Having been pursued, unsuccessfully, many times by his father in previous years, today Senator Rand Paul, together with Rep. Thomas Massie re-introduced legislation to “Audit the Fed", after a similar effort stalled in the last Congress.
While in the past such a proposal, which has been vocally opposed by Janet Yellen and Wall Street for obvious reasons, was quietly shut down it may face its best odds ever of becoming law in the current Congress according to the Hill. With both chambers controlled by Republicans long critical of Fed’s policies, the legislation could end up being a test of Donald Trump stated resolve to putting the Fed to heel. In the past, the president elect has heaped scorn on the central bank, and demanded accountability from the "independent" Fed.
To that end, Paul specifically mentioned Trump in a statement about the bill Wednesday, making clear the measure’s proponents believe they have an ally in their cause coming to the White House.
“The U.S. House has responded to the American people by passing Audit the Fed multiple times, and President-elect Trump has stated his support for an audit. Let’s send him the bill this Congress,” said Paul.
Under the proposed bill, the Fed’s monetary policy deliberations could be subject to outside review by the Government Accountability Office. Proponents of the measure argue that the Fed is too powerful and lacks sufficient oversight for its interest rate decisions. But Fed officials from Yellen on down, as well as other critics, have warned that such a policy could subject the Fed to undue political pressure and discourage it from taking unpopular steps for the good of the overall economy.
While in the past, the proposal garnered bipartisan support and has passed the House several times in past Congresses, it usually stalled in the Senate. Senate Democrats refused to bring up the bill for consideration when they controlled the chamber, and senators rejected the bill in 2016 after it was brought up by the new GOP majority.
Two non-Republican senators — Bernie Sanders (I-Vt.) and Tammy Baldwin (D-Wis.) — voted for the measure then. Only one Republican, Sen. Bob Corker (Tenn.), opposed it. But the situation is different in 2017, as lawmakers who assumed President Obama would veto any “Audit the Fed” legislation in the past now are anticipating a White House with a vocal Fed critic at the helm. Furthermore, with Republicans controlling both chambers, any attempts to kill the bill will be more complicated.
During his presidential campaign, Trump frequently singled out the Fed, arguing during presidential debates that the institution was deliberately keeping interest rates low for Obama’s political benefit.
Fed officials are fiercely protective of their reputation as pursuing policies free of political motivation, and Yellen has shot down any notion of partisan intent in its policymaking. But lawmakers hoping to overhaul how the Fed does business see an opening in 2017.
“It is time to force the Federal Reserve to operate by the same standards of transparency and accountability to the taxpayers that we should demand of all government agencies,” said Massie.
Skeptics, however, note with Trump surrounding himself by numerous Wall Street scions in his new administration, and with the Fed an entity owned mostly by Wall Street (as Ben Bernanke's former advisor infamous suggested last year when he said that "People Would Be Stunned To Know The Extent To Which The Fed Is Privately Owned") it remains unlikely that any true change to the operational nature of the Fed will be implemented, especially if it gives Congress an upper hand over Wall Street in what to many is the most important decision-making process in the nation: setting the price of the money in general, and the US dollar in particular.