MNI BRIEF: Top Republican Ponders Reform At Regional Fed Banks

The top Republican on the Senate Banking Committee said Wednesday Congress should weigh an overhaul of the Federal Reserve Regional Bank system.

While Senator Pat Toomey, a Republican of Pennsylvania, said he is not ready to formally release any proposals, he also ruled out ideas that he would seek to eliminate the central bank's regional branches.

"I have not advocated that we eliminate them and I don't have a specific list of reforms. But I have raised the issue that if the regional Feds continued to wander ever further from what I think is their mission, then Congress will inevitably and should think about whether this is the right model," he said in response to a question from MNI.

"I think it's reasonable to ask the question, 'What should the role be prospectively?'" he said in a No Labels webinar, also raising questions about whether regional banks should be subject to FOIA. "I'm really asking questions more and raising this as an exercise to think about, rather than making a series of policy recommendations at this point."

When asked about mandating the Fed follow a Taylor Rule, he said he is sympathetic to the idea, but added that he would still be open to an "escape hatch" for extraordinary circumstances. Toomey also said he believed the central bank's 2% inflation target might be too high, eroding the purchasing power for many Americans over time.