“AUDIT THE FED” COULD PASS BOTH HOUSES
“The most worrisome part of this aggression to people inside the Fed is the possible adoption by both houses of Congress of a bill requiring the Government Accountability Office to conduct a full ‘audit’ of the central bank, a process that could include regular public airing of private internal debates inside the [FOMC] on sensitive policy decisions such as raising or lowering interest rates, or taking other actions to aid a struggling economy or slow one that seems in danger of overheating. … [O]fficials inside the Fed worry it could ascend from the fringes and pass both houses. Obama could veto the measure, but doing so would be politically difficult because on the surface it sounds like a reasonable measure to increase transparency of an institution that now has nearly $5 trillion in assets on its balance sheet. But the Fed’s assets are already subject to regular and extensive audits, central bank officials say. Yellen and others, including former Fed Chair Ben Bernanke, worry that instead of transparency, regularly publishing transcripts of the meetings at which Fed governors set interest rates would make them less inclined to act in ways they view as good for the economy and more in ways that would please whatever party happens to control Congress.
“‘It is extremely important for FOMC members to feel completely free to discuss and argue with each other and test out different theories and different hypotheses,’ said Donald Kohn, former vice chairman of the Fed, who is now at the Brookings Institution. “I fear that Congress will use the threat of a GAO audit to try and delay or change Fed actions, which strikes me as moving in the wrong direction.’”
Full story: http://politico.pro/1va2o8c
“The most worrisome part of this aggression to people inside the Fed is the possible adoption by both houses of Congress of a bill requiring the Government Accountability Office to conduct a full ‘audit’ of the central bank, a process that could include regular public airing of private internal debates inside the [FOMC] on sensitive policy decisions such as raising or lowering interest rates, or taking other actions to aid a struggling economy or slow one that seems in danger of overheating. … [O]fficials inside the Fed worry it could ascend from the fringes and pass both houses. Obama could veto the measure, but doing so would be politically difficult because on the surface it sounds like a reasonable measure to increase transparency of an institution that now has nearly $5 trillion in assets on its balance sheet. But the Fed’s assets are already subject to regular and extensive audits, central bank officials say. Yellen and others, including former Fed Chair Ben Bernanke, worry that instead of transparency, regularly publishing transcripts of the meetings at which Fed governors set interest rates would make them less inclined to act in ways they view as good for the economy and more in ways that would please whatever party happens to control Congress.
“‘It is extremely important for FOMC members to feel completely free to discuss and argue with each other and test out different theories and different hypotheses,’ said Donald Kohn, former vice chairman of the Fed, who is now at the Brookings Institution. “I fear that Congress will use the threat of a GAO audit to try and delay or change Fed actions, which strikes me as moving in the wrong direction.’”
Full story: http://politico.pro/1va2o8c
