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115TH CONGRESS
" HOUSE OF REPRESENTATIVES
2d Session

!

REPORT
115–980

FEDERAL RESERVE SUPERVISION TESTIMONY
CLARIFICATION ACT

SEPTEMBER 26, 2018.—Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

Mr. HENSARLING, from the Committee on Financial Services,
submitted the following

R E P O R T
[To accompany H.R. 4753]

The Committee on Financial Services, to whom was referred the
bill (H.R. 4753) to amend the Federal Reserve Act to require the
Vice Chairman for Supervision of the Board of Governors of the
Federal Reserve System to provide a written report, and for other
purposes, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
The amendment is as follows:
Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Federal Reserve Supervision Testimony Clarification Act’’.
SEC. 2. VICE CHAIRMAN FOR SUPERVISION REPORT REQUIREMENT.

Paragraph (12) of section 10 of the Federal Reserve Act (12 U.S.C. 247b) is
amended—
(1) by redesignating such paragraph as paragraph (11); and
(2) in such paragraph—
(A) by striking ‘‘shall appear’’ and inserting ‘‘shall provide written testimony and appear’’; and
(B) by adding at the end the following: ‘‘If, at the time of any appearance
described in this paragraph, the position of Vice Chairman for Supervision
is vacant, the Chairman or their designee shall appear instead and provide
the required written testimony.’’.

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PURPOSE

AND

SUMMARY

On January 10, 2018, Representative Frank Lucas introduced
H.R. 4753, the ‘‘Federal Reserve Supervision Testimony Clarification Act’’, which clarifies Section 1108 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act. This legislation estab79–006

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lishes procedures to fulfill Section 1108’s semi-annual testimony
mandate for the Federal Reserve’s Vice Chairman for Supervision.
The legislation establishes that the Chairman of the Board of Governors of the Federal Reserve System (Federal Reserve), or the
Chairman’s designee, will fulfill the testimony requirement for the
Federal Reserve’s Vice Chairman for Supervision if the United
States Senate has not confirmed an individual to serve as the Vice
Chairman for Supervision.
BACKGROUND

AND

NEED

FOR

LEGISLATION

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Section 1108 of Dodd-Frank Wall Street Reform and Consumer
Protection Act (P.L. 111–203) amended Section 10 of the Federal
Reserve Act and created a new position at the Federal Reserve, the
Vice Chairman for Supervision. The Vice Chairman for Supervision
is a presidential appointee subject to the advice and consent of the
Senate. This amendment to the Federal Reserve Act also requires
the Vice Chairman for Supervision to testify semi-annually before
Committee on Financial Services of the House of Representatives
and the Committee on Banking, Housing and Urban Affairs of the
United States Senate. The testimony, as mandated by the amendment to the Federal Reserve Act, requires the Vice Chairman for
Supervision to discuss ‘‘the efforts, activities, objectives, and plans
of the Board with respect to the conduct of supervision and regulation of depository institution holding companies and other financial
firms supervised by the Board.’’
During his tenure as a Federal Reserve Board Governor, Daniel
Tarullo fulfilled this function in practice. However, the Obama Administration never nominated him (or anybody else) to formally
serve as the Federal Reserve’s Vice Chairman for Supervision. The
failure to nominate former Governor Tarullo or any other person to
the Vice Chairman for Supervision avoided accountability measures
that Congress established for that position, including the requirement to appear before Congress.
During President Obama’s administration, Financial Services
Committee Chairman Jeb Hensarling and former Senate Banking,
Housing and Urban Affairs Committee Chairman, Richard Shelby,
sent a letter on September 21, 2016 to former Federal Reserve
Chair Janet Yellen to ‘‘appear semi-annually before both the Senate Committee on Banking, Housing, and Urban Affairs, and the
House Committee on Financial Services to testify on the matters
specified in Section 1108 of the Dodd-Frank Act, until the position
of Vice Chairman for Supervision position is filled.’’
The Federal Reserve Supervision Testimony Clarification Act,
H.R. 4753, requires the Vice Chairman for Supervision to provide
as part of his or her statutorily required semi-annual testimony a
report on the status of proposed and anticipated rulemakings. H.R.
4753 also requires that, if the Vice Chairman for Supervision position is vacant, then the Chairman of the Board of Governors or the
Chairman’s designee must fulfill the statutory requirement for
semi-annual testimony.
HEARINGS
The Subcommittee on Monetary Policy and Trade held a hearing
titled ‘‘A Further Examination of Federal Reserve Reform Pro-

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3
posals’’ to consider matters relating to H.R. 4753 on January 10,
2018.
COMMITTEE CONSIDERATION
The Committee on Financial Services met in open session on
September 13, 2018, and ordered H.R. 4753 to be reported favorably to the House without amendment by a recorded vote of 49
yeas to 0 nays (recorded vote no. FC–203), a quorum being present.
COMMITTEE VOTES

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Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion
to report legislation and amendments thereto. The sole recorded
vote was on a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed
to by a recorded vote of 49 yeas to 0 nays (Record vote no. FC–203),
a quorum being present.

