WASHINGTON — Federal Reserve Chairwoman Janet Yellen faced criticism Wednesday that the central bank—and her monetary policy—is too politically influenced.
Rep. Scott Garrett, R-N.J., said her numerous meetings with President Barack Obama and Treasury Secretary Jacob Lew show that the Fed is “making decisions clearly on a partisan, political basis.”
“It paints a pretty damning picture, I think,” said Garrett, a member of the House Financial Services Committee that questioned Yellen. “The Fed already has been completely immersed and guided by partisan politics.”
Yellen adamantly denied the claims, saying it was a “complete mischaracterization” of her meeting schedule.
Like her predecessors, Yellen said she meets with a “wide range of groups,” but maintains the independence of the Fed from political pressure. She said she only discusses general economic issues with Lew, not monetary policy.
The criticism comes in light of Kentucky Republican Sen. Rand Paul’s push to “Audit the Fed,” which would subject the Fed’s monetary decisions to increased oversight from Congress’ investigative arm.
Yellen strongly opposes “Audit the Fed” legislation, which she said would impose undue political pressure on the central bank.
“It’s obviously critically important that the Federal Reserve be accountable to Congress. We are accountable to Congress,” said Yellen, emphasizing that the Fed already complies with congressional oversight.
But Republicans are looking for reform — and Yellen is unlikely to escape the pressure for change.
“I for one believe Fed reforms are needed, and I for one believe Fed reforms are coming,” said Committee Chairman Jeb Hensarling, R-Texas.
Rep. Bill Huizenga, R-Mich., suggested that Yellen report to Congress four times each year rather than twice. Yellen said she was open to that suggestion.
Further oversight, Yellen made clear, will be less welcome.
Paul has reintroduced his “Audit the Fed” bill with 30 co-sponsors. Although a similar bill was passed by the House last year, it went nowhere in the Democrat-controlled Senate.
With Republicans now in control, the bill’s fate largely rests in Senate Majority Leader Mitch McConnell’s hands. It is unclear whether McConnell, the senior senator from Kentucky, will make it a priority.
“Do we want the same Congress that cannot fund Homeland Security in control of the Fed?” said Rep. Al Green, D-Texas. “I think it’s important for us to have opportunities for transparency, but not at the expense of the independence of the Fed.”