M.Scott Mahaskey/POLITICO Yellen pans 'Audit the Fed' The Fed chair says it will apply inappropriate political pressure on the central bank.

Federal Reserve Chair Janet Yellen on Tuesday reiterated her strong opposition to “Audit the Fed” legislation championed by Sen. Rand Paul that would subject the Fed’s monetary policy decisions to new scrutiny from the investigative arm of Congress, arguing it would place harmful political pressure on the central bank.

Yellen said much of the Fed’s operations, including financial transactions, are already audited, pushing back against the charge from Paul (R-Ky.) and other critics that it is not transparent.


“I want to be completely clear that I strongly oppose Audit the Fed,” she told the Senate Banking Committee at a hearing. “Audit the Fed is a bill that would politicize monetary policy and it would bring short-term political pressures to bear on the Fed.”

Under current law, the Fed’s monetary policymaking process cannot be scrutinized by the Government Accountability Office. Paul’s bill would lift this ban and ask GAO to perform an audit, although it is short on specifics beyond that. Supporters of the legislation argue that prohibiting the GAO from keeping tabs on monetary policy prevents Congress from providing greater oversight of a policy process that has an enormous impact on the economy.

Paul is promoting the bill as part of his early foray into the 2016 presidential contest and is using it as a fundraising tool.

The House has passed the legislation previously and the Republican-controlled Senate is expected to take it up this Congress, with Senate Majority Leader Mitch McConnell (R-Ky.) earlier this year announcing his support for the proposal.

That Yellen came to the hearing to pan “Audit the Fed” came as no surprise.

That Republican Sen. Bob Corker of Tennessee helped her make the strongest case against the proposal was unexpected.

Corker made clear on Tuesday that he is no fan of “Audit the Fed,” arguing it would be bad policy.

His questioning at the hearing took on a joking tone when he asked Yellen about the Fed’s transparency.

“While you may issue an updated balance sheet each week, how do we know those securities actually exist?” Corker said with a smile.

Yellen said Big Four accounting firm Deloitte audits the Fed’s balance sheet and she held up a copy of the audited financial statements.

“So they do exist?” Corker asked cheekily.

“They do exist senator,” Yellen affirmed.

“It’s obvious to me that the Audit the Fed effort is to not to address auditing the Fed because the Fed is audited,” Corker said. “So to me it’s an attempt to allow Congress to be able to put pressure on Fed members relative to monetary policy. And I would just advocate that would not be a particularly good idea and it would cause us to put off tough decisions for the future, like we currently are doing with budgetary matters. Do you agree with that?”

“I strongly agree,” Yellen said.