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COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House
of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X
of the Rules of the House of Representatives, are incorporated in
the descriptive portions of this report.
PERFORMANCE GOALS

AND

OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House
of Representatives, the Committee states that H.R. 4753 will
strengthen Congress’s ability to fulfill its statutory mandate to effectively supervise the Federal Reserve System.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY,
EXPENDITURES

AND

TAX

The Committee has not received an estimate of new budget authority contained in the cost estimate prepared by the Director of
the Congressional Budget Office pursuant to Sec. 402 of the Congressional Budget Act of 1974. In compliance with clause 3(c)(2) of
rule XIII of the Rules of the House, the Committee opines that
H.R. 4753 will not establish any new budget or entitlement authority or create any tax expenditures.
CONGRESSIONAL BUDGET OFFICE ESTIMATES
The cost estimate prepared by the Director of the Congressional
Budget Office pursuant to Sec. 402 of the Congressional Budget Act
of 1974 was not submitted timely to the Committee.
FEDERAL MANDATES STATEMENT
This information is provided in accordance with section 423 of
the Unfunded Mandates Reform Act of 1995. The Committee has
determined that the bill does not contain Federal mandates on the
private sector. The Committee has determined that the bill does
not impose a Federal intergovernmental mandate on State, local, or
tribal governments.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b) of the
Federal Advisory Committee Act were created by this legislation.
APPLICABILITY

TO

LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the
terms and conditions of employment or access to public services or
accommodations within the meaning of the section 102(b)(3) of the
Congressional Accountability Act.

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EARMARK IDENTIFICATION
With respect to clause 9 of rule XXI of the Rules of the House
of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not
contain any congressional earmarks, limited tax benefits, or limited
tariff benefits within the meaning of the rule.

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DUPLICATION

OF

FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no provision
of the bill establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program;
(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public
Law 111–139; or (3) a program related to a program identified in
the most recent Catalog of Federal Domestic Assistance, published
pursuant to the Federal Program Information Act (Pub. L. No. 95–
220, as amended by Pub. L. No. 98–169).
DISCLOSURE

OF

DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rule makings: The
Committee estimates that the bill requires no directed rule makings within the meaning of such section.
SECTION-BY-SECTION ANALYSIS

OF THE

LEGISLATION

Section 1. Short title
This Section cites H.R. 4753 as the Federal Reserve Supervision
Testimony Clarification Act.
Section 2. Vice Chairman for Supervision report requirement
This section provides for the Federal Reserve Board Chair, or the
Chair’s designee, to appear before Congress, in the event that the
Vice Chairman for Supervision has not been confirmed.
CHANGES

IN

EXISTING LAW MADE

BY THE

BILL,

AS

REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic,
and existing law in which no change is proposed is shown in
roman):
CHANGES

IN

EXISTING LAW MADE

BY THE

BILL,

AS

REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic,
and existing law in which no change is proposed is shown in
roman):
FEDERAL RESERVE ACT
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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

SEC. 10. The Board of Governors of the Federal Reserve System
(hereinafter referred to as the ‘‘Board’’) shall be composed of seven
members, to be appointed by the President, by and with the advice

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and consent of the Senate, after the date of enactment of the Banking Act of 1935, for terms of fourteen years except as hereinafter
provided, but each appointive member of the Federal Reserve
Board in office on such date shall continue to serve as a member
of the Board until February 1, 1936, and the Secretary of the
Treasury and the Comptroller of the Currency shall continue to
serve as members of the Board until February 1, 1936. In selecting
the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district, the President shall
have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country. In selecting members of the Board, the President shall appoint at least 1 member with demonstrated primary
experience working in or supervising community banks having less
than $10,000,000,000 in total assets. The members of the Board
shall devote their entire time to the business of the Board and
shall each receive and annual salary of $15,000, payable monthly,
together with actual necessary traveling expenses.
The members of the Board shall be ineligible during the time
they are in office and for two years thereafter to hold any office,
position, or employment in any member bank, except that this restriction shall not apply to a member who has served the full term
for which he was appointed. Upon the expiration of the term of any
appointive member of the Federal Reserve Board in office on the
date of enactment of the Banking Act of 1935, the President shall
fix the term of the successor to such member at not to exceed fourteen years, as designated by the President at the time of nomination, but in such manner as to provide for the expiration of the
term of not more than one member in any two-year period, and
thereafter each member shall hold office for a term of fourteen
years from the expiration of the term of his predecessor, unless
sooner removed for cause by the President. Of the persons thus appointed, 1 shall be designated by the President, by and with the
advice and consent of the Senate, to serve as Chairman of the
Board for a term of 4 years, and 2 shall be designated by the President, by and with the advice and consent of the Senate, to serve
as Vice Chairmen of the Board, each for a term of 4 years, 1 of
whom shall serve in the absence of the Chairman, as provided in
the fourth undesignated paragraph of this section, and 1 of whom
shall be designated Vice Chairman for Supervision. The Vice Chairman for Supervision shall develop policy recommendations for the
Board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the
Board, and shall oversee the supervision and regulation of such
firms. The chairman of the Board, subject to its supervision, shall
be its active executive officer. Each member of the Board shall
within fifteen days after notice of appointment make and subscribe
to the oath of office. Upon the expiration of their terms of office,
members of the Board shall continue to serve until their successors
are appointed and have qualified. Any person appointed as a member of the Board after the date of enactment of the Banking Act
of 1935 shall not be eligible for reappointment as such member
after he shall have served a full term of fourteen years.
The Board of Governors of the Federal Reserve System shall
have power to levy semiannually upon the Federal reserve banks,

