McFeatters: Safeguard Fed's independence
The U.S. Federal Reserve building in Washington, D.C. (Aug. 9, 2011) Credit: Getty Images
Perhaps it was a farewell gesture to Ron Paul, who, after serving in Congress three different times and running for president three times, is retiring at age 76.
The House finally approved legislation long sought by the libertarian Republican, a bill calling for a comprehensive audit of the Federal Reserve and its 12 regional banks.
The Fed is already subject to a number of annual audits and the minutes of the deliberations of its board of governors are a matter of public record, although on a delayed basis.
The Fed doesn't object generally to the audit, but it objects vehemently to audits that would demand documents by Fed policy makers on the pros and cons of supporting changes in interest rates, decisions that affect everything from home mortgages to car loans to saving accounts.
Chairman Ben Bernanke said it would be a "nightmare scenario" that could open up the Fed's deliberations to political interference from Congress and the White House. Being able to open a spigot of cash would be a powerful political tool but one dangerous to the health of the economy.
However far the Paul bill goes, Congress must ensure that nothing jeopardizes the independence of the Fed and or is even seen as an encroachment on its economic impartiality.
