Governor Jerome H. Powell At the Catholic University of America, Columbus School of Law, Washington, D.C. February 9, 2015 – “Audit the Fed” and Other Proposals: “It has been a little more than six years since the fall of 2008, when the peak of a severe financial crisis presented the very real threat of a second Great Depression. The damage was extensive, and for some time, the recovery was frustratingly slow. But the economy has improved considerably over the past two years, and I am optimistic that that this improvement will continue. The financial system is also stronger and more resilient after improvements in regulation and oversight by the Federal Reserve and other agencies and better management by banks and other financial firms. The Fed acted boldly during and after the financial crisis in the face of great uncertainty. The full effects of these policies will become clearer with the passage of time. Indeed, the Federal Reserve’s role in the Great Depression of the 1930s is still actively debated. That said, as I will show, the evidence as of today is very strong that the Fed’s actions generally succeeded and are a major reason why the U.S. economy is now outperforming those of other advanced nations. Other central banks are now embracing some of the same bold steps undertaken much earlier by the Fed. Against that background, I am concerned about several troubling proposals that would subject monetary policy to undue political pressure and place new limits on the Fed’s ability to respond to future crises. My remarks will address three such proposals. The first goes by the somewhat misleading name of “Audit the Fed,” and would subject the Federal Reserve’s conduct of monetary policy to unlimited congressional policy audits (not to be confused with financial audits, which are already conducted regularly. The second is a proposal to require the Fed to adopt and follow a specific equation in setting monetary policy and to face immediate congressional hearings and investigation by the Government Accountability Office (GAO) whenever it deviates from the policy dictated by that equatio. And third, there are discussions about imposing new limitations on the Fed’s long-held powers to provide liquidity during a financial crisis.”