The White House threatened a veto of Republican legislation to reform the Federal Reserve Tuesday evening, warning that the bill would hinder the central bank’s efforts to keep unemployment low and prices stable.
The bill, the Fed Oversight Reform and Modernization Act of 2015, includes a number of measures meant to make the Fed more responsive to Congress. One provision singled out by the White House is a requirement that the Fed publish a rule describing how it makes monetary policy decisions, and be forced to testify before Congress and face a Government Accountability Office audit if it deviates from that rule.
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The requirement “threatens one of the central pillars of the nation’s financial system and economy” by exposing the Fed to audits based on the “political whims of members of the Congress,” the White House Office of Management and Budget said.
The administration also warned that the bill’s requirement of cost-benefit analysis for regulations proposed by the Fed would be “burdensome.”
Earlier Tuesday, Federal Reserve Chairwoman Janet Yellen also expressed concern about the legislation in a letter to House Speaker Paul Ryan, R-Wis., and Minority Leader Nancy Pelosi, D-Calif.
The bill was approved by the House Financial Services Committee in July and is likely to receive a vote in the GOP-dominated House later this week.
The White House also threatened a veto of a separate piece of Republican legislation Tuesday, taking aim at a bill sponsored by Rep. Andy Barr of Kentucky that would lighten one of the rules on mortgages put in place in the wake of the subprime mortgage crisis. The bill would relax safety rules for home loans imposed by the Consumer Financial Protection Bureau for loans that banks held on their own books, rather than resold as part of securities.
