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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: Charles Macdonald who wrote (19051)	9/1/2009 6:54:19 PM
From: I_C_Deadpeople	Read Replies (1) \| Respond to of 50005

I essentially agree (I am a CA and a former auditor), but I would venture a guess that the Fed is WELL prepared for any audit. Companies can hide a lot of things. Public accountants have been impotent in the new financial world so again, I ask, who would do such an audit? Anyone remotely related to the government is tainted.

To: Charles Macdonald who wrote (19051)	9/2/2009 7:48:20 AM
From: fred woodall	1 Recommendation Read Replies (2) \| Respond to of 50005

Examining The Fed's Actions -------------------------------------------------------------------------------- Tue Sep 01 21:13:04 2009 EDT (From THE WALL STREET JOURNAL) By Peter Eavis [Financial Analysis and Commentary] Why shouldn't Congress overhaul the Federal Reserve? Support is growing for legislation to broaden Congress's scrutiny of the central bank. Many on Wall Street oppose such moves, believing they would lead to politicians meddling with monetary policy. However, there is plenty of room for changes that make the Fed more accountable while stopping short getting Congress involved in setting interest rates. Over recent decades, the need to guard central-bank independence has become widely accepted. Few politicians wanted to add to existing opportunities for scrutiny, like the Fed's semiannual report to Congress on monetary policy. However, over the past year, there has been a groundswell of support for greater Fed accountability. The reasons: The Fed allowed the housing bubble to inflate and bank balance sheets to deteriorate; the central bank has ballooned its own balance sheet to support credit markets; and now the Obama administration wants to give the Fed more power to regulate the financial system. That has helped create backing for a bill from Rep. Ron Paul to subject the Fed to a special congressional audit. What might sensible reforms look like? First, the Fed's mission needs to be more holistic -- to also take into account asset prices and financial sector stability. Right now, monetary policy focuses on promoting maximum employment, stable prices and moderate long-term interest rates. The Fed more or less achieved those goals from 2003 through 2006, yet in that period a destructive credit and housing bubble developed. Fed supporters correctly point out that it is difficult -- and potentially counterproductive -- to target asset prices. And they add: Higher capital ratios for banks, a possibility under the Obama overhaul, could theoretically ensure financial stability through a bubble. But sometimes an interest-rate response could be necessary, especially when the rising asset is widely held, like housing, and risks causing distortions in the economy. Large moves in asset prices should become an important part of the mix when weighing all the evidence to set interest rates. As for higher capital ratios, on their own they don't necessarily stop banks from financing frothy asset purchases, and becoming vulnerable in the bust. For instance, at the end of 2006, bank equity as a percentage of assets was at its highest level in at least 15 years, according to the FDIC. Reforms to improve accountability also make sense. If the Fed fails to meet a reasonable set of goals, Congress should have the power to demand an explanation of what went wrong, and how the Fed intends to avoid a repeat. In New Zealand, such a system even allows for the dismissal of the central bank head. A better Fed means a better economy. Who wouldn't want that?