Let the Sunshine in at the Federal Reserve
Let the Sunshine in at the Federal Reserve By Stephen Moore for CNS News
I’m disappointed I had to withdraw from the nomination to be a member of the Federal Reserve Board because I do believe the Fed needs to change the way it operates. In the last month, I started investigating how it makes its decisions, which have such a dramatic impact on jobs, wages, interest rates and the overall well-being of the country. How does the Fed make its monetary policy decisions on setting interest rates, buying bonds and regulating our financial institutions?
What I have discovered is that this powerful agency of government truly does operate under a stone wall of secrecy. Meetings are held behind closed doors; statements are carefully crafted to reveal little in the way of what monetary authorities actually think; and the day-to-day activities are shielded from audit.
The Fed is arguably the least transparent agency of the federal government, outside of security agencies such as the CIA. It is obvious why national security agencies need to be secretive. But why does the Fed?
When elected officials like Sen. Rand Paul have requested more Fed openness, the Fed hierarchies are contemptuous. He says their response is: “Go away. It is none of your business.”
I have asked several former Fed governors whose opinions I greatly respect about this issue, and they have said they generally oppose too much transparency. They say it would stifle frank debate on tough and pressure-packed issues if reporters and television cameras were allowed in the room. Perhaps, but this was the argument against putting cameras in Congress. The benefits of open public debate have surely outweighed the costs. Why not have C-SPAN at the Federal Open Market Committee meetings?
I certainly believe in a Fed that acts independently and far removed from partisan politics. This is critical to the Fed’s mission. But that does not translate into a lack of accountability. I agree with Rep. Bill Huizenga of Michigan, a sponsor of the Fed Oversight Reform and Modernization (FORM) Act which would require more accountability at the Fed. “With the Federal Reserve having more power and responsibility than ever before, it is imperative the Fed changes its opaque structure,” he says. “The Fed’s recent high degree of discretion and its lack of transparency in how it conducts monetary policy demonstrate that … We need to modernize the Federal Reserve and bring it into the 21st Century.”