Proposed Federal Reserve Transparency Act wrongheaded in the extreme.

Discussion in 'Wall St. News' started by Debaser82, Jul 26, 2009.

  1. Focus on the Fed

    Transparency at the central bank is a serious question. It deserves a serious answer.

    Friday, July 24, 2009

    THE FEDERAL Reserve Board's independence is a bit like the judiciary's independence. Absolutely vital for the institution's proper functioning, it nevertheless depends on Congress and the president to respect decisions with which they disagree. In such cases, the best protection for either the Supreme Court or the Fed is to stay strictly within its legally prescribed authority and to act according to principled criteria: legal ones for the justices, technical economic ones for the central bank.

    Which brings us to the proposed Federal Reserve Transparency Act, sponsored by anti-Fed crusader Ron Paul (R-Tex.) in the House and socialist Bernard Sanders (I-Vt.) in the Senate. In the name of open government, it would subject the Fed's decisions to a full-blown audit by the Government Accountability Office, the investigative arm of Congress. Though the bill has attracted 276 co-sponsors in the House and 17 in the Senate, it is wrongheaded in the extreme. By opening up the Fed's most sensitive interest rate and credit policies to public second-guessing, the bill would create a risk -- real and perceived -- of monetary policy bent to suit congressional overseers. This would destroy financial markets' faith in the Fed and, by extension, the value of the U.S. dollar, just as surely as a political "audit" of the Supreme Court's deliberations would undercut public faith in the justice system.

    However, there is a reason that this bill, unthinkable in normal times, is gaining traction now. Under Chairman Ben S. Bernanke, the Fed has expanded its role in the U.S. economy to an unprecedented extent, making use of its balance sheet to prop up troubled Wall Street firms, the commercial-paper market and much else. Congress, quite understandably, is nervous, with the perhaps inevitable result that Fed-bashing is in vogue on Capitol Hill.

    For the most part, Mr. Bernanke's actions have been both necessary and proper, in that federal law authorized him to respond to what have definitely been "unusual and exigent" circumstances. He has tested the limits of his power but not exceeded it. Still, there is no clear mechanism to hold the Fed accountable for any mistakes it might have made that contributed to the crisis in the first place -- or might be making now.

    Mindful of that, Mr. Bernanke has done more than any other chairman in recent memory to explain his actions and his institution to Congress and the public. In public hearings this week, he has wisely outlined his plans to unwind the Fed's balance sheet in a non-inflationary way, reassuring the markets that the Fed has no desire for a permanently expanded role in the financial system.

    The Federal Reserve Transparency Act is an unserious answer to a serious question. Over the long term, Congress and the president do need to ensure the optimal balance between independence and accountability at the Fed. This is especially true since the Obama administration's proposals for financial regulatory reform would give the Fed even more power, as the arbiter of which firms are "too big to fail." If the Fed is to stay free, it should, to the greatest extent possible, stay focused on its core mission of managing the nation's money supply.
  2. piezoe


    When translated, what you are saying is: Fed policies can not stand the light of day." I don't think that would come as a surprise to many of us. It is an interesting contrast to compare, for example, the operation of the Norwegian Central Bank, one that is very open to public scrutiny, and that of the US, and to draw your own conclusion as to which does better..
  3. jem


    what a bunch of bullshit that is.

    "real or perceived risk"....

    Whenever you see that construction - you are guaranteed to read bullshit right after it.

    Real? Congress has no control over the fed. Except perhaps to revoke it charter. (and I do not even know that they can do that. )
    there is no real threat to the Feds monetary policy.

    And even if there were - could there be any worse policy.

    Those bastards allowed for a loosening of credit standards during the biggest asset bubble in history. 110 % loan to value exploding arm no docs loans with 5% fees to the mortgage broker?

    member banks with CDOs to the 55 trillion level. Super leverage.

    We need a private bank like the fed like we need a socialist for president.

    Barney Frank could not have done a worse job. Only the equivalent.
  4. "real or perceived risk".... sounds a lot like Obama's "created or saved jobs".
    How do ya count "saved" jobs?
    Ya don't. It's a scam, just like the Fed, Congress, etc.
  5. Who is the author of that opinion? It doesn't say.

    Anyway, who would want any oversight - like when Greenspan was keeping rates artificially low for so long?

    It was much easier to do that without anyone second-guessing him.
  6. Nothing wrong with transparency at all.
  7. This article and anyone who thinks transparency of the Fed would result in Mutually Assured Destruction is a complete and total moron and shouldn't be allowed anywhere near a computer or the internet.
  8. achilles28


    Bernacke fear-mongered a dollar crash and Depression if the FED is audited. Who is he working for??

    Congress has the Constitutional RESPONSIBILITY to coin money and regulate the value, thereof.

    Of course, that authority was unconstitutionally ceded to a private coterie of bankers who ran the Country into the ground with stratospheric debt levels.

    Congress can and should revoke the FED charter and end debt-based economics.

    The FED transparency act is the first step to reveal the litany of fraudulent activity and manipulation.

    Good is done in the light of day. Evil is done in secret.

    Who does Bernacke work for? Who owns the FED System??

    Banks make ridiculous money when cheap credit abounds (bubble economics). Who has the incentive to keep debt high? Rates artificially low? And, as a by-product, grow ever larger (and more destructive bubbles)???

    Time to end this Game. Our ancestors didn't fight and DIE so these motherless fucks on Wallstreet could bury us alive. Time to take the Country BACK!!
  9. pma


    #10     Jul 28, 2009