The Washington Post took a shot at the Rep. Ron Paul led, bipartisan coalition in Congress to audit the Fed. The proposal, which has 276 co-sponsors in the House and 17 supporters thus far in the Senate, as rallied by avowed socialist Sen. Bernard Sanders, would give the Government Accountability Office authority to conduct a comprehensive audit of the Fed's use of money. Their argument is that, given the trillions spent and loaned by the Fed over the past 18 months, the time has come to make them accountable to the American public.
Fed Chair Bernanke argues that the threat of such an audit disturbs the important independence the Fed has. The WaPost agreed saying:
The Federal Reserve Board's independence is a bit like the judiciary's independence. Absolutely vital for the institution's proper functioning, it nevertheless depends on Congress and the president to respect decisions with which they disagree. In such cases, the best protection for either the Supreme Court or the Fed is to stay strictly within its legally prescribed authority and to act according to principled criteria: legal ones for the justices, technical economic ones for the central bank. [...]
By opening up the Fed's most sensitive interest rate and credit policies to public second-guessing, the bill would create a risk -- real and perceived -- of monetary policy bent to suit congressional overseers. This would destroy financial markets' faith in the Fed and, by extension, the value of the U.S. dollar...
But the question really is, does the proposed GAO audit of the Fed constitute a threat of its independence. The audit is not an attempt to control interest rates. The audit would not make monetary policy recommendations the Fed would be forced to follow. The audit would simply provide an outside perspective. Congress doesn't need a tool to intimidate the Fed into changing rates since the Fed isn't completely independent. Now, I'm not sure what Congress plans to do after the GAO audits the Fed, but if there is any debate here, it should be over the value of transparency itself.
And again, as I wrote a couple weeks ago: the Fed isn't perfect, but I'd rather a less politically engaged body be setting monetary policy than Congress.