CNBC’s Regan Worries 'Freshman Congressmen from Timbuktu' to Have Too Much Policy Influence if Fed Audit Bill Passed

November 20th, 2009 8:51 PM

It's an issue that libertarian Rep. Ron Paul, R-Texas, and Sen. Bernie Sanders (I-Vt.), a self-proclaimed socialist agree on: Congress should have the authority to call for the Federal Reserve to be audited.

But it is also something that some in the financial media are reluctant to support, especially judging from the tone of CNBC "The Call" co-host Trish Regan and comments CNBC senior economics reporter Steve Liesman. On the Nov. 20 broadcast of "The Call," CME Group reporter Rick Santelli made the case that Federal Reserve should be audited. He cited opposition to the Fed audit proposal from Sen. Judd Gregg, R-N.H., which was based on Congress' inability to be fiscally responsible.

"He said, ‘You know, there independence is important to protect the soundness of the dollar,'" Santelli said. "Has he read any papers lately or looked at any charts? Come on. Amen, amen that this process is happening. They're not taking away their independence to make a decision on interest rates. We need to know where the money is going. I remember when Ben Bernanke faced committees of elected officials and said, ‘We can't audit the Fed because then you might look unfavorably on some of the counterparties we deal with. That's like finding paraphernalia under your kids bed and then not asking where he got it."

That prompted Regan to ask Santelli a question that contained a tinge of elitism.

"Do you really want one of these freshman congressmen from Timbuktu having a big say in Fed monetary policy?" Regan asked. "Do you think that's the right thing?"

Santelli reaffirmed his position and said he didn't believe an audit would impact monetary policy.

"I want them audited," Santelli said "The congressman you're talking about isn't going to impact whether they raise or lower rates. We're just going to get a better glimpse as to who's involved with the Fed and any clarity - if it's one-one-millionth it's better than nothing."

CNBC senior economics reporter Steve Liesman shared Regan's concern and warned of unintended consequences should Congress have the authority to call for an audit and proposed a "freshman congressman" could call for an audit days before a Federal Reserve meeting and create a "chilling effect" when rates were to be raised.

But "The Call" co-host and host of "The Kudlow Report" dismissed that concern and explained the audit wouldn't occur immediately.

"In fairness, whatever your view is on the bill, the bill has a six-month lag on the audit," Kudlow explained. "It would not affect current meetings."