"At All Costs"

It's on:

Obama administration officials have declined to weigh in on specific amendments to the financial reform bill, with one exception: Sanders' move to audit the Federal Reserve. Fed and administration officials have signaled they would fight to stop it at all costs.

This is getting weird. Has this administration ever thrown down a similar gauntlet on anything else -- including healthcare reform? There can't be much doubt now that during the private discussions last summer between the White House and Bernanke about latter's nomination, there was a quid pro quo that involved Bernanke staying on, easy money for as long as possible, and a White House commitment to fight the audit. Since even the most stringent part of the audit proposals explicitly preserves policy independence, the Fed's almost frantic desperation is inexplicable -- unless its principals are worried less about the institution than about exposure of their own conduct.

This is the holy grail of financial reform. You can rework the nuts and bolts of derivatives and proprietary trading all you want. But to restore public confidence and address the long-term stability of the system, the secrecy and lack of accountability at the core must end. There is no natural conflict between policy independence and mandated congressional oversight of the Fed as an institution. But with crunch time on the audit now here, expect the Fed and its defenders to get a lot louder about the choice -- a false one -- between independence and "politicization."