Bill would allow Congress to audit Fed
A House committee has approved a bill sponsored by Republican Ron Paul to expand congressional oversight of the Federal Reserve. Steve Henn reports.
Congressman Ron Paul (Gabriel Bouys/AFP/Getty Images)
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KAI RYSSDAL: About those central banks and their role in all this that Bob mentioned. The House Financial Services Committee passed a bill last night that would give Congress more power over the Federal Reserve, including the ability to force Ben Bernanke and the gang down at the Fed to open up their books.
Marketplace's Steve Henn reports.
Steve Henn: Auditing the Fed would shine a bright light on previously secretive transactions with banks and foreign governments. Auditors could examine the Fed's inner debates on interest rates and find out if the Fed was quietly trying to stop this financial crisis before it got started, or perhaps inadvertently encouraged the kinds of risky investments that lead to the collapse.
William Greider: And the audit will tell us a lot about that.
William Greider is author of "Secrets of the Temple." He says a thorough audit is overdue. And he believes it's crazy for Congress to try to reform the financial system until lawmakers fully understand the Fed from the inside.
Greider: And out of that, we, the people, will have a completely different understanding of what happened and what the government ought to do to change things.
But Ted Truman is worried. He's a former economist who sat in on Fed open-market committee meetings for years. He says sometime soon, the Fed is going to need to raise interest rates.
Ted Truman: When they make that decision, there will be people in the market, and certainly politicians, who will say that's a mistake. And they will demand an audit.
Truman fears that if Fed policy makers know an audit is coming, they're likely to be too cautious, delay a rate increase and...
Truman: Interest rates will be kept too low for too long and you will actually feed the next asset-price bubble.
Truman says feeding a bubble is exactly the same mistake the Fed made just four years ago.
In Washington, I'm Steve Henn for Marketplace.
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From Milan, MI, 11/22/2009
While some instances of transparency regulations may be onerous (because they cost too much or because they would require the infringement of the security of citizens' "effects"), in general the only organizations that object to being subjected to transparency laws in principle are those that we most want to apply those laws to, because they're hiding something important.
11/22/2009
Ted Truman says "Interest rates will be kept too low for too long and you will actually feed the next asset-price bubble"
It's not like the Federal reserve has reversed its policy to keep interest rates low forever.
It looks like Ted is fear mongering!
From Riverside, CA, 11/22/2009
The Federal Reserve has power that rivals the Pentagons. The power of USA Capital and Currency policy could more quickly devastate a third world power then several armored divisions.
Yet The Fed is not owned by the Federal Government. It is as if the Chairman of the joint chiefs of staff is appointed by the president, but the secretaries of the Navy, Air force, Army by the private sector. Think of this analogy, with the private sector owning and operating Army and marine divisions let alone the Strategic Command.
This is what is happening, but we are rescuing or destroying corporate concerns with about the same efficiency then we have taken restructured Panama, Haiti, Afghanistan and Iraq.
Whether this system is prudent with the awesome World power of the USA (now declining) financial Hegemony is very questionable. Whether this system is prudent without transparency and auditing oversight is clearly not debatable. Common sense dictates not to delegate the most powerful prerogatives of USA political power (capital and currency flows) to the private sector without reasonable accountability, and transparency.
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