News Column

Janet Yellen Objects to Audit of Fed Meetings

November 14, 2013

Patrice Hill, The Washington Times

janet yellen
Janet Yellen, President Obama's nominee for head of the Federal Reserve (official portrait)

Nov. 14--Federal Reserve Vice Chairman Janet Yellen, President Obama's choice to head the central bank, said on Thursday that she objects to legislation auditing the Fed if it allows Congress to scrutinize and pressure central bankers' deliberations over interest rates and monetary policy.

Sen. Paul Rand, Kentucky Republican, is pushing a bill that would give congressional watchdogs authority to audit such internal deliberations, and is demanding a vote on the bill as the price of allowing the Senate to vote on Ms. Yellen's nomination to succeed Ben Bernanke as the Fed's next chairman in January.

"I would object to legislation that would subject the Fed to short-term pressures that would affect [its] independence," she said in testimony at her confirmation hearing before the Senate Banking Committee.

"We're one of the most transparent central banks in the world, but I would not support anything that diminishes the independence," she said in her first appearance before Congress since Mr. Obama nominated her to replace Mr. Bernanke after his scheduled departure on Jan. 30.

"For 50 years, Congress has recognized that there should be an exception to the [General Accountability Office's] ability to audit" federal agencies when it comes to the highly sensitive monetary deliberations at the Fed, which regularly move financial markets all over the world, she said.

"Allowing the central bank to be independent is important to assuring markets and the public that we will achieve price stability," because it ensures that legislators cannot interfere with the sometimes painful measures the Fed must take to quell inflation and other economic problems, such as raising interest rates, she said.

Mr. Paul later in questioning Ms. Yellen did not mention his bill, but sought to determine her views on gold and the stock market. Ms. Yellen said she recognizes that many people like to invest in gold when they are worried about inflation or stability in global markets, but does not believe it is a reliable indicator of what is happening in the economy.

She added that she does not see a bubble in the stock market, at present, although some measures indicate that stock valuations are "somewhat elevated" in part because of the Fed's ultra-easy money policies since 2008.

Ms. Yellen said she would not hesitate to use the Fed's many regulatory and monetary powers to curb dangerous market bubbles in the future, as well as curb any risky practices among banks which could lead to another financial crisis like the one that caused the Great Recession in 2008.

"This is the most important lesson learned from the financial crisis," she said, stressing that she wants to do everything she can to prevent such a debacle from occurring again in the future if she is confirmed as chairman.

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(c)2013 The Washington Times (Washington, DC)

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Original headline: Fed nominee Janet Yellen objects to audit of monetary meetings


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Source: (c)2013 The Washington Times (Washington, DC)


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