reserve bank) and an entity receiving 
assistance from any action taken by the Board described under 
subsection (e) [or (f)] shall provide for access by the 
Comptroller General in accordance with this paragraph.
  (e) Notwithstanding subsection (b), the Comptroller General 
may conduct audits, including onsite examinations when the 
Comptroller General determines such audits and examinations are 
appropriate, of any action taken by the Board under [the third 
undesignated paragraph of section 13] section 13(3) of the 
Federal Reserve Act (12 U.S.C. 343); with respect to a single 
and specific partnership or corporation.
  [(f) Audits of Credit Facilities of the Federal Reserve 
System.--
          [(1) Definitions.--In this subsection, the following 
        definitions shall apply:
                  [(A) Credit facility.--The term ``credit 
                facility'' means a program or facility, 
                including any special purpose vehicle or other 
                entity established by or on behalf of the Board 
                of Governors of the Federal Reserve System or a 
                Federal reserve bank, authorized by the Board 
                of Governors under section 13(3) of the Federal 
                Reserve Act (12 U.S.C. 343), that is not 
                subject to audit under subsection (e).
                  [(B) Covered transaction.--The term ``covered 
                transaction'' means any open market transaction 
                or discount window advance that meets the 
                definition of ``covered transaction'' in 
                section 11(s) of the Federal Reserve Act.
          [(2) Authority for audits and examinations.--Subject 
        to paragraph (3), and notwithstanding any limitation in 
        subsection (b) on the auditing and oversight of certain 
        functions of the Board of Governors of the Federal 
        Reserve System or any Federal reserve bank, the 
        Comptroller General of the United States may conduct 
        audits, including onsite examinations, of the Board of 
        Governors, a Federal reserve bank, or a credit 
        facility, if the Comptroller General determines that 
        such audits are appropriate, solely for the purposes of 
        assessing, with respect to a credit facility or a 
        covered transaction--
                  [(A) the operational integrity, accounting, 
                financial reporting, and internal controls 
                governing the credit facility or covered 
                transaction;
                  [(B) the effectiveness of the security and 
                collateral policies established for the 
                facility or covered transaction in mitigating 
                risk to the relevant Federal reserve bank and 
                taxpayers;
                  [(C) whether the credit facility or the 
                conduct of a covered transaction 
                inappropriately favors one or more specific 
                participants over other institutions eligible 
                to utilize the facility; and
                  [(D) the policies governing the use, 
                selection, or payment of third-party 
                contractors by or for any credit facility or to 
                conduct any covered transaction.
          [(3) Reports and delayed disclosure.--
                  [(A) Reports required.--A report on each 
                audit conducted under paragraph (2) shall be 
                submitted by the Comptroller General to the 
                Congress before the end of the 90-day period 
                beginning on the date on which such audit is 
                completed.
                  [(B) Contents.--The report under subparagraph 
                (A) shall include a detailed description of the 
                findings and conclusions of the Comptroller 
                General with respect to the matters described 
                in paragraph (2) that were audited and are the 
                subject of the report, together with such 
                recommendations for legislative or 
                administrative action relating to such matters 
                as the Comptroller General may determine to be 
                appropriate.
                  [(C) Delayed release of certain 
                information.--
                          [(i) In general.--The Comptroller 
                        General shall not disclose to any 
                        person or entity, including to 
                        Congress, the names or identifying 
                        details of specific participants in any 
                        credit facility or covered transaction, 
                        the amounts borrowed by or transferred 
                        by or to specific participants in any 
                        credit facility or covered transaction, 
                        or identifying details regarding assets 
                        or collateral held or transferred by, 
                        under, or in connection with any credit 
                        facility or covered transaction, and 
                        any report provided under subparagraph 
                        (A) shall be redacted to ensure that 
                        such names and details are not 
                        disclosed.
                          [(ii) Delayed release.--The 
                        nondisclosure obligation under clause 
                        (i) shall expire with respect to any 
                        participant on the date on which the 
                        Board of Governors, directly or through 
                        a Federal reserve bank, publicly 
                        discloses the identity of the subject 
                        participant or the identifying details 
                        of the subject assets, collateral, or 
                        transaction.
                          [(iii) General release.--The 
                        Comptroller General shall release a 
                        nonredacted version of any report on a 
                        credit facility 1 year after the 
                        effective date of the termination by 
                        the Board of Governors of the 
                        authorization for the credit facility. 
                        For purposes of this clause, a credit 
                        facility shall be deemed to have 
                        terminated 24 months after the date on 
                        which the credit facility ceases to 
                        make extensions of credit and loans, 
                        unless the credit facility is otherwise 
                        terminated by the Board of Governors.
                          [(iv) Exceptions.--The nondisclosure 
                        obligation under clause (i) shall not 
                        apply to the credit facilities Maiden 
                        Lane, Maiden Lane II, and Maiden Lane 
                        III.
                          [(v) Release of covered transaction 
                        information.--The Comptroller General 
                        shall release a nonredacted version of 
                        any report regarding covered 
                        transactions upon the release of the 
                        information regarding such covered 
                        transactions by the Board of Governors 
                        of the Federal Reserve System, as 
                        provided in section 11(s) of the 
                        Federal Reserve Act.]

