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Michael Cox, economics professor at Southern Methodist University who formerly served as the chief economist at the Dallas Fed.“But the Fed was created by Congress, and it can be uncreated by Congress.” But some members of Congress would like to see more transparency. Rand Paul (R-Kentucky) in January reintroduced the “Federal Reserve Transparency Act,” colloquially referred to as the “Audit the Fed” bill.The Federal Reserve’s work can often be mind-bendingly complex.
These long-term home loans are most notably dictated by market-driven factors, such as the 10-year Treasury yield. During the financial crisis, the Fed slashed its fed funds rate to near-zero, and it still wasn’t enough to stimulate the economy. Fed Chairman Ben Bernanke devised a plan to start buying Treasuries and mortgage-backed securities to make that happen, an initiative commonly known as “quantitative easing.” [READ: Everything you need to know about the Federal Reserve’s balance sheet – and how it could impact you] A Fed rate hike also probably seems like it would be a punch to the gut for the millions of Americans carrying student loan debt.The legislation was previously floated by his father, Ron Paul, a former Republican representative from Texas.The bill calls for the nonpartisan, independent Government Accountability Office (GAO) to run additional audits of the Fed, including “its transactions for or with foreign central banks, governments of foreign countries, or non-private international financing organizations,” the bill states.But in reality, the Fed is audited, and it has an immense amount of oversight, even though it is technically independent from Congress.In other words, just because officials can choose to raise or lower interest rates as they see fit, doesn’t mean they don’t have to follow the rules.