At swearing-in, Bernanke pledges transparency

Section:

So what about the Bloomberg and GATA lawsuits for information?

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By Tom Braithwaite
Financial Times, London
Wednesday, February 3, 2010

http://www.ft.com/cms/s/0/0f595a98-10fe-11df-9a9e-00144feab49a.html

WASHINGTON -- Ben Bernanke was sworn in for a second term as chairman of the Federal Reserve at a private ceremony at the central bank's headquarters in Washington yesterday and spoke of both increasing transparency and safeguarding the embattled institution's independence.

After a fraught passage to reconfirmation that underscores the political challenges ahead, Mr Bernanke eventually received the approval of the Senate last week to continue as head of the Fed.

With his wife, Anna Bernanke, by his side he was sworn in by Donald Kohn, the Fed's vice-chairman, and told staff that "we must continue to protect our independence" but said the organisation "should be prepared to ... become even more transparent" to assure the public of "the integrity of all our operations, including all aspects of our balance sheet and our financial controls."

The transparency pledge may form only a small part of the plan to assuage congressional critics. Mr Bernanke has not only to enact a tricky exit from the Fed's unconventionally loose monetary policy but also to defend the central bank's regulatory arm against an attempt in the Senate Banking Committee to remove it.

Democrats and Republicans in the committee want to hive off the Fed's bank supervision role and give it to a new agency, merging existing regulation duties of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., and Office of Thrift Supervision.

Other members of Congress led by Ron Paul, the Republican representative from Texas, want to subject the Fed to sweeping audits. Mr Bernanke and the Fed's supporters in Washington are looking to sate the demands for transparency while stopping short of the full-scale audit that they say could imperil the freedom from politics of monetary policy decisions.

"That independence serves important public objectives," said Mr Bernanke. "Critically, it allows the Federal Open Market Committee to make monetary policy in the longer-term economic interests of the American people, rather than in the service of short-term political imperatives."

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