The Fed under fire! Geithner wants to study Fed governance

Posted Sep 23rd 2009 1:20PM by Connie Madon
Filed under: Management, Money and Finance Today, Politics, Federal Reserve

The U.S. Treasury and Congress are putting pressure on the Fed to disclose its governance policies.

Almost three months ago, on June 17, the Obama administration proposed a regulatory overhaul including a "comprehensive review of the Fed's ability to accomplish its existing and proposed functions."

There is some confusion as to why the Treasury is undertaking this task. The Fed was created by Congress to be independent of the executive branch and Congress.

While the Fed is digging in and refusing to cooperate, the pressure keeps mounting in light of the massive spending programs that the Fed has undertaken.

Congress is now jumping in for a Fed review. In April, the Senate passed 96-2 a nonbinding budget amendment for "an evaluation of the appropriate number and associated costs" of district banks. The measure was sponsored by Christopher Dodd and Richard Shelby. On the House side, Barney Frank said that his committee intends to probe how the 12 regional Fed presidents are appointed. Legislation in both houses of Congress would allow for audits by the Government Accountability Office of the central bank's monetary policy and other operations. The Fed has staunchly opposed any such audits.

The Fed wants more power to become regulator with the authority over big banks through a council of regulators. Barney Frank has told Bloomberg that "There will be a council."

How all of these political machinations play out in the final analysis is unknown. It seems increasing clear that something will be done, but what and how are still up for grabs.

Do you favor audits of the Fed's spending?

Tags: audits, Barney Frank, big banks, Christopher Dodd, Congress, featured, Federal Reserve, Geithner, inthenews, Richard Shelby, supervisory council, Treasury

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Reader Comments (Page 1 of 1)

9-23-2009 @ 2:45PM

thedude said...

This is going to provide some fertile ground for conspiracy theorists on all sides

A- the fed is about as shady as any back ally in NYC and as such caution should be the word when entering their territory

B- this is another ploy by the Democrat majority in congress to seize more power, by controlling the fed they would have absolute control over all US citizens and then they could begin to start printing Renminbi and facilitate the sale of the entire US to China and creating a global currency based on the Chinese economy.

To answer your question: Do I favor audits of the feds spending ? ABSOLUTELY
Do I favor absolute disclosure of the Feds practices? ABSOLUTELY

I also favor audits of Democrat party members tax returns and verification of ANYTHING that comes out of Obamas and Pelosi' mouths THEY LIE !

9-23-2009 @ 9:10PM

william lindblad said...

I can't answer your question as I simply am not sure auditing the Fed is in the publics best interest. Perhaps some limited disclosure would be in order, but full detailed audits?

I think the best thing to do here is start from scratch.

Why do we have the Fed? What prompted the creation of a pseudo-government agency? It is sort of government sponsored and sort of communicates with government. Essentially, it's between private and government with a whole lot of discretionary power in the market of money.

A long lost event in 1909 is what prompted the Fed. It's obscure, but it does have a name. J.P. Morgan and the banks. The real J.P. had a similar economic event to today's back in time and his solution was to call all the prominent bankers of the time to a meeting. J.P. locked the doors and would not let anyone go until they came up with a solution. Pretty much the same as what the FDIC is doing today - let those that are insolvent fail and be bought up by those that are solvent. Slight difference today as the government made some of the big ones that would have been insolvent - solvent. Of course, if the big banks went, so would have went the entire country.
All predicaments have a solution. Back in time J.P.'s action did not go unnoticed, and hence, we have the Fed. I don't think that anyone managed to audit J.P.

All in all I think we could equate all events of the past few years to a person that was shot. Bad wound, but not fatal. Surgery, rehab and a good deal of rest will bring them around. That's the good side. The bad is wait until the bill is presented.