Ron Paul: Fed Needs to Clear the Air on its History

The Federal Reserve may grow in power under the Senate's plans for financial reform, but Rep. Ron Paul (R-Texas) said on Washington Unplugged today that Congress has abdicated its oversight responsibilities, allowing the Fed to funnel money to whomever it pleases -- even possibly the Watergate burglars.

Regardless of whether such a plot is true, "it gives you a good reason to audit the Federal Reserve," Paul told moderator Bob Schieffer.

Paul and other legislators have blasted Federal Reserve Chairman Ben Bernanke, charging he has failed to maintain sound credit markets, among other things. Paul has led a popular legislative effort to audit the Fed.

At a congressional hearing last month at which Bernanke testified, Paul charged the Federal Reserve with facilitating the Watergate burglars, as well as funneling $5.5 billion to Saddam Hussein in the 1980s. Bernanke called the allegations "bizarre."

On Unplugged today, Paul said his charges are backed up by a book by former House Financial Services Committee staffer Robert Auerbach, now a professor at the University of Texas.

"They facilitated it," Paul said with respect to the Watergate allegation. "It just goes to show it's a very political organization. If you have a president like Nixon... and he had to get the money and somebody could do it, why wouldn't they be able to do this?"

Schieffer asked Paul if it was irresponsible to propagate those allegations without further evidence, to which he said, "I think it's irresponsible to ignore what the Fed does in secrecy -- that's where the irresponsibility is... If there's the slightest chance, why don't we clear the air on this?"

"I think the irresponsibility falls on the Congress for ignoring the Fed," he added. "We're derelict in our duties. Congress has a cozy relationship with the Fed."

The charge that the Federal Reserve funneled money to Saddam Hussein, Paul says, illustrates how "the insanity of our foreign policy is connected with our monetary policy and the Federal Reserve facilitates it in several ways."

Paul's bold positions on issues like the Federal Reserve have won him loyal supporters. He once again at this year's Conservative Political Action Conference won an unofficial straw poll as the best GOP presidential candidate for 2012.

As to whether Paul, 74, will actually run, he said, "I haven't made any decision."

Watch the full interview above, as well as an interview with Republican Senate candidate Tom Campbell on what he can do for California.

"Washington Unplugged" appears live on CBSNews.com each weekday at 12:30 p.m. ET. Click here to check out previous episodes.

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