In a speech at the Economic Club of New York in New York City on Wednesday, Federal Reserve Bank of Dallas President Richard Fisher's reflections on his decade with the Fed included his insistence that monetary policy should not be politicized.
Fisher drew on his experience of sitting in on 78 regular meetings and 18 special meetings of the Federal Open Market Committee (FOMC) in the last decade in presenting his vehement argument that the Fed should be independent, as was the stance of former Fed Chair Paul Volcker. Fisher told the audience that Volcker was "the George Washington of monetary policy—the very exemplar of the leadership and integrity and dedication that needs to be the inviolable hallmark of every central banker who follows in his footsteps."
Following his praise of Volcker, Fisher continued to assert his stance against the politicization of monetary policy by attacking S.264: The Federal Reserve Transparency Act of 2015, a bill commonly known as "Audit the Fed" introduced in the Senate last month by Senator Rand Paul (R-Kentucky). The bill calls for complete transparency from the Central Bank and has drawn severe opposition from many, including current Fed Chair Janet Yellen, who have vowed to resist any legislative attempts to further scrutinize the Fed's activity. Previous Audit the Fed bills introduced have never made it out of both the Senate and the House.
Fisher quoted from a book by John Lanchester entitled How to Spend Money that described the Bank of England as something outsiders see as "a cross between Hogwarts, the Death Star, and the Office of Ebenezer Scrooge." Fisher likened those pushing for an Audit the Fed bill to those "outsiders" referred to in Lanchester's book, calling them "wolves in sheep's clothing" who have "failed at their job" and find it "convenient to create a boogeyman out of an entity that does its job efficiently."
"It is always politically convenient to make something sound mysterious, if not malevolent, by claiming it is opaque," Fisher said. "Which is precisely what is happening now with Senate Bill 264. The operations and finances of the Board of Governors and the 12 Federal Reserve banks are already audited up the wazoo. As to policy, as soon as our deliberations at the FOMC conclude, we report to the public what we decided. We publish a thorough review of what we discussed—and all views are considered, even those of dissenters like Richard Fisher—in the form of minutes of every FOMC meeting three weeks after we meet. And we subject our Chair to a no-holds-barred press conference on a quarterly basis. All of this alongside frequent speeches and press interviews by the 12 Federal Reserve Bank presidents, who voice their independent views."
Fisher expressed his confidence that leading Republican lawmakers would not "meddle" in monetary policy by pushing an Audit the Fed bill.
"I am personally confident that responsible senior senators and congressmen like Sen. (Richard C.) Shelby of Alabama, who chairs the Senate Committee on Banking, Housing and Urban Affairs, and Congressman (Jeb) Hensarling, the Texan who chairs the House Financial Services Committee, can prevent any meddling with monetary policy while understanding the need for their colleagues to vent and score political points," Fisher said. "'Audit the Fed' is nothing more than an attempt to override purely economic judgments and bend monetary policy to the will of politicians. It is misguided. I pray we don’t go there. I can think of nothing that would do more damage to our nation’s prosperity."