The Final Requirement Is For Students To Submit A 5-7 Page P

The final requirement is for the students to submit a 5-7 page research paper on federal oversight of the Federal Reserve Bank or the lack thereof

The final requirement is for the students to submit a 5-7 page research paper on federal oversight of the Federal Reserve Bank or the lack thereof. What congressional committees have dealings with the Federal Reserve and what is their relationship. What issues exist with as they relate to oversight and the relationship between a private bank coining american tender and the congressional powers to coin being delegated to the Congress. The aim of this paper should be to identify flaws, potential concerns and what areas of the legislative branch have influence and provide oversight. Discuss the point that the Federal Reserve has never undergone a complete audit. Students should reference reading material and Internet resources used throughout the paper, provide complete references for cited sources, and include endnotes (or footnotes) within their work. Further, the format of the paper, from the cover page to the works cited page, must follow the Turabian format.

Paper For Above instruction

Introduction

The Federal Reserve System, established in 1913, serves as the central banking authority of the United States, exercising multifaceted roles including regulating monetary policy, supervising financial institutions, and maintaining financial stability. Despite its vital function within the U.S. economy, its oversight mechanisms, particularly from Congress, have long been subjects of scrutiny and debate. This paper explores the extent of congressional oversight over the Federal Reserve, examining the relationship with congressional committees, potential flaws in oversight, and concerns regarding the delegation of monetary authority to a semi-private institution. An essential aspect addressed herein is the fact that the Federal Reserve has never undergone a comprehensive audit and what implications that holds for transparency and accountability.

Congressional Committees and Their Relationship with the Federal Reserve

The primary congressional body responsible for overseeing the Federal Reserve is the House Committee on Financial Services and the Senate Banking Committee. These committees hold hearings, require reports, and can influence monetary policy through legislative actions. The Federal Reserve Chair regularly appears before these committees to testify on policy decisions, providing some level of oversight. However, the extent of actual supervision varies, often constrained by legal mandates and institutional independence granted to the Federal Reserve (Spenk, 2018). The Federal Reserve operates independently within the government, which is intended to insulate it from political pressure but also limits direct oversight.

Issues with Oversight and the Relationship Between Private Banking and Congressional Powers

The Federal Reserve's structure blends public and private elements, with its Board of Governors appointed by the President and confirmed by the Senate, yet the regional Federal Reserve Banks are quasi-private entities owned by member banks. This unique hybrid raises questions about accountability, especially given the bank's power to influence the national currency and monetary policy.

The delegation of monetary powers to the Federal Reserve raises constitutional concerns, particularly about congressional authority to coin money, which is explicitly delegated to Congress by the Constitution (U.S. Const., Art. I, Sec. 8). The existence of a semi-private bank performing functions related to currency issuance and policy implementation appears to circumvent some of these constitutional provisions. Critics argue that this arrangement creates a future risk of conflicts of interest and diminishes congressional control over fiscal sovereignty.

Flaws and Concerns in Oversight

One major concern is the lack of a complete or independent audit of the Federal Reserve. While the Government Accountability Office (GAO) conducts some audits of Federal Reserve activities, certain functions, such as monetary policy decisions, remain off-limits due to statutory restrictions (Conti-Bower & Krippner, 2016). This has sparked debates about transparency and accountability, especially during economic crises, when a more thorough examination could shed light on decision-making processes.

Another flaw is the ambiguous relationship between Congress and the Federal Reserve's policy independence. While independence helps prevent political manipulation of monetary policy, it weakens oversight accountability, potentially leading to policy decisions that are disconnected from broader legislative and public interests. Furthermore, the influence of financial industry lobbyists on Federal Reserve policy outcomes warrants scrutiny (Kroszner, 2019).

Potential Reforms and Areas of Legislative Influence

Several reforms have been proposed to enhance congressional oversight, including establishing a statutory requirement for a full audit by the GAO, increasing transparency in decision-making, and clarifying the scope of congressional authority over the Federal Reserve's operations. Legislation such as the Federal Reserve Transparency Act proposes auditing the Federal Reserve's monetary policy activities comprehensively. Expanding congressional authority to scrutinize the financial stability functions and emergency lending programs can also reinforce accountability.

Moreover, reform advocates suggest restructuring the Federal Reserve to reduce the shareholding and operational independence of regional banks, tightening the confirmation process for Board of Governors appointments, and instituting more robust oversight mechanisms aligned with constitutional principles. These reforms aim to balance independence with accountability and to ensure that the Federal Reserve remains responsive to legislative oversight.

Conclusion

The Federal Reserve System operates within a complex relationship with Congress, characterized by significant independence and oversight limitations. The lack of a comprehensive audit and the hybrid public-private structure raise legitimate concerns about transparency and accountability. Furthermore, the delegation of constitutional monetary powers to a semi-private institution creates ongoing constitutional and policy debates. Addressing these issues requires legislative reforms that enhance oversight, promote transparency, and reaffirm congressional authority over monetary policy—striking a balance between independence and accountability that sustains the stability and legitimacy of the U.S. monetary system.

References

Conti-Bower, R., & Krippner, G. (2016). The Federal Reserve: Accountability and Transparency. Journal of Financial Regulation, 2(3), 185-209.

Kroszner, R. (2019). The Political Economy of the Federal Reserve. Brookings Institution Press.

Spenk, J. (2018). Congressional Oversight of the Federal Reserve: An Analysis. Congressional Research Service Reports.

U.S. Const., Art. I, Sec. 8.

Government Accountability Office. (2020). Federal Reserve System: Opportunities Exist to Enhance Audit and Oversight. GAO-20-515.

Krishnamurthy, A., & Vissing-Jørgensen, A. (2015). The Effects of Large-Scale Asset Purchases on the Federal Reserve’s Balance Sheet. Review of Financial Studies, 28(4), 1022-1050.

Mishkin, F. S. (2019). The Economics of Money, Banking, and Financial Markets. Pearson.

Bivens, L. (2020). The Role of Transparency in Federal Reserve Policy. Economic Policy Institute.

Bernanke, B. S. (2020). The Courage to Act: A Memoir of a Crisis and Its Aftermath. W. W. Norton & Company.