U.S. Rep. Barney Frank's (D-Mass.) House Financial Services Committee has voted in favor of a proposal to have the Government Accountability Office audit the Federal Reserve, according to the Associated Press. But in my view, auditing the Fed is a thinly veiled first step toward wiping out the Fed, or at least diminishing it through political meddling. And since going back to a world without a properly functioning U.S. central bank is not a realistic option, Fed critics need to think carefully about how we can best regulate the financial markets before they start interfering with one of our most important regulatory institutions.
Before getting into why we shouldn't audit the Fed, a brief word on Rep. Frank. Last year, I appeared on a Boston-area TV program right after Frank. As I was sitting in the green room waiting to go on to the set, I was told I had to evacuate immediately. The reason? Frank wanted the green room for himself -- alone. When Frank slowly made his way onto the set, where I was sitting, he completely ignored me and made it clear he did not want to interact with anyone but the fellow interviewing him. Frank ended up taking up all but five minutes of my allotted time. To be fair, he had many interesting things to say.