Securities Regulation Daily Wrap Up, DODD-FRANK ACT—Garrett plans legislation requiring Fed employees to disclose securities trading and designate Vice-Chair for regulation, (Jan 23, 2014)

By Jim Hamilton, J.D., LL.M.

Representative Scott Garrett (R-N.J.), chair of the House Financial Institutions Subcommittee, said that he will soon introduce legislation to improve transparency at the Federal Reserve Board. The bill will require certain Fed employees to disclose brokerage accounts and trading activities, prohibit investment in certain securities, require pre-clearance on trades, and ban trading on material, nonpublic information. The coming Federal Reserve Accountability and Transparency Act would also require the Fed to publish a notice that details the subject, scope, and goals of any international agreements and solicit comments from market participants ahead of negotiations, he stated.

According to Chair Garrett, this mechanism would allow market participants a formal process to ensure that the concerns of financial institutions of all sizes are represented. The legislation would also require the Fed to provide relevant congressional committees with details of the agreements before they are finalized.

Chair Garrett noted that the Dodd-Frank Act created the role of vice chair of supervision at the Federal Reserve, a position intended to increase regulatory accountability at the central bank. The President has not submitted a nominee for this post to the Senate and the position remains vacant. As long as this vacancy continues, the pending legislation would require the responsibilities of the vice chair, including testifying to Congress on all Fed rulemakings, to be assumed by the Fed's second-in-command.

LegislativeActivity: DoddFrankAct