Making the Fed more accountable to Congress and the public may be just what it needs to fend off Trump’s threats to its independence

Filed 1mo ago · Via The Conversation · The Buffoon Desk

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Kevin MacLeod · incompetech.com · CC BY 4.0

Photo: Habib M'henni · CC BY 4.0 · via Wikimedia Commons

The Federal Reserve, now holding a balance sheet roughly seven times its pre-2008 size, faces renewed questions about accountability as new Chair Kevin Warsh prepares his first Jackson Hole speech. President Trump has pressured the Fed on rates and tried, unsuccessfully before the Supreme Court, to remove Governor Lisa Cook. Scholars note the Fed is self-financed, its governors serve 14-year terms removable only 'for cause,' and its inspector general is appointed by the very chair being overseen.

Since 1978's Humphrey-Hawkins Act and Federal Banking Agency Audit Act, congressional oversight has existed but with a carve-out shielding monetary-policy deliberations from audit. Critics call the resulting arrangement 'undersight.' The authors argue that credible external scrutiny might be what keeps the Fed's independence defensible rather than merely assumed.

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✒ FROM THE EDITORIAL DESK

An unelected body that prints trillions, sets its own budget, and appoints its own watchdog asking to be trusted more, not less, is quite the pitch. The argument that accountability strengthens independence is reasonable, but it is also exactly what an institution under political siege would say regardless of whether it believed it.

Source: Read the original at The Conversation → Scored: Our Story Begins · Kevin MacLeod · CC BY 4.0