           *       *       *       *       *       *       *

                              ----------                              


REVISED STATUTES OF THE UNITED STATES

           *       *       *       *       *       *       *



TITLE LXII--NATIONAL BANKS.

           *       *       *       *       *       *       *


Sec.
5133. Formation of national banking associations.
     * * * * * * *
5156B. International processes.

           *       *       *       *       *       *       *


SEC. 5156B. INTERNATIONAL PROCESSES.

  (a) Notice of Process; Consultation.--At least 30 calendar 
days before the Comptroller of the Currency participates in a 
process of setting financial standards as a part of any foreign 
or multinational entity, the Comptroller of the Currency 
shall--
          (1) issue a notice of the process, including the 
        subject matter, scope, and goals of the process, to the 
        Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate;
          (2) make such notice available to the public, 
        including on the website of the Office of the 
        Comptroller of the Currency; and
          (3) solicit public comment, and consult with the 
        committees described under paragraph (1), with respect 
        to the subject matter, scope, and goals of the process.
  (b) Public Reports on Process.--After the end of any process 
described under subsection (a), the Comptroller of the Currency 
shall issue a public report on the topics that were discussed 
at the process and any new or revised rulemakings or policy 
changes that the Comptroller of the Currency believes should be 
implemented as a result of the process.
  (c) Notice of Agreements; Consultation.--At least 90 calendar 
days before the Comptroller of the Currency participates in a 
process of setting financial standards as a part of any foreign 
or multinational entity, the Board of Directors shall--
          (1) issue a notice of agreement to the Committee on 
        Financial Services of the House of Representatives and 
        the Committee on Banking, Housing, and Urban Affairs of 
        the Senate;
          (2) make such notice available to the public, 
        including on the website of the Office of the 
        Comptroller of the Currency; and
          (3) consult with the committees described under 
        paragraph (1) with respect to the nature of the 
        agreement and any anticipated effects such agreement 
        will have on the economy.
  (d) Definition.--For purposes of this section, the term 
``process'' shall include any official proceeding or meeting on 
financial regulation of a recognized international organization 
with authority to set financial standards on a global or 
regional level, including the Financial Stability Board, the 
Basel Committee on Banking Supervision (or a similar 
organization), and the International Association of Insurance 
Supervisors (or a similar organization).

