These critics call for more oversight, transparency, and disclosure for the Fed. More specifically, critics have focused on Government Accountability Office (GAO) audits of the Fed and the disclosure of details on the identities of borrowers and terms of loans. Some of these critics downplay the degree of Fed oversight and disclosure that already takes place, which is outlined in this report. Contrary to popular belief, GAO has conducted frequent audits of the Fed since 1978, subject to statutory restrictions discussed below. In addition, the Fed's annual financial statements are audited by private-sector auditors. 111-203 ) resulted in an audit of the Fed's emergency activities during the financial crisis, released in July 2011, and an audit of Fed governance, released in October 2011. In December 2010, as a result of the Dodd-Frank Act, the Fed released individual lending records for emergency facilities, revealing borrowers' identities for the first time. Going forward, the act requires individual records for discount window and open market operation transactions to be released with a two-year lag; the Fed began releasing those records in the third quarter of 2012. Although oversight and disclosure are often lumped together, they are separate issues and need not go together. Oversight entails independent evaluation of the Fed; disclosure concerns what internal information the Fed releases to the public. Contrary to a common misperception, a GAO audit would not, under current law, result in the release of any confidential information identifying institutions that have borrowed from the Fed or the details of other transactions. It also issues semiannual reports to Congress that provide an overview of its activities. 111-203)

Title XI of the Dodd-Frank Act included provisions that allow GAO for the first time to audit open market operations, discount window lending, actions taken under emergency authority (§13(3) of the Federal Reserve Act), and programs created in response to the financial crisis for
(A) the operational integrity, accounting, financial reporting, and internal controls governing the credit facility or covered transaction;
(B) the effectiveness of the security and collateral policies established for the facility or covered transaction in mitigating risk to the relevant Federal reserve bank and taxpayers;
(C) whether the credit facility or the conduct of a covered transaction inappropriately favors one or more specific participants over other institutions eligible to utilize the facility; and
(D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility or to conduct any covered transaction. If the Fed deviated from its rule, it would have triggered a GAO audit not subject to the remaining statutory restrictions and testimony by the Fed chair before the committees of jurisdiction. 24 would eliminate statutory prohibitions on GAO audits of activities related to monetary policy and Fed lending, and it would require a one-time GAO audit of the Fed within 12 months of enactment that is not subject to remaining statutory restrictions, similar to H.R. The Fed is statutorily required to have its financial statements annually audited by an independent auditor. Despite the limited scope of statutory requirements, particularly related to monetary policy, the Fed has publicly disclosed extensive information on its operations on a voluntarily basis. Public and congressional interest in Fed disclosure increased in response to the significant financial assistance the Fed provided the financial sector during the financial crisis. The Emergency Economic Stabilization Act (P.L. Greater disclosure and outside evaluation, such as GAO audits of monetary policy, could potentially help Congress perform its oversight duties more effectively. Most economists believe that the Fed's independence to carry out day-to-day decisions about monetary policy, unburdened by short-term political considerations, strengthens the Fed's credibility in the eyes of the private sector that it will achieve its mandated goal of price stability. Although few policymakers argue for total independence or total disclosure and oversight, the policy challenge is to strike the right balance between Fed independence and Fed accountability. With regard to its GAO audit provision, she stated that the bill 
would politicize monetary policy and bring short-term political pressures into the deliberations of the FOMC by putting into place real-time second guessing of policy decisions….
Critics of the Federal Reserve (Fed) have long argued for more oversight, transparency, and disclosure. Criticism intensified following the extensive assistance the Fed provided to financial firms during the financial crisis. Some critics downplay the degree of Fed oversight and disclosure that already takes place.
For oversight, the Fed is required to provide a written report to and testify before the committees of jurisdiction semiannually. In addition, these committees periodically hold more focused hearings on Fed topics. Critics have sought a Government Accountability Office (GAO) audit of the Fed. The Fed's financial statements are annually audited by private-sector auditors. Contrary to popular belief, GAO has periodically conducted Fed audits since 1978, subject to statutory restrictions, and a GAO audit would not, under current law, release any confidential information identifying institutions that have borrowed from the Fed or the details of other transactions. The Dodd-Frank Act (P.L. 111-203) resulted in an audit of the Fed's emergency activities during the financial crisis and an audit of Fed governance. GAO can currently audit Fed activities for waste, fraud, and abuse. Effectively, the remaining statutory restrictions prevent GAO from evaluating the economic merits of Fed policy decisions. H.R. 24 would remove these restrictions and require a GAO audit that would not be subject to remaining statutory restrictions.
For disclosure, the Fed has publicly released extensive information on its operations, mostly on a voluntary basis. It is statutorily required to release an annual report and a weekly summary of its balance sheet. In December 2010, the Dodd-Frank Act required the Fed to release individual lending records for emergency facilities created during the financial crisis, revealing borrowers' identities and loans' terms. Going forward, individual records for discount window and open market operation transactions have been released with a two-year lag. More recently, congressional attention has shifted to disclosure related to Fed regulation.
Although oversight and disclosure are often lumped together, they are separate issues. Oversight entails independent evaluation of the Fed; disclosure is an issue of what internal information the Fed releases to the public. A potential consequence of greater oversight is that it could undermine the Fed's political independence. Most economists contend that the Fed's political independence leads to better policy outcomes and makes policy more effective by enhancing the Fed's credibility in the eyes of market participants. Chair Yellen believes that the GAO audit provision "would politicize monetary policy and bring short-term political pressures into the deliberations of the FOMC by putting into place real-time second guessing of policy decisions." Disclosure helps Congress and the public better understand the Fed's actions. Up to a point, this makes monetary and regulatory policy more effective, but too much disclosure could make both less effective because they rely on confidential, market-moving information. The challenge for Congress is to strike the right balance between a desire for the Fed to be responsive to Congress and for the Fed's decisions to be immune from short-term political calculations. A potential drawback to greater disclosure is that publicizing the names of borrowers could potentially stigmatize them in a way that causes runs on those borrowers or causes them to shun access to needed liquidity. Either outcome could result in a less stable financial system. A potential benefit of publicizing borrowers is to safeguard against favoritism or other conflicts of interest.