MULVANEY: Chair Yellen, it appears that the FOMC has had at least two special hearings over the course of the last several years regarding the debt ceiling...
So, in light of the fact there've been at least two hearings where the technical aspects or the plans regarding the processing of federal payments have been raised, and the conclusions of both of those that it would not materially impact the conduct or procedures of the Fed, I'll ask you a simple question: Is there a contingency plan in place regarding federal payments -- the making of federal payments in the event the debt ceiling is not raised?
YELLEN: Not to the best of my knowledge.
MULVANEY: Then I'll ask you, Ms. Yellen -- thank you for that -- in the 2011 minutes, which read, "The staff provided an update on the debt limit status, conditions in the financial markets and, most importantly, plans that the Federal Reserve and the Treasury had developed regarding a process of federal payments," what were those plans that had already been developed as of at least August 2011?
YELLEN: Well I mean, we're discussing very technical issues connected with the payment system, for example, would the Treasury put through in the morning ACH payments that they might not have sufficient balances in their account to pay.
MULVANEY: And what would happen in such a circumstance?
YELLEN: Well, in such a circumstance , if they did that, banks would receive instructions in the morning to pay customers amounts that the Treasury wouldn't have in their checking account to make good on. And so their checks would bounce leaving those institutions in a very difficult situation...
MULVANEY: Are the plans that are referenced in the 2011 hearing in writing?
YELLEN: There are -- there are briefings that staff made to the Federal Open Market Committee when we met, when we met about what our plans would be in terms of the responsibilities...
MULVANEY: I understand that, but are the briefings based upon a written document? Are they based on some verbal history at the Fed or the Treasury? Is there a written down plan on these payments?
YELLEN: To the best of my knowledge, there is no written down...
MULVANEY: Given the fact that coming up with a contingency plan would have a great deal of impact on calming the markets in the face of a debt ceiling difficulty, do you think it's a good idea to develop a contingency plan for prioritization of payments in the event the debt ceiling is not raised?
YELLEN: That's a matter that is entirely up to the Treasury. That is not the domain of the Federal Reserve.
MULVANEY: But you have -- you perform the functions for the Treasury through the New York Fed, don't you?
YELLEN: With the Fed's -- with the Treasury's fiscal agent.
MULVANEY: If they asked you to do it, could you?
YELLEN: It is not up to us to develop a plan concerning what bills would be paid.
MULVANEY: If the Treasury asked you to create a program to put into place through the New York Fed could you do it?
YELLEN: I don't know that we could do that.
MULVANEY: Do you think it would be a good idea to do that?
YELLEN: Treasury submits to us every day a set of payments to make.
MULVANEY: I understand.
Let me finish with this, Ms. Yellen.
I appreciate that.
We have asked for the records from the Fed, specifics related -- identified in the meeting from the New York Fed. The New York Fed has told us we cannot have have them until they get permission to give them to us from the Treasury.
In light of your earlier comments to Ms. Bachmann and Ms. Posey regarding Fed independence, are you concerned about having to ask the Treasury for permission to give information to Congress?
YELLEN: Well, the Federal Reserve acts as the Treasury's fiscal agent, and in that case we take instructions from the Treasury and are merely acting as their agent. That's one of our roles to serve as the fiscal agent of the Treasury. It is not a monetary policy role.