           *       *       *       *       *       *       *

                              ----------                              


                    SECURITIES EXCHANGE ACT OF 1934


TITLE I--REGULATION OF SECURITIES EXCHANGES

           *       *       *       *       *       *       *



                   securities and exchange commission

  Sec. 4. (a) There is hereby established a Securities and 
Exchange Commission (hereinafter referred to as the 
``Commission'') to be composed of five commissioners to be 
appointed by the President by and with the advice and consent 
of the Senate. Not more than three of such commissioners shall 
be members of the same political party, and in making 
appointments members of different political parties shall be 
appointed alternately as nearly as may be practicable. No 
commissioner shall engage in any other business, vocation, or 
employment than that of serving as commissioner, nor shall any 
commissioner participate, directly or indirectly, in any stock-
market operations or transactions of a character subject to 
regulation by the Commission pursuant to this title. Each 
commissioner shall hold office for a term of five years and 
until his successor is appointed and has qualified, except that 
he shall not so continue to serve beyond the expiration of the 
next session of Congress subsequent to the expiration of said 
fixed term of office, and except (1) any commissioner appointed 
to fill a vacancy occurring prior to the expiration of the term 
for which his predecessor was appointed shall be appointed for 
the remainder of such term, and (2) the terms of office of the 
commissioners first taking office after the enactment of this 
title shall expire as designated by the President at the time 
of nomination, one at the end of one year, one at the end of 
two years, one at the end of three years, one at the end of 
four years, and one at the end of five years, after the date of 
the enactment of this title.
  (b) Appointment and Compensation of Staff and Leasing 
Authority.--
          (1) Appointment and compensation.--The Commission 
        shall appoint and compensate officers, attorneys, 
        economists, examiners, and other employees in 
        accordance with section 4802 of title 5, United States 
        Code.
          (2) Reporting of information.--In establishing and 
        adjusting schedules of compensation and benefits for 
        officers, attorneys, economists, examiners, and other 
        employees of the Commission under applicable provisions 
        of law, the Commission shall inform the heads of the 
        agencies referred to under section 1206 of the 
        Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989 (12 U.S.C. 1833b) and Congress 
        of such compensation and benefits and shall seek to 
        maintain comparability with such agencies regarding 
        compensation and benefits.
          (3) Leasing authority.--Nothwithstanding any other 
        provision of law, the Commission is authorized to enter 
        directly into leases for real property for office, 
        meeting, storage, and such other space as is necessary 
        to carry out its functions, and shall be exempt from 
        any General Services Administration space management 
        regulations or directives.
  (c) Notwithstanding any other provision of law, in accordance 
with regulations which the Commission shall prescribe to 
prevent conflicts of interest, the Commission may accept 
payment and reimbursement, in cash or in kind, from non-Federal 
agencies, organizations, and individuals for travel, 
subsistence, and other necessary expenses incurred by 
Commission members and employees in attending meetings and 
conferences concerning the functions or activities of the 
Commission. Any payment or reimbursement accepted shall be 
credited to the appropriated funds of the Commission. The 
amount of travel, subsistence, and other necessary expenses for 
members and employees paid or reimbursed under this subsection 
may exceed per diem amounts established in official travel 
regulations, but the Commission may include in its regulations 
under this subsection a limitation on such amounts.
  (d) Notwithstanding any other provision of law, former 
employers of participants in the Commission's professional 
fellows programs may pay such participants their actual 
expenses for relocation to Washington, District of Columbia, to 
facilitate their participation in such programs, and program 
participants may accept such payments.
  (e) Notwithstanding any other provision of law, whenever any 
fee is required to be paid to the Commission pursuant to any 
provision of the securities laws or any other law, the 
Commission may provide by rule that such fee shall be paid in a 
manner other than in cash and the Commission may also specify 
the time that such fee shall be determined and paid relative to 
the filing of any statement or document with the Commission.
  (f) Reimbursement of Expenses for Assisting Foreign 
Securities Authorities.--Notwithstanding any other provision of 
law, the Commission may accept payment and reimbursement, in 
cash or in kind, from a foreign securities authority, or made 
on behalf of such authority, for necessary expenses incurred by 
the Commission, its members, and employees in carrying out any 
investigation pursuant to section 21(a)(2) of this title or in 
providing any other assistance to a foreign securities 
authority. Any payment or reimbursement accepted shall be 
considered a reimbursement to the appropriated funds of the 
Commission.
  (g) Office of the Investor Advocate.--
          (1) Office established.--There is established within 
        the Commission the Office of the Investor Advocate (in 
        this subsection referred to as the ``Office'').
          (2) Investor advocate.--
                  (A) In general.--The head of the Office shall 
                be the Investor Advocate, who shall--
                          (i) report directly to the Chairman; 
                        and
                          (ii) be appointed by the Chairman, in 
                        consultation with the Commission, from 
                        among individuals having experience in 
                        advocating for the interests of 
                        investors in securities and investor 
                        protection issues, from the perspective 
                        of investors.
                  (B) Compensation.--The annual rate of pay for 
                the Investor Advocate shall be equal to the 
                highest rate of annual pay for other senior 
                executives who report to the Chairman of the 
                Commission.
                  (C) Limitation on service.--An individual who 
                serves as the Investor Advocate may not be 
                employed by the Commission--
                          (i) during the 2-year period ending 
                        on the date of appointment as Investor 
                        Advocate; or
                          (ii) during the 5-year period 
                        beginning on the date on which the 
                        person ceases to serve as the Investor 
                        Advocate.
          (3) Staff of office.--The Investor Advocate, after 
