Philly Fed chief slams audit bill as ‘political interference’

The outgoing president of the Philadelphia Federal Reserve in his final public speech on Tuesday denounced the “Audit the Fed” proposal championed by Sen. Rand Paul (R-Ky.).

“This proposal … is an attempt to reduce the independence of the central bank through the threat of a political action in real time,” President Charles Plosser said in remarks in Philadelphia.

{mosads}Plosser said the “Audit the Fed” legislation subjects the central bank to “political interference.”

“History is replete with examples of what happens when central banks are not independent or become agents for a nation’s fiscal policy,” he added, pointing to Germany between the world wars, among other nations.

“The consequences — higher inflation, currency crises and economic instability — are not good,” Plosser said. “This is why so many countries have structured their central banks with a great deal of independence from political interference.”

Plosser’s criticism of the proposal, which would allow for increased congressional oversight of the central bank, is the latest from Fed officials who are going on the offensive against the plan.

“Americans have a long history of suspicion toward the concentration of authority,” Plosser concluded. “So, Congress has created a uniquely American form of a central bank to find a middle ground between centralization and decentralization, between the public and private sectors, and among Washington, Wall Street and Main Street.”

Paul, a potential 2016 GOP presidential contender, has fundraised off the Fed legislation, raising more than $88,000 earlier this month for his political action committee.