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.
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