Bernanke: Anti-Fed Laws Could 'Seriously Impair' U.S. Economy

Ben BernankeFederal Reserve Chairman Ben Bernanke has fired back at current Congressional proposals to strip away at the Fed’s time-honored functions and regulatory authority, asserting that the measures would “seriously impair” prospects for U.S. economic stability.
In a column dated for this coming Sunday, that appears currently on the website of the Washington Post, Bernanke is adamant in defending the Fed’s role and response to the financial crisis, the worst economic breakdown since the Great Depression. 
“…Congress is still in the midst of considering how best to reform financial regulation,” Bernanke writes. “I am concerned, however, that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions…These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States.”
Bernanke added that the Fed played a significant role in arresting the financial crisis, and “we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation.”
The Federal Reserve, the nation’s primary banking regulatory agency, has been the target of many in Congress concerned about potential taxpayer losses stemming from the sweeping bailout programs of the past 14 months. Both the House and the Senate are considering legislation to overhaul regulatory financial oversight, the largest threat to the existing structure of the Fed since the creation of the institution in 1913.
Last week, the House Financial Services Committee passed an amendment that would have the Government Accountability Office, the investigative arm of Congress, conduct audits of all the Fed’s  operations, including emergency lending programs, bailouts of financial institutions, dealings with other central banks and the Fed’s decision-making in setting interest rates. The amendment is part of the larger House financial oversight legislation; however, it is unclear how far legislators would allow the audits to proceed.
Bernanke conceded that the proposed measures are, in large part, a result of public anger over the financial rescue of some financial institutions.
“The government’s actions to avoid financial collapse last fall — as distasteful and unfair as some undoubtedly were — were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society,” Bernanke writes.
Bernanke staunchly defended the skills and experience of those working for the Fed, both staff and consultants, explaining that he is “supplementing bank examination staffs with teams of economists, financial market specialists and other experts.”
This expertise “is essential for supervising highly complex financial firms and for analyzing the interactions among key firms and markets,” he said. 
“We have come a long way in our battle against the financial and economic crisis, but there is a long way to go,” Bernanke concluded. “Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation.”
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