Why does the Fed fear an Audit?

Seth Lipsky of the New York Sun wants to know:

Yellen dug in her heels Tuesday, when she appeared before the committee and was asked about Sen. Rand Paul’s Federal Reserve Transparency Act. She said she wanted to be “completely clear” that she “strongly” opposes the measure.

Paul’s bill is known as “Audit the Fed.” At one point Yellen waved a copy of the central bank’s regular financial statement, which is prepared by its certified accountant, and declared that the Fed is already audited. But that was a disingenuous flourish.

What Paul is talking about (and she knows it) isn’t a financial audit of the Fed’s books. He’s eying a much broader look at how the Fed makes monetary policy and what it is doing with foreign banks.

Such matters, which would be routine at any other bank, are off-limits to the Fed’s auditors as a matter of law passed in the 1970s.

So Congress is looking at overriding that law. A few months ago, the House passed the measure by a vote of 333 to 92.

The audit the House wants would be done by the Government Accountability Office (which dubs itself “the taxpayer’s friend”). Yellen’s line before the Senate was that opening up the Fed to an audit would “politicize monetary policy.”

She should take that up with George Washington, James Madison, Alexander Hamilton and the boys. After all, the Constitution they wrote specifically granted the monetary powers to Congress, the most political branch of the government.

Read the whole piece here.

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