HR-3189 : Still Just a Bill

Fed Oversight Reform and Modernization Act of 2015 or the FORM Act of 2015

This bill amends the Federal Reserve Act to require the Chairman of the Federal Open Market Committee (FOMC), within 48 hours after the end of a FOMC meeting, to submit to the appropriate congressional committees and the Government Accountability Office (GAO) a Directive Policy Rule, meeting specified criteria, accompanied by a statement identifying the FOMC members voting in its favor.

A Directive Policy Rule shall describe the FOMC strategy or rule for the systematic quantitative adjustment of a Policy Instrument Target to:

• respond to a change in specified Intermediate Policy Inputs, and
• provide the basis for an Open Market Operations Directive to achieve a specified Policy Instrument Target presented by the FOMC to the Federal Reserve Bank of New York to guide open-market operations.

The GAO shall determine if a Directive Policy Rule has materially changed from the rule most recently submitted, and the Chairman of the Board of Governors of the Federal Reserve System (Board) must testify within 7 legislative days before certain congressional committees as to why any noncompliance exists.

The GAO must also, upon congressional request, audit the conduct of monetary policy by the Board and the FOMC.

A blackout period shall take place starting one-week before an FOMC meeting and ending midnight of the day of its completion. During the black-out period only specified public communications are permissible by members and FOMC staff with respect to either macroeconomic or financial developments or about current or prospective monetary policy issues.

FMOC membership shall increase from five to six representatives of the Federal Reserve Banks. The selection process for such representatives is revised, in part to divide elections from different Banks into odd-numbered and even-numbered calendar years.

The Dodd-Frank Wall Street Reform and Consumer Protection Act is amended to require the Board, before adopting sets of conditions for stress tests of nonbank financial companies it supervises and bank holding companies, to: (1) first issue regulations for them, subject to public notice and comment, which shall include methodologies and models used to estimate losses on certain assets; and (2) before publishing them submit copies of such regulations to the GAO and the Panel of Economic Advisors of the Congressional Budget Office.

Stress test requirements used by the Board shall apply to all stress tests performed under the Comprehensive Capital Analysis and Review exercise.

The Federal Reserve Act is further amended to increase from semiannual to quarterly the Board Chairman’s appearances before Congress.

Before issuing any regulation the Board must consider specified economic impacts.

When deciding whether to regulate, the Board must:

• assess the costs and benefits of available regulatory alternatives, and
• consider a regulation's impact upon certain areas of economic activity.

In its final rule the Board must: (1) explain the nature of comments that it received together with a response to them; and (2) make a postadoption impact assessment of the costs, benefits, and intended and unintended consequences of any "major rule" adopted or amended.

Board members and employees shall be subject to the same ethics standards, prohibitions, and restrictions as apply to employees of the Securities and Exchange Commission (SEC) with respect to financial interests, transactions, and outside employment and activities.

Both the Federal Reserve Act and the Federal Deposit Insurance Act are revised to require the Federal Reserve Board and the Federal Deposit Insurance Corporation Board, respectively, in the process of setting financial standards as a part of any foreign or multinational entity, to solicit public comment and issue public reports, including a notice of agreement.

The Department of the Treasury, the Comptroller of the Currency, and the SEC shall likewise be subject to these same requirements for their participation in similar processes.

The authority of the Federal Reserve Board to discount notes, drafts, and bills of exchange secured to a Federal Reserve Bank's satisfaction in unusual and exigent circumstances shall be limited to only those circumstances posing a threat to U.S. financial stability. The affirmative vote of at least nine presidents of the Federal Reserve Banks shall be necessary for a discount decision, in addition to (as under current law) the affirmative vote of five Board members.

Federal Reserve Banks may not accept as collateral for an emergency loan any equity securities issued by the recipient of the loan or of other financial assistance.

No applicant shall be eligible to borrow from any emergency lending program or facility unless the Board and all applicable federal banking regulators certify that the applicant is not insolvent.

The Board shall by rule establish a minimum interest rate on the principal amount of financial assistance to a recipient.

The FOMC shall determine the interest rates on balances maintained at a Federal Reserve Bank by or on behalf of a depository institution.

The GAO shall audit both the Federal Reserve Board and the Federal Reserve Banks within 12 months after enactment of this Act.