Shelby ‘very interested’ in auditing the Federal Reserve

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January 30, 2015

WASHINGTON — In an interview with Bloomberg Thursday, Sen. Richard Shelby (R-Ala.), the chairman of the Banking committee, signaled support for auditing the Federal Reserve.

“I’m very interested in some type of audit of the Fed, especially their portfolio,” he said. “I don’t want to be a member of the board of governors of the Fed, I don’t think Congress’s role is to be that, but as oversight we should make sure that what they do, that they’re doing right and there are a lot of questions about the portfolio of the Fed coming from [quantitative easing], too.”

Quantitative easing (QE), the Fed’s program of buying assets to increase the money supply, is essentially printing money and lending it to banks at extremely low interest rates so they have more money to lend to their customers.

Auditing the Fed has been a favorite subject of many on the left and right who fear the bank’s massive rounds of QE have been a de facto bailout of large corporations while doing little for the middle class. In recent years the primary voice in the movement to audit the country’s central bank has been Kentucky Senator and Presidential hopeful Rand Paul.

Sen. Paul introduced a bill to audit the Fed Wednesday. “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,” Sen. Paul said in a statement. “The Fed’s currently operates under a cloak of secrecy and it has gone on for too long.”

The Federal Reserve holds an estimated $4.5 trillion in assets after several rounds of QE since the financial crisis, and Congress has little to no oversight.

Fed Chairman Janet Yellen has urged Congress not to conduct an audit of the Fed, fearing it would impede on the Board of Governors’ independence in making decisions on monetary policy.

Sen. Shelby, who views Chairman Yellen as a “lax” regulator, wants to see a long-term plan for ending QE. “My concern about the Federal Reserve right now is the portfolio of the Fed,” said Shelby. “All the bonds, all the securities they’ve bought. What’re they going to do with them, when are they going to deleverage? How are they going to do it? This is unprecedented.”