In this report, we assess today’s House FinServ Monetary Policy and Trade Subcommittee hearing at which Republicans took the Fed to task for post-crisis monetary policies in general and IOER in particular. Both Chairman Barr (R-KY) and Vice Chairman Williams (R-TX) charged that paying IOER is paying banks not to lend, diverting capital from the economy. While few Democrats attended today’s hearing, Rep. Sherman (D-CA) also criticized IOER on these same grounds. While witnesses generally agreed with these assertions and no Members came to IOER’s defense, one witness noted that removing IOER would likely drive banks to charge for deposits – a conclusion consistent with FedFin work. Both Republicans and Democrats also expressed significant concern about the distributional impacts of the Fed’s unconventional monetary policy – a concern FedFin has addressed extensively in the past.
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