U.S. Rep. French Hill (R-AR) introduced legislation in the House that would prohibit the Federal Reserve from transferring its earnings to the Consumer Financial Protection Bureau (CFPB) if the central bank incurs an operating loss.
Unlike most federal agencies, the CFPB is not funded through congressional appropriations but instead from the earnings of the Federal Reserve.
In addition, the Federal Reserve Loss Transparency Act would require the Federal Reserve to calculate its net earnings and total capital in accordance with U.S. generally accepted accounting principles.
“Since I introduced this legislation last September, the Federal Reserve has posted over $100 billion in operating losses and the number continues to soar. These growing losses to American taxpayers are rooted in our central bank’s overreliance on buying government bonds and mortgage-backed securities as an emergency monetary policy tool,” Hill said. “With billions in real losses and over a trillion in unrealized, mark-to-market losses, the Federal Reserve should focus on responsible monetary policy instead of funding the Consumer Financial Protection Bureau (CFPB), which should be put on congressional appropriations.”
U.S. Sens. Bill Hagerty (R-TN) and Katie Britt (R-AL) have introduced companion legislation in the U.S. Senate.
“I’m pleased to join Representative Hill in reintroducing this bill that provides much-needed transparency and accountability to the Federal Reserve and CFPB,” Hagerty said. “The Federal Reserve has accumulated over $1 trillion in mark-to-market losses, and yet is able to obscure these losses through unconventional accounting gimmicks. This should be of great concern to all Americans, particularly as the Federal Reserve continues to send hundreds of millions of dollars to the CFPB outside of the appropriations process.”
Britt added that taxpayers deserve the highest levels of transparency and accountability from the Federal Reserve.
“Instead of using hundreds of millions of dollars to keep propping up the CFPB, the Federal Reserve needs to get back to focusing on recovering the billions in losses they’ve posted and pursuing responsible monetary policy that helps hardworking families live their American Dream,” Britt said.