Along with extending unemployment benefits, the Senate is also expected to vote on the nomination of Janet Yellen for chairman of the Federal Reserve today.
For Sen. Rand Paul (R-Ky.), it’s a chance for him to once again complain about the Fed’s policies and push his ‘Audit the Fed’ bill.
Paul has already declared on Twitter his intentions to make a speech in opposition to Yellen.
Earlier last year, Paul announced the he would put a ‘hold’ on Yellen’s nomination unless Senate Majority Leader Harry Reid (D-Nev.) gave his bill a vote. For Paul to have blocked the nomination, he would’ve needed 39 of his colleagues to join him in a filibuster.
Now, that isn’t even possible after Senate Democrats changed the rules to eliminate the filibuster for executive branch and judicial nominations. Yellen is all, but certain to be confirmed.
Nevertheless, Paul is looking to use the occasion to gain some attention for his bill.
Unfortunately for Paul, current Fed Chair Ben Bernanke perfectly explained last week why his legislation is so misguided in his speech at the American Economic Association:
What types of transparency are needed to preserve public confidence? At the most basic level, a central bank must be clear and open about its actions and operations, particularly when they involve the deployment of public funds. The Federal Reserve routinely makes public extensive information on all aspects of its activities, and since the crisis it has greatly increased the quantity and detail of its regular reports to the Congress and the public.3
Importantly, contrary to what is sometimes asserted, all of the Fed’s financial transactions and operations are subject to regular, intensive audits–by the Government Accountability Office, an independent Inspector General, and a private accounting firm, as well as by our own internal auditors.4 It is a testament to the dedication of the Federal Reserve’s management team that these thorough audits have consistently produced assessments of the Fed’s accounting and financial controls that most public companies would envy.
If that wasn’t enough, Bernanke called out Paul’s bill in the fourth footnote:
However, there have been recent proposals (so-called Audit the Fed measures) to expand the authority of the GAO over the Federal Reserve to include reviews of monetary policy decisions. Because the GAO is the investigative arm of the Congress and GAO reviews may be initiated at the request of members of the Congress, these reviews (or the prospect of reviews) of individual policy decisions could be seen, with good reason, as efforts to bring political pressure to bear on monetary policymakers. A perceived politicization of monetary policy would reduce public confidence in the ability of the Federal Reserve to make its policy decisions based strictly on what is good for the economy in the longer term. Balancing the need for accountability against the goal of insulating monetary policy from short-term political pressures is very important, and I believe that the Congress had it right in the 1970s when it explicitly chose to protect monetary policy decision making from the possibility of politically motivated reviews.
So, if you see Paul’s tweets today or hear his speech, remember, Bernanke has already explained why you should oppose the ‘Audit the Fed’ bill.
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