As a candidate, President Trump strongly supported auditing the Federal Reserve — a move that many fear could subject the world’s most powerful central bank to political interference.
But Steven Mnuchin, U.S. Treasury secretary nominee, doesn’t sound like he believes auditing the Fed is necessary.
Senator Bill Nelson sent Mnuchin a written question asking the Trump nominee what he thinks about “politicizing decisions” made by the Fed and the “benefits of an independent central bank.”
Mnuchin responded cautiously, but made no mention of the dire need to audit the Fed that Senators Ted Cruz and Rand Paul — and Trump — have voiced.
“As you know, the Federal Reserve is organized with sufficient independence to conduct monetary policy,” Mnuchin wrote.
Trump’s Treasury pick added, “I endorse the increased transparency we have seen from the Federal Reserve Board over recent years.”
An audit would allow the General Accountability Office to review the Fed’s decisions on raising and lowering interest rates — a critical tool the Fed uses to encourage growth or keep the economy from overheating.
Compare Mnuchin’s statements with pre-election comments made by Mnuchin’s future boss. Last February, Trump said on Twitter that it’s “so important to audit The Federal Reserve.”
Trump even called out Cruz for missing a January vote on an “Audit the Fed” bill.
Mnuchin’s carefully-crafted answer should come as a relief to those who fear that auditing the Fed would be a terrible idea.
“When I saw the quote, I took a lot of comfort in it. There is someone in a key position who is trying to calm things down,” said Jeffrey Shafer, who worked at the Federal Reserve for more than a decade.
Shafer said history shows that when central banks become subject to political pressure, they “serve the short-term interests of who’s running for office instead of focusing on a stable economy.”
He should know. Shafer served at the Fed in the 1970s during a time that the central bank was very slow to tackle skyrocketing inflation. Many later blamed political pressure from the Nixon White House on the Fed not to raise rates more rapidly.
Ironically, Trump has said he thinks today’s Fed is actually too political.
During the first presidential debate in September, Trump said that under Janet Yellen the “Fed is being more political than Secretary Clinton.” Speaking on CNBC, Trump also said Yellen should be “ashamed of herself” for keeping rates artificially low.
Yellen has defended the Fed against these attacks. During the Fed’s last pre-election meeting, Yellen vowed to “lead an institution that’s not political” and insisted the central bank is “not politically compromised.”
Mnuchin’s Fed comments are another sign that the former Goldman Sachs banker could serve as a moderate voice inside the Trump administration.
During his confirmation hearing, Mnuchin said he supports the Volcker Rule, the post-crisis rule that prevent banks big banks from making risky bets with their own money. Instead of killing the rule as GOP legislation would do, Mnuchin suggested reforming it.
Mnuchin also said he believes the Consumer Financial Protection Bureau, the watchdog agency inspired by Elizabeth Warren, is worth keeping.
–CNNMoney’s Patrick Gillespie, Heather Long and Paul R. La Monica contributed to this report.
