A top Federal Reserve official on Wednesday called Sen. Rand Paul and other backers of “audit the Fed” legislation “sheep in wolves’ clothing” who want to make a “bogeyman” out of the central bank.
Richard Fisher, the outgoing President of the Federal Reserve Bank of Dallas, said the finances and many operations of the central bank and its 12 regional banks already are “audited up the wazoo.”
He said he believes the movement led by Paul, R-Ky., to enact legislation allowing audits of the Fed’s monetary-policy decisions is an attempt to cover up for lawmakers’ failings on economic policy.
“It is always politically convenient to make something sound mysterious, if not malevolent, by claiming it is opaque,” Fisher said in a speech to the Economic Club of New York that is part of an effort by Fed officials to fight the legislation.
“My suspicion is that many of those in Congress calling for ‘auditing’ the Fed are really sheep in wolves’ clothing,” he said. “Having proven themselves unable to cobble together with colleagues a working fiscal policy or to construct a regulatory regime that incentivizes rather than discourages investment and job creation — in other words, failed at their own job — they simply find it convenient to create a bogeyman out of an entity that does its job efficiently.”
Fisher, known for being outspoken and for sometimes outrageous comments, has been a frequent dissenter on Fed stimulus policies under former Chairman Ben S. Bernanke and his successor, Janet L. Yellen.
But he is on the same page as them in opposing “audit the Fed” legislation.
He is stepping down next month after 10 years heading the Dallas Fed, a position that allowed him to rotate into the central bank’s policymaking committee once every three years.
Paul has taken up the anti-central-bank movement begun by his father, former Rep. Ron Paul, R-Texas, who wrote a book in 2009 titled “End the Fed.”
Sen. Paul is frequently mentioned as a candidate for the Republican presidential nomination in 2016. He held an “Audit the Fed” rally at a Des Moines winery last week. Iowa holds the nation’s first presidential nominating caucuses.
Last month, Paul reintroduced legislation that would remove restrictions on the Government Accountability Office auditing the Fed’s monetary-policy decisions.
“The Fed currently operates under a cloak of secrecy and it has gone on for too long,” he said in introducing the bill. “The American people have a right to know what the Federal Reserve is doing with our nation’s money supply.”
Paul’s bill already has 31 co-sponsors, all but one of them Republicans. A similar bill in the House from Rep. Thomas Massie, R-Ky., has 133 co-sponsors — 126 of them Republicans.
The Republican-controlled House easily passed “audit the Fed” bills with bipartisan support in 2012 and 2014. Each time, the legislation stalled in the then-Democratic-controlled Senate.
With Republicans now having majorities on both sides of the Capitol, the legislation could make it to President Barack Obama’s desk.
Jason Furman, Chairman of the White House Council of Economic Advisors, told Bloomberg this week that the legislation is “dangerous” because it would allow Congress to tell the Fed how to conduct monetary policy. He said he’d advise Obama to oppose it.
Fed officials are trying to rally opposition.
Yellen, like Bernanke, has said she opposes audits of the Fed’s monetary-policy actions. The Fed’s independence is “very important” and it should be “free of short-run political interference with respect to monetary policy,” she told reporters in December.
On Monday, Fed governor Jerome Powell, who served as a Treasury Department official under President George H.W. Bush, said in a speech that the legislation was “misguided” and risked hindering the central bank’s ability to handle a financial crisis.
Fisher said he didn’t think senior congressional leaders “would actually want the Fed’s policy deliberations to be infected by politics.”
“ ‘Audit the Fed’ is nothing more than an attempt to override purely economic judgments and bend monetary policy to the will of politicians,” he said. “It is misguided. I pray we don’t go there. I can think of nothing that would do more damage to our nation’s prosperity.”