In this report, we analyze today’s lightly-attended House FinServ Monetary Policy and Trade Subcommittee hearing on unconventional monetary policy. Much of today’s debate revolved around the proper role of monetary policy and how monetary policy has, critics allege, since the crisis been used to combat problems better left to fiscal policy. However, the hard line taken in House-passed legislation (see FSM Report FEDERALRESERVE26) was softened in some ways, suggesting to us strong GOP critics of the FRB may recalibrate some legislative provisions to ensure that resulting reforms are, at least in their view, workable. As is evident in other debates – e.g., the one now taking place on Obamacare – top legislators know that, under the Trump Administration, they are shooting with “live ammunition,” meaning that legislation can no longer be pushed to the extreme knowing that it would be vetoed by Mr. Obama or blocked in the Senate.
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