Senator Rand Paul (R-Ky.) will likely challenge President Barack Obama’s nomination of Janet Yellen as the Federal Reserve’s next top decision maker in a bid to force a Senate vote on a bill he proposed to audit the Fed’s policy-making deliberations.
In a statement Friday, Paul said, “As part of Senate consideration of the Janet Yellen nomination to be Chair of the Federal Reserve, I will request a vote on my bipartisan Federal Reserve Transparency Act, S. 209. The American people deserve transparency from the federal reserve and the federal government as a whole.”
Paul’s Fed transparency bill is a Senate version of similar legislation long-championed by and originally introduced in the House of Representatives by his father, former Representative Ron Paul (R-Texas). The elder Paul is a longtime Fed critic and the author of books and numerous essays on the Fed’s monetary abuses.
The older Paul has also made clear that he expects little change to accompany leadership changes at the Fed, saying earlier this month in a weekly address: “Yellen, like Bernanke, Summers, and everyone else within the Fed’s orbit, believes in Keynesian economics. To economists of Yellen’s persuasion, the solution to recession is to stimulate spending by creating more money. Wall Street need not worry about tapering of the Fed’s massive program of quantitative easing under Yellen’s reign. If anything, the Fed’s trillion dollars of yearly money creation may even increase.”
The act would remove current restrictions which hamper the Government Accountability Office’s (GAO) ability to carry out a full audit of the Federal Reserve.
“We must take a critical look at the Fed’s monetary policy decisions, discount window operations, and a host of other things, with a real audit – and not just pay lip-service to the idea of an audit,” Paul’s Senate website says of the act’s importance. “At a time when we’re seeing great volatility in small Euro-zone economies like Greece, Portugal, and Ireland, it is more crucial than ever that we have real transparency at our own central bank.”
A Democratic Senate aide told CNBC that Paul’s ability to stymie Yellen’s confirmation in an effort to bring about a Senate vote on his bill “should not be overstated.” In order to hold up confirmation hearings, which have not yet started, Paul would need the backing of at least 40 of his colleagues to prevent Senate leadership from blocking his effort.
A similar bill in the House garnered strong bipartisan support in 2012, but Senate majority leader Harry Reid (D-Nev.) said that he would not allow any audit the Fed bills to reach the Senate floor.
Some policy analysts suggest that lawmakers will steer clear of Paul’s effort to hold up Yellen’s confirmation for fear of reminding voters of the political gridlock accompanying recent budget debates in Congress.
Still, Paul could garner some support for his latest effort. As one Forbes contributor noted Friday:
Not only should he be commended for the step by Republicans but he should be supported by as many Democrats as possible – which would only be in keeping with the 89 Democrats who contributed to the bi-partisan support of H.R. 459 in 2012 which simply sought to “To require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States, and for other purposes,” the exact same language as Rand Paul’s S.209 — Federal Reserve Transparency Act of 2013.
There is no way to justify opposition to S. 209 and support of H.R. 459. But I wonder – will Democrats still try to find a way?
Paul said he intends to formally initiate the hold on Yellen’s confirmation next week.