It looks like those Republicans are at it again. Yes, they are looking to "audit the Fed" (see proposed bill here). As the argument goes, the Federal Reserve is not under enough scrutiny because of the exemptions they receive from being audited by the Government Accountability Office (GAO). The intuition behind it seems sound enough. The purpose of an audit is to determine whether the information presented in a certain financial report reflects the entity's actual state of financial affairs. If the Federal Reserve is going to pass overarching monetary such as quantitative easing, shouldn't the American people have a right to know how money is being generated or allocated?
The catch here is that the Fed is already being audited. The GAO has done it, and consulting firm Deloitte audited the Federal Reserve Bank of New York (FRBNY) in 2012. The Fed also releases its minutes from its Federal Open Market Committee meetings. In spite of what is nominally done, I have to wonder just how thorough the audits actually are. If the current audits are already adequate, then the "Audit the Fed" bill that Rand Paul is trying to pass would be superfluous at best. However, Federal Reserve Chair Janet Yellen doesn't want the bill passed.
The issue is not that it's a standard audit, but if you look at the proposed bill itself, it also includes greater oversight and, even more importantly, program evaluation. As the Cato Institute brings up in its recent analysis on the matter, the Fed has enough exemptions from he the GAO in terms of more thorough auditing, something which the "Audit the Fed" bill seeks to rectify.
One of the arguments that Yellen makes is that it would kill Federal Reserve independence. Do you honestly think the Federal Reserve acts independently when the President of the United States is the one who selects the seven members on the Board of Governors, amongst whom the President selects a Chair of the Federal Reserve? Not only is there not a true sense of independence, but there are a small select group of people who have immense influence over the purchasing power of the dollar.
Release of aggregate data would help determine taxpayer exposure risk, as well as how well the Fed is handling its job. Information on specific transactions would even provide insight into who is receiving favoritism from the Fed (read: rent-seeking). The Congressional Research Service (CRS) points out that greater transparency would not only help market actors make better decisions, but that more transparency would make for more effective monetary policy (CRS, p. 11). Critics of "Audit the Fed" really think that this would hamper Fed efficacy, but this goes on the erroneous assumption that the Fed does a good job at managing monetary policy. It would be nice to know things such as how Federal Reserve policies have either helped or harmed the economy (e.g., Did quantitative easing work? Did the Fed contribute to the housing bubble, and if so, how badly?). I think that the Fed has too much overarching power, which is another topic for another time. But if one is going to at least argue that the Fed is going to have such power, wouldn't it make sense to hold them accountable via greater oversight and make sure they're doing a good job? Is that really too much to ask?