Tea Party Demands Fed Audit. But, To What End?

February 21, 2015

Congresses' more misguided members continue to introduce legislation calling for a "full audit" of the Federal Reserve. Leading the electorate to believe that the nations fiscal and monetary policy is being conducted by the equivalent of the neighborhood pub. With unbalanced books, off-the-book assets and hidden liabilities.
Don't believe the hype.
Currently, the Government Accountability Office has authorization to audit all federal bank supervisory agencies. Granted, such authorization may not include the ability to review "deliberations, decisions or actions on monetary policy matters" or the transactions made "under the direction of the Federal Open Market Committee."
Accordingly, the legislation would repeal the above exclusions. But why?
The Fed is already the world's most transparent central bank. The 12-member FOMC provides a statement after every meeting. Announces all actions and decisions. The minutes of which are then released to the sparse population that would take the time to drudge through them.
The Fed's chairman and governors also must appear regularly before Congress. Twice each year.
Have an issue with the Fed's mandated objectives? I get it.  Promoting maximum employment via assuring that growth rates remain commensurate to the economy's long-run potential? Yea. That's weighty stuff.
Still, were baffled as to what the Tea Party's Fed critics believe an audit might reveal. Receipts for Greenspan's saxophone lessons? An unsigned contract for, and so neutralizing the goal of, the Louisiana Purchase? Enough people.
Most importantly, wouldn't a Congressional audit mandate put undue political pressures on the Fed? So diminishing its cherished independence? One that has served the U.S. well in both good times and bad.
In this country, transparency must be valued throughout the nation's highest institutions. Too often, its not. Yet, those calling for a Fed audit must consider the ramifications of, as well as the necessity for, regular Fed audits. Especially as most of these responsibilities are already provided for through existing channels. Should the Fed's critics get their wish, the implications may include unintended consequences.

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