Today, the Senate Banking Committee voted to confirm Janet Yellen as the next Chairman of the Board of Governors of the Federal Reserve. Republican Senators Coburn, Corker, and Kirk joined with Democrats in a 14-8 vote. [Correction: the post erroneously added Senator Vitter to the list. He voted no. Vitter has always been a leader in pushing for transparency at the Fed and has pushed for votes on auditing the Fed in previous sessions.]
Thanks to a complete lack of oversight by Congress, the Fed has now become an autonomous fourth branch of government with complete power over the economy and the prerogative to pick winners and losers.
Of all the current members of the Federal Open Market Committee (FOMC), the governing board of the Federal Reserve, Yellen is the strongest proponent of endless monetary stimulus and manipulation. At the confirmation hearing, Yellen opposed any form of congressional oversight and transparency, intimating that the Fed should be completely inoculated from outside pressure. She evidently believes the Fed should serve as the Supreme Court of the economy.
It is amazing how the Fed has quadrupled its balance sheet since 2008, engendering real negative interest rates when coupled with near-zero percent Federal Funds rates – all to service expansion of government as cheaply as possible. Yet, few people are even demanding that we audit such a powerful institution.
Yellen has not explained how she plans to unload the massive balance sheet in a stable manner.
She has not shown us an end-game for endless reliance on monetary morphine.
She has not committed to ending the precedent for distorting the housing market with perennial purchases of mortgage-backed securities.
This is not democracy in action. Republicans should block Yellen’s nomination on the Senate floor unless Democrats agree to allow the GAO to audit the Fed. Especially after Harry Reid pulled the nuclear option on judicial nominees, there is no reason for Republicans to hand them the Yellen confirmation on a silver platter.