Federal Reserve Reform Act
The Federal Reserve Reform Act of 1977 was a reform of the Federal Reserve System in the United States .
Federal Reserve Reform Act
The Federal Reserve Reform Act of 1977 put the Federal Reserve under a series of reforms that made it more accountable for its monetary and fiscal policies and aimed at "promoting maximum employment, output and price stability." The law has the price stability explicitly stated for the first time as a national political objective. It also required quarterly reports to Congress "on the range of monetary and credit aggregates for the next 12 months". In addition, the selection of the directors of the B and C reserve banks has been changed. Discrimination on the basis of race, creed, skin color, gender or national origin was banned and the composition of the directors had to represent the interests of "agriculture, trade, industry, services, workers and consumers". The Federal Reserve Act , which established the Federal Reserve in 1913, made no mention of services, nor labor and consumers. Finally, the law introduced Senate endorsement of the chairmen and vice chairmen of the Supreme Council of the Federal Reserve . The Federal Reserve Reform Act made the Federal Reserve more transparent to the oversight of Congress.
Historical context and goals
Much of the text of the Federal Reserve Reform Act refers to the US Congress using its powers of control over the Federal Reserve to disclose its monetary goals. Since the adoption of Congressional Resolution 133 in 1975, the Federal Open Market Committee had announced the M1, M2, and M3 long-term monetary aggregates . This policy was codified in the Federal Reserve Reform Act. Congress passed this policy on the assumption that the Federal Reserve's actions would directly affect the business climate and wanted to keep an eye on attempts by the Federal Reserve to change them. Federal Reserve officials who objected were not necessarily motivated by a need for secrecy. Rather, they believed that disclosing the Federal Reserve's views would make it more difficult to carry out its plans in the future as the markets react to the Federal Reserve's plans and change the Federal Reserve's outlook. Certain market players would use the Federal Reserve's disclosures to make profitable investments that would alter market outcomes and neutralize the Federal Reserve's actions. In addition, the Federal Reserve argued that this benefit would benefit a few people who would not be in the public interest. This was why the Federal Reserve consistently exceeded its monetary growth targets well into the Volcker years.
Individual evidence
- ↑ PUBLIC LAW 95-188-NOV. 16, 1977. In: CONGRESSIONAL RECORD. November 16, 1977, accessed January 21, 2020 .
- ↑ Hearings. US Government Pritning Office, July 18, 1977, accessed January 21, 2020 .
- ^ What is the Fed: Financial Stability. Retrieved January 22, 2020 (English).
- ↑ Chad Emerson, The Illegal Actions of the Federal Reserve: An Analysis of How the Nation's Central Bank Has Acted Outside the Law in Responding to the Current Financial Crisis. William & Mary Business Law Review, 2010, accessed January 21, 2020 .