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Federal Reserve Chairman Ben Bernanke calls it his “nightmare scenario.” One of Mitt Romney’s top economic advisers called it “trouble.”

Yet as they look to their national convention starting in Tampa on Aug. 27, Republicans are considering including a plank in their party platform calling for a full audit of the central bank.

Prodded by the failed primary bid of longtime Fed critic Ron Paul -- and the grassroots enthusiasm the Texas congressman’s cause inspired among bail-out weary Tea Party activists and small government advocates -- Republicans are entertaining a prospect that has long made them and some of their financial supporters cringe.

Paul, in an interview, warned that if Romney’s backers resist the effort, it could result in a politically distracting and messy fight in front of the national media. “It’s good economics and it’s good legislation, but it’s also good politics, because 80 percent of the American people agree with it,” Paul said. If Republican leaders “exclude it, I would think some of my supporters would be annoyed and feel strongly enough to take it to the floor under the rules.”

Romney Position Unclear

Romney’s position on the issue is murky. While he says he backs a Fed audit, he has not formally endorsed Paul’s legislation -- which mandates a Government Accountability Office audit of the Fed that includes deliberations on changes to the benchmark interest rate -- nor the effort to include it in the party’s messaging document to be hammered out before its formal adoption at the Republican National Convention.

“My own view is that we should audit the Fed and that the actions of the Fed should be open for the review of Congress and the understanding of the American people,” the presumed Republican nominee told reporters Aug. 3.

Romney spokeswoman Andrea Saul declined repeated requests to divulge Romney’s stance on a Fed audit that would include monetary policy.

On July 25, on a 327-98 vote -- with just one Republican dissenting -- the U.S. House passed the legislation. While it’s not likely to become law, supporters of Paul and his son Senator Rand Paul, a Kentucky Republican who will speak at the convention, say they're ready to instigate a potentially divisive floor fight if they are snubbed by Republican leaders crafting the platform.

Floor Fight

“I can’t imagine, politically speaking, that the Romney campaign, which is pushing the direction of the platform, would want to risk any type of debate or contention on the floor of the convention on this,” said Christopher Stearns, a 25-year-old delegate from Portsmouth, Virginia, who is leading the Paul forces’ platform efforts. “I would be more than happy to lead a debate on the floor to make sure this is brought up.”

It’s unclear how successful the effort will be, and party officials are reluctant to discuss the matter publicly.

“I have absolutely no idea what’s going on with the platform,” former New Hampshire Governor John Sununu, a Romney surrogate who heads the convention’s powerful Rules Committee, said in a brief interview, declining to discuss the matter further.

Virginia Governor Bob McDonnell, a vice presidential prospect for Romney who is heading the Platform Committee, told The Washington Times last week that the Fed audit was part of ongoing discussions, adding that Paul and his son have “a lot of great ideas.”

Platform Committee

The Platform Committee is scheduled to meet in Tampa August 19-21 to come up with a proposal to present to the convention the following week.

Former Republican National Committee Chairman Haley Barbour said while there’s nothing wrong with auditing the Fed’s transactions and accounts -- as is currently done -- it would be “objectionable” for the party to go on record in support of giving Congress access to statements and deliberations in the bank’s meetings.

“I don’t want Congress controlling the money supply or usurping the authority of the Fed -- I can’t think of a group that I would less rather have do that, just because they’re politicians and this is not about politics,” Barbour said in an interview. “I do not think any group would put purity on issues like this in front of victory.”

The very fact that the prospect of including a Fed audit plank in the platform is on the table illustrates the degree to which Romney’s allies are trying to harness -- rather than openly defy -- grassroots support for Paul at the convention.

Most Popular

On the platform committee Web site the Republican Party launched last month, proposals to audit the Federal Reserve are among the most popular. Paul supporters say they’ve gotten little resistance as they pitch the idea to fellow delegates around the country. Several state Republican parties, including those in Idaho, Iowa, Nevada, Texas and Wisconsin, have platforms calling for an audit or elimination of the Fed.

Romney has chosen his words on the issue carefully, stopping short of siding with Paul even as he cozies up to the retiring congressman and his supporters.

When the House passed the measure last month, Romney posted on the social media site Twitter: “Ron Paul’s ‘Audit The Fed’ bill is a reminder of his tireless efforts to promote sound money and a more transparent Federal Reserve.”

Romney’s rhetoric on the issue has shifted considerably from two years ago, when the former Massachusetts governor noted that the Fed is already subject to audit by an independent firm -- and rejected any move that could lead to Congress dictating to the central bank.

Romney Rhetoric

“Well, the Federal Reserve is audited, I presume, by independent auditors,” Romney told a questioner who stopped him on the street in Manchester, New Hampshire, in August 2010 and asked his position on Paul’s legislation, according to a video clip of the exchange circulating on the Internet. “The question is really, should the Congress oversee the Federal Reserve, and it does to a certain extent, but I do not want to have the Congress calling the shots for the Federal Reserve.”

That’s the “nightmare scenario” Bernanke sketched out for Congress at a July 18 hearing, when he said he was concerned about the prospect that a lawmaker who disagreed with a Fed chairman’s decision to raise interest rates could call for an audit in order to second-guess the decision.

“I think that would have a chilling effect, and would prevent the Fed from operating on the apolitical, independent basis that is so important, in which experience shows is likely to lead to a low-inflation healthy currency kind of economy,” Bernanke told the House Financial Services Committee.

Hubbard Opposition

Glenn Hubbard, the dean of the Columbia Business School who is one of Romney’s lead economic advisers, expressed similar concerns in a July 2009 opinion piece published in the Wall Street Journal, in which he called Paul’s measure a “bad bill,” and said of Congress’s efforts to wield more oversight of the Fed: “This is trouble.”

“The Fed must above all maintain its political independence in conducting monetary policy,” Hubbard wrote in his article, co-authored by Harvard University finance professor Hal Scott, a former American Stock Exchange governor, and Brookings Institution Chairman John L. Thornton, a former Goldman Sachs executive.

Some of Romney’s biggest financial backers share the view. Sander Gerber of Hudson Bay Capital, who attended a June 28 fundraiser for Romney at New York’s Pierre Hotel as well as one in Jerusalem July 30, and has given more than $30,000 over the past year to his campaign and the Republican Party, said some of the central bank’s operations should not be open to audit.

Apolitical FED

“I believe the Fed’s effectiveness hinges on its ability to be apolitical,” Gerber said in an e-mail, adding that he had not studied the issue thoroughly. At the same time, he added, it must “represent the interests of the people. Some things should be audited, other things not.”

Other Romney allies say they expect the platform committee to finesse the issue in a way that satisfies Paul and avoids a public feud without ceding the power to dictate the party’s message to a candidate who didn’t earn enough delegates to contend for the nomination.

“They will find a way that accommodates some of his concerns and recognizes that he worked hard and ran a good campaign that struck a chord with people,” said Steve Duprey, a New Hampshire Republican National Committeeman. “But if you lose, you don’t get to write the platform -- that’s the way this works.”

(For more campaign news, see ELECT.)