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Revised Senate Fed Audit Amendment Lacks Bite

Daniel Indiviglio
The Atlantic [1]
May 8, 2010

Perhaps no other force had as much to do with stabilizing the financial system during the crisis as the Federal Reserve. And no other influence is shrouded in so much mystery. Although its tactics were hugely successful, the Fed has become incredibly controversial due to its secrecy. It has some politicians on both sides of the aisle calling for an audit to enhance transparency. But the Senate amendment — sponsored by Sen. Bernard Sanders (I-VT) — changed significantly on Thursday and lost much of its bite.

The House version of reform contains an amendment [2] (.pdf) to audit the Fed sponsored by Rep. Ron Paul (R-TX). Indeed, in Sanders’ original version [3] (.pdf), he virtually copied Paul’s amendment word-for-word, and added a section about better publicizing the details of Fed activity. Initially, both would have allowed periodic audits of all of the Fed’s policy actions. They each would have also permitted the Government Accountability Office to determine what scopes the audits would encompass.

No more. In order to appeal to a broader audience, the revised Senate amendment [4] (.pdf) has been watered down significantly. Now, the action would be reduced to a one-time audit, specifically targeted at the Fed’s new programs created during the financial crisis. It also specifies the scope of work that the GAO should consider.

Paul is not amused. He released a statement [5] yesterday condemning the changes.

Full article here [1]