Political Commentary

The House Financial Committee approved a bill that would allow Congress to audit the Federal Reserve.  The measure was approved by a 43 to 26 vote and could be up for a vote in the House by December 1.  309 House members are already on board with the bill.  The bill has been met with opposition of Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner, who claim that the bill would hinder The Fed’s “independence.”

The Fed is saying that by becoming “more transparent” to the American public, institutions would be afraid to borrow from The Fed since they will be seen as “troubled firms,” which will only make the economic situation worse. Ron Paul, the leader of the Federal Reserve Audit Bill, made the following comments about the proposed legislation:

If you care about transparency of the Fed, you would allow a look at monetary policy. We’re dealing with trillions of dollars that doesn’t get audited. There is no reason why the world can’t know, eventually, what the Fed is doing.

Warren Buffett recently spoke out about the pending legislation and is opposed to the bill.  Buffett says that curbing the Fed’s independence would lead to a lot of “mischief.”