Senate unanimously passes Fed audit bill

posted at 10:55 am on May 12, 2010 by Ed Morrissey

At one time, the push to audit the Fed was limited to the fringe of both the Left and the Right.  Yesterday, the idea officially became mainstream, with the Senate voting unanimously for an audit of the Federal Reserve.  Along the way, though, the proposal got narrowed — so much so that the movement’s unofficial sponsor suggests that the word “audit” is a bit of a misnomer:

The Fed amendment was submitted by Sen. Bernard Sanders (I-Vt.) and co-sponsored by colleagues on both sides of the aisle. It gives the Government Accountability Office expanded power to audit the Fed and requires the central bank to disclose details about firms that received emergency aid during the financial crisis.

“We are beginning to lift the veil of secrecy on what is perhaps the most important agency in the United States,” Sanders said.

Facing pressure from the Obama administration and fellow lawmakers, Sanders agreed last week to narrow his initial proposal, which would have required the Fed to submit to regular audits.

Instead, under the legislation, the Fed must undergo a one-time examination of its massive emergency lending programs and post details on its Web site by December about the firms that benefited from its lending during the crisis. The new language, however, prevents investigators from peering into the central bank’s deliberations on interest rates and other elements of monetary policy. …

Paul expressed disappointment with the Sanders amendment, writing on his Web site that “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. In fact, rather than still calling the Sanders Amendment an audit, maybe it should instead be called more of a disclosure at this point.”

For Paul and Sanders, the original point was to shed light on the Fed’s manipulation of monetary policy, not just to examine its books.  The audit, or what Paul more accurately calls a disclosure, will give lawmakers its first peek into the machinations conducted by the Fed in the collapse and stabilization of the financial markets over the past two years.  The Fed itself didn’t object to this version of the bill, which should give an indication that they expect nothing to come to light that will embarrass the institution.  The Senate’s unanimous support shows how politically safe going this far and no farther has become.

This will almost certainly leave the people who most wanted an audit — and a commitment to audits on a regular basis — unsatisfied.  Many (although not all) audit advocates prescribe to a theory that the Fed operates within or heads a conspiracy to manipulate wealth and power in arbitrary, secret, and vaguely evil ways.  Exempting its monetary policy deliberations from disclosure will do nothing to address those fears, or for the Fed to put them to rest.

That won’t be the only disappointment in this bill, either.  An amendment to start disconnecting Fannie Mae and Freddie Mac from the government failed, mostly along party lines, 43-56.  Filed by Judd Gregg, John McCain, and Richard Shelby, the amendment would have mandated an end to government support of the failed GSEs within two years.  Taxpayers have already poured $145 billion into the lending guarantors, who issued a combined request of $21 billion in more aid over the past two weeks.

Why did it fail?  It’s become clear that Democrats don’t want to disconnect Fannie and Freddie from government control, or even plan for it.  They want to have them on hand for their next manipulation of the lending markets in service to their ideas of social engineering — which was the underlying cause of the financial collapse in 2008.  That’s a much bigger problem than anything the Fed is doing, audit or no audit.


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It’s become clear that Democrats don’t want to disconnect Fannie and Freddie from government control, or even plan for it. They want to have them on hand for their next manipulation of the lending markets in service to their ideas of social engineering — which was the underlying cause of the financial collapse in 2008.

Financial collapse is a feature, not a bug. See Alinsky and Rahm, “never-waste-a-crisis” Emmanuel.

bitsy on May 12, 2010 at 11:03 AM

The new language, however, prevents investigators from peering into the central bank’s deliberations on interest rates and other elements of monetary policy. …

…Thanks for nothing.

…this is what you get when the corrupt are asked to oversee and regulate the corrupt.

….blows a big a$$ hole in all that “we need more regulations” line the liberals keep pushing.

Regulations and investigations are worthless if they are carried out by the same people who benefit from their corruption.

Baxter Greene on May 12, 2010 at 11:05 AM

Sure would be nice if the senate did not fund one more penny to fred and fann. I know this will never happen though.
L

letget on May 12, 2010 at 11:06 AM

Absolute power corrupts absolutely.

Fletch54 on May 12, 2010 at 11:07 AM

About a century late and not likely to find much.

Speakup on May 12, 2010 at 11:07 AM

“The Fed itself didn’t object to this version of the bill, which should give an indication that they expect nothing to come to light that will embarrass the institution. The Senate’s unanimous support shows how politically safe going this far and no farther has become.”

Whitewash.

“That won’t be the only disappointment in this bill, either. An amendment to start disconnecting Fannie Mae and Freddie Mac from the government failed, mostly along party lines, 43-56.”
Rinse.