        consultation with the Chairman of the Commission, may 
        retain or employ independent counsel, research staff, 
        and service staff, as the Investor Advocate deems 
        necessary to carry out the functions, powers, and 
        duties of the Office.
          (4) Functions of the investor advocate.--The Investor 
        Advocate shall--
                  (A) assist retail investors in resolving 
                significant problems such investors may have 
                with the Commission or with self-regulatory 
                organizations;
                  (B) identify areas in which investors would 
                benefit from changes in the regulations of the 
                Commission or the rules of self-regulatory 
                organizations;
                  (C) identify problems that investors have 
                with financial service providers and investment 
                products;
                  (D) analyze the potential impact on investors 
                of--
                          (i) proposed regulations of the 
                        Commission; and
                          (ii) proposed rules of self-
                        regulatory organizations registered 
                        under this title; and
                  (E) to the extent practicable, propose to the 
                Commission changes in the regulations or orders 
                of the Commission and to Congress any 
                legislative, administrative, or personnel 
                changes that may be appropriate to mitigate 
                problems identified under this paragraph and to 
                promote the interests of investors.
          (5) Access to documents.--The Commission shall ensure 
        that the Investor Advocate has full access to the 
        documents of the Commission and any self-regulatory 
        organization, as necessary to carry out the functions 
        of the Office.
          (6) Annual reports.--
                  (A) Report on objectives.--
                          (i) In general.--Not later than June 
                        30 of each year after 2010, the 
                        Investor Advocate shall submit to the 
                        Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the objectives of the Investor Advocate 
                        for the following fiscal year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall contain full and 
                        substantive analysis and explanation.
                  (B) Report on activities.--
                          (i) In general.--Not later than 
                        December 31 of each year after 2010, 
                        the Investor Advocate shall submit to 
                        the Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the activities of the Investor Advocate 
                        during the immediately preceding fiscal 
                        year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall include--
                                  (I) appropriate statistical 
                                information and full and 
                                substantive analysis;
                                  (II) information on steps 
                                that the Investor Advocate has 
                                taken during the reporting 
                                period to improve investor 
                                services and the responsiveness 
                                of the Commission and self-
                                regulatory organizations to 
                                investor concerns;
                                  (III) a summary of the most 
                                serious problems encountered by 
                                investors during the reporting 
                                period;
                                  (IV) an inventory of the 
                                items described in subclause 
                                (III) that includes--
                                          (aa) identification 
                                        of any action taken by 
                                        the Commission or the 
                                        self-regulatory 
                                        organization and the 
                                        result of such action;
                                          (bb) the length of 
                                        time that each item has 
                                        remained on such 
                                        inventory; and
                                          (cc) for items on 
                                        which no action has 
                                        been taken, the reasons 
                                        for inaction, and an 
                                        identification of any 
                                        official who is 
                                        responsible for such 
                                        action;
                                  (V) recommendations for such 
                                administrative and legislative 
                                actions as may be appropriate 
                                to resolve problems encountered 
                                by investors; and
                                  (VI) any other information, 
                                as determined appropriate by 
                                the Investor Advocate.
                          (iii) Independence.--Each report 
                        required under this paragraph shall be 
                        provided directly to the Committees 
                        listed in clause (i) without any prior 
                        review or comment from the Commission, 
                        any commissioner, any other officer or 
                        employee of the Commission, or the 
                        Office of Management and Budget.
                          (iv) Confidentiality.--No report 
                        required under clause (i) may contain 
                        confidential information.
          (7) Regulations.--The Commission shall, by 
        regulation, establish procedures requiring a formal 
        response to all recommendations submitted to the 
        Commission by the Investor Advocate, not later than 3 
        months after the date of such submission.
          (8) Ombudsman.--
                  (A) Appointment.--Not later than 180 days 
                after the date on which the first Investor 
                Advocate is appointed under paragraph 
                (2)(A)(i), the Investor Advocate shall appoint 
                an Ombudsman, who shall report directly to the 
                Investor Advocate.
                  (B) Duties.--The Ombudsman appointed under 
                subparagraph (A) shall--
                          (i) act as a liaison between the 
                        Commission and any retail investor in 
                        resolving problems that retail 
                        investors may have with the Commission 
                        or with self-regulatory organizations;
