ORRIN G Hatch End the Fed 1

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  • 8/14/2019 ORRIN G Hatch End the Fed 1




    Website: http://www.senate.gov/-hatch ON TAXATIONFebruary 10, 2009

    Dear Mr.:Thank you for writing to express your support for legislation that would abolish or regulate

    he Federal Reserve Board, essentially removing Federal regulation of banking and returning our

    nation to the "gold standard." I appreciate hearing from you.

    Since the Federal Reserve Act was signed into law in 1913, the Federal government has hada role in ensuring the integrity of our country's financial system in order to protect American

    nvestors and consumers against such problems as bank failure. The Federal Reserve System is a

    mixture of public and private entities. The Federal Reserve Board has been granted the authority byCongress to set monetary policy and to regulate commercial banking activities. While the Federal

    Reserve System was established as an independent agency, the President of the United States

    appoints the seven members of the board with the appointments subject to confirmation by theSenate. Congress also has the power to modify the Federal Reserve System.

    The system also receives extensive feedback from high-level representatives of the public

    hrough frequent meetings with members of the Executive Branch and appearances before

    ongressional committees.

    While many people have questioned the constitutionality of the Federal Reserve Systembased upon provisions in the Constitution which give Congress numerous power to "coin money and

    o regulate the value thereof," the Congress has appropriately assigned these authorities togovernment agencies. For example, the Internal Revenue Service (IRS) has been given authority to

    ollect taxes. Similarly, the Federal Reserve System has been delegated the authority to establish

    monetary policy.t is the consensus of many observers that the Federal Reserve System is responsive to the

    needs of the economy, especially the stock market: Compared with virtually all foreign central

    banks, the Federal Reserve System appears to be very forthcoming in disclosing policies and open toeceiving suggestions. Therefore, I am hesitant to support proposals to further erode the

    ndependence of the Federal Reserve System or to intrude on the setting of monetary policy. Over

    he last 25 years, the level of inflation has been quite stable and low, even compared to the periodbefore we created the Federal Reserve.PRINTED ON RECYCLED PAPER

    February 10, 2009

    Page 2

    The legislation that has been mentioned, the Federal Reserve Board Abolition Act

    H.R. 2755), was introduced in the House of Representatives by Rep. Ron Paul of Texas during theast Congress. Rep. Paul has been a vocal critic of the Fed and has supported its abolition for some

    ime. No action was taken on H.R. 2755 prior to the adjournment of the 110th Congress. Rest

    assured I will keep your views in mind should similar legislation be introduced in the 111 th Congress.

    For further reading, I have enclosed a copy of a report issued by the Congressional ResearchService entitled, "Monetary Policy and the Federal Reserve: Current Policy and Conditions." I hope

    you will find this useful.

    Again, thank you for writing.


    Orrin G. HatchUnited States Senator