Should the Federal Reserve Committee be regulated by the Government Accountability Office? U.S. Representative Ron Paul (R-Texas) says yes, and Scott G. Alvarez of the Federal Reserve says no.
Paul is the sponsor of H.R. 1207, which calls for audits on the Federal Reserve, a quasi-public entity that in theory can control the nation's money supply, set interest rates, and implement monetary policy.
At a Friday hearing, Paul said the Fed needs GAO oversight because they aren't doing their job correctly.
"The Federal Reserve was designed, and their mandate was to make sure that we have full employment, price stability, and stable interest rates," Paul said. "In my lifetime, interest rates have been 21 percent and less than one percent- so they fail there. They [the Fed] want a stable dollar and stable prices... well, we have continuous inflation."
Paul said it's Congress' responsibility to make sure the Fed does what it was created for and not buy into the idea that the Fed needs more power and more secrecy.
Fed Board of Governors General Counselor Scott G. Alvarez argued before Paul, Chairman Barney Frank (D-Mass.), and other members of the House Financial Services Committee, saying that Fed autonomy is instrumental in safeguarding U.S. interest rates, but also that an independent Fed is a nonpolitical Fed.
Alvarez said from an economic stance, GAO regulation would hinder Fed access to and implementation of some programs.
"If it looks like the Federal Reserve is changing directions because a statement [of] the policy review by another agency is influencing the Federal Reserve's decision... then the integrity of the process will be undermined, confidence that the Federal Reserve will move in the direction that is best for the economy will be undermined, and we won't be able to carry out our job as well," Alvarez said. "And that's what we're concerned about."
Alvarez said the Fed has taken many steps to increase transparency since the 2008 bank bailouts, but when Rep. Emanuel Cleaver II (D- Mo.) asked him about the misinterpretation between Congress and the Treasury Department and the Federal Reserve, as far as Troubled Assets Relief Program allocations, Alvarez said the latter departments decided to use the funds to restore confidence to banking institution, a decision Cleaver said was not immediately apparent when TARP was passed.
Ron Paul Seeks Fed Oversight, Fed Fights Back
Should the Federal Reserve Committee be regulated by the Government Accountability Office? U.S. Representative Ron Paul (R-Texas) says yes, and Scott G. Alvarez of the Federal Reserve says no.
Paul is the sponsor of H.R. 1207, which calls for audits on the Federal Reserve, a quasi-public entity that in theory can control the nation's money supply, set interest rates, and implement monetary policy.
At a Friday hearing, Paul said the Fed needs GAO oversight because they aren't doing their job correctly.
"The Federal Reserve was designed, and their mandate was to make sure that we have full employment, price stability, and stable interest rates," Paul said. "In my lifetime, interest rates have been 21 percent and less than one percent- so they fail there. They [the Fed] want a stable dollar and stable prices... well, we have continuous inflation."
Paul said it's Congress' responsibility to make sure the Fed does what it was created for and not buy into the idea that the Fed needs more power and more secrecy.
Fed Board of Governors General Counselor Scott G. Alvarez argued before Paul, Chairman Barney Frank (D-Mass.), and other members of the House Financial Services Committee, saying that Fed autonomy is instrumental in safeguarding U.S. interest rates, but also that an independent Fed is a nonpolitical Fed.
Alvarez said from an economic stance, GAO regulation would hinder Fed access to and implementation of some programs.
"If it looks like the Federal Reserve is changing directions because a statement [of] the policy review by another agency is influencing the Federal Reserve's decision... then the integrity of the process will be undermined, confidence that the Federal Reserve will move in the direction that is best for the economy will be undermined, and we won't be able to carry out our job as well," Alvarez said. "And that's what we're concerned about."
Alvarez said the Fed has taken many steps to increase transparency since the 2008 bank bailouts, but when Rep. Emanuel Cleaver II (D- Mo.) asked him about the misinterpretation between Congress and the Treasury Department and the Federal Reserve, as far as Troubled Assets Relief Program allocations, Alvarez said the latter departments decided to use the funds to restore confidence to banking institution, a decision Cleaver said was not immediately apparent when TARP was passed.