- Ohio university quiz implies atheists are naturally smarter than Christians
- Rep. Henry Cuellar on border crisis: ‘Playing defense on the one-yard line’
- Activists vow to occupy fast-food restaurants to get higher pay
- Rep. Luis Gutierrez: Senate Dems wary of immigration politics
- Summer camp for 1 percenters: Sushi, limos and shopping at FAO Schwarz
- Colorado gun crackdown law found to be built on faulty data
- Hank Aaron steps to fundraising plate for Democrat Michelle Nunn
- ISIL terrorists blow up burial site of Jonah, vow more of same
- Impeach Obama, say 35 percent in new poll
- Taliban yank 14 Shiites off bus, bind and shoot them on Afghan road
House provision on Fed rejected
Move a win for Bernanke
Question of the Day
Congressional negotiators on Wednesday jettisoned a House amendment that threatened to interfere with the Federal Reserve’s anti-inflation efforts while widening the public window for viewing into the Fed’s secretive lending and securities market activities.
The rejection of the House provision, authored by Rep. Ron Paul, Texas Republican and former presidential candidate, represented a major victory for Fed Chairman Ben S. Bernanke, who often clashes with Mr. Paul over inflation-fighting policies and warned against jeopardizing the central bank’s independence.
The question of the Fed’s independence is a touchy one from Wall Street to Beijing. China and other major investors in U.S. securities have increasingly voiced worries about future inflation in the U.S. driven by spiraling budget deficits.
Many investors fear the political fight in Congress over bank bailouts has weakened the Fed and invited congressional interference in critical Fed functions, including setting the level of short-term interest rates to deter inflation, and printing money to keep the global economy running.
“I thought we all agreed we do not want to interfere with monetary policy,” said House Financial Services Chairman Barney Frank, in presenting a compromise proposal to exempt the Fed’s monetary-policy deliberations from audits by the Government Accountability Office sought by Mr. Paul.
The compromise instead requires the Fed to post extensive details about its 2008 rescues of American International Group, Bear Stearns and other big financial institutions - which provoked a firestorm in Congress last year - while authorizing the GAO to audit future emergency Fed cash infusions for financial institutions.
The Fed would also have to regularly disclose information about its daily transactions with Wall Street banks through its discount lending window and securities market operations in New York, with a two-year lag.
But Mr. Frank, Massachusetts Democrat, said it was particularly important to insulate the Fed’s deliberations on interest-rate policy and interactions with foreign central banks from immediate congressional review and interference so the Fed can continue to act quickly to avert international financial calamities like the European debt crisis from spreading to U.S. markets.
The House conferees voted 12-7 to replace Mr. Paul’s amendment with Mr. Frank’s compromise. The Senate conferees moved to accept most of the House compromise Wednesday night, but were still negotiating some details and postponed a final vote on the measure until Thursday.
Mr. Paul vowed to keep fighting and making his case to voters, who he said are increasingly suspicious of the secretive and powerful central bank and want to know what the Fed is doing with the trillions of dollars it prints and doles out regularly in financial markets. He pointed out that his amendment gained the support of a solid majority of 319 House members last year.
“I think the American people are going to be disappointed,” he said. “I am confident the Fed issue will not be laid to rest. People are becoming more and more aware that the Fed should not get a free ride” and continue being the only federal agency not subject to comprehensive GAO audits.
While Mr. Paul contended his amendment was not intended to interfere in the Fed’s monetary operations, he acknowledged that he is not happy with what the Fed is doing and would like to see far-reaching changes at the central bank.
Mr. Paul is an advocate of returning to the gold standard, which existed until the 1970s and which ties the value of the dollar to the nation’s gold reserves. Published reports recently revealed that he has major gold investments, which have gained substantially in value in the last year as investors around the world - some persuaded by his views - have been stockpiling the precious metal.
To further prevent politicization of the Fed, the conferees moved toward dropping a Senate proposal requiring the U.S. president to appoint the president of the Fed’s New York reserve bank, who works closely with the Fed chairman to carry out monetary policy and sits on the Fed’s interest-rate-setting committee.
Currently, the New York Fed president is chosen by the bank’s board of directors, which is made up mostly of bank executives based in New York. The conferees were working on details of a compromise to blunt the influence of banks in making future appointments.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
- Economists see signs of another market bubble
- Crude oil will head north of the border to Canada
- S&P: Boeing to suffer if Ex-Im Bank killed
- U.S. job gains, unemployment dip push markets into record territory
- Unemployment falls to 6.1 percent amid U.S. hiring surge
Latest Blog Entries
TWT Video Picks
Second- and third-stringers eye 2016 if front-runner stumbles
- Michelle Obama says money in politics is bad, asks donors for 'big, fat check'
- Presidents of Honduras, Guatemala blame U.S. for border children crisis
- 'We're coming for you, Barack Obama': Top U.S. official discloses threat from ISIL terrorists
- EDITORIAL: Detroit's water 'spigot bigots'
- NAPOLITANO: What if our democracy is a fraud?
- Hamas rejects Kerry's call for cease-fire; Fears grow others could join fight against Israel
- Crime-ridden U.S. cities differ on ways to fight gun violence
- Obama takes aim at 'corporate deserters'
- Let it roll: D.C. Council hits Las Vegas on taxpayer's dime, leaves $14,000 tab
- Obama orders Pentagon advisers to Ukraine
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq