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Legislation to Lift Veil of
Secrecy & Audit
'The Fed' Gains
Momentum in Congress
317 Co-Sponsors in House to Include
Entire 178 Member Republican Caucus
Vermont Senator Bernie Sanders (I)
Introduces Companion Legislation
in
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22 Republicans & 8 Democrats
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California Senator Barbara Boxer
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The Federal Reserve
Transparency Act
H.R. 1207
The Ron Paul Revolution!
After decades warning the nation of the dangers inherent in the secrecy in The Fed’s deliberation, decision-making process, and actions with The People’s currency, Congressman Ron Paul has caught the attention and gained the support of colleagues on both sides of the aisle, and across many spectrums of political philosophy in the 111th Congress.
With 301 co-sponsors as of October 12, H.R. 1207, The Federal Reserve Transparency Act of 2009 would amend Title 31 of U.S. Code and remove prohibitions placed on the General Accounting Office in their audit of The Fed.
The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress - often called the "congressional watchdog" - and investigates how the federal government spends taxpayer dollars. The head of GAO is the Comptroller General of the
Under current U.S. law, GAO has the authority to audit The Fed, however, the audit 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 of Governors and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection.”
EDITOR’S NOTE: Above quote is verbatim from Title 31, U.S. Code, Section 714 (Money and Finance, Government Accounting Office, General Duties and Powers).
In addition, according to the same U.S. Code Section, GAO may conduct an “onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing.”
H.R. 1207 removes all restrictions placed on GAO in their auditing powers of The Fed by U.S. Code, and requires an audit of The Fed under the Amended rules be completed before the end of 2010.
Within 90 days of completion of the GAO’s audit of The Fed, the Comptroller General must make the audit available to the Speaker of the House, the majority and minority leaders of the Senate and the House, and “any other Member of Congress who requests it.”
The GAO’s audit of The Fed must include “a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.”
In the U.S. Senate, Paul’s H.R. 1207 has been introduced by self-described socialist and Vermont Independent, Senator Bernie Sanders, as S. 604. Sanders’ Bill and has 30 co-sponsors, to include Senator Barbara Boxer, one California's two ultra-Liberal Senators.
Speech from the Floor of House of Representatives on
Mr. PAUL: Madam Speaker, I rise to introduce the Federal Reserve Transparency Act. Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the
How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation.
Serious discussion of proposals to oversee the Federal Reserve is long overdue. I have been a longtime proponent of more effective oversight and auditing of The Fed, but I was far from the first Congressman to advocate these types of proposals. Esteemed former members of the Banking Committee such as Chairmen Wright Patman and Henry B. Gonzales were outspoken critics of The Fed and its lack of transparency.
Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations. While the conventional excuse is that this is intended to reduce The Fed's susceptibility to political pressures, the reality is that The Fed acts as a foil for the government.
Whenever you question The Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests.
The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight?
Particularly when hundreds of billions of dollars of currency swaps have been announced and implemented, The Fed's negotiations with the European Central Bank, the Bank of International Settlements, and other institutions should face increased scrutiny, most especially because of their significant effect on foreign policy.
If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet The Fed avoids both fates.
More importantly, The Fed's funding facilities and its agreements with the Treasury should be reviewed. The Treasury's supplementary financing accounts that fund Fed facilities allow the Treasury to funnel money to Wall Street without GAO or Congressional oversight.
Additional funding facilities, such as the Primary Dealer Credit Facility and the Term Securities Lending Facility, allow The Fed to keep financial asset prices artificially inflated and subsidize poorly performing financial firms.
The Federal Reserve Transparency Act would eliminate restrictions on GAO audits of the Federal Reserve and open Fed operations to enhanced scrutiny.
We hear officials constantly lauding the benefits of transparency and especially bemoaning the opacity of The Fed, its monetary policy, and its funding facilities.
By opening all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much-needed transparency of the Federal Reserve. I urge my colleagues to support this Bill.
Fed CONGRESSMAN RON PAUL Republican - The public is demanding transparency in government like never before. A majority of the House has cosponsored HR 1207. Yet, Senator Jim DeMint’s heroic efforts to attach it to another piece of legislation elicited intense opposition by the Senate leadership. The hearings on Capitol Hill provided us with a great deal of information about the types of arguments that will be levied against meaningful transparency and how the secretive central bankers will defend the status quo that is so beneficial to them. Claims are made that auditing the Fed would compromise its independence. However, by independence, they really mean secrecy. The Fed clearly cherishes its vast power to create and spend trillions of dollars, diluting the value of every other dollar in circulation, making deals with other central banks, and bailing out cronies, all to the detriment of the taxpayer, and to the enrichment of themselves. I am happy to challenge this type of “independence.” They claim the Fed is endowed with special intellectual abilities with which to control the market and that central bankers magically know what the market needs. We should just trust them. This is patently ridiculous. The market is a complex and intricate thing. No one knows what the market needs other than the market itself. It sends signals, such as prices, that should be reacted to and respected, not thwarted and controlled. Bankers are not all-knowing and cannot ignore the rules of supply and demand. They might act as if they are, but their manipulation of the market just ends up throwing it wildly off balance, which gives us the boom and bust cycles. They claim the Fed must remain apolitical. No organization is apolitical that relies on the President to appoint the Chairman. In fact, it is subject to the worst sort of politics – power to create trillions of dollars and affect the value of every dollar in the country without the accountability of direct elections or meaningful oversight! The Fed typically enacts monetary policy that is favorable to particular administrations close to elections, to the detriment of long-term considerations. They do this partly because of the political appointee process for the Chairmanship. The only accountability the Federal Reserve has is ultimately to Congress, which granted its charter and can revoke it at any time. It is Congress’s Constitutional duty to protect the value of the money, and they have abdicated this responsibility for far too long. This was the issue that got me involved in politics 35 years ago. It is very encouraging to finally see the issue getting some needed exposure and traction. It is regrettable that it took a crisis of this magnitude to get a serious debate on this issue.
or Fed Secrecy?
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Last week I was very pleased that hearings were held on the independence of the Federal Reserve System. My bill HR 1207, known as the Federal Reserve Transparency Act, was discussed at length, as well as the general question of whether or not the Federal Reserve should continue to operate independently.
