Corbett Daly: This is Reuters. I’m Corbett Daly in Washington. The Obama administration wants to give the Federal Reserve even more power to oversee financial institutions that could be deemed too big to fail. Republican Congressman Ron Paul of Texas wants more oversight of the Fed itself. Paul is a long-time critic of the Fed, but this time he has 250 members of Congress backing his bill that would give the Government Accountability Office the ability to audit the Fed, including monetary policy. Congressman Paul, thanks for joining us.
Ron Paul: Good to be with you.
Corbett Daly: Chairman Bernanke has said that your bill could revoke the independence of the Fed. Is that your intention here?
Ron Paul: That wouldn’t be too bad of an idea. Why should they be independent? Independent to them means secrecy, do whatever they want, spend trillions of dollars, bailout their friends, make deals with international bankers, with other central banks and other governments. No, they shouldn’t have a right to do that. We have an obligation as members of Congress to protect the people and to protect the value of the money. So to do that you have to know what the Fed is doing.
Corbett Daly: The Fed watchers say that [need] independence to be able to raise interest rates when it’s politically unpopular. I guess you think that that’s not [the case]?
Ron Paul: They also might want to lower interest rates when it’s very popular for political reasons. This idea of independence is a façade because others have done some investigation and traced the willingness of the Federal Reserve board chairman to talk to and work with the presidents. You know, when they want to be reappointed, so there is a lot political shenanigans going on with the Fed already.
So this idea that they want independence is not so. As a matter of fact, my bill really doesn’t address that subject as much because it doesn’t tell the Fed what to do, it just means that we have an obligation to know what they are doing, what kind of money they are spending and who’s getting the benefits.
Corbett Daly: The chairman has also said that giving the Congress greater oversight of the Fed would risk the stability of the dollar. Are you worried about that at all?
Ron Paul: Yeah, I’m very worried about that. That’s one of the reasons we need the audit. It is to find out what they’re doing because…
Corbett Daly: He says they are oversight of the Fed itself would risk the stability of the dollar.
Ron Paul: I don’t believe that, I think it would be the opposite. I think the fact that they can double the money supply like they did in the last year… that is horrendous amount of inflation. If you double the money supply it means that eventually you will have less money. The dollar now is worth 4 cents of what it was worth in 1913 when the Fed was established. So that tells you they’re not very good at protecting the value of money. So that’s the obligation. They should protect the value of the money, not to be the counterfeiters. They are the counterfeiters of the world, and they are protected by this secrecy.
Corbett Daly: You’ve gotten a lot of support; 250 members of Congress. How about the speaker, has she promised you that she’ll bring it to a vote?
Ron Paul: No, I haven’t personally talked to her about that. We do have some chairmen on board.
Corban Daily: Who do you have on board?
Ron Paul: Louise Slaughter is on this, as well as John Conyers, and we have 80 Democrats.
Corbett Daly: How about Chairman Frank?
Ron Paul: He’s not hostile to it. But it just wouldn’t be the thing that chairmen of a banking committee do, especially if Nancy Pelosi doesn’t want it.
Corbett Daly: So how do you hope to get it passed?
Ron Paul: It’s going to be difficult, because I know how powerful those who believe in the Federal Reserve System are. And we saw that in the Senate this week when DeMint tried to put it on to a bill and they say, “Oh no, you’re not allowed to amend an appropriation bill”. So technically they said you can’t do it. Even though he pointed out, “Well, you do it all the time!” But that means they’re lining up their ducks, they’re going to fight us to the nail; but the American people want more transparency, that’s why we have the people on our side.
Corbett Daly: Another hot topic for regulation is the Commodities Futures Trading Commission. This week they have a proposal to impose more trade restrictions on speculative trading in the energy markets. A lot of business community and some consumers say that this may go too far. Do you agree with that?
Ron Paul: Well, it was too far when they first started. I don’t believe in that kind of regulations. We didn’t have a Depression because we didn’t have enough regulation, but they said we didn’t have and that’s when the SEC and these other organizations came in. So when Enron failed they said, “We didn’t have enough regulations,” but then they passed Sarbanes-Oxley and they go on and on and they always say we need more regulations because they fail to see what causes the problem.
The problem comes from the mischief at the Fed because they create artificially low interest rates which create the atmosphere of a bubble and all the mal-investment and bad debt. So you can’t compensate by more regulations. What you want is the market to regulate this, you want people to go bankrupt. You want a correction. They don’t allow corrections.
We need a housing correction, we need the prices to go down, we need less houses being built, we need the markets to be cleared. But no, we have to keep building houses and keep the prices up and do all these things. The central economic planners doing monetary policy is the worst way in the world.
Corbett Daly: Congressman Paul, thanks for joining us.
Ron Paul: Thank you.
Corbett Daly: I’m Corbett Daly in Washington. We’ve been speaking with Congressman Ron Paul from Texas. Thanks for watching and tune in Reuters for more on the latest changes to the regulatory landscape.