As anticipated, today’s hearing with House Financial Services was considerably more contentious than the Senate Banking session (see Client Report FEDERALRESERVE34), with Chair Yellen taking a still more assertive stand in the face of stronger and often more partisan criticism.  Although House Republicans share concerns about the FRB’s portfolio with their Senate colleagues, Chairman Hensarling (R-TX) reiterated also that he believes that payments by the Fed of interest on excess reserves (IOER) are illegal.  A recent FedFin paper addresses this question and broader IOER issues clearly now on the FinServ agenda.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.