Lew Urged by Senator Hatch to Release Emergency Debt Planby and
Hatch proposes greater transparency in debt-contingency plans
GOP, Obama administration at odds over prioritizing payments
Republicans are stepping up demands to the U.S. Treasury Department and Federal Reserve for more transparency on debt-management plans during a crisis, as Senate Finance Committee Chairman Orrin Hatch called Secretary Jacob J. Lew “less than forthcoming” in congressional testimony on the issue.
The government in 2011 and 2013 almost breached the nation’s debt limit, pushing the Fed and Treasury Department to draw up contingency plans. Republicans and the Obama administration have clashed over whether the government can prioritize debt payments to avoid violating the legal borrowing limit as GOP lawmakers refused to raise the ceiling and Lew called prioritizing payments “default by another name.”
Republican staff on the House Financial Services Committee earlier this year accused the Obama administration of misleading the public about emergency planning during recent debt-ceiling showdowns and obstructing a subsequent congressional probe into the matter. Hatch echoed those accusations on Wednesday and said in letters to Lew and Fed Chair Janet Yellen that he made “repeated inquiries” for information, including details from a Federal Open Market Committee meeting on Aug. 9, 2011, where participants discussed contingency planning.
Documents subpoenaed from the Treasury and the New York Fed “indicate that the Treasury secretary’s testimony before Congress and responses to my inquiries were less than forthcoming on the existence of detailed contingency plans during the highly publicized 2011 and 2013 debt limit impasses,” Hatch, of Utah, wrote in one of the letters.
Hatch’s proposed legislation seeks public disclosure of government plans for high-risk events such as cyber attacks, extreme weather and debt repayment that are on par with what large financial firms provide. Hatch also wants information on those people involved at the Treasury since January 2011 in development of contingency plans for a possible U.S. debt default or credit-rating downgrade.
The Treasury didn’t immediately have a comment on Hatch’s letters. Fed spokesman David Skidmore said in an e-mail that the central bank received Hatch’s letter and will respond to it.
Fed and Treasury transparency on contingency planning has sparked a long-running battle by Hatch, who has oversight responsibility for the U.S. Treasury market. In a 2013 letter to former Fed Chairman Ben S. Bernanke, Hatch noted that Fed officials discussed debt-limit contingency planning during a Federal Open Market Committee conference call on Aug. 1, 2011, transcripts of which are only disclosed with a five-year lag.
Such discussions “can hardly be regarded as monetary policy making,” Hatch said in the 2013 letter. “If construed as such, Fed discussions of virtually anything could simply be delegated to an FOMC meeting and cloaked under the guise of monetary policy discussions.”