McCaskill & The Federal Reserve

I recently wrote McCaskill about the Federal Reserve.  She always responds at least with a mass mailer, and that is what I got today in my e-mail.  I thought I would post the letter for all to read here:

September 9, 2009

Dear Mr. PunkJohnnyCash

Thank you for contacting me regarding the Federal Reserve (Fed). I appreciate hearing from you, and I welcome the chance to respond.

As you know, the Federal Reserve has been active in U.S. monetary policy and bank regulation since it was established in 1913. Its decisions regarding interest rates have a significant impact on inflation, growth, and other aspects of the economy.

Recently, the Federal Reserve’s emergency powers, enumerated in the Federal Reserve Act, to lend in “unusual and exigent circumstances,” have caused some concern. The Fed has taken several actions, such as issuing guarantees on short term corporate debt (also known as “commercial paper”), providing inter-bank loans, and further providing a substantial amount of credit to institutions like AIG that are in danger of failing.

Missourians are right to be concerned about transparency and accountability at the Fed. By law and by custom, it is meant to be independent and free of political influence. I support this independence. However, given the concentration of economic power currently housed at the Fed, it is more important than ever for the Fed to operate in a transparent and accountable manner. With this concern in mind, several bills have been introduced in Congress to increase transparency and accountability. They include, for instance, the Federal Reserve Sunshine Act, which directs the Comptroller General to complete an audit of the Federal Reserve and report the findings to Congress. I will be watching the progression of proposals like this closely. Please also know that I will be sure to keep your views in mind when considering this or any other relevant legislation considered by the Senate.

You may be interested to know that I have been working hard in the Senate to fight waste, fraud, abuse throughout the federal government. I chair the Subcommittee on Contracting Oversight which seeks to root out mismanagement and waste in government contracting, a trillion dollar industry. I have passed legislation that strengthened the federal system of Inspectors General (IGs), which are the taxpayers’ first line of defense against waste fraud and abuse. This was the most significant IG reform since the IG system was created over 30 years ago. I have also worked to defend IGs when their authority has been questioned. For instance, when the authority of the IG overseeing emergency stabilization funds for the banking system was questioned, I won passage of a law reinforcing his ability to effectively oversee the those funds.

Again, I share your interest in transparency in government and at the Fed. Thank you again for contacting me. I hope you will continue to reach out in the future with your thoughts and advice.

Sincerely,
Claire McCaskill
United States Senator