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in proportion to their capital stock and surplus, an assessment sufficient to pay its estimated expenses and the salaries of its members and employees for the half year succeeding the levying of such
assessment, together with any deficit carried forward from the preceding half year, and such assessments may include amounts sufficient to provide for the acquisition by the Board in its own name
of such site or building in the District of Columbia as in its judgment alone shall be necessary for the purpose of providing suitable
and adequate quarters for the performance of its functions. After
September 1, 2000, the Board may also use such assessments to acquire, in its own name, a site or building (in addition to the facilities existing on such date) to provide for the performance of the
functions of the Board. After approving such plans, estimates, and
specifications as it shall have caused to be prepared, the Board
may, notwithstanding any other provision of law, cause to be constructed on any site so acquired by it a building or buildings suitable and adequate in its judgment for its purposes and proceed to
take all such steps as it may deem necessary or appropriate in connection with the construction, equipment, and furnishing of such
building or buildings. The Board may maintain, enlarge, or remodel any building or buildings so acquired or constructed and
shall have sole control of such building or buildings and space
therein.
The principal offices of the Board shall be in the District of Columbia. At meetings of the Board the chairman shall preside, and,
in his absence, the vice chairman shall preside. In the absence of
the chairman and the vice chairman, the Board shall elect a member to act as chairman pro tempore. The Board shall determine and
prescribe the manner in which its obligations shall be incurred and
its disbursements and expenses allowed and paid, and may leave
on deposit in the Federal Reserve banks the proceeds of assessments levied upon them to defray its estimated expenses and the
salaries of its members and employees, whose employment, compensation, leave, and expenses shall be governed solely by the provisions of this Act, specific amendments thereof, and rules and regulations of the Board not inconsistent therewith; and funds derived
from such assessments shall not be construed to be Government
funds or appropriated moneys. No member of the Board of Governors of the Federal Reserve System shall be an officer or director
of any bank, banking institution, trust company, or Federal Reserve bank or hold stock in any bank, banking institution, or trust
company; and before entering upon his duties as a member of the
Board of Governors of the Federal Reserve System he shall certify
under oath that he has complied with this requirement, and such
certification shall be filed with the secretary of the Board. Whenever a vacancy shall occur, other than by expiration of term, among
the six members of the Board of Governors of the Federal Reserve
System appointed by the President as above provided, a successor
shall be appointed by the President, by and with the advice and
consent of the Senate, to fill such vacancy, and when appointed he
shall hold office for the unexpired term of his predecessor.
The President shall have power to fill all vacancies that may
happen on the Board of Governors of the Federal Reserve System
during the recess of the Senate by granting commissions which
shall expire with the next session of the Senate.

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Nothing in this Act contained shall be construed as taking away
any powers heretofore vested by law in the Secretary of the Treasury which relate to the supervision, management, and control of
the Treasury Department and bureaus under such department, and
wherever any power vested by this Act in the Board of Governors
of the Federal Reserve System or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury,
such powers shall be exercised subject to the supervision and control of the Secretary.
The Board of Governors of the Federal Reserve System shall annually make a full report of its operations to the Speaker of the
House of Representatives, who shall cause the same to be printed
for the information of the Congress. The report required under this
paragraph shall include the reports required under section 707 of
the Equal Credit Opportunity Act, section 18(f)(7) of the Federal
Trade Commission Act, section 114 of the Truth in Lending Act,
and the tenth undesignated paragraph of this section.
No Federal Reserve bank may authorize the acquisition or construction of any branch building, or enter into any contract or other
obligation for the acquisition or construction of any branch building, without the approval of the Board.
The Board of Governors of the Federal Reserve System shall
keep a complete record of the action taken by the Board and by the
Federal Open Market Committee upon all questions of policy relating to open-market operations and shall record therein the votes
taken in connection with the determination of open-market policies
and the reasons underlying the action of the Board and the Committee in each instance. The Board shall keep a similar record with
respect to all questions of policy determined by the Board, and
shall include in its annual report to the Congress a full account of
the action so taken during the preceding year with respect to openmarket policies and operations and with respect to the policies determined by it and shall include in such report a copy of the
records required to be kept under the provisions of this paragraph.
ø(12)¿ (11) APPEARANCES BEFORE CONGRESS.—The Vice
Chairman for Supervision øshall appear¿ shall provide written
testimony and appear before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives and at semiannual hearings regarding the efforts, activities, objectives,
and plans of the Board with respect to the conduct of supervision and regulation of depository institution holding companies and other financial firms supervised by the Board. If, at
the time of any appearance described in this paragraph, the position of Vice Chairman for Supervision is vacant, the Chairman or their designee shall appear instead and provide the required written testimony.

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