Mark Calabria asks the right questions. An excerpt:
The fact that Rep. Ron Paul’s bill to audit the Fed currently has 313 co-sponsors is a clear indication that Congress is unhappy with the Fed’s lack of transparency. Bernanke’s lobbying efforts against the Paul bill have had little traction. When it comes to transparency, the simple truth is that the Fed lacks credibility on the issue. Bernanke should use his confirmation hearing as an opportunity to re-build that credibility.
Bernanke has argued against the Paul bill on the grounds that it would diminish the Fed’s independence. The fact is, however, that Bernanke’s own actions have undermined the Fed’s independence to a far greater degree than anything an audit would do. He has acted essentially as a full member of both the Obama and Bush administrations. Going forward, he will be under tremendous pressure from the Obama administration to maintain loose monetary policy.
Perhaps the most important question Bernanke should answer is: how will he re-build and maintain an independent Fed?