                          (ii) review and make recommendations 
                        regarding policies and procedures to 
                        encourage persons to present questions 
                        to the Investor Advocate regarding 
                        compliance with the securities laws; 
                        and
                          (iii) establish safeguards to 
                        maintain the confidentiality of 
                        communications between the persons 
                        described in clause (ii) and the 
                        Ombudsman.
                  (C) Limitation.--In carrying out the duties 
                of the Ombudsman under subparagraph (B), the 
                Ombudsman shall utilize personnel of the 
                Commission to the extent practicable. Nothing 
                in this paragraph shall be construed as 
                replacing, altering, or diminishing the 
                activities of any ombudsman or similar office 
                of any other agency.
                  (D) Report.--The Ombudsman shall submit a 
                semiannual report to the Investor Advocate that 
                describes the activities and evaluates the 
                effectiveness of the Ombudsman during the 
                preceding year. The Investor Advocate shall 
                include the reports required under this section 
                in the reports required to be submitted by the 
                Inspector Advocate under paragraph (6).
  (h) Examiners.--
          (1) Division of trading and markets.--The Division of 
        Trading and Markets of the Commission, or any successor 
        organizational unit, shall have a staff of examiners 
        who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
          (2) Division of investment management.--The Division 
        of Investment Management of the Commission, or any 
        successor organizational unit, shall have a staff of 
        examiners who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
  (i) Securities and Exchange Commission Reserve Fund.--
          (1) Reserve fund established.--There is established 
        in the Treasury of the United States a separate fund, 
        to be known as the ``Securities and Exchange Commission 
        Reserve Fund'' (referred to in this subsection as the 
        ``Reserve Fund'').
          (2) Reserve fund amounts.--
                  (A) In general.--Except as provided in 
                subparagraph (B), any registration fees 
                collected by the Commission under section 6(b) 
                of the Securities Act of 1933 (15 U.S.C. 
                77f(b)) or section 24(f) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-24(f)) shall 
                be deposited into the Reserve Fund.
                  (B) Limitations.--For any 1 fiscal year--
                          (i) the amount deposited in the Fund 
                        may not exceed $50,000,000; and
                          (ii) the balance in the Fund may not 
                        exceed $100,000,000.
                  (C) Excess fees.--Any amounts in excess of 
                the limitations described in subparagraph (B) 
                that the Commission collects from registration 
                fees under section 6(b) of the Securities Act 
                of 1933 (15 U.S.C. 77f(b)) or section 24(f) of 
                the Investment Company Act of 1940 (15 U.S.C. 
                80a-24(f)) shall be deposited in the General 
                Fund of the Treasury of the United States and 
                shall not be available for obligation by the 
                Commission.
          (3) Use of amounts in reserve fund.--The Commission 
        may obligate amounts in the Reserve Fund, not to exceed 
        a total of $100,000,000 in any 1 fiscal year, as the 
        Commission determines is necessary to carry out the 
        functions of the Commission. Any amounts in the reserve 
        fund shall remain available until expended. Not later 
        than 10 days after the date on which the Commission 
        obligates amounts under this paragraph, the Commission 
        shall notify Congress of the date, amount, and purpose 
        of the obligation.
          (4) Rule of construction.--Amounts collected and 
        deposited in the Reserve Fund shall not be construed to 
        be Government funds or appropriated monies and shall 
        not be subject to apportionment for the purpose of 
        chapter 15 of title 31, United States Code, or under 
        any other authority.
  (j) International Processes.--
          (1) Notice of process; consultation.--At least 30 
        calendar days before the Commission participates in a 
        process of setting financial standards as a part of any 
        foreign or multinational entity, the Commission shall--
                  (A) issue a notice of the process, including 
                the subject matter, scope, and goals of the 
                process, to the Committee on Financial Services 
                of the House of Representatives and the 
                Committee on Banking, Housing, and Urban 
                Affairs of the Senate;
                  (B) make such notice available to the public, 
                including on the website of the Commission; and
                  (C) solicit public comment, and consult with 
                the committees described under subparagraph 
                (A), with respect to the subject matter, scope, 
                and goals of the process.
          (2) Public reports on process.--After the end of any 
        process described under paragraph (1), the Commission 
        shall issue a public report on the topics that were 
        discussed at the process and any new or revised 
        rulemakings or policy changes that the Commission 
        believes should be implemented as a result of the 
        process.
          (3) Notice of agreements; consultation.--At least 90 
        calendar days before the Commission participates in a 
        process of setting financial standards as a part of any 
        foreign or multinational entity, the Commission shall--
                  (A) issue a notice of agreement to the 
                Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, 
                Housing, and Urban Affairs of the Senate;
                  (B) make such notice available to the public, 
                including on the website of the Commission; and
                  (C) consult with the committees described 
                under subparagraph (A) with respect to the 
                nature of the agreement and any anticipated 
                effects such agreement will have on the 
                economy.
          (4) Definition.--For purposes of this subsection, the 
        term ``process'' shall include any official proceeding 
        or meeting on financial regulation of a recognized 
        international organization with authority to set 
        financial standards on a global or regional level, 
        including the Financial Stability Board, the Basel 
        Committee on Banking Supervision (or a similar 
        organization), and the International Association of 
        Insurance Supervisors (or a similar organization).

