Sen. Richard Shelby: ‘Be Careful’ of Auditing the Fed

By Ali Meyer | March 25, 2015 | 3:43pm EDT

FILE - In this Feb. 25, 2015 file photo, Federal Reserve Chair Janet Yellen testifies before the House Financial Services Committee hearing: "Monetary Policy and the State of the Economy," on Capitol Hill in Washington. (AP Photo/Pablo Martinez Monsivais, File)

( - In a speech at the Capital Markets Summit at the Chamber of Commerce in Washington, D.C., on Wednesday, Sen. Richard Shelby (R-Ala.) urged caution at the proposal of audit the Federal Reserve.

“What I do believe, and we’ve had testimony, that we need to have strong oversight of the Federal Reserve,” said the senator. “Some people propose, let’s audit the Federal Reserve, and we have to determine I think what do we mean by audit. What does that mean? If that’s creating monetary policy or getting into monetary policy and everything by the Congress, I think we ought to look at that closely and be careful of what we do.

“I’m not a big fan of the Federal Reserve every day - I used to be - because I’ve seen a few mistakes to say the least that they have made over the years,” said Shelby. “They’re not perfect, but if we didn't have a central bank I think we’d have to create one or something similar.”

“Federal Reserve officials have stressed the importance of the Fed’s independence,” Shelby said at a Senate Banking, Housing and Urban Affairs Committee hearing titled “Federal Reserve Accountability and Reform” on March 3. “But, such independence does not mean that it is immune from congressional oversight. After all, Congress wrote the statute that created the Fed and sets forth its policy objectives.

While Shelby maintains that he wants “oversight” of the Fed, he has opposed a proposal to audit it. Sen. Rand Paul (R-Ky.)introduced an “Audit the Fed” proposal on January 26, which would audit the central bank and “mandate that the Federal Reserve’s credit facilities, securities purchases, and quantitative easing activities would be subject to Congressional oversight.”  Shelbyopposed this proposal.

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