Federal Reserve Chairwoman Janet Yellen downplayed concerns about the central bank’s transparency and accountability Wednesday, saying the Federal Reserve System “works well.”
Speaking at a press conference following the Fed’s monetary policy decision, Yellen appeared skeptical of recent congressional efforts to overhaul the workings of the central bank.
Sen. Rand Paul, R-Ky., has drawn the most attention for his “Fed audit” legislation, which would subject the Fed’s monetary policy decisions to reviews from the Government Accountability Office.
But more recently the Senate Banking Committee, headed by Sen. Richard Shelby, an Alabama Republican, also has investigated changes to the structure of the Federal Reserve System, ones that could receive support from more liberal legislators.
In particular, some lawmakers favor reforming the Federal Reserve Bank of New York, which carries out the Fed’s monetary policy and includes Wall Street banks in its region. Among others, Sen. Sherrod Brown of Ohio, the ranking Democrat on the Banking Committee, has questioned whether the New York Fed is too close to the banks it supervises.
But Yellen rejected those concerns Wednesday.
“I think the Federal Reserve works well,” she said. “The system we have was put into place by Congress decades ago. I don’t think it’s a system that’s broken.”
“I don’t think the system is broken, I think it’s working well, I don’t see need for changes,” she added, “but of course it’s up to Congress to review that.”
Yellen has long experience at the Fed, working on its staff earlier in her career and then returning as a governor, president of the San Francisco Fed, vice chairwoman and now chairwoman.
On Wednesday, she warned that an audit of the Fed’s monetary policy committee decisions would politicize the process, undermining the central bank’s authority. It’s an admonishment she has repeated in recent months in speeches and congressional testimony as Paul’s bill has gained attention.
“We are a transparent central bank,” Yellen said.
At the press conference, Yellen was forced to defend the Fed’s transparency when asked about reports of a criminal investigation into a 2012 leak of details from a Fed monetary policy meeting.
Last week, Bloomberg reported that House Financial Services Committee Chairman Jeb Hensarling said that he had been told by the Fed’s inspector general that there was an ongoing criminal investigation into the source of the leak, and that members of the Fed’s monetary policy committee had caused the inspector general to drop an earlier investigation into it.
“That is an allegation,” Yellen said Wednesday, claiming that as far as she knows it has “no basis in fact.”
News of Fed decisions on interest rates or bond purchases can move global markets. Yellen said that leaks don’t “occur very often,” but if they do, the Fed follows in-house procedures to investigate what happened. The Fed has arranged to brief members of Congress who have inquired about the leak, she said.
