July 8, 2009
WASHINGTON – A proposal from a long-time congressional foe of the Federal Reserve that could give lawmakers sway over monetary policy has won the support of a majority in the House of Representatives, alarming officials at the U.S. central bank.
The Federal Reserve Transparency Act of 2009, put forward by Republican Representative Ron Paul of Texas, now has 250 co-sponsors in the House. It will get air-time on Thursday during a congressional hearing on Fed independence that will feature testimony from the Fed’s No. 2 official, Donald Kohn.
[efoods]Paul has tapped into this anger and put forward a 2-1/2 page bill that would explicitly repeal a provision of law that prohibits the Government Accountability Office, a government watchdog agency, from auditing monetary policy decisions.
Fed officials see this as a dangerous intrusion on their independence that could hinder their ability to make the best long-term decisions for the economy.