November 21, 2009

Bill to audit Federal Reserve passed in Committee

Filed under: Uncategorized — Greg in cheeseland @ 2:22 am

For the first time in history, the Federal Reserve Bank may be facing an audit. Yesterday, the House Finance Committee passed a bill (HR 1207) that authorizes the Government Accountability Office (GAO) to conduct a wide-ranging audit of the Fed’s secretive deals with foreign central banks and major U.S. financial institutions.

HR 1207 faced fierce last-minute opposition from centrist Democrats, including Rep. Barney Frank, who is the Chairman of the House Finance Committee and from Federal Reserve executives. The actions of Federal Reserve officials and the centrist “Blue Dog” democrats in their wallets should leave no doubt that there is something to hide from Congress and the American people.

Opponents of HR 1207 argue that it could be perceived as influencing monetary policy, which can have inflationary pressure. Reps. Paul and Alan Grayson (D-FL), however, made it clear that is not the intent by adding an amendment that expressly blocks Congress from interfering with the independence of monetary policy decision-making. Ron Paul made that very clear in a speech before the committee.

Ben Bernanke, the Chairman of the Fed, could (or would) not account for $500 billion of those funds when questioned earlier this year by Rep. Grayson. In essence, the Fed has been using taxpayer money to invest in foreign banks and large Wall Street firms that deal with derivatives on the world market, while at the same time neglecting to invest funds in smaller banks that could loan the money to consumers and small businesses. The end result is mega-profits for the big banks while the rest of the economy stagnates and unemployment continues to rise. Anger over the pillaging of America’s economic security by the financial elite is found on both ends of the political spectrum.

Glenn Greenwald, an investigative reporter writing for, points out what may be the most significant aspect of the passage of HR 1207:

Our leading media outlets are capable of understanding political debates only by stuffing them into melodramatic, trite and often distracting “right v. left” storylines. While some debates fit comfortably into that framework, many do not. Anger over the Wall Street bailouts, the control by the banking industry of Congress, and the impenetrable secrecy with which the Fed conducts itself resonates across the political spectrum, as the truly bipartisan and trans-ideological vote yesterday reflects. Populist anger over elite-favoring economic policies has long been brewing on both the Right and Left (and in between), but neither political party can capitalize on it because they’re both dependent upon and subservient to the same elite interests which benefit from those policies.

While the passing of this bill in committee is a huge hurdle overcome, it must still come to a full vote in the House and a companion bill must be passed in the Senate, where there seem to be many more obstacles in getting any sort of populist legislation passed.

But a victorious Rep. Grayson said yesterday, “Today was Waterloo for Fed secrecy.”

Read more here:

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