News Column

Bernanke to Testify Following Charge He Withheld Info

May 22, 2013
Fed Chairman Ben Bernanke
Fed Chairman Ben Bernanke

U.S. Federal Reserve Chairman Ben Bernanke's Capitol Hill testimony Wednesday follows lawmakers charging he purposely withheld strategic information from them.

Bernanke is to appear before the House-Senate Joint Economic Committee at 10 a.m. This will be followed 4 hours later by the release of the minutes of the central bank's most recent policy meeting.

The testimony and the minutes release could alter the financial markets' mood.

House Oversight Committee Chairman Darrell Issa, R-Calif., and committee member Jim Jordan, R-Ohio, told Bernanke in a letter a month ago they were frustrated by his lack of response to a February demand for documents detailing the bank's strategy on buying and eventually selling more than $3.3 trillion in bonds and other assets.

The central bank has purchased the mortgage-backed and treasury securities as part of its easy-money stimulus programs to boost economic growth.

The bonds purchase is known as "quantitative easing," an unconventional monetary policy central banks use to stimulate economies when standard monetary policies don't work.

The lawmakers said they wanted to know the Fed's quantitative easing buying plans, and they wanted to make sure the Fed's plans for selling the assets don't hurt the U.S. economy.

The lawmakers said in their April 22 letter Bernanke "willfully" withheld public and non-public documents the committee requested, The Wall Street Journal reported.

"The American people have a right to know the true risks associated with the expansion of the Federal Reserve's balance sheet," the lawmakers wrote. "The Fed's obstruction and lack of transparency must stop."

The committee told Bernanke the Fed must provide all the material it demanded by May 6 or it would consider using the panel's subpoena power to get the materials.

When the Fed acknowledged receiving the letter it simply said the central bank would respond to Issa and Jordan.

It was not immediately clear what, if anything, happened May 6.

But Bernanke met privately with Issa and other lawmakers last week to discuss the quantitative easing strategy, people who attended the meeting told Politico Tuesday.

The participants declined to disclose what Bernanke told lawmakers, other than saying he discussed the bond-buying programs and other issues.

A Fed spokesman declined to comment.

The markets have been speculating the Fed could start to gradually cut back on quantitative easing.

But Federal Reserve Bank of St. Louis President James Bullard said Tuesday the Fed should press on with quantitative easing but be willing to change the amount of securities the Fed buys to reflect unpredictable economic currents.

Bullard told Germany's Goethe University Frankfurt the U.S. "recovery from the financial crisis and the ensuing recession has been slower than expected" and pointed out "Europe has returned to recession." He said "inflation has recently been below target in both the U.S. and Europe."

U.S. inflation is well under the Fed's 2 percent official target and may go lower, economists forecast.

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Source: Copyright UPI 2013

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