House approves legislation that would open up the Federal Reserve’s monetary policy decisions to government audits.
- The bill is not expected to advance in the Senate.
- The vote, winning two-thirds majority support, reflects rising concern over the central bank’s actions to prop up the economy and financial sector and its effectiveness as a bank regulator.
- While Rep. Ron Paul, R-Texas, has long been a champion of greater oversight of the central bank and his efforts have repeatedly won backing from more conservative elements of the Republican party, Wednesday’s vote saw Democrats join in support, reflecting growing discomfort with the largely opaque and powerful institution.
- Fed officials worry a government audit would subject their decision-making to political pressure. No matter what, the central bank’s actions over the next few months will be interpreted by many as politically motivated.
- Fed Chairman Ben Bernanke warned the bill would present a “nightmare scenario” for the Fed, citing evidence that central banks that are not subject to political pressure do better for the economy.