The New York Times’ Edmund Andrews has a good piece today chronicling Fed Reserve Chairman Ben Bernanke’s effort to effectively campaign on behalf of Fed policies. I disagree a bit with Andrews’ premise that Bernanke is doing something unprecedented in the history of the Fed — Alan Greenspan did achieve "rock-star fame" and his predecessor, Paul Volcker, was also a prominent public figure. But the point is that Bernanke realizes the public, and Congress, are starting to cast a suspicious eye:
Republican lawmakers portray the Fed as the embodiment of heavy-handed big government, and have called for scaling back the central bank’s regulatory powers. But liberal Democrats, like Representative Dennis J. Kucinich of Ohio, have accused the Federal Reserve of caving in to demands by banks for huge bailouts, for failing to protect consumers against dangerous financial products and for being too secretive about its emergency rescue programs.
More than 250 lawmakers have signed a bill sponsored by Mr. [Ron] Paul that would allow the Government Accountability Office to “audit” the Fed’s decisions on monetary policy — a move that Fed officials see as a direct threat to their political independence in carrying out their central mission of setting interest rates.
One thing Fed expert William Greider points out in a Nation piece calling for the Fed’s democratization is that the central bank is wholly a creation of Congress. Lawmakers tend to talk about the Fed as some foreign power, but it’s the power, and duty, of Congress to control the national treasury. I think it makes sense for Bernanke to promote the very subjective decisions he makes, just like Treasury Sec. Tim Geithner does. It also makes sense for Congress to know how much money the Fed is printing and what they’re spending it on.-MB