According to a report in TheHill.com, Bernanke used his appearance yesterday before the House Financial Services Committee to fight efforts that would make the Federal Reserve subject to auditing by the Government Accountability Office (GAO). Bernanke warned that such audits would compromise the central bank's independence and open it to political machinations.
‘The nightmare scenario that I have is one in which some future Fed chairman would decide to say, 'Raise the federal funds rate by 25 basis points,' and somebody in this room would say, 'I don't like this decision and I want the [GAO] to go in … and give us an independent opinion of whether or not that would be the right decision,'’ Bernanke told the committee, adding that GAO oversight would have a ‘chilling effect’ on the central bank's operations and effectiveness.
Bernanke stated that he supported the notion of transparency, but that Paul's legislation – which has 271 co-sponsors and was approved by voice vote by the House Oversight Committee last month – was the wrong approach to the subject.
‘I think the term 'audit the Fed' is deceptive,’ he said. ‘The public thinks auditing means checking the books [and] making sure you're not doing special deals.’