“Why did it fail? It’s become clear that Democrats don’t want to disconnect Fannie and Freddie from government control, or even plan for it. They want to have them on hand for their next manipulation of the lending markets in service to their ideas of social engineering — which was the underlying cause of the financial collapse in 2008. That’s a much bigger problem than anything the Fed is doing, audit or no audit.”

Repeat.

Archimedes on May 12, 2010 at 11:09 AM

The assumption behind this is that the Fed is never Audited, in fact they are Audited every year with some things off limits for a period of time.

Here is the US Code Law on the Federal Reserve Audits:

http://codes.lp.findlaw.com/uscode/31/I/7/II/714

31 U.S.C. § 714 : US Code – Section 714: Audit of Financial Institutions Examination Council, Federal Reserve Board, Federal reserve banks, Federal Deposit Insurance Corporation, and Office of Comptroller of the Currency

jp on May 12, 2010 at 11:13 AM

If you look closely at that picture of Bernanke on the cover of Time magazine, you can clearly see his little devil horns.

Emperor Norton on May 12, 2010 at 11:13 AM

heh.

mad saint jack on May 12, 2010 at 11:14 AM

An amendment to start disconnecting Fannie Mae and Freddie Mac from the government failed,

Of course an honest audit of those two GSE’s would surely put the Chris Dodds and Barney Franks of the senate where they belong, behind bars in the big house.

fourdeucer on May 12, 2010 at 11:14 AM

The Wolf’s,Weasels and Fox’s guarding the
Chicken Coop!(sarc).

canopfor on May 12, 2010 at 11:16 AM

Most people were looking for disclosure, not so much audit. A “one time” audit that was voted on gives them WAY too much power to shift crap around on books to make it look “pretty”. This was a completely easy vote to “get people off their backs”. When you have both sides coming together that are this corrupt, you have only one concept in focus: Repeat after me… Meaningless Political Cover.

SkinnerVic on May 12, 2010 at 11:19 AM

Audit
lets not and say we did!

cartooner on May 12, 2010 at 11:22 AM

I can understand the reluctance that the Fed has about being audited by Congress to some extent. I mean it would over time get to be nothing more than political theater, but they need to come clean on how all of that Sekrit TARP money was doled out.

Johnnyreb on May 12, 2010 at 11:25 AM

Bust Up These Beasts
Steve Forbes 07.28.08, 6:00 AM ET

The Treasury/Fed/Congressional rescue of Fannie Mae and Freddie Mac is only a stopgap. Unless fundamentally restructured, these two debt-bloated giants will sooner or later blow up.

The once implicit, now explicit, government guarantee for these two quasi-government entities was the reason that they could be leveraged to the hilt, with a debt-to-equity ratio of almost 25-to-1. Instead of just packaging mortgages and selling them off, the companies kept hundreds of billions in these instruments in their own portfolios to fatten profits–and enrich their politically connected managers and political allies. They also went into the junk-mortgage business, buying more than $170 billion worth of dodgy paper.

fourdeucer on May 12, 2010 at 11:30 AM

Proof yet again that we need massive replacement of those in congress. We must convince our representatives that they only remain in office as long as they do the will of the people.

Sadly, not only will this never happen, there are too many people who now expect the government to save them from whatever hardship has befallen them. We are truely a nation in decline.

jackal40 on May 12, 2010 at 11:32 AM

Another government sham…

d1carter on May 12, 2010 at 11:33 AM

unanimous = political theater.

I get real suspicious when Dems and Repubs both absolutely agree on something..

Guardian on May 12, 2010 at 11:34 AM

there are too many people who now expect the government to save them from whatever hardship has befallen them. We are truely a nation in decline.

jackal40 on May 12, 2010 at 11:32 AM

That’s pretty much been the plan since the late 1960s. and it seems to be working. Took a whole lot longer than planned, but it’s working.

Johnnyreb on May 12, 2010 at 11:35 AM

hummm, who’s going to be doing the audit? Congress can’t scrape together enough brain power to do it, much less understand the results. They know we the people don’t like the FED so this is just more pander from the pros.

Kissmygrits on May 12, 2010 at 11:53 AM

“Sadly, not only will this never happen, there are too many people who now expect the government to save them from whatever hardship has befallen them”

Until it is revealed that the hardship that has befallen them is government that is, it why those in power don’t want to reveal their part in it.

Archimedes on May 12, 2010 at 11:58 AM

Let’s just get rid of the Fed. They are NOT a governmental entity and they are the main part of the problem and not the solution.

