The four prohibitions permit Congress to exercise only very limited oversight of the Fed's activities.
In light of the above restrictions, the Fed is what one must term a very closed institution, and it is no wonder that half the U.S. Congress is interested in seeking a change. The Fed was supposedly established to ward off economic downturns such as occurred a few years before it was established. It did not, however, do a very good job, as only a decade and a half after its founding, the country entered the Great Depression. So much for the intent of Congress.
Now why would anyone want to restrict Congress from overseeing what is going on at one of the nation's major economic institutions? It is said that an audit minus the restrictions on the books would interfere with the Fed's independence and turn policy into a political football. But should a body, whose actions have such a great impact on the daily lives of citizens, be as independent as it is? Perhaps if angelic personages were guaranteed to populate the world of finance, one could answer "yes," but the history of that sector does not support such a contention.
Murphy, in answer to Funiciello's question, touched on whether the General Accounting Office of the Federal government, rather than a private accounting firm, should audit the Fed. "That could make sense," said Murphy. "I actually talked with (Fed) Chairman (Ben) Bernanke about it; he said, 'I think it's kind of duplicating the work.'" In other words, No. Not that Bernanke is the right person to ask, as it is unlikely he would support greater Congressional oversight of his turf. What is interesting is how Murphy handled a question from a constituent by deflecting its true intent and turning it into a meaningless issue, namely, auditing by the GAO. One ought to study his technique carefully because it is in widespread use.
It would seem a bit out of place for a man of Murphy's intelligence to respond to a constituent the way he did. The legislation in question, which was introduced by former presidential contender Rep. Ron Paul (R-Tex.), has been well publicized and has often been characterized in the media and by its supporters as a bill to "audit the Fed." He could not mistake the meaning of Funiciello's query. But then, we Americans are accustomed to having our government lie right to our faces, as it did when it told us that there were weapons of mass destruction in Iraq before committing wealth and blood to a destructive invasion and occupation of that country. So what's a little obfuscation on the part of a freshman congressman?
Yes, technically Murphy is probably correct in saying that the Fed is audited. But he used that information to sidestep the issue at hand--namely, the question of whether or not to lift restrictions on the audit--and to mislead his constituents on a vital policy matter. Murphy is up for reelection in 2010.