A major split has developed between the Treasury Dept. and the Federal Reserve. Fed Chairman Ben Bernanke has denied a request from Treasury Secretary Tim Giethner for a public review of the Fed’s structure and governance. Earlier this year the Fed denied a similar request from congress. According to American Banking News:
“Much of the impetus behind this initiative from the Treasury Department came from concerns over Ben Bernanke going far beyond his delegated authority, to bail out businesses like those in the auto industry, along with AIG and Bear Stearns, which aren’t part of its mandate. Of course bailing out the financial industry isn’t part of its mandate either, but these other industries are easier to identify as obvious to not being related to the Federal Reserve and its stated purpose.”
Ironically, even with the Feds bogus claims of independence, many of the regional fed chairman were initially in favor of the review. They have now closed ranks and will be fighting against it. The Feds insistence on independence and secrecy, combined with the mounds of taxpayer money they are spending, is slowly isolating it.
Together with HR 1207, which would audit the Federal Reserve and currently has 290 cosponsors in the House, S.604 in the Senate has 27 cosponsors. Senators as diverse as Orrin Hatch of Utah and Barbara Boxer of California have signed on. Neither Nevada Senator Reid or Senator Ensign have said a single word about it. One might think that being on the side of the people would give either one a much needed PR boost. We’ll see.