Federal Reserve Reform Act
Federal Reserve Reform Act (1977)
1) Link to the Text of the Act
Read the statute (12 U.S.C. §§ 225a, 263, 610)
2) Why It Was Done
Passed in the wake of the 1970s stagflation crisis, the Act clarified the Federal Reserve’s responsibilities, strengthened oversight, and set policy goals for monetary stability, employment, and growth.
3) Pre-existing Law or Constitutional Rights
Before this Act, the Federal Reserve’s mandate was less explicit. This law formalized a “dual mandate” of employment and price stability under Congress’s constitutional power over money.
4) Overreach or Proper Role?
Supporters saw it as proper Congressional direction for the Fed. Critics worried it politicized monetary policy and gave Congress too much influence over central banking independence.
5) Who or What It Controls
- Federal Reserve Board of Governors (policy guidance and accountability)
- Chair of the Federal Reserve (required to testify before Congress)
- Congress (received formal reports on monetary goals)
6) Key Sections / Citations
- 12 U.S.C. § 225a: “Dual mandate” — maximum employment, stable prices, moderate interest rates
- 12 U.S.C. § 263: Clarified Federal Open Market Committee (FOMC) structure
- 12 U.S.C. § 610: Conflict of interest rules for Fed officials
7) Recent Changes or Live Controversies
- Forms the statutory basis for debates over whether the Fed should prioritize inflation or jobs.
- Amended by later acts (e.g., Dodd–Frank Act 2010) for reporting and oversight.
- Still cited in modern controversies over Fed independence and Congressional oversight.
8) Official Sources