The Federal Reserve Board rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance.
The Obama administration wanted a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”
Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”
Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director had this to say:
It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study. The Fed was created by Congress and it is not part of the executive branch.
This is just more fuel to the fire for auditing the Fed. H.R. 1207, a bill to audit the Federal Reserve, currently has 290 cosponsors, a 2/3 majority in the House and is scheduled to have a hearing on September 25th.