The TRUTH can only damage the economic and financial stability if it is based on fraud and illegal operations/bailouts.
The truth never damages/hurts, but it always cures illusions, lies, expectations and fraud.
Those that want to tell you that the truth may be harmful are crooks and liars.
– The Federal Reserve Doesn’t Want Banks to Increase Lending, Because of Inflation
– House Panel Approves Ron Paul’s Amendment to Audit The Federal Reserve
– Ron Paul rebuts criticism of Federal Reserve audit (19 Nov 2009)
– Ron Paul: Federal Reserve Audit Legislation ‘Gutted’, ‘There’s Nothing Left’
– New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money
(As a side note: Truth is the basis of love itself. Without truth there is no love.)
WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke said on Friday congressional proposals to audit the Fed and strip it of regulatory powers as part of post-crisis reforms could damage prospects for economic and financial health in the future.
“These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States,” Bernanke wrote in a column posted on the Washington Post’s website.
The rare newspaper column by a Fed chairman comes shortly before Bernanke testifies before a Senate panel on his renomination to serve a second four-year term at the helm of the central bank and answers a series of steps on Capitol Hill that could diminish the central bank’s role.
Lawmakers are angry with the Fed over its emergency bailouts of major financial firms and its failure to prevent the contagion of mortgage delinquencies that crashed the financial system. A proposal to audit the Fed’s monetary policy deliberations won a committee vote recently over the objections of House Financial Services Committee Chairman Barney Frank.
Frank’s Senate counterpart, Banking Committee Chairman Christopher Dodd, is himself the author of a proposal to consign the Fed solely to making decisions about setting benchmark interest rates.
Bernanke, in his column, conceded the Fed had missed some of the riskiest behavior in the lead up to the crisis. But he said the Fed had helped avoid an even more damaging economic meltdown and has stepped up its policing of the financial system.
“The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation,” he said.
Bernanke acknowledged that lawmakers are responding to public anger over the government’s response to the turmoil.
“The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis,” he said.
However, the central bank has moved “aggressively” to fix the problems, Bernanke said. The Fed’s knowledge of complex financial institutions is invaluable in supervising them, he said.
The Fed’s ability to slash interest rates to combat a recession without fueling inflation depends on its political independence he said. Allowing audits of its monetary policy — as proposed legislation would do — would increase the perceived influence of Congress on interest rate decisions, he said.
That, in turn “would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation,” Bernanke wrote.
Frank has said the audit provision is likely to be revisited as legislation winds through both houses of Congress.
Dodd has said his proposal is a starting point for debate.
(Reporting by Mark Felsenthal; Editing Bernard Orr)
Fri Nov 27, 2009 9:28pm ES
By Mark Felsenthal
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