Congresswoman Member Maxine Waters, Ranking Member of the House Financial Services Committee, submitted the following statement for the record at a Monetary Policy and Trade Subcommittee hearing titled “Interest on Reserves and the Fed’s Balance Sheet”:

Thank you Chairman Huizenga and Ranking Member Moore for organizing today’s hearing.

As we look at the Fed’s implementation of monetary policy in the post-crisis environment I think it’s important to look at the circumstances that have brought us to this point.

In 2008, the Federal Reserve had to take unconventional steps to stabilize the economy and temper the devastating effects of the financial crisis. Fortunately for the American people, the Fed’s approach softened the severity of the crisis, shortened its duration, and put us on the road to recovery.

Today, the Fed faces a new set of challenges. To safely return to its normal role guiding monetary policy, while being careful not to harm the US economy, the Fed must rely, again, on new tools, specifically paying interest on reserves.

While I initially raised concerns with this approach, after exploring this matter further and speaking at length with Chair Yellen, it has become abundantly clear that the net benefits to the public that result from this policy are substantial.

Without the ability to directly affect rates through the payment of interest, and unwind its interventions, the Fed would have to engage in dangerous fire sales of the assets on its balance sheet that would threaten our recovery and cost taxpayers dearly.

I hope that as our Committee conducts its oversight, we keep these salient facts in mind.

Thank you, I yield back.

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