Reid: We Must Maintain An Independent Federal Reserve

“In the wake of the financial crisis that crippled our nation’s economy, I came to more fully understand how important it is that any audit respects the independence of the Federal Reserve.”

“Let’s be clear, this bill is not about auditing the Federal Reserve. It’s not about transparency or book keeping. That oversight already exists. This bill is about giving Tea Party Republicans and their billionaire donors the authority to control the United States economy.”

“This bill is a sham and we should dispense with it as quickly as possible.”

Washington, D.C. – Nevada Senator Harry Reid spoke on the Senate floor today about Republican attempts to undermine the Federal Reserve. Below are his remarks as prepared for delivery:

For years I have supported a responsible audit of the Federal Reserve. The American people deserve an audit of one of the most vital parts of our government. In the wake of the financial crisis that crippled our nation’s economy, I came to more fully understand how important it is that any audit respects the independence of the Federal Reserve. The Federal Reserve was crucial to our economic recovery. Emergency provisions, to address economic catastrophes allowed the Federal Reserve to respond much faster to the economic crisis than  Congress could.

If the Federal Reserve had not stepped  in, the consequences of the Great Recession would have been tremendously worse. The Federal Reserve could act quickly to safeguard the US economy because of its independence. One of the greatest lessons we learned from the Great Recession remains clear today: the Federal Reserve must not be hamstrung by any political restrictions.

The Federal Reserve is a cornerstone of the global economy. We must maintain a Federal Reserve that is transparent, but we must respect the independence of the Federal Reserve for the well-being of the global economy. That’s why we included an amendment in the Wall Street Reform bill to responsibly audit the Federal Reserve while respecting its independence. That amendment passed unanimously.

The bill on which the Senate will vote tomorrow, sponsored by the junior Senator from Kentucky, would critically undermine this delicate balance. Wall Street Reform ensured that the Government Accountability Office could audit the Federal Reserve. And in accordance with the law, the Government Accountability Office has carried out those audits. In the year after the passage of Dodd-Frank, the Federal Reserve was audited 29 times. Since that time, the Federal Reserve has been audited 102 times. You don’t have to take my word for it. The 102 audits of the Federal Reserve are available to everyone on the Federal Reserve website. Proponents of this bill know that. Their calls for audits have been answered.

Let’s be clear, this bill is not about auditing the Federal Reserve. It’s not about transparency or book keeping. That oversight already exists. This bill is about giving Tea Party Republicans and their billionaire donors the authority to control the United States economy. It is an attack on policies that are designed to stabilize the US Economy and help the middle class bounce back. Political parties should not and cannot run monetary policy at the Federal Reserve. That would be disastrous. I’m disappointed that the Senate will waste its time on another misguided partisan attack like this one.

This bill is an attack on the Federal Reserve mandate to create full employment. These attacks are partisan in nature and it is unconscionable to think that the Republican Leader would begin this year attacking policies that benefit the middle class. Some Republicans agree. Senator Bob Corker, a member of the Banking Committee, said this of the “Audit the Fed” bill.

“It’s obvious to me that the Audit the Fed effort is to not address auditing the Fed because the Fed is audited…to me, it’s an attempt to allow Congress to be able to put pressure on Fed members relative to monetary policy, and I would just advocate that that would not be a particularly good idea and it would cause us to put off tough decisions for the future, like we currently are doing with budgetary matters.”

I agree with Senator Corker: injecting politics into the Federal Reserve is a bad idea. This bill is a sham and we should dispense with it as quickly as possible.  I will vote against this bill, and I urge my colleagues to do the same.