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Fed Lawyer: Audits Called for by Ron Paul Could Hurt Monetary Policy


Fed General Counsel Scott Alvarez, in testimony prepared for a Friday hearing, said legislation in the U.S. House of Representatives giving the Government Accountability Office greater leeway to examine the central bank could have a detrimental effect.

“These concerns likely would increase inflation fears and market interest rates and, ultimately, damage economic stability and job creation,” Alvarez said in the prepared remarks for theHouse Financial Services Committee hearing.

In addition to potentially undermining public and investor confidence in the Fed’s setting of monetary policy, Alvarez said the legislation could hurt the U.S. government’s relationships with other countries.

“Foreign central banks and governments likely would be less willing to engage in financial transactions with the Federal Reserve if these transactions were subject to policy review by the GAO,” he said.

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