The House of Representatives took on the Federal Reserve on Thursday, passing legislation to reform the way the central bank handles monetary policy and rate-setting decisions.
Approval of H.R. 3189, the Fed Oversight Reform and Modernization Act of 2015, was along party lines, with two Democrats voting for it. It would require the Federal Reserve to use mathematical formulas when setting interest rates, and would reduce its emergency lending powers, among other changes.
House Financial Services Chairman Jeb Hensarling, R-Texas, said the changes were needed to curb a Federal Reserve that “has morphed into a government institution whose unconventional activities and vastly expanded powers would scarcely be recognized by drafters of the original legislation that created it.
“The Fed's monetary policy must be made clear and credible,” Mr. Hensarling said during floor debate.
Federal Reserve Chairwoman Janet Yellen warned House leaders in a letter Monday that the act “attempts to increase transparency and accountability through misguided provisions that would expose the Federal Reserve to short-term political pressures.”
The White House said in a policy statement that the president would veto the bill.
The Senate has not scheduled action on the measure.