Good News. Federal Reserve to Be Audited. Senate Passes Bill

Bernanke refused to tell the Senate and specifally Bernie Sanders, but Sanders has the last word!

One giant step for US democracy. We need wins like this to preserve our democracy.
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Senate Backs One-Time Audit of Fed’s Bailout Role
May 11, 2010, 2:09 pm
The Senate on Tuesday voted unanimously to require a one-time audit of the Federal Reserve’s emergency actions during and after the 2008 financial crisis as part of broad legislation overhauling the nation’s financial regulatory system, The New York Times’s David M. Herszenhorn reports from Washington.

The amendment, proposed by Senator Bernard Sanders, independent of Vermont, above, would require the Government Accountability Office to scrutinize some $2 trillion in emergency lending that the Fed provided to the nation’s biggest banks. The vote was 96 to 0.

“At a time when the Federal Reserve has provided the largest taxpayer bailout in the history of the world, the largest financial institutions in this country, trillion-dollar institutions,” Mr. Sanders said in a floor speech, “the Sanders amendment makes it clear that the Fed can no longer operate in the kind of secrecy that it has operated in forever.”

He added, “For the first time the American people will know exactly who received over $2 trillion in zero or virtually zero-interest loans from the Fed, and they will know the exact terms of those financial arrangements.”

Mr. Sanders, a professed socialist, has long demanded greater transparency at the central bank, and his original plan could have subjected the Fed to continuing audits of some routine operations. But he agreed to scale back the proposal in the face of opposition by the White House, the Fed, the Treasury and some Senate colleagues.

The critics said that more aggressive audits would impede the Fed’s independence and potentially interfere with its ability to set monetary policy. Mr. Sanders and other proponents of fuller audits of the Fed rejected those assertions and said they were providing adequate safeguards to protect the central bank’s integrity.

While the Senate provision would require an audit of the Fed’s emergency operations beginning on Dec. 1, 2007, the House approved an even tougher audit requirement in its version of the financial regulatory legislation.

Senator David Vitter, Republican of Louisiana, put forward an amendment that would have mirrored the tougher House language, but it was rejected. The vote was 37 to 62.

Before the vote, Mr. Vitter appealed for support, saying the proposal by Mr. Sanders did not go far enough. “I urge all of my colleagues, Democrats and Republicans, to support both amendments to have full openness and accountability and transparency with all the protections that are included against politicizing individual Fed decisions,” he said.

The House bill, which was approved in December, included a proposal sponsored by one of the most conservative lawmakers, Representative Ron Paul, Republican of Texas, and one of the most liberal, Representative Alan Grayson, Democrat of Florida.

The Paul-Grayson proposal would allow audits by the Government Accountability Office of every item on the Fed’s balance sheet, including all credit facilities and all securities purchase programs, but would allow an exemption for unreleased transcripts and minutes of closed-door meetings. It also would establish a 180-day time lag before details of the Fed’s market actions could be released.

It also included specific language stating that it was not intended to interfere with monetary policy or to involve Congress in decisions regarding monetary policy.

Mr. Paul had said that the audits would serve as a counterbalance to a broad expansion of the Fed’s regulatory authority in the financial system and, like Mr. Sanders, he had long demanded greater transparency. But in recent days, Mr. Paul has reacted angrily to the compromise proposal accepted by Mr. Sanders.

“While it is better than no audit at all, it guts the spirit of a truly meaningful audit of the most crucial transactions of the Fed,” Mr. Paul wrote on his Web site. “In fact, rather than still calling the Sanders Amendment an audit, maybe it should instead be called more of a disclosure at this point.”

“The new language of the Sanders amendment requires a one-time disclosure from the Fed,” Mr. Paul continued. “Basically, their sins of the past would be revealed and Americans would know more about who got bailed out by the Fed and under what terms. This would be good, but it’s not nearly enough.”

http://dealbook.blogs.nytimes.com/2...ne-time-audit-of-feds-bailout-role/?src=busln

 

Still a major step in the right direction. Once we manage to take one step to make the Fed accountable to our elected leaders who knows how much more info we can managwe to get from these private bankers.

Despite conventional wisdom it is not good to have non-elected bankers having this much ability to decide what happens to the economy. The president and congress should have more power wrt to the Fed.