This is such an informative speech that I am taking the liberty of providing the link to Governor Powell's remarks written out. This is available via the Fed's website. I hope every member of ET will take the time to read this very important speech. http://federalreserve.gov/newsevents/speech/powell20150209a.htm
So basically a Fed governor, who now answers to no one, objects to the Congress knowing exactly what they are doing? There is already political pressure on the Fed. To imply otherwise is to insult our intelligence. The Fed has the power to try to help pols get reelected, as Bernanke did with obama, or to hurt them, as Greenspan did with Bush 41. When they assume such a grand role in our lives, they are naive not to expect more oversight to go with it.
The Fed is highly transparent, so Congress knows exactly what the Fed is doing. What the audit the Fed push is about is not a financial audit, Congress already has that. It is about a policy audit. That is an extremely bad idea.
Sadly, 75% of Americans know very little about how the Federal Reserve functions other than disinformation they acquire from watching you tube videos. That is why I posted Powell's important speech: to counter the ridiculous disinformation that is out there. Fortunately, for all of us, there is no chance that the "audit the Fed" nonsense will result in statutory law anytime soon. It's just another of endless, time wasting attempts at political pandering to lunatic fringes of the Republican party to keep one's job. If however enough disinformation gets repeated enough times, it can eventually be confused with truth. I liken these fringe group efforts to disrupt and misinform to continuing efforts stemming from Wall Street to get their hands on the nearly three trillion Social Security trust by the unrelenting spreading of Social Security disinformation. A lie told often enough, will be repeated with increasing conviction to the point that it seems like truth, even to the teller. This is all a part of open government where a person has the freedom to say pretty much anything, no matter how outrageous or untrue. In a republic such as ours we should champion this right, but at the same time take the effort to become informed, so that ultimately our Republic is not threatened by exercise of the very freedoms we all cherish.
There sure is a lot of ridiculous disinformation out there. I would agree with that. But you're just as guilty as spreading nonsense, from the other side.
To the best of my knowledge, Beltway, the way it works is that the U.S. President appoints the Board of Governors and selects one person to be Chair and another to be Vicechair. He then submits his nominations to the Senate who are charged in the Constitution with either confirming or rejecting the Presidents nominations. So it would seem that Jerome Powell would answer directly to the President who in turn answers to the American people every four years. However this is only what it might seem like. In reality, there is statutory law, I believe it was added as part of the 1935 banking act, that protects Powell from being dismissed for policy opinions. He is appointed for four years. So he will only have to answer to the President and the Senate every four years. This is an arrangement similar to our Presidents having only to answer directly to us every four years! It seems to me that, in a most practical sense, you are correct: Powell essentially answers to no one except himself at night when he turns out the light. I see this as a great strength of the Reserve System, protecting it from undue political interference. But I understand that there are actually those in Congress that would like to be able to dictate monetary policy to the Fed. That's what the deceivingly labeled "Audit the Fed " Bill is really about. The Fed is already very thoroughly and independently audited and the results of the audits are public. So knowing that, one must infer that there is much more to this Bill than meets the eye. Frankly the very idea of even the most knowledgeable of our congressmen or senators, let alone any of the country bumpkins, dictating monetary policy strikes unremitting terror into my feeble heart. I feel chest pains coming on just writing this!! Yikes!!! Let me point out something that may be missed by a lot of Fed detractors who still maintain the fiction that the Fed is largely a for profit private sector venture. Prior to 1935 the Regional Bank Presidents had significantly more power in the Reserve system than they do today. In fact they had more say in Fed operation than the Board in Washington. The 1935 act reversed that power structure, making the Regional Bank Presidents much less powerful and consolidating ultimate decision making with the Board of Governors in Washington and the powerful FOMC. I think, today, after the 1935 act was passed, it is fair to say that the Federal reserve is very much an independent Federal agency with active participation and feedback of "private sector", shareholder owned Banks that have chosen to be a part of the Federal Reserve System (not Private banks answering only to a fat guy with a cigar, as in a popular You Tube Video! ) . I certainly can't disagree with you, however, when you point out that there must be at least some political pressure on Fed governors, but I would think that mostly will be felt by the Board Chair. Although he or she is protected by statutory law from being fired for policy decisions, nevertheless as long as we have a human in that role they are going to feel political pressures. It will be a measure of their character to what extent they can put this pressure and their personal political proclivities aside. Every four years they have to be confirmed by the Senate so I suppose we could say that at least every four years they must answer to the President and the U.S. Senate. I should think that will be enough to keep them from becoming overtly political. This is excellent and very clear: http://www.federalreserve.gov/pubs/frseries/frseri.htm
You keep stating that the Fed should be free from political influence, and you keep ignoring that the Fed is already influenced by both politicians AND the banks/financial institutions that own them. Just as is the SEC, the CFTC, and to a lesser extent, FINRA. The revolving door is disgusting. Rand Paul does not want to dictate monetary policy to the Fed. That's your bullshit interpretation of the bill. It is a scare tactic that the shadowy institution uses on the media and the public in order to allow it to continue to operate unsupervised and hidden from the public eye.
I addressed the issue of political influence immediately above. Possibly you didn't have an opportunity to read my response to Beltway yet. The Fed must obey Federal "sunshine laws". The public may attend most of its meetings. Minutes are kept and you may read them, if you missed the meeting. There is an Inspector General that carefully monitors the Fed. The GAO monitors the Fed, Congress monitors the Fed, and the Fed is audited and the audits are part of the public record. The Fed has a website where everything it does is reported to the public. Fed officials meet regularly with the President, the CEA, and Congress to keep them informed of their policy decisions and actions and to answer questions. The Fed is in daily contact with the Treasury Department and the Treasury Secretary is on the Presidents Cabinet. Do you have suggestions, perhaps, on how the Fed could be even more open in its operations than it already is? If so, I'm sure they would be delighted to hear from you. The Honorable Governor Janet Yellen Federal Reserve Board 20th Street and Constitution Avenue, N.W. Washington, D.C. 20551