House Committee Approves Ron Paul’s Audit The Fed Bill
Full vote on transparency bill next month?
June 28, 2012
The House Oversight Committee approved a bill Wednesday introduced by Congressman Ron Paul that would see a full audit of the Federal Reserve for the first time in its history.
The bipartisan vote was almost completely unanimous in it’s favor of Federal Reserve Transparency Act, with no vocal opposition and the legislation will now advance to the floor of the House of Representatives next month.
If it is successful, the bill would require the Government Accountability Office (GAO) to conduct a top to bottom audit of the Fed’s board of governors and 12 regional banks, and reveal details of its private monetary policy deliberations.
The only opposition came from the ranking Democrat on the committee, Elijah Cummings (D-Md.), who attempted to introduce an amendment that would prevent the GAO from auditing the Fed’s discussions on monetary policy. Cummings withdrew the amendment after Chairman Darrell Issa (R-Calif.) noted that it “essentially guts this bill.”
Issa noted that “It is long past time for a real audit,” and was backed up by Rep. Justin Amash, who highlighted the deficiencies in the current system of monitoring the Federal Reserve’s secret actions:
Ron Paul has made an audit of the Fed a long term goal during his time in Congress.
After introducing his original audit the Fed bill in 2009, a watered down version was added to the Dodd-Frank financial reform law signed into law last year. However, much of Paul’s bill had been stripped away, and even the Congressman himself voted against the final bill.
However, the bill did allow for a rare one off audit of the Federal Reserve’s crisis-response emergency lending programs of 2008. In October of last year, in his role as chairman of the Domestic Monetary Policy subcommittee, Paul relished the glimmer of transparency and led the hearing into the GAO’s audit.
“More people now are starting to realize that the Fed isn’t independent of political independence because indirectly and some times more directly it is involved in political decisions or at least private decisions to serve some political interest.” Paul noted during the hearing last year.
Along with Paul, Republicans in attendance argued that the audit should pave the way for regular reviews of the Fed’s policies, as well as more complete disclosure of exactly who has received upwards of $27 trillion in bail out funds since 2008.
“Would it be much of a problem if we were doing this every year?” Paul asked.
Although the one time GAO audit was extremely limited in its scope, the report found several instances of conflicts of interest and questionable practices involving Fed officials. It was also revealed that the Fed made $16.1 trillion in secret loans to Wall Street firms at the height of the crisis.
The full audit the Fed bill would repeal specific limitations that were applicable to the previous one off audit of the Fed. Currently, any audits of the Board and Federal reserve banks may not include—
(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or
(4) a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)–(3) of this subsection.
In order for the legislation to be signed into law, it will have to pass both Chambers of Congress. The Senate version of the bill, introduced by Paul’s son Rand (R-KY), has yet to be marked-up for debate.
In an emailed press release this morning, Sen. Paul said:
“Today, I applaud the unanimous passage of Audit the Fed out of committee and commend House leadership for promising a vote on Audit the Fed next month.”
“It is important that we get our economy growing again through savings and investment, not more debt and deficit spending. But we can’t turn the economy around until we fix the root of the problem: an unaccountable Federal Reserve. A complete and thorough audit of the Fed will finally allow the American people to know exactly how their money is being spent by Washington.” Sen. Paul continued.
“I have introduced similar legislation in the Senate and will continue to fight on the frontlines of this battle to get Audit the Fed passed through Congress,” he added.
Ron Paul has previously highlighted the importance of bringing full Transparency to the Federal Reserve, noting that it would pave the way for a return to sound monetary policy and help mark an end to the practices that have plunged the economy into deep crisis.
“The Federal Reserve behind the scenes has the power to create money out of thin air, I mean it’s absolutely bizarre. Never in the history of the world has any one single bank been given the power to create the reserve currency of the world like we have had since 1971. So yes, they can bailout their friends and let the people they don’t like fail, and create a trillion dollars or more out of thin air in order to prop up some companies at the expense of others, it’s not viable, it makes no sense.” Paul urged in a 2010 interview with CNBC.
“When the history of this time is written, people will say ‘how in the world did they believe that a few people in a secret room can decide what interest rates should be, how much the money supply should be, who should fail, what bad assets, what worthless assets the tax payers have to buy?’ it’s absolutely bizarre, yet the American people right now I think are waking up to it.”