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Sen. Elizabeth Warren (D., Mass.), a member of the Banking Committee and an outspoken critic of the Fed’s oversight of big banks, said she does not support Mr. Paul’s proposed legislation, which she said could have “dangerous” implications for monetary policy.
“I strongly support and continue to press for greater congressional oversight of the Fed’s regulatory and supervisory responsibilities, and I believe the Fed’s balance sheet should be regularly audited – which the law already requires,” Ms. Warren said in an emailed statement. “But I oppose the current version of this bill because it promotes congressional meddling in the Fed’s monetary policy decisions, which risks politicizing those decisions and may have dangerous implications for financial stability and the health of the global economy.”
Sen. Elizabeth Warren—that beloved populist and bank-busting champion of the little guy—has long vowed to bring accountability to the government, stop reckless corporate malfeasance, and rescue the economy from the hands of our shadowy overlords.
She does not support Sen. Rand Paul's "Audit the Fed" bill, however.
originally posted by: MOMof3
So, I read it and looked up other points of views. I think the timing is wrong. We are just crawling out of a recession for some and a depression for others. Something like that could unhinge it all again.
Other than that, Warren going along with Paul. Are you crazy?!
originally posted by: xuenchen
What could an audit possibly do to threaten an economic recovery ?
Lizabeth has been exposed.
It is important to note that GAO investigations are not the financial audits that many assume them to be. They extend beyond mere accounting to examine strategy, judgments and day-to-day decisionmaking. Indeed, by statute, the GAO is charged with making recommendations to Congress about the areas they have reviewed. This could put the GAO in the position of reviewing the FOMC's policy decisions and recommending its own course for monetary policy.
With these features in mind, the potential benefits of GAO policy audits would be small, even before considering the potential costs. Unlike the programs that are typically the subject of GAO policy audits, such as procurement decisions that may be brought to light only by the GAO's attention, monetary policy decisions occur with all of the world watching. They are announced immediately, described in an FOMC statement, often elaborated on in a press conference, and the subject of endless same-day-analysis and debate.
With all of this transparency and analysis, very little would be revealed by GAO policy audits that would help evaluate the effectiveness of monetary policy. The benefits of frequent GAO policy audits would also be low because the effects of monetary policy are felt with a considerable time lag and are often only clear years later.
Audit the Fed also risks inserting the Congress directly into monetary policy decisionmaking, reversing decades of deliberate effort by the Congress to insulate the Fed from political pressure in carrying out its day-to-day duties. Indeed, some advocates of the bill have expressed support for complete elimination of the Federal Reserve. Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials. As recent U.S. history has shown, elected officials have often pushed for easier policies that serve short-term political interests, at the expense of higher inflation and damage to the long-term health and stability of the economy.
To those who may doubt that GAO investigations would be used by the Congress to try to influence monetary policy, let me briefly describe another proposal which envisions exactly that. This bill would require the FOMC to carry out monetary policy according to a simple equation and require immediate congressional hearings and a GAO audit whenever monetary policy deviates from this equation. Simple policy rules of this nature are used by the FOMC and by central banks around the world as a guide to policy. No central bank applies them in such a mechanical fashion, and there is very little support among economists for doing so. Based on my own experience in business, in government service, and in life, I doubt that important decisions can be reduced ultimately to such an equation. The most such a rule might do is get you 80 percent of the way there; that last 20 percent makes all the difference.
Well well .... looks like Senator Warren is opposed to the "Audit the Fed" bill introduced by Senator Rand Paul. Her statements about this quagmire are conflicting as usual. Almost like she's scared of something .... or scared of someone.
On Thursday, the Massachusetts Democrat announced a new bill, the Medical Innovation Act, which she says would address two major problems: dwindling government investment in medical research and illegal practices by major pharmaceutical companies. The bill, which she intends to introduce in the Senate next week, would take money from fines levied against major pharmaceutical companies that engaged in illegal practices and use it to fund drug research at the National Institutes of Health (NIH) and the Food and Drug Administration (FDA).