May 28, 2010 1:29PM

Public Wants Fed Audit

A new Rasmussen poll has 80% of the American public supporting an audit of the Federal Reserve. Only 9% of the public oppose, with the rest unsure.

Unfortunately the poll did not ask specific questions over whether such an audit should cover monetary policy or just the Fed’s 2008 bailout activities. So while the poll is likely to keep pressure on Congress, during its conference negotiations over financial regulation, to retain some audit of the Fed, the likely result is that Congress will leave out any real, on‐​going audit of monetary policy. 

After Sen. Bernie Sanders essentially gutted his own amendment, Senator Dodd and the Obama administration agreed to a minor audit of the Fed’s emergency lending programs. Ron Paul, sponsor of the House version of the audit, quickly labeled this as a “sell‐​out”. Fortunately Congressman Paul looks to be a House conferee on the bill, so some hope remains of a full audit being included.

Opponents of a Fed audit claim this would undermine the Fed’s political independence. Sadly what opponents, including many economists, are missing is that the Fed is currently far from independent of politics. This is again an area where the public gets what the experts miss, as just 20% of poll respondents thought the Fed has acted independently. A full 60% felt the Fed was too much influenced by the President, getting at a crucial point concerning Fed independence: it is independence from the Executive branch that is critical.