First of all, before I go anywhere with this, I know GC already gave her a link but this recent Re: the Auditors post on, well, auditors — or rather the lack thereof — is a do-not-miss. It is especially relevant when we're talking about the usefulness of audits, PCAOB or otherwise.
As many of you already know, the PCAOB is on the chopping block and bad. While we'll have to let that one work itself out in court, the case against the PCAOB is actually an all-too-familiar argument.
The Federal Reserve System (much like the PCAOB) pulls its regional bank presidents not under direct Presidential directive but because that's how it has always been. The President appoints a Fed Chairman of course but beyond that, Washington tries to stay as far away from the regional Fed bank structure as possible. Why? That question is a tad too complicated to answer here, so we'll get into that another day.
The important part here is that the Fed should be closely watching the PCAOB case in the Supreme Court. If the PCAOB is brought before the people of the United States to answer for its alleged recklessness as an agency free from Presidential influence, the Fed may follow soon after.
The plaintiffs argued that the PCAOB violates the separation of powers principles in the Constitution because the PCAOB's members are appointed by the SEC and not directly by the president, and they cannot be fired except for cause. Several justices indicated some sympathy for that viewpoint in their questions.
Gee, that sounds just a little too familiar. Seeing as how two-thirds of regional Fed bank directors are chosen by the very banks those regional banks "supervise", the Fed may have some 'splaining to do.
So while Bernanke is out there running PR for the Fed System to keep nosy Congressmen out of their business, where is the PCAOB defensive play against SCOTUS? Don't they have anything to say in their own defense? Apparently not if my experience is any indication.
While most of you know I am not exactly a cheerleader of the PCAOB nor the Fed, I can't see how consolidating all of our power in Washington can be a benefit either. There is something to be said for the wacky structure of these agencies as it is a Frankenstein of influence instead of a concentrated wave of power emanating from DC.
So watch the PCAOB case closely, Ben Bernanke, it could be you next and you don't want to have to explain why the banks you regulate pick the soldiers of your precious System.