WH official: 'Audit the Fed' bill is 'dangerous'

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One of President Obama’s top economic advisers said Tuesday he opposed “dangerous” legislation that would give lawmakers closer scrutiny over Federal Reserve deliberations.

Jason FurmanJason FurmanCongress must repeal the debt limit so no party can take it hostage Former WH economists argue steel tariffs would hurt US economy, diplomatic ties Economy adds 222K jobs in June, beating expectations MORE, chairman of Obama’s Council of Economic Advisers, called pending legislation subjecting monetary policy deliberations to outside review “somewhere between superfluous and highly counterproductive.”

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He added that he would encourage President Obama to oppose the bill if it reached his desk. That opposition could be noteworthy, as previous efforts have stalled in a Democrat-led Senate, which is now in GOP control.

Furman argued that the bill, presented by its proponents as a needed check on the central bank, would effectively allow lawmakers critical of the Fed to second-guess its moves.

“What that bill is about is about Congress supplanting its judgment as to what monetary policy should be,” he said in an interview with Bloomberg TV. “Congress shouldn’t be telling the Fed what to do with monetary policy.”

Sen. Rand PaulRand PaulOvernight Defense: Military won't lift transgender ban until Trump sends directions | House passes national security spending | Russian sanctions bill heads to Trump Overnight Cybersecurity: Senate sends Russia sanctions bill to Trump | Senators unveil email privacy bill | Russia tried to spy on Macron with Facebook Senate sends Russia sanctions bill to Trump's desk MORE (R-Ky.) reintroduced legislation earlier this month that would subject the Fed to external audit of its monetary policy deliberations. The central bank’s financial operations are already subject to outside oversight, but Fed critics in and outside of Congress have pushed for years to allow for a policy review as well.

Since taking unprecedented action during the financial crisis and ensuring recession, the Fed has weathered significant criticism from conservatives, who argue its extremely relaxed policy is ineffective and could expose the U.S. to damaging inflation.

The bill already has 30 cosponsors, and similar legislation has passed the House several times in recent years with bipartisan support. Fed audit efforts stalled in previous Congresses when Senate Democrats refused to take up the bill.

But with Republicans in control of both chambers of Congress, there could be a new effort to advance legislation to the president’s desk.

Sen. Elizabeth WarrenElizabeth WarrenSenate heading for late night ahead of ObamaCare repeal showdown Dem senators 'seek assurances' Icahn not swaying regulators on AIG: report Maryland Dem considering bid to take on Trump MORE (D-Mass.), a high-profile populist on financial issues, announced her opposition to a Fed audit bill Tuesday, saying it would amount to “congressional meddling.”

Fed officials are frequently reticent to criticize lawmakers, but have been aggressive in opposing “Audit the Fed” legislation. They have argued that allowing lawmakers to demand reviews of policy decisions could subject the Fed to political pressure, and make it less effective.

Fed Chairwoman Janet Yellen has said she would oppose such legislation, and Fed Governor Jerome Powell called the proposals “misguided” in remarks Monday.

“I am concerned about several troubling proposals that would subject monetary policy to undue political pressure and place new limits on the Fed's ability to respond to future crises,” he said.

Despite those protests, bills to subject the Fed to that review have found success in recent years. In 2014, the House passed an “Audit the Fed” bill by a vote of 333 to 92, with over 100 Democrats voting in favor of it.