As Ben Bernanke’s confirmation hearing begins in the Senate Banking Committee, a source tells FDL News that one Senate staffer and an outside source confirmed to him that at least one Republican on the committee will also place a hold on the Federal Reserve chairman, throwing the process into potential turmoil and giving Chris Dodd a difficult series of choices to make.
Dodd, who just announced his intention to vote for Bernanke’s confirmation in the Banking Committee and on the floor of the Senate, would be in charge of the decision to honor or ignore that hold. The fact that Dodd tried to place a hold on the FISA Amendments Act in 2007-08, and was generally ignored by Harry Reid, just adds a layer of irony to the process.
The source, speaking on condition of anonymity because of his work behind the scenes on the Bernanke confirmation, told me that two separate sources assured him that the Republican hold would be made public after today’s hearing. One staffer said that two Republicans would place the hold, while the other said it would just be one. The source said that the trans-partisan nature of opposition to Bernanke, with a conservative Republican and a socialist independent uniting to block the appointment, shows the intensity of the feelings on the issue. “It’s great to see everyone come together – Democrats, Republicans, progressives and libertarians, against this Federal Reserve, which is not federal, and not a reserve, just a group printing money and giving it to their buddies,” the source said.
While most people think that the multiple holds would delay the process, it’s unclear whether or not it would succeed. Dodd would probably have the discretion to roll over the hold in committee, though he may be reluctant to do so, experts in Senate procedure said. Harry Reid could also seek cloture on the motion to proceed on Bernanke’s nomination on the floor, which would require 60 votes.
At the very least, this delay and the publicity surrounding bipartisan opposition to Bernanke would bring attention to the issue of the Federal Reserve and the desire for transparency, like the movement to audit the Fed. That provision has already passed in the large financial reform bill in the House Financial Services Committee, and Barney Frank said yesterday that he didn’t expect any changes to the bill as it passed the House, citing the public anger over the issue of transparency. There is language on Fed audits in the draft financial reform bill written by Sen. Dodd, which also strips the Fed of some of its power, but it is not the same as Bernie Sanders’ audit the Fed bill, which has as many as 30 cosponsors.
The source, who has been working on the Federal Reserve issue for five years, marveled at how the issue has gained so much new attention during the financial crisis. “Up until last year, nobody knew what the Fed was. Ron Paul got 5 co-sponsors on his audit bill when he first introduced it, and now we have 300.”
Sen. Dodd’s office has not yet responded with a comment.
UPDATE: Bernanke just addressed the auditing issue in his opening statement, saying that the Fed is highly transparent. He cites the detailed minutes from FOMC meetings, quarterly projections, public financial statements and balance sheets. He said that their financial activities are subject to review by an Inspector General, and that the Government Accountability Office can audit the Fed’s operations “except for monetary policy in related areas explicitly exempted by a 1978 provision passed by the Congress.” He said that this protects the Fed’s independence and resists short-term political pressures.
Something tells me that’s not going to be good enough.
UPDATE II: Progressive economist Dean Baker of CEPR and Libertarian Mark Calabria of Cato have an op-ed out today calling for more transparency from the Fed before confirmation of Bernanke, particularly transparency in the Fed’s policy in allowing the housing bubble to inflate.