Financial Regulation Bill Needs TRUE Audit of Fed

Friday, July 2, 2010 9:47 AM by Julie Borowski

Yesterday, Republican leaders submitted a motion to recommit in the House to require a true and comprehensive audit of the Federal Reserve in the Financial Regulation Bill. The motion, which included language identical to Ron Paul's Audit the Fed bill, unfortunately was defeated by a close margin. Instead, the bill that passed the House yesterday includes a watered down version of the audit language. Currently, the weak audit the Fed amendment in the bill would exempt important information such as monetary policy decisions, agreements with foreign central banks and discount window operations from an audit. While better than what we saw the first time around with Sen. Sanders’s fig leaf amendment, taxpayers deserve to know exactly how the Fed is spending their money. Leaders from across the political spectrum support a thorough audit of the Federal Reserve that would reveal how the secretive central bank has disbursed $2 trillion in taxpayer money under TARP. It was recently reported that the Fed had taken on unwise risks including making taxpayers junk-bond buyers without Congress knowing. Ben Bernanke and Timothy Geithner (then New York Fed President) testified in April of 2008 to the solvency of the bonds, even though at that time more than $40 million of the assets had been downgraded to less than investment-grade purchases. This led to the bank taking on the most risk it has ever attempted to hold – setting the stage for huge financial liabilities for taxpayers. This risky lending was all made possibly by the obscurity of the Federal Reserve’s operations. How many other risky decisions has the central bank made that are unknown to Congress? Only a transparent audit of the Fed without any special exemptions will inform taxpayers of all of the reckless decisions the Fed is making on their dime.

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