Rand Paul reignites ‘Audit the Fed’ fight

Lawmakers are again trying to subject the Federal Reserve to a top-to-bottom review.

Sen. Rand Paul (R-Ky.), who is eyeing a presidential run in 2016, introduced legislation this week that would subject the central bank to a complete audit of its activity by the Government Accountability Office.

“The American people have a right to know what the Federal Reserve is doing with our nation’s money supply. The time to act is now,” Paul said in a statement.

The bill, just days old, has already garnered 29 co-sponsors, including fellow potential presidential contenders Sens. Ted Cruz (R-Texas) and Marco Rubio (R-Fla.). One Democrat, Sen. Mazie Hirono (D-Hawaii), has signed on as well.

{mosads}A similar bill was introduced in the House earlier this month, and has attracted more than 100 Republican co-sponsors.

Efforts to subject the Fed to a complete audit have been underway for years, under a campaign begun by former Rep. Ron Paul (R-Texas), Rand Paul’s father, who developed a loyal following as a dark horse presidential candidate with an anti-Fed message as a cornerstone of his campaign.

Proponents of such legislation argue that it would provide a much-needed check on the Fed’s control over the economy. Republicans, in particular, have been harshly critical of the Fed’s unprecedented policy moves in the wake of the financial crisis, arguing the intense stimulus could expose the U.S. to damaging inflation in the future.

But central bank officials, often wary of weighing in on political debates, have been quick to criticize such legislation. They argue that most of the Fed’s work is already subject to outside review, and allowing politicians to demand audits of monetary policy decisions could subject it to harmful political interference.

Fed Chairwoman Janet Yellen has repeatedly opposed such legislation, and said in December she would “forcefully” argue against another audit bill in 2015.

Despite those protests, the “Audit the Fed” movement has gained steam.

Several bills have passed the House, attracting significant bipartisan support. Previous efforts to audit the Fed had stalled in the Democratic-controlled Senate, but with Republicans now in control of both chambers, it appears likely there is a clear path for sending such a bill to the president’s desk.

Among the co-sponsors of Paul’s latest bill is Sen. Mitch McConnell (R-Ky.), the Senate majority leader.  

Hirono, the lone Democrat supporting the bill currently, said the Fed deserves some credit for the economic turnaround, but that the American people also deserve a full accounting of what the central bank did during the crisis.

“Greater transparency will help us prevent another Great Recession, and I believe will increase the American public’s confidence in the Fed rather than diminishing it,” she said in a statement. “While the Fed must make its monetary policy decisions based on data, not on politics, we owe it to Hawaii’s middle-class families, small businesses, and others that suffered so much to give them a full accounting of those actions.”

This post updated at 7:38 pm.