FORM Act of 2015

Fed Oversight Reform and Modernization Act of 2015 or the FORM Act of 2015

(Sec. 1) This bill amends the Federal Reserve Act to require the Chairman of the Federal Open Market Committee (FOMC), within 48 hours after the end of a FOMC meeting, to submit to the appropriate congressional committees and the Government Accountability Office (GAO) a Directive Policy Rule, meeting specified criteria, accompanied by a statement identifying the FOMC members voting in its favor.

A Directive Policy Rule shall describe the FOMC strategy or rule for the systematic quantitative adjustment of a Policy Instrument Target to:

• respond to a change in specified Intermediate Policy Inputs, and
• provide the basis for an Open Market Operations Directive to achieve a specified Policy Instrument Target presented by the FOMC to the Federal Reserve Bank of New York to guide open-market operations.

The GAO shall determine if a Directive Policy Rule has materially changed from the rule most recently submitted, and the Chairman of the Board of Governors of the Federal Reserve System (Board) must testify within seven legislative days before certain congressional committees as to why any noncompliance exists.

The GAO must also, upon congressional request, audit the conduct of monetary policy by the Board and the FOMC.

(Sec. 2) A blackout period shall take place starting one week before an FOMC meeting and ending midnight of the day of its completion. During the black-out period only specified public communications are permissible by members and FOMC staff with respect to either macroeconomic or financial developments or about current or prospective monetary policy issues.

(Sec. 4) FMOC membership shall increase from five to six representatives of the Federal Reserve Banks. The selection process for representatives is revised, in part to divide elections from different Banks into odd-numbered and even-numbered calendar years.

(Sec. 5) The Dodd-Frank Wall Street Reform and Consumer Protection Act is amended to require the Board, before adopting sets of conditions for stress tests of nonbank financial companies it supervises and bank holding companies, to: (1) first issue regulations for them, subject to public notice and comment, which shall include methodologies and models used to estimate losses on certain assets; and (2) before publishing them submit copies of such regulations to the GAO and the Panel of Economic Advisors of the Congressional Budget Office.

Stress test requirements used by the Board shall apply to all stress tests performed under the Comprehensive Capital Analysis and Review exercise.

The Board shall also publish:

• the aggregate number of supervisory letters sent since the enactment of this Act to bank holding companies with total consolidated assets of $50 billion or more, and keep this number updated; as well as
• the aggregate numbers designated "Matters Requiring Attention" and "Matters Requiring Immediate Attention."

(Sec. 6) The Federal Reserve Act is further amended to increase from semiannual to quarterly the Board Chairman’s appearances before Congress.

(Sec. 7) The Board's Vice Chairman for Supervision, as part of Board testimony before specified congressional committees, shall report on the status of proposed and anticipated rulemakings. If the Vice Chairman for Supervision position is vacant, the Board's Vice Chairman shall fulfill the statutory requirement for semi-annual testimony.

(Sec. 8) Before issuing any regulation the Board must consider specified economic impacts.

When deciding whether to regulate, the Board must:

• assess the costs and benefits of available regulatory alternatives, and
• consider a regulation's impact upon certain areas of economic activity.

In its final rule the Board must: (1) explain the nature of comments that it received together with a response to them; and (2) make a postadoption impact assessment of the costs, benefits, and intended and unintended consequences of any "major rule" adopted or amended.

(Sec. 9) Board members and employees shall be subject to the same ethics standards, prohibitions, and restrictions as apply to employees of the Securities and Exchange Commission (SEC) with respect to financial interests, transactions, outside employment and activities, and Office of Personnel Management employee responsibilities and conduct regulations.

The Board shall make publicly available on its website a searchable database of all Board members, officers, and employees who receive an annual salary above the annual rate of basic pay for GS-15 of the General Schedule, including yearly salary information and any nonsalary compensation such staff receive.

Each Board member may employ at least two individuals.

(Sec. 10) Both the Federal Reserve Act and the Federal Deposit Insurance Act are revised to require the Federal Reserve Board and the Federal Deposit Insurance Corporation Board, respectively, in the process of setting financial standards as a part of any foreign or multinational entity, to solicit public comment and issue public reports, including a notice of agreement.

The Department of the Treasury, the Comptroller of the Currency, and the SEC shall likewise be subject to these same requirements for their participation in similar processes.

(Sec. 11) The authority of the Federal Reserve Board to discount notes, drafts, and bills of exchange secured to a Federal Reserve Bank's satisfaction in unusual and exigent circumstances shall be limited to only those circumstances posing a threat to U.S. financial stability. The affirmative vote of at least nine presidents of the Federal Reserve Banks shall be necessary for a discount decision, in addition to (as under current law) the affirmative vote of five Board members.

Federal Reserve Banks may not accept as collateral for an emergency loan any equity securities issued by the recipient of the loan or of other financial assistance.

No applicant shall be eligible to borrow from any emergency lending program or facility unless the Board and all applicable federal banking regulators certify that the applicant is not insolvent.

The Board, within six months of the enactment of this Act, shall adopt a rule:

• establishing a method for determining the sufficiency of collateral pledged to secure lending,
• acceptable classes of collateral,
• the amount of any discount of the lendable value of collateral for a loan that the Federal Reserve Banks will apply to calculate the sufficiency of the collateral, and
• a method for obtaining independent appraisals of the collateral the Federal Reserve Banks receive.

The Board, also within six months of the enactment of this Act, shall by rule establish a minimum interest rate on the principal amount of any emergency loan or financial assistance to a recipient. The applicable minimum interest rate shall be the sum of:

• the most recent 90-day average of the secondary discount rate of all Federal Reserve Banks; plus
• the most recent 90-day average of the difference between a distressed corporate bond yield index and a bond yield index of debt issued by the United States.

The bill limits discounts under the lending program to participants that are financial institutions, excluding federal, state, and local government agencies.

(Sec. 12) The FOMC shall determine the interest rates on balances maintained at a Federal Reserve Bank by or on behalf of a depository institution.

(Sec. 13) The GAO shall audit annually both the Federal Reserve Board and the Federal Reserve Banks within 12 months after enactment of this Act.

(Sec. 14) The Board, shall, as part of its monthly "Industrial Production or Capacity Utilization" statistical release (or any successor release), analyze:

• the impact on the index described in the statistical release because of the operation of the Export-Import Bank; and
• the amount of foreign industrial production supported by foreign export credit agencies, using the same method used to measure industrial production in the statistical release and scaled to be comparable to the industrial production measurement for the United States.

(Sec. 15) The Federal Reserve Act is amended to require that, with respect to the election or designation of Class B and C directors of Federal Reserve District Banks, due consideration be given to the interests of traditionally underserved communities and populations.

(Sec. 16) Centennial Monetary Commission Act of 2015

The bill establishes a Centennial Monetary Commission to examine how U.S. monetary policy since the creation of the Board in 1913 has affected the performance of the U.S. economy in terms of output, employment, prices, and financial stability over time.

(Sec. 17) The Federal Reserve Act is amended to state that the portion of net earnings of each Federal Reserve Bank which remains after dividend claims have been fully met shall no longer be deposited in the Bank's surplus fund but shall be transferred to the Board for transfer to the Treasury general fund. The Federal Reserve Banks shall also transfer all their current surplus funds to the Board for transfer to the Treasury general fund.

(Sec. 18) The FOMC shall record and make available to the public the full transcript of all of its meetings.