Statement by David W. Mullins, Jr., Vice Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, April 28, 1992

Statement by David W. Muffins, Jr., Vice Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, April 28, 1992

Thank you for this opportunity to communicate the Board of Governors' views on proposed legislation concerning the government securities market. The Joint Report on the Government Securities Market suggested comprehensive administrative changes, some already made and others proposed, that will significantly increase openness in this market and sharply limit the possibility of a replay of recent events.| The Board supports these changes, which are targeted to the problems and to the opportunities identified to foster fair and efficient markets. In the Board's view, this progress makes it inadvisable to enact either H.R.4450 or H.R.3927.

This decision was made after having carefully weighed the costs and benefits of further change, as we see them at this time, in accordance with our legislated role in the oversight of financial markets. In 1789, President Washington and the first Congress charged the Department of the Treasury with the responsibility of borrowing in the name of the new republic. In 1913, the drafters of the Federal Reserve Act assigned the Federal Reserve District Banks to serve as fiscal agents for the Treasury and facilitated the nationwide distribution of the debt. Later, in 1934, the Congress created the Securities and Exchange Commission to enforce securities laws that were targeted to counter the considerable problems at hand in private financial markets by nurturing fairness and openness. Although the Board works closely with the various agencies and has general oversight responsibilities for the activities of the District Banks, it has little direct regulatory authority for the U.S. government securities market.

We think that this arrangement is wise and gives the Board of Governors a unique perspective by allowing us to examine important issues regarding this market from an economywide perspective. Freed of the specific responsibilities of managing the debt, distributing securities, or policing trading activity, we can evaluate the consequences of proposed reform against broad public policy standards.

Our …

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Publication information: Article title: Statement by David W. Mullins, Jr., Vice Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, April 28, 1992. Contributors: Not available. Journal title: Federal Reserve Bulletin. Volume: 78. Issue: 6 Publication date: June 1992. Page number: 421+. © 1999 Board of Governors of the Federal Reserve System. COPYRIGHT 1992 Gale Group.

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