February 10, 2015

Rand Paul's bill to audit central bank 'misguided,' says Fed governor

Federal Reserve Governor Jerome Powell spoke out Monday against efforts to audit the central bank and increase congressional oversight of its decisions under consideration on Capitol Hill.

Powell, a Republican who served in the George H.W. Bush Treasury Department, did not cite Sen. Rand Paul, R-Ky., by name. But his remarks were clearly aimed at proposals introduced by Paul and other Republicans, making the speech an unusual effort by a Fed official to weigh in on legislation.
Powell said he was "concerned about several troubling proposals" under consideration in Congress, calling them "misguided."

Paul's bill would remove the existing limitations on Government Accountability Office audits of the Fed. The main effect of the legislation would be to subject the Fed's monetary policy meetings to immediate scrutiny from the GAO and Congress.

The Fed is already exhaustively audited, Powell said, and "very little would be revealed" by audits of the monetary policy meetings.

Instead, the bill would mostly serve to insert politics into the Fed's interest rate and money supply decisions, he argued.

"Audit[ing] the Fed also risks inserting the Congress directly into monetary policy decision-making, reversing decades of deliberate effort by the Congress to insulate the Fed from political pressure in carrying out its day-to-day duties," he said, citing the Great Inflation of the 1960s and '70s in which high inflation rates were the norm.

Some supporters of the Fed audit, Powell said, support the elimination of the Fed — likely a reference to Paul or his father, former Texas congressman Ron Paul who was a libertarian presidential candidate in the Libertarian Party and the Republican Party, and wrote the book End the Fed.


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