WASHINGTON — Rep. Jeb Hensarling, R-Texas, has requested a study from the Government Accountability Office on the mandate that banks hold stock in the Federal Reserve System.
The chairman of the Financial Services Committee has asked the GAO to look at the policy implications of the requirement that a bank hold stock up equal to 6% of its capital plus surplus in its respective regional Fed bank, with half of that amount paid in and the rest subject to call the Fed. The issue of the Fed stock requirements came to public attention earlier this summer when lawmakers proposed slashing the dividend the Fed pays to banks for that stock from 6% to 1.5% to help pay for the nation’s highways bill.
"I write to request that the [GAO] study and report on the policy implications, including the effect on the federal banking regulators, the Federal Reserve Banks and national and state bank members of the Federal Reserve System, of modifying or eliminating the existing requirement that all Fed member banks purchase stock issued by their respective Federal Reserve Bank," Hensarling wrote in a Sept. 10 letter to Comptroller General Gene Dodaro.
The Texas lawmaker requested details on the "historical rationale" for the requirement, along with the budget and policy implications of amending the dividend rate, making the requirement voluntary or retiring Fed bank stock altogether.