Matt Collins
02-03-2015, 07:07 PM
Sen. Rand Paul (http://www.paul.senate.gov/files/documents/GRA15012.pdf), (R-KY), the libertarian son of Fed scourge and former presidential candidate Ron Paul, last week proposed legislation (http://www.reuters.com/article/2015/01/28/us-usa-fed-audit-idUSKBN0L121V20150128) with 30 Senate sponsors that would subject Fed monetary policy decisions to reviews by the Government Accountability Office, the congressional watchdog.
With Republicans in control of the House and Senate and hostile to the Fed’s post-crisis monetary policies, the idea could get a breath of new life in Congress this year, much to the chagrin of Fed officials. Senate Banking Committee Chairman Richard Shelby (R-Ala) has suggested he’s interested (http://www.bloomberg.com/news/videos/2015-01-29/iran-nuclear-talks-is-survival-question-shelby-says) in the Paul bill, though it’s unclear how far he is willing to take it. He is not a co-sponsor.
“I’m very interested in some type of audit of the Fed, especially the portfolio,” Mr. Shelby said in an interview with Bloomberg. But he added, “I don’t want to be a member of the Board of Governors of the Fed. I don’t think Congress’s role should be that.”
The Fed sees GAO reviews of its monetary policy decisions as a congressional intrusion into its independent decision-making.
Former Fed Chairman Ben Bernanke strongly and successfully resisted “Audit the Fed” proposals and Chairwoman Janet Yellen is sure to do the same. In a December news conference (http://www.federalreserve.gov/mediacenter/files/FOMCpresconf20141217.pdf), Ms. Yellen said she would be “very concerned” about such a bill and would “forcefully make the case” against it.
The Fed demonstrated its savvy in dealing with Congress during Dodd-Frank debates in 2010. Efforts to impose congressional inspections of monetary policy and to reduce the Fed’s bank regulatory powers failed. It emerged from those debates in most respects with more power than it had before.
Ms. Yellen will have President Obama on her side again if the bill gets new life. She will also have the central bank’s 12 regional bank presidents, an influential but little seen force in Congress with strong connections in the deep-pocketed business and banking communities around the country.
It remains hard to see the Fed losing this battle.
-By Jon Hilsenrath
SOURCE:
http://blogs.wsj.com/economics/2015/02/02/grand-central-yellen-prepared-to-fight-a-revived-audit-the-fed-movement/
With Republicans in control of the House and Senate and hostile to the Fed’s post-crisis monetary policies, the idea could get a breath of new life in Congress this year, much to the chagrin of Fed officials. Senate Banking Committee Chairman Richard Shelby (R-Ala) has suggested he’s interested (http://www.bloomberg.com/news/videos/2015-01-29/iran-nuclear-talks-is-survival-question-shelby-says) in the Paul bill, though it’s unclear how far he is willing to take it. He is not a co-sponsor.
“I’m very interested in some type of audit of the Fed, especially the portfolio,” Mr. Shelby said in an interview with Bloomberg. But he added, “I don’t want to be a member of the Board of Governors of the Fed. I don’t think Congress’s role should be that.”
The Fed sees GAO reviews of its monetary policy decisions as a congressional intrusion into its independent decision-making.
Former Fed Chairman Ben Bernanke strongly and successfully resisted “Audit the Fed” proposals and Chairwoman Janet Yellen is sure to do the same. In a December news conference (http://www.federalreserve.gov/mediacenter/files/FOMCpresconf20141217.pdf), Ms. Yellen said she would be “very concerned” about such a bill and would “forcefully make the case” against it.
The Fed demonstrated its savvy in dealing with Congress during Dodd-Frank debates in 2010. Efforts to impose congressional inspections of monetary policy and to reduce the Fed’s bank regulatory powers failed. It emerged from those debates in most respects with more power than it had before.
Ms. Yellen will have President Obama on her side again if the bill gets new life. She will also have the central bank’s 12 regional bank presidents, an influential but little seen force in Congress with strong connections in the deep-pocketed business and banking communities around the country.
It remains hard to see the Fed losing this battle.
-By Jon Hilsenrath
SOURCE:
http://blogs.wsj.com/economics/2015/02/02/grand-central-yellen-prepared-to-fight-a-revived-audit-the-fed-movement/