Paul Threatens to Delay Fed Nominees in Fight Over Audits

U.S. Senator Rand Paul is threatening to stall three nominations to the Federal Reserve Board unless the chamber gets a chance to vote on his bill calling for public audits of the central bank’s monetary policy.

The Kentucky Republican said yesterday in a letter to Majority Leader Harry Reid that he would object to any move to vote on the people picked by President Barack Obama to fill three vacancies on the Fed board. Paul, a possible contender for the presidency in 2016, said his measure deserved to be considered alongside the nominees.

“As the Senate debates the Federal Reserve Board nominees, there is no more appropriate time to provide Congress with additional oversight and scrutiny of the actions and decisions of the central banks,” Paul said in the letter to Reid, a Nevada Democrat.

Paul’s threat comes about two weeks before the Fed board will be left with fewer than half its seven seats filled. The nominations cited in his letter as subject to possible delay include Stanley Fischer as vice chairman, and Lael Brainard and Jerome Powell for the central bank’s board.

Paul’s bill would remove limits on the Government Accountability Office’s audits of Fed operations, allowing scrutiny of interest-rate decisions and securities purchases. Former Fed Chairman Ben S. Bernanke has said the measure would expose central-bank policy making to political pressure and risked jeopardizing its independence.

Adam Jentleson, a spokesman for Reid, criticized Paul’s tactics. “This is completely predictable but effectively meaningless since Republicans are already obstructing virtually all nominees,” he said in an e-mail.

Altered Rules

Paul can’t single-handedly block the nominees, who probably will draw wide support from Democrats. The most he and other Republicans can do would be to draw out floor consideration of each to several days, making it harder for the Senate to confirm them before the end of next week, when the chamber takes a one-week recess until June.

Reid altered Senate rules last year so that almost all nominees can be confirmed with a simple majority, effectively stripping Republicans of the power to block nominations in a chamber where Democrats control 55 of 100 seats.

Another vacancy on the board opens at the end of this month. Fed Governor Jeremy Stein has said he will leave the Fed on May 28 to return to teaching at Harvard University. That would bring board membership to the lowest level in history unless the Senate can confirm the three nominees in time.

Reid said last month he thought the Senate would be able to confirm them before the end of May.

Yellen Nomination

Paul’s demands that his audit measure be considered also surfaced during Senate consideration of Janet Yellen’s nomination to succeed Bernanke as central bank chief. He and Reid met in mid-December, a few weeks before Yellen won Senate confirmation.

In March 2013, Paul blocked a vote on confirming John Brennan as director of the Central Intelligence Agency until he won a White House pledge against the use of drones to attack Americans. Paul spoke for more than 12 hours.

Fischer, 70, was nominated to be the Fed’s vice chairman, the job Yellen held for three years before she succeeded Bernanke in February.

Fischer, who has served as head of the Bank of Israel and the No. 2 official at the International Monetary Fund, may help Yellen revamp the Fed’s communications strategy for signaling the future path of the main interest rate, which has been held near zero since December 2008.

To contact the reporters on this story: Kathleen Hunter in Washington at khunter9@bloomberg.net; Jeff Kearns in Washington at jkearns3@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net; Chris Wellisz at cwellisz@bloomberg.net Michael Shepard

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