Last week's approval by the House Financial Services Committee of the Ron Paul-drafted legislation, the "Federal Reserve Transparency Act" (HR 1207) as part of Chairman Barney Frank's financial services "reform" bill, has caused much consternation on the part of the Federal Reserve. Fed Chairman Ben Bernanke reportedly has been plying the Halls of Congress in an effort to convince lawmakers that opening the Fed to even the limited scrutiny HR 1207 mandates would cause the sky to fall. The reality is that bringing meaningful accountability to this powerful, 96-year old private bank than manages our public money supply, will require much heavier lifting by the Congress than a single piece of legislation opening the Fed's actions to limited audit by the Government Accountability Office (GAO).

Since its creation in 1913, the Federal Reserve Bank and its seven Board members have enjoyed a degree of power and autonomy not shared by even the most secret of our foreign intelligence agencies. The president appoints all members of the Fed board, who are then subject to confirmation by the Senate. The chairman and vice-chairman are selected by the president from among the seven board members, and then subject to separate Senate confirmation. While not appointed to life tenure as are federal judges, the Fed board members serve lengthy, 14-year terms.

Although the chairman of the Fed testifies publicly before both House and Senate committees each year, Rep. Ron Paul is correct in noting that such hearings do not in any meaningful way constitute real oversight of the central bank. The "normal" manner in which such hearings are conducted by the huge, 70-member House Financial Services Committee, does not and cannot be structured to provide in-depth, long-term guidance or accountability.

While Ron Paul's proposal would make a dent in the secrecy shield clothing the Federal Reserve Bank, even if it were eventually to pass both houses of Congress, there is no guarantee at this point that President Barack Obama would sign it into law. And even if the president was to do so, the limited degree of public transparency such a law would bring to the venerable Fed, would amount to far less scrutiny and accountability than is required of every other agency, office and department of the federal government.

A far better approach would be to tackle the problem of Fed accountability by forcing the Congress (not the GAO) to do what it should have been doing all along but has declined to do - actually fulfill its job under the Constitution and conduct real oversight. In the case of the Federal Reserve, because of the complexity and importance of the issues that would necessarily be involved in such oversight, the regular, standing committee system of the House and Senate would be ill-equipped to manage such endeavors except in a cursory fashion. Instead, both houses should consider legislation establishing permanent select committees to deal with the Fed.

In this way, a limited number of members of each house could be chosen based on expertise and interest. Partisan politics could be minimized by mandating equal representation by both major parties, with the chairs chosen by the majority party. The last time Congress addressed a serious oversight problem in this manner was in the late 1970s, when lack of accountability and transparency of the CIA and other foreign intelligence agencies led to serious civil liberties abuses by those agencies. In an effort to bring long-term, institutional accountability to this mess (which reached its peak during the administration of President Richard M. Nixon), the Democratic-controlled Congress established the House Permanent Select Committee on Intelligence (HPSCI) and the Senate Select Committee on Intelligence (SSCI).

While the three-decade history of oversight by the two intelligence oversight committees has not been uniformly positive, and partisan politics continues to plague the work of both the oversight committees and the executive branch agencies they oversee, the unique structure created more than three decades ago has worked much better than the previous, "good ole boy" system; and arguably on balance, overall quite well.

To me, and to many in the Congress and certainly among the public at large, the need for a much greater degree of transparency and oversight of the Federal Reserve Bank than we have witnessed to this point, is absolutely essential. Entrusting to a closed fraternity of seven men and women, shielded from any meaningful mechanism to ensure their accountability, has - at a minimum - magnified the mistakes the Fed has made over the years of its existence. The various efforts to make the bank even less accountable than initially designed, such as the 1978 law limiting further even the limited audits of its monetary and foreign currency decisions, have failed to insulate the Fed from "political pressures."

Structuring a serious, long-term oversight mechanism that provides flexibility even as it mandates certainty of accountability, would serve all parties - the Congress, the Fed, the administration, the taxpayers, and foreign and domestic financial institutions - far better than the current system cloaked in unnecessary secrecy.

For Added Information Visit :
http://theconservatives.com/taxes-spending/2009/11/24/a-proposal-to-make-the-fed-truly-accountable.h