Real-estate mogul Mortimer Zuckerman says Congress should avoid limiting the authority of the Federal Reserve.
“It is critical that the Federal Reserve remain at the center of new regulatory efforts,” Zuckerman, chairman of U.S. News & World Report, wrote in The Wall Street Journal.
“The Fed may be less popular today on Capitol Hill, but there is no other institution — certainly not Congress — with the sophisticated understanding and detailed knowledge to monitor the financial health of the banking firms.”
The House Financial Services Committee recently approved a bill that would allow Congress to order audits of all the Fed’s lending programs and its interest rate policy.
“The central bank may have fumbled a bit in the evolution of the bubble economy,” Zuckerman writes.
“But once the crisis hit, it was the Fed, under Chairman Ben Bernanke, whose innovative, imaginative response to the crisis literally saved the financial world.”
This would have been impossible without the Fed’s independence and wide-ranging powers, Zuckerman maintains.
“Should Congress undermine the Fed, we could face a worldwide collapse of confidence in the dollar that would inevitably lead to higher interest rates,” he writes.
Sarah Binder, a senior fellow at the Brookings Institution, writes on the group’s Web site that contrary to conventional wisdom, the Democrats who supported the House bill are moderates rather than liberals.
That will make the bill more difficult to defeat, she says.
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