Sen. Richard Shelby eyes Fed reforms

by Kevin Cirilli - 03/04/15 4:57 PM ET

Senate Banking Committee Chairman Richard Shelby (R-Ala.) doesn’t want to the audit the Federal Reserve, but that doesn’t mean he isn’t eying legislation to reform the central bank.

Shelby told The Hill in an interview Wednesday that he’s “holding hearings to determine where legislation is needed.”

{mosads}”We’re going to continue some hearings,” he said. “We’re trying to figure out what we can do, how we can do it and how best to do it.”

Shelby said he was scheduled to meet with Fed Chairwoman Janet Yellen on Thursday, but the meeting has since been postponed because of an expected snowstorm.

Shelby has opposed the “Audit the Fed” proposal Sen. Rand Paul (R-Ky.), which would allow for the government to audit the central bank.

That proposal has little chance to make its way through Shelby’s panel, especially with Shelby and Sen. Bob Corker (R-Tenn), another committee member, opposing the legislation.

Shelby has echoed Yellen’s concerns that Paul’s proposal would politicize monetary policy.

“I don’t want Congress setting monetary policy,” Shelby said.

At a hearing on Fed transparency Tuesday, Shelby sent more signals he’s looking at legislation.

“Federal Reserve officials have stressed the importance of the Fed’s independence,” Shelby said at the hearing. “But such independence does not mean that it is immune from Congressional oversight.”

Still, his increased interest in transparency at the central bank is a clear sign that he’ll look to use his gavel to push for reforms at the bank. He said there is no clear timetable for when he might unveil legislation.

There are various proposals being discussed in Washington, from making the president of the New York Fed a Senate appointee to shaking up the regional banking structure of the system.

Shelby wouldn’t specify which reforms he’d like to see implemented.

But at the hearing, Shelby noted the 2010 Dodd-Frank Wall Street reform law expanded Fed official’s powers.

“Dodd-Frank greatly expanded the regulatory reach of the Federal Reserve,” Shelby said at the hearing. “It did not, however, examine whether it was correctly structured to account for these new and expansive powers. Therefore, the Committee will be examining the appropriateness of the Fed’s current structure in a post Dodd-Frank world.”

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