Lucas: Monetary Policy Transmission is Different in Oklahoma than it is in New York

Today, the House Financial Services Committee is holding a Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity field hearing, led by Task Force Chairman Frank Lucas (OK-03), titled "Examining the Structure of the Federal Reserve System."

Read Task Force Chairman Lucas' opening remarks as prepared for delivery:

"Good morning. To my colleagues and our witnesses – welcome to Oklahoma City! I am grateful to everyone that traveled to join us here today.  

"Today’s field hearing of the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity is focused on the topic of the structure of the Federal Reserve System.  

"It is fitting for us to be discussing this topic while in the heartland of the country. One of Oklahoma’s first Senators – Robert Owen – saw the failures of the first two central banks and knew that part of the reason they were not enduring, was because they weren’t appropriately responsive to the concerns of Americans across the country.  

"That’s why, as the sponsor of the Federal Reserve Act of 1913, Senator Owen set up the federated system that we have today – 12 private Reserve Banks with district-specific geographic and industrial expertise overseen by the Board of Governors in Washington, DC.  

"The Reserve Banks act as lender and supervisor of member banks, ensure the safety of our payments system, and inform monetary policy.  

"This private-public partnership we have with our central bank serves as a check against the federal government dominating our monetary system.  

"The Boards of Directors for each of the banks are composed of nine directors – three representing member banks, three representing the public, and three appointed by the Board of Governors with consideration of agriculture, commerce, industry, services, labor, and consumers. They play an essential role in governing the Reserve Bank and ensuring they represent the districts they serve.  

"Importantly, the 1913 Act also set up the Federal Advisory Council for the Board. It is comprised of one banking representative from each of the districts who bring insight and analysis directly to the Board.  

"The Community Advisory Council also allows for direct representation from community leaders and industry experts to enlighten the Board on economic conditions around the country.  

"By design, each district brings to the table its own perspective – our nation has many differing viewpoints, and our central bank should be able to reflect all of them.  

"St. Louis developed the impressive database ‘FRED’ to provide the broader system and the public with the Fed’s economic data. Dallas provides extensive oil industry expertise. Richmond has a special focus on the economic conditions of rural communities.  

"The Kansas City Bank supports the broader system through its expertise in agricultural economics. As someone with a degree in the subject, I know well the unique considerations of raising food and fiber and those economic impacts.  

"Whether it’s the inelasticity of demand, risk management practices, or the impact of global markets, equipment leasing, and the weather forecast – all of these issues determine how the economy moves through farm country.

"Monetary policy transmission is different in Oklahoma than it is in New York.  

"That’s why it’s so important that our farmers and ranchers have a seat at the table when monetary policy decisions are being made.  

"Through rotating voting seats at the Federal Open Market Committee, five Reserve Bank Presidents help set the administered rates. The Reserve Banks act as the conscience of the FOMC. 

"Thank you again for being here for this important discussion.  

"I yield back."