In a possible effort to bolster his yet-to-be-announced 2016 presidential campaign, Sen. Rand Paul (R-Kentucky) introduced the Federal Reserve Transparency Act, which would leverage a more extensive audit on the Federal Reserve.
Chair of the Federal Reserve Janet Yellen has openly expressed criticism of the bill, stating that Congress politicizing its operations would hinder the department.
Students like junior Elaine Phillips agree with Yellen, saying the bill is a power play for Congress to gain political points. Phillips believes the current audits on the Federal Reserve provide enough insight and the bill is more about power than transparency.
“For years the Federal Reserve has worked to provide transparency that wasn’t here 20 years ago,” Phillips said. “The bill is unnecessary and would just be a political move for those proposing and fighting for the bill.”
Despite Phillips’ concerns about how much benefit the bill could actually bring, the bill seems to align with Paul’s generally libertarian beliefs. One of Paul’s most stated tenants is that elected officials should restrict the size and power of government.
“A complete and thorough audit of the FED will finally allow the American people to know exactly how their money is being spent by Washington,” Paul said in a Jan. 26 press release. “The FED currently operates under a cloak of secrecy and it has gone on for too long. The American people have a right to know what the Federal Reserve is doing with our nation’s money supply.”
Social studies teacher Bryn Orton agrees with Phillips that transparency could cause some unnecessary roadblocks for the Federal Reserve; however, he believes transparency is important in the bigger picture of governmental affairs.
“No one really welcomes oversight. It is usually forced,” Orton said. “Transparency can create issues in the short term, but the long-term bend of transparency is always toward better.”
Junior Stephen Sowers disagrees slightly with Phillips, saying the bill can be beneficial at pointing out policies and employees in the Reserve who are detrimental to the economy.
“In Rand Paul’s Transparency Act, he wanted to just lay [the audit] out on the table and say ‘You have to show us exactly what you’re doing,’” Sowers said. “Now we’re in a lot of debt so maybe they aren’t doing their job well and maybe the Transparency Act is a good thing.”
Although he sees potential benefits, Sowers remains ambivalent about the bill for different reasons than just politicizing. He foresees a possibility of mass anguish among the population if certain Federal Reserve policies, such as in a scenario when a wildly unpopular decision is made out of necessity, are shown.
“The Reserve is worried though, that when they do that, it could cause panic,” Sowers said. “The problem is, if something looks bad that the Federal Reserve is doing, it’s not necessarily a terrible thing, it’s just that the people don’t know why they’re doing that.”
By Luke Chval
photo by Pablo Martinez Monsivais/AP
Federal Reserve Chair Janet Yellen goes over her note prior to testifying on Capitol Hill in Washington, Wednesday, Feb. 25, 2015, before the House Financial Services Committee hearing: “Monetary Policy and the State of the Economy.”
infographic by Emily Franke
poll by Devesh Kumar