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 3189 includes a range of highly controversial and 
partisan provisions that the Financial Services Committee 
already marked up and which Democrats objected to, as part of 
Committee Republicans' ``FRAT Act'' in the 113th Congress. This 
includes the requirement for a rules-based monetary policy 
regime, GAO audits of monetary policy deliberations, and 
unworkable cost-benefit analysis requirements designed to 
hamstring agency rulemakings. H.R. 3189 also includes several 
new provisions, including changes to the membership of the 
Federal Open Markets Committee (FOMC) that diminish the 
democratic accountability of the Federal Reserve, and changes 
that limit the Federal Reserve's ability to provide liquidity 
to a broad range of solvent institutions during a crisis.

    Section 2 of the bill requires the FOMC to issue a 
``directive policy rule'' for determining the course of 
monetary policy and subjects this rule to a review by the GAO.

    This represents a dramatic departure from the current 
practice where members of the FOMC are afforded substantial 
discretion and are expected to rely on their best judgment 
given all available information to achieve the Federal 
Reserve's objective to promote maximum employment, stable 
prices and moderate long-term interest rates.

    The combination of a strict policy rule and the 
corresponding GAO compliance reviews and audits would 
inevitably impair the Federal Reserve's ability to set monetary 
policy independently and in a manner that accounts for the 
broadest possible range of dynamic economic indicators. These 
changes would constrain the Federal Reserve's ability to 
respond appropriately to unforeseen circumstances, such as the 
period following the financial crisis of 2008. Federal Reserve 
Chair Janet Yellen has repeatedly made this point, stating that 
``simple rules that perform well under ordinary circumstances 
just won't perform well with persistently strong headwinds 
restraining recovery and with the federal funds rate 
constrained by the zero lower bound.''

