The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“FEDERAL RESERVE EXERTS POWERFUL INFLUENCE” mentioning the Federal Reserve System was published in the House of Representatives section on pages H5457-H5458 on July 17, 1997.
The publication is reproduced in full below:
FEDERAL RESERVE EXERTS POWERFUL INFLUENCE
The SPEAKER pro tempore (Mr. Rogan). Under a previous order of the House, the gentlewoman from New York [Mrs. Maloney] is recognized for 5 minutes.
Mrs. MALONEY of New York. Mr. Speaker, when the Federal Reserve speaks, people listen. When the Fed is about to make some sort of monetary decision, the world stops and watches. That is because the Federal Reserve System is comprised of powerful experts whose influence affects anyone who makes and spends money.
Some people think the Federal Reserve's primary purpose is to conduct monetary policy. Little do they know that only 1,600 of the Fed's 25,000 employees are working in monetary policy. The rest are employed in unrelated services, such as the transportation of paper checks.
The Fed pays $36 million for this service, of which $17 million is a Government subsidy. This money, taxpayer money, could be used to reduce the debt.
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The Federal Trade Commission staff said in a 1990 report that these subsidies drive out private competition and innovation.
My bill would end this subsidy. It is time to ask why a giant Government bureaucracy is subsidized to run something that the private sector can run far more efficiently.
I come before my colleagues tonight to point out another area of this powerful Government bureaucracy that has not received enough scrutiny, the Fed's fleet of 47 airplanes that ferries canceled checks back and forth across the country Monday through Thursday.
Since 1980, the Monetary Control Act has required the Fed to extend these check-clearing services beyond its member banks to all depository institutions at prices without a subsidy. The purpose of the Monetary Control Act of 1980 was to make sure that private companies could compete with the Federal Reserve on a level playing field in providing services to the banking industry. But the Fed, to this day, insists on subsidizing its paycheck transportation as long as it makes up the cost somewhere else in its operation.
The Democratic staff of the Committee on Banking and Financial Services conducted a 2-year investigation of the Fed's check-clearing practices and determined that, as of 1997, $17 million of the $36 million used to run the program is subsidized by you and me, the American taxpayer.
In effect, we are subsidizing an inefficient, overgrown operation that the private sector could provide at a lower cost and with better results. If this operation cannot be run more efficiently, the Government should check out of the check transportation business and concentrate on helping Americans make money, not waste it.
I recently introduced a bipartisan bill with my colleague the gentleman from Washington [Mr. Metcalf]. This bill would end this subsidy and require the Federal Government and the Fed to operate on a level playing field with the private sector.
As we enter the 21st century, with all the revolutionary changes, it is bad public policy and downright foolish to subsidize the Fed's transportation of paper checks. Competition and free enterprise will provide lower prices and wider consumer choices in the provision of banking service.
Support our bipartisan bill, the Efficient Check Clearing Act of 1997, H.R. 2119, and help bring our Nation's central bank into the 21st century.
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