House votes to audit the Federal Reserve

posted at 5:21 pm on July 25, 2012 by Erika Johnsen

If one cannot “end the Fed,” one can instead go for what is perhaps the next best thing and legislatively instigate an independent audit to examine the Federal Reserve’s many questionable financial decisions since the 2008 financial crisis — and Ron Paul just did.

“Since the 2008 financial crisis, the Fed has tripled its balance sheet to $3 trillion, equivalent to 20% of the economy, through an unprecedented series of bailouts and economic interventions,” said House Oversight and Government Reform Committee chairman Darrell Issa, R-Calif., who shepherded the bill through his committee. “The public has a right to understand how and under what terms decisions were made and who is responsible.”

The legislation tasks the Government Accountability Office (GAO) with auditing the Federal Reserve and reporting back within a year. The 327-98 vote amounts to a personal victory for Rep. Ron Paul, R-Texas, who has called for such an audit for years.

Chairman Ben Bernanke has long been opposed to such an audit, since it would interfere with his decision-making process (some people just don’t like checks and balances, yo), but Rep. Paul took him to task on the transparency score during a Financial Services Committee hearing last week. Righteous:

While the audit passed the House with flying colors (hey, check out that bipartisan support — Congress can get things done, guys!), Mr. Paul expressed some skepticism that the similar legislation introduced by his son Sen. Rand Paul will make it through the Senate and to President Obama’s desk: “The Senate will give us trouble,” he said on C-SPAN yesterday. And while that may be true for the time being, it sounds like something the other chamber’s Democrats haven’t been opposed to in the past:

The overwhelming 327-98 vote sends the bill to the Senate where Majority Leader Harry Reid, Nevada Democrat, has previously expressed support for an audit — though it’s unclear he’ll carve out time for the legislation this year.

Regardless, with such overwhelming bipartisan support, the initiative is on Congress’s radar, and with all of the money and clutch decision-making that goes through the Fed’s unchecked authority every day, I think Rep. Paul was right to be so insistent about it. The longtime Congressman has decided not to seek another term and will retire at the end of this session, and I say he can go ahead and count this as a feather in the cap of his career.


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over to you Harry…

DanMan on July 25, 2012 at 5:25 PM

Yawn.

bgibbs1000 on July 25, 2012 at 5:26 PM

Aww, the paulbots will be too (pleased that is :)…

jimver on July 25, 2012 at 5:26 PM

The overwhelming 327-98 vote sends the bill to the Senate where Majority Leader Harry Reid, Nevada Democrat, has previously expressed support for an audit — though it’s unclear he’ll carve out time for the legislation this year.

Nah, Harry will give RP a nice parting gift when RP retires. Harry will hand him back the bill, untouched by the Senate. The Obama administration cannot handle too many more scandals.

Fallon on July 25, 2012 at 5:27 PM

This goes nowhere until such future time when BHO and Reid are both gone, and at a time when the Dems are out of power so they can blame all the nefarious looking numbers on Republicans.

Otherwise it dies a quiet death in a Senate chamber somewhere.

Difficultas_Est_Imperium on July 25, 2012 at 5:28 PM

I’ve been thinking…has the Senate passed any substantive legislation since the 2010 midterms? Heck, have they even debated any legislation that had both substance *and* a good chance at passing since the 2010 midterms?

Mohonri on July 25, 2012 at 5:28 PM

Harry Reid to announce hearings into why Chick-Fil-A does not have Chicago values in 5…4…3…2…

Left Coast Right Mind on July 25, 2012 at 5:30 PM

The overwhelming 327-98 vote sends the bill to the Senate where Majority Leader Harry Reid, Nevada Democrat, has previously expressed support for an audit — though it’s unclear he’ll carve out time for the legislation this year.

However….If the Republican controlled house passed it….ten to one old Dingy Harry is now dead set against it. Good old Cowboy Poetry Harry is only wired one way.

logicman_1998 on July 25, 2012 at 5:31 PM

The overwhelming 327-98 vote sends the bill to the Senate where Majority Leader Harry Reid, Nevada Democrat, has previously expressed support for an audit — though it’s unclear he’ll carve out time for the legislation this year

.

Much more important carving of the Senate’s time is required to ensure all Presidential candidates must turn over 93 years worth of tax returns while Senators and Congressmen need not turn over 1.

weaselyone on July 25, 2012 at 5:32 PM

Harry Reid to call Staples and request another File 13 drawer…

hillsoftx on July 25, 2012 at 5:33 PM

Barry can rest easy. There’s no way that Reid will let a Senate bill pass. The last thing they want is for the country to see the RED INK all over the Fed’s books.

GarandFan on July 25, 2012 at 5:34 PM

…Harry will make sure the sh!t hits the fan on the Federal Reserve when Mitt is in office…and it will still be Bushes fault!

KOOLAID2 on July 25, 2012 at 5:37 PM

I’ve been thinking…has the Senate passed any substantive legislation since the 2010 midterms? Heck, have they even debated any legislation that had both substance *and* a good chance at passing since the 2010 midterms?

Farm (Footstamp) Bill? That wasn’t good, but that’s about all that has come out of the Senate that I can think of.