    Requiring GAO auditors to investigate and second-guess any 
change in the status quo would create inappropriate incentives 
for policy makers to downplay potentially significant changes 
in market conditions, and would make it substantially more 
difficult for members of the FOMC, a majority of which are 
subject to presidential nomination and Senate confirmation, to 
do their jobs.

    Section 4 of the bill increases the power of the regional 
Federal Reserve banks on the FOMC, and eliminates the FRBNY's 
permanent voting position. The bill provides that 6 of the 12 
Regional Reserve bank presidents would serve a one-year term on 
the FOMC followed by the other 6 Regional Reserve bank 
presidents the following year. This would increase influence of 
the regional banks, which tend to emphasize inflation over 
employment, by one vote.
    Section 5 requires the Board to publicly disclose the 
methodology for conducting ``stress tests'' of regulated banks, 
thereby undermining the purpose of the tests by allowing the 
large banks to game the system, thus resulting in a false sense 
of financial stability.
    Section 8 of the bill requires the Federal Reserve's Board 
to conduct a cost-benefit analysis prior to issuing any 
regulation. Although in theory such cost-benefit analysis 
requirements are seemingly common sense, in practice such 
provisions are problematic for a number of reasons. For 
example, how should the Federal Reserve value the benefits of 
preventing a financial crisis, or averting a market failure 
associated with the absence of a particular regulation? How 
would the Federal Reserve prove in court that the estimated 
benefits are reasonable if the crisis the Federal Reserve seeks 
to prevent through its regulation has never occurred?
    Rather than reflect a good faith effort to improve 
rulemakings and reduce regulatory burden, the heightened cost-
benefit analysis requirements included in the bill fail to 
provide safeguards that would protect the Federal Reserve's 
ability to issue critical rules in cases where the precise 
benefits cannot be identified.
    Finally, current law already requires that the Federal 
Reserve conduct economic analyses pursuant to the Economic 
Growth and Regulatory Paperwork Reduction Act, the Paperwork 
Reduction Act, the Congressional Review Act, and the Regulatory 
Flexibility Act, as other agencies do. In addition, the Board 
is subject to the Administrative Procedure Act, which provides 
a formal and standardized process for soliciting and 
incorporating public feedback. In issuing major rules, the 
Federal Reserve has made extensive efforts to understand and 
incorporate the views of all affected parties.
    Section 10 requires that the Fed, FDIC, OCC, SEC, and 
Treasury to notify Congress and the public within at least 30 
days of entering into international negotiations on regulatory 
matters. The bill also requires these agencies to solicit 
public comments, consult with the relevant committees, and 
issue a public report covering the topics that were discussed 
and any revised policy changes that the agencies believe should 
be implemented as a result of the negotiations. Prior to 
entering into any agreements as part of an international 
negotiation, the bill specifies that the agencies must also 
provide at least 90 days' notice to both Congress and the 
public.
    These cumbersome requirements would likely impair valuable 
discussions that U.S. regulators are engaged in to ensure cross 
border financial regulatory harmonization, a goal which has 
traditionally been a nonpartisan issue. Such requirements may 
also politicize the Federal Reserve's collaborative role in 
promoting international financial stability.
    Finally, section 13 of the bill removes the restrictions 
that are currently in place that prevent the GAO from second-
guessing monetary policy decisions and bringing political 
pressure to bear on monetary policy decisions, and requires the 
GAO to conduct an ``audit'' of the Board and the Federal 
Reserve Banks within one year of enactment. This provision 
ignores the fact that the books of the Federal Reserve are 
already subject to extensive audits, including an audit of the 
Federal Reserve's crisis lending facilities.
    For the foregoing reasons, the Minority opposes H.R. 3189.

                                   Maxine Waters.
                                   Juan Vargas.
                                   Gwen Moore.
                                   Ed Perlmutter.
                                   Carolyn B. Maloney.
                                   Denny Heck.
                                   Joyce Beatty.
                                   Gregory W. Meeks.
                                   Wm. Lacy Clay.


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