Dallas FED Official: Keep Fed policy out of GAO’s hands, By AARON LONDON, Staff Writer, Dayton Beach News Journal Online - January 30, 2010
Richard W. Fisher, president and chief executive officer at the Federal Reserve Bank of Dallas, in a speech at the annual meeting of the Waco Business League said it is up to Congress to bring the nation back to fiscal sanity “and I pray its members will find the resolve and the support from their constituents to get it done.” While that is something Congress should be doing, Fisher said efforts to require audits by the General Accountability Office of Fed monetary policy decisions are not something he wants to see.

“I suppose another set of eyes might provide further confidence regarding our holdings,” he said. “But making the discussions held by me and my colleagues at the FOMC subject to congressional second-guessing or creating a process where bank presidents and their politically independent boards have to worry about satisfying Washington powers rather than representing their districts’ views . . . can only lead us straight to the fate that was suffered by once great economies like pre-Weimar Germany and pre-Peron Argentina.”

Fisher said he did not hold the Fed blameless for the financial crisis, reiterating his long-held position that interest rates have been too low for too long, fueling speculative activity. “This does not mean that those who dwell in the political realm should try to fix the problem by throwing themselves into the monetary mix,” he said. “We should not now politicize an institution that, in the turbulence of this period, pulled our economy back from the brink of the abyss and has taken significant steps to repair the holes in its regulatory and supervisory apparatus.”

In a blunt and direct assessment of what could happen if Fed monetary policy decisions are subject to GAO review, Fisher said the consequences could be serious. “It will indeed lead us down the path to the politicization of the central bank of the world’s greatest economy, putting the United States on a road that leads directly to financial ruin,” he said.

This full text of Fisher’s remarks are at Risks to Sustained Economic Recovery (With Lessons Learned from Winston Churchill and Teddy Roosevelt Remarks before the Annual Meeting of the Waco Business League; Waco, Texas - January 12, 2010