On one side of that divide stands Bernanke, a Republican and economist with technocratic bona fides after being thrice nominated by President George W. Bush to various posts, including his current spot, before being reappointed by President Obama. On the other is Paul, the leading light for the Republican Party’s disaffected libertarian cohort who see the Bernanke years, including bank bailouts and rock-bottom interest rates for years on end, as not distasteful necessities but deep betrayals of conservative financial principles.
Many on the Financial Services Committee were in a reflective mood early in Wednesday’s hearing – including Paul.
“I have over the years obviously been critical about what goes on in monetary policy, but it hasn’t been so much the chairman of the Federal Reserve, whether it was Paul Volcker or Alan Greenspan or the current chairman, it’s always been the system,” Paul said. “I think they have a job that they can’t do because it’s an unmanageable job, it’s a fallacy, it’s a flawed system, and therefore we shouldn’t expect good results.
Burnished by double a member’s usual time allotment – fellow libertarian Rep. Walter Jones (R) of North Carolina gave up his time so Paul could speak at greater length – Paul uncorked one of his standard diatribes about the Federal Reserve’s secret deliberations over monetary moves.
The argument has particular weight this week, as the House is set to take up (and likely pass) next week Paul’s bill to force the Federal Reserve to reveal more about its deliberations over monetary policy moves.
“Whose responsibility is it under the Constitution to manage monetary policy?” he asked.
“Congress has the authority and it's delegated to the Federal Reserve. That’s a policy decision that you’ve made,” Bernanke replied.
Paul was unimpressed.
“But [Congress] can’t transfer authority. You can’t amend the Constitution by just by saying ‘We’re going to create some secret group of individuals and banks.’ That’s amending the Constitution. You can’t do that, and then all of a sudden allow this to exist in secrecy,” Paul fumed.