Today they are voting on competing tax plans in the Senate.
Obama’s tax plan and the Republican’s Tax plans are being voted separately. McConnel is not blocking the vote.

Problem is, the Obama Tax Plan Bill did not originate in the House, so even if it passes the Senate would have to pass it again after the House originates and passes one.

Talking about not having time to carve out time to vote on legisliation….one would think that there would be time today since the Obama Tax Bill can’t go anywhere even if passed.

weaselyone on July 25, 2012 at 5:38 PM

I’ve been thinking…has the Senate passed any substantive legislation since the 2010 midterms? Heck, have they even debated any legislation that had both substance *and* a good chance at passing since the 2010 midterms?

Farm (Footstamp) Bill? That wasn’t good, but that’s about all that has come out of the Senate that I can think of.

weaselyone on July 25, 2012 at 5:38 PM

They passed the increase on the debt ceiling. Can’t possibly cut off the flow of pork and spending.

sharrukin on July 25, 2012 at 5:41 PM

Paul has been after this for many years. Many reps voted for it because they know it doesn’t have a “snowball’s chance” of passing the Senate. Paul is a quitter because now that he has finally become chair of the banking committee, he is quitting congress.– And don’t tell me that he has spent enough time serving our country, remember he ran for Pres; he wanted 4 more years. Now that he just can’t sit back and whine, he is quitting. He should have been reinvigorated by the 2010 win and laid out a whole strategy for getting the country’s money system back on track — and stayed in congress to make it happen.

KenInIL on July 25, 2012 at 5:42 PM

If one cannot “end the Fed,” one can instead go for what is perhaps the next best thing and legislatively instigate an independent audit to examine the Federal Reserve’s many questionable financial decisions since the 2008 financial crisis — and Ron Paul just did.

No, auditing the Fed IS the same thing as abolishing it. The Fed isn’t a financial institution in any rational sense. It is corruption solely for the sake of corruption; take that away, and the Fed has no raison d’etre.

Ergo this will not happen. The fix is in; No way this would have passed in the house unless they knew for a fact it can’t possibly pass in the Senate.

logis on July 25, 2012 at 5:44 PM

I’ve been thinking…has the Senate passed any substantive legislation since the 2010 midterms?

Mohonri on July 25, 2012 at 5:28 PM

King Barry and the Democraps don’t need no steenking Congress. As long as he can pass everything by Executive Order, they’re happy.

UltimateBob on July 25, 2012 at 5:46 PM

FINAL VOTE RESULTS FOR ROLL CALL 513
(Republicans in roman; Democrats in italic; Independents underlined)

H R 459 2/3 YEA-AND-NAY 25-Jul-2012 2:58 PM
QUESTION: On Motion to Suspend the Rules and Pass, as Amended
BILL TITLE: To require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States before the end of 2012, and for other purposes

http://clerk.house.gov/evs/2012/roll513.xml

canopfor on July 25, 2012 at 5:48 PM

If it doesn’t pass the Senate, maybe President Romney can issue an Executive Order to Audit the Fed. I suppose the Obama folks would be squeeling then, no?

weaselyone on July 25, 2012 at 5:48 PM

Barry can rest easy. There’s no way that Reid will let a Senate bill pass. The last thing they want is for the country to see the RED INK all over the Fed’s books.

GarandFan on July 25, 2012 at 5:34 PM

Nah. The audit will last years.

stvnscott on July 25, 2012 at 5:48 PM

A Guide to American Gangsters: The American Financial Mafia…

Banks: All American banks are part of the criminal financial organization that controls most wealth in America. The CEOs of the biggest banks are the “dons” (Capo Crimini) in the American Financial Mafia. Many of these “dons” serve on Federal Reserve boards (like JP Morgan’s Dimon does), thus guaranteeing massive conflicts of interests and allowing the dons and their banks to financially benefit themselves above all others with the Fed’s FREE money.

Federal Reserve: aka, “The Commission” – The national ruling body of America’s Financial Mafia. The Fed is run by the seven members of the Board of Governors of the Federal Reserve System. These and the members of Federal Open Market Committee (FOMC) and the twelve regional Federal Reserve Bank presidents located in major cities throughout the nation are the “bosses” of the American Financial Mafia, with the Fed Chairman, currently bailout bernanke, serving as the “Boss of the Bosses” (Cappo di tutti cappi).

The Fed tries to gain respectability by claiming that its role includes “Conducting the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices.” The past 3+ years of 8%+ unemployment and the corresponding massive decrease in the labor force participation rate proves that that claim is total bs. In reality, The Commission does only one thing: Ensure multi-BILLION dollar profits for BIG BANKS and Wall Street investors. In this respect, The Commission is almost identical to the the initial focus of the American branch of the criminal mafia named “La Costra Nostra” which was concentrated on protection rackets. The Fed serves as a “protector” of BIG BANK and Wall Street profits, while doing nothing for “Main Street” America.

After nearly a hundred years the American criminal mafia still flourishes. Yet, all the criminal actions of the criminal mafia amount to small potatoes compared to the reduced standard of living for the average middle class and poor Americans that has resulted from the many asset and equity bubbles created by the irresponsible actions of the far more powerful, far more insidious and far more dangerous American Financial Mafia.

ABOLISH THE AMERICAN FINANCIