Yeah, they already have internal audits that they're required to provide to Congress, who then take that and exert control over taxation.
When they say, "Audit the Fed" they mean they wanna see EVERYTHING. Absolutely everything lent to whom, what banks asked for money, etc.
Currently the Federal Reserve ensures the stability of banks at the cost of transparency - my understanding is that they give out numbers on what was loaned, but don't provide specific information on which banks asked for loans, because that kind of information would both subject banks to whims of the market (investors would be able to see which banks were asking for money and jump ship accordingly) AND make them less likely to ask for money when they really need it. It would be nice to understand in more detail which banks were going to the Fed responsibly for money, BUUUUT… the Fed is pretty forthcoming considering it has the annual audit, weekly balance sheets, and a few other tools. The question is whether knowing more than that is a good thing.
The big problem with auditing the Fed is that the Federal Reserve shouldn't be directly subject to political whims of whoever is currently in charge.
A Congress that can "Audit the Fed" in the kind of detail that many in Congress (especially Republicans but also many Democrats) are advocating for can put pressure on the Fed to change interest rates for short term political gain.Which is Very Bad.
Is it really that bad by itself? From what I understand of your post, the Federal Reserve does an audit but only releases selective information to the Congress. Who decides how much they want to release? What if there are vested elements inside the Federal Reserve that release information that can help them push a certain agenda with the Congress? By doing a full audit, you are giving lawmakers more information to aid their decision making. Are you sure the requirement of transparency is really at the cost of the stability of banks? Remember this information is only being released to the Congress, not to the public at large. I'm not sure if the Congress is legally/constitutionally bound to release this information to the public. Are they? And if they are, they can always choose to release the information after a delay, when the immediate impact the information can have has been mitigated. Audits don't put the Fed under the direct political whim of anyone. Audit is just a collection and release of information. Checks and balances. The Congress always pushes the Fed according to it's political agenda, I'm not sure how a full audit affects that anyway. I feel the benefits of such a move more than outweigh it's potential drawbacks.
What needs to be ensured is that the Fed be given enough safeguards so that it can work outside of the political interference of the Congress. In such a framework, a full audit is definitely a beneficial exercise. Checks and balances.
