Senator Rand Paul (R-Ky.) wants an up or down vote on his bill that would require a full audit of the Federal Reserve, but Senate Majority Leader Harry Reid doesn’t want to let that happen.

To force the issue, Paul is trying to block new nominees to the Federal Reserve’s Board of Governors.

On Wednesday, Paul failed to stop the confirmation of Stanley Fischer to the Board (although the former Bank of Israel governor hasn’t yet been confirmed as Vice Chair). That leaves two vacancies on the Board of Governors, with a third set to open up at the end of May when Jeremy Stein steps down.

Critics charge that Paul’s tactic—which would leave the Fed  short-handed— “could be dangerous to the economy.”  Perhaps.

But the Fed was pretty much fully staffed leading up to the 2008 crisis, and that didn’t work out so well.

When referring to “the Fed” in this context, we are really referring to the Federal Open Market Committee (FOMC).  The FOMC is the agency responsible for implementing the U.S. central banks’ monetary policy.

A fully staffed FOMC consists of all seven members of the Fed’s Board of Governors, as well as five Federal Reserve district bank presidents.  The New York district bank president has a permanent seat on the committee, and four other district presidents rotate on a yearly basis.

So we normally concentrate the power of the Federal Reserve in the hands of 12 people.  And now, with Stein’s vacancy, that power will be concentrated in the hands of nine people—this sort of reduction in force hardly portends economic disaster.

In fact, the debate over vacancies at the Fed serves only to distract us from the real issue, which is transparency at the Federal Reserve.

And that is why the debate over nominees should not stop the Senate from voting on Rand Paul’s bill.  It has 29 co-sponsors, including one Democrat, and its companion bill in the House has more than 200 co-sponsors with 19 Democrats on board.  In the last Congress, a similar bill passed the House of Representatives by a margin of 327-98.

Oddly enough, in 1995 Harry Reid supported an audit-the-Fed bill and complained that even though he offered the legislation “every year” it never went anywhere.  The framework for audits existing then is essentially the same in place today.

It is true that the Dodd-Frank Act subjected the “emergency lending” facilities created during the recent crisis to a full audit, and future emergency lending will be as well.  Details on the Fed’s discount window lending must also be disclosed now with a two-year delay.

But discount window lending makes up a very small portion of what the Fed currently does, and there’s no reason all of the Fed’s operations shouldn’t be open to the public (with an appropriate time delay).  The U.S. is still a democracy, and the Fed isn’t supposed to be harboring national secrets.

Senator Paul’s bill would merely serve to get rid of the remaining restrictions on Federal Reserve audits, thus opening the way to examine more closely items such as the Fed’s transactions with foreign central banks and deliberations concerning open market operations.

Some critics argue that lifting these restrictions might endanger the Fed’s vaunted independence, but this argument depends on a narrow definition of independence.

The Fed certainly is independent in that neither the President nor Congress decides what the Fed’s interest rate targets will be.  But passing Paul’s bill wouldn’t change that arrangement.  And there’s virtually no chance Congress will start having regular votes on what the Fed’s new targets should be, regardless of the fate of Paul’s bill.

More broadly, though, the Federal Reserve is not independent because it is the fiscal agent of the U.S. Treasury.  Its primary dealers are obligated to buy U.S. Treasury debt at the direction of the FOMC.  Aside from open market operations, the historical record clearly demonstrates that the Fed and Treasury have often collaborated.

Most recently, the two agencies worked very closely to provide “assistance” to various financial firms.  There’s very little sign of independence in either the GAO report on emergency assistance during the crisis or in Tim Geithner’s new book.

The public has every right to know exactly what the Fed does on a regular basis, even with regard to open market operations.  Like any government agency, the Federal Reserve must be held accountable to Congress and, therefore, to the public.

Maybe more detailed audits will reveal absolutely nothing useful about the Fed’s past operations, but there’s no reason anything they’ve done should be kept secret.  There’s also no reason our elected officials shouldn’t be held accountable to a yes or no vote on this issue.

 - Norbert J. Michel, Ph.D. is a research fellow in specializing in financial regulations at The Heritage Foundation’s Roe Institute of Economic Policy Studies.