A growing effort in the House to require periodic audits of the Federal Reserve is little more than "great PR," one Republican senator stressed Friday.
Reps. Ron Paul (R-Texas) and Alan Grayson's (D-Fla.) effort to subject much of the Fed's records, communications and decisions to public scrutiny survived a key committee vote this week, and it now over 300 supporters in the House. But Sen. Judd Gregg (R-N.H.) told CNBC Friday morning that the amendment was little more than "pandering [to] populism."
"For the Congress to get into monetary policy, it's just absolutely inexcusable," he said. "We can't handle fiscal policy, but now we want to manage monetary policy? One of the great strengths of our nation is an independent Fed, and this idea that's coming out of the House, which is populist fervor ... is absolutely wrong, and it would do fundamental damage to our system of monetary policy."
"They're all absolutely wrong, there's no question about it, and [it's] because they want to get reelected," a frustrated Gregg added. "It's great PR; you go home and beat up the Fed."
Ultimately, Gregg's remarks on Friday perhaps indicate that the House's provision on Fed audits could be a key sticking point when both chambers vote on financial regulatory reform later this year.
While a reform bill with Paul's amendment intact seems likely to pass the House, it is not clear whether that amendment will have a similar fate in the Senate. The audit proposal could thus become yet another sticking point chamber conferees will have to hammer out, assuming the bills progress to that stage.
At the very least, however, Gregg has signaled an unwillingness to vote for any variation of such an audit. He maintained on Friday that it would undermine the country's monetary policy, and he attributed its growing popularity to a dangerous, "William Jennings Bryan philosophy of governance" taking hold in Congress.
"We can't allow it to be successful because if we do, we will undermine one of great strengths, which is that we have an independent Fed which maintains the soundness of the dollar," he said. "And that is absolutely critical — not only to us, but the world."