Dorgan, Grassley introduce another amendment for spending transparency
Thursday, May 6th, 2010
The push to audit the Federal Reserve was given a fresh injection yesterday with the introduction of another bipartisan amendment to the Wall Street reform bill in the Senate that would force the central bank to reveal where $2 trillion in public bailout money was spent.
Sens. Chuck Grassley (R-Iowa) and Byron Dorgan (D-N.D.) noted that the Fed’s continued secrecy regarding its emergency lending programs, even in the face of federal court rulings, had motivated them to introduce the measure.
“The Fed refuses to disclose this information to the American people so we are taking Congressional action to determine how the Fed has used these trillions of dollars,” Dorgan said in a joint press release.
“The Fed has gone beyond was was viewed as its historical authority in the last two and a half years without any transparency or accountability,” Grassley said. “Our amendment changes that by making the Fed’s emergency loan authority subject the light of day.”
Grassley is already a co-sponsor of the audit the Fed amendment introduced by Sen. Bernie Sanders (I-Vt.).
Sanders’ amendment is due to be voted on imminently. If it succeeds, following the passage of a similar amendment in the House late last year sponsored by Congressman Ron Paul, The Fed may be forced to undergo a thorough audit by Congress’ investigative arm, the Government Accountability Office.
Currently the GAO has no means of reviewing the vast majority of the Fed’s monetary policy deliberations and decisions. The GAO also cannot examine the Fed’s transactions with foreign governments, foreign central banks and other global financial organizations.
“How often do you have some of the most progressive members in Congress — and I include myself within that fold — working with some of the more conservative members?” Sanders observed Wednesday.
Earlier this week it was revealed that the Fed is secretly engaged in an intense lobbying effort to stave off moves toward an audit. It is pushing Senators to support an amendment by Sen. Jeff Merkley (D-Ore.) that would amount to a much more restrictive audit provision.
In addition to backlash from the Fed and the country’s largest commercial banks, the thorough audit provisions face opposition from the White House. Chief of staff Rahm Emanuel is reportedly working closely with the Fed to kill off the audit provisions at all costs to protect the power structure dominated by the international banking elite.
All three parties contend that an audit would politicize monetary policy decisions and threaten the independence of the Fed.
Dean Baker, renowned macroeconomist and co-founder of the Center for Economic and Policy Research explains why such contentions are weak arguments:
I just don’t see any legitimate meaning of that term, independence, that it interferes with. We want them to make what they think are the best calls. But after the fact, do they have to answer for it? Should they have to say that these are the calls we made, this is why we made them? Absolutely.
I don’t understand how that isn’t independent. So those are the two arguments, on the one hand the stigma that will be created if at some point it’s known that banks go to the Fed, and on the other hand, that it somehow harms their independence. I mean, the FDA has to give a full account, we reviewed this drug, we reviewed that drug, this is why we approved this drug, here’s why we didn’t. I don’t understand why the fed should operate differently.
If the audit the Fed provisions survive, it may leave Obama no choice but to veto the entire financial reform bill.
The administration wants to see the creation of a large “independent” bureau within the Federal Reserve to police lending and other customer financial service transactions.
“It creates one of the most important, one of the most powerful, all-powerful individuals in the entire federal government,” Sen. Roger Wicker, R-Miss., has commented, objecting to the autonomy the Democratic leadership would give the head of the bureau.
A veto on auditing the Fed would prove a very unpopular move, which is why the White House wants it killed off in the Senate.
A Wall Street Journal poll illustrates the overwhelming support for auditing the Fed, with almost 90% saying a measure allowing Congress to audit the Fed should be passed.
This article was posted: Thursday, May 6, 2010 at 8:27 am