By Peter Schroeder - 11/24/10 04:53 PM EST
Although supportive of the Fed's policies, Zandi, whose work has been frequently cited by the Obama administration, said the bank could have done a better job explaining why it was taking these steps.
"They needed to be clearer up front with how they expected [quantitative easing] to benefit the economy, what the downsides were and if people had that framework, then maybe some of this might not have happened," he said.
The Fed's decision to buy $600 billion of Treasury bonds in an effort to boost lending has been widely criticized by Republicans and will be subject to a hearing next week hosted by longtime liberal Fed critic Rep. Dennis Kucinich (D-Ohio).
Some Republican lawmakers have suggested the Fed's dual mandate of maximizing employment and controlling inflation be cut in half, leaving the central bank focusing just on inflation.
But Zandi said the Fed would likely be pursuing the same policies it is now under a single mandate, but removing the Fed's obligation to focus on employment could send a distressing message to the American public.
"It may send an unfortunate signal to the broader population that the Fed's only purpose going forward would be on inflation and not on their plight in finding a job," he said. "This is perhaps a debate for another day when the economy is functioning more normally."
Rep. Ron Paul (R-Texas) is expecting to take over the House Financial Services subcommittee charged with overseeing the Fed, with many expecting him to use the position to renew his push for an audit of the central bank.
Zandi noted that "audits are not a bad thing per se," but added that any examination of the Fed would have to be "well defined and focused."
"It's the independence of the Fed that is the bedrock of the financial system and the economy," he said.