But, as the Geithner/Barclays/Libor fiasco at the New York Federal Reserve shows, auditing only "The" Fed, and not the regional Feds, or at least the NY Fed with its special oversight of Wall Street, isn't good enough.
How many people realize that the 12 regional Feds are almost totally private entities, yet have major powers themselves? From Wikipedia's entry on the Federal Reserve System:
The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market CommitteeFederal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils. ... The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers. The result is a structure that is considered unique among central banks.And, there's the problem.
Now, unlike Paul, and many of his goldbug wingnut followers, I don't want to abolish the Fed, not in the sense of getting rid of a central bank entirely. That's even more retrograde than the gold standard.
I do, though, want to reform the current Fed.
We don't need to have 2/3 of the board of each regional Fed nominated by private banks, with half of those, or 1/3 total directly controlled by them and the other half (1/3 total) allegedly representing "the public." Really, this means banks control 2/3 of the nine board members.
Instead, give one of those three votes to credit unions, one to savings and loans, and maybe one to pension funds. That's just for starters.
There's much more that's needed. I'm not sure that we don't even need to have a fully nationalized central bank like the European Central Bank. Because, here's the ultimate problem with the regional Feds:
The Federal Reserve Banks have an intermediate legal status, with some features of private corporations and some features of public federal agencies. The United States has an interest in the Federal Reserve Banks as tax-exempt federally-created instrumentalities whose profits belong to the federal government, but this interest is not proprietary. In Lewis v. United States, the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations."Further details partially qualify that, but, there you go ... for all intents and purposes, the regional Feds are primarily private entities.
I do know that we ought to have the Fed chairman term-limited. Yes, Bill Clinton was gullible enough, and neoliberal enough, to keep appointing Alan Greenspan. But, assuming it was neoliberalism as the primary culprit, term limits would have nipped that in the bud.
Now, if we can't "reform" the Fed, then I say —replace it! But don't abolish it and replace it with nothing.