Nuts4koi on May 12, 2010 at 12:03 PM

At one time, the push to audit the Fed was limited to the fringe of both the Left and the Right.

Ah yes, I remember my time in the fringe. Preaching in 1995 that we were in a historic housing boom. Being ignored by friends who continued to pour money into their homes.

No so fringy any more.

Maybe we will get money based on a commodity standard the way things are going.

Bill C on May 12, 2010 at 12:07 PM

Nuts4koi on May 12, 2010 at 12:03 PM

Clueless.

lorien1973 on May 12, 2010 at 12:08 PM

Seems to me the description as the Party of No is more aptly applied to Demokrats.

Expand off-shore drilling? No.
Drilling in ANWR? No.
Access to shale? No
Eliminate subsidies for Fannie & Freddie? No.
Eliminate taxpayer exposure to Fannie & Freddie? No.
Require voter ID? No.
Enforce immigration laws? No.
Sell health insurance across state lines? No.
Tort reform? No.
Demonstrate fiscal responsibility? No.
Advocate personal responsibility? No.
Tell the truth? No.

Feel free to add on.

anglee99 on May 12, 2010 at 12:17 PM

Clueless.

lorien1973 on May 12, 2010 at 12:08 PM

Why?

There are better ways to supply money to the economy other than throwing money at every financial dislocation since the Mexican crisis.

Bill C on May 12, 2010 at 12:17 PM

Funny how following a ‘fat fingered’ market glitch the bill gets gutted.

Chubbs65 on May 12, 2010 at 12:28 PM

An amendment to start disconnecting Fannie Mae and Freddie Mac from the government failed, mostly along party lines, 43-56.

Roll call. Bayh (IN) and Feingold (WI) voted with the Republicans. Byrd didn’t vote. Again.

conservative pilgrim on May 12, 2010 at 12:36 PM

Quite a different cover on Time than the man of the year photo.

kens on May 12, 2010 at 12:40 PM

Nuts4koi on May 12, 2010 at 12:03 PM

Clueless.

lorien1973 on May 12, 2010 at 12:08 PM

clueless? dude, wouldnt you want to bring back the greenback and get rid of federal reserve notes? greenback = debt free and reserve note = debt. i mean, what are you, a re-re or something?

moonbatkiller on May 12, 2010 at 12:53 PM

Clueless.

lorien1973 on May 12, 2010 at 12:08 PM

Yes you are. And stupid, and willfully ignorant, and a pathetic wingnut to boot.

S–tcanning the Fed will be only the first step if we are to even survive with our economy intact in the next decade.

Dark-Star on May 12, 2010 at 12:56 PM

So if the govt want to audit me I can just give them a quick peek and nothing more that might incriminate me?

Yakko77 on May 12, 2010 at 1:49 PM

So if the govt want to audit me I can just give them a quick peek and nothing more that might incriminate me?

Yakko77 on May 12, 2010 at 1:49 PM

Go ahead and try that and see if it works out for you lol. Kind of like telling the IRS you are using the Rangle Rule.

Nuts4koi on May 12, 2010 at 1:56 PM

Dark-Star on May 12, 2010 at 12:56 PM

Thanks for the comment. I was going to respond, but if I start feeding the trolls I have a hard time stopping.

Nuts4koi on May 12, 2010 at 1:57 PM

My God, my God, MY GOD! I once thought the FED needed to be done away with. Now it needs to be cleaned, disinfected, scrutinized, torn limb from limb, dissected, obliterated, burned and nuked. And, the longer Congress waits to do it, the closer those in Congress come to needing to be cleaned, disinfected, scrutinized, torn limb from limb, dissected, obliterated, burned and nuked.

Let’s see what the next batch in Congress has the courage to do – - – or not.

Woody

woodcdi on May 12, 2010 at 8:03 PM

jp on May 12, 2010 at 11:13 AM

jp,

the audit doesn’t include monetary policy. That’s why Ron Paul and most of the House wanted H.R. 1207 (Vitters amendment in the Senate) to pass. Senator Gregg and Dodd, two that aren’t running for reelection, were adamantly against Vitters amendment and spoke out about H.R. 1207.

This Sanders amendment does nothing to stop the cause of the bust to begin with; Federal Reserve Monetary policy.

Sanders was a sell out. Gregg and Dodd cater to the crony bankers at the Fed.

Now the Fed is giving money to Greece, but hey…so is Congress.

Vote for those who don’t vote for more Federal Reserve power and giving money to the IMF.

Fed Up on May 14, 2010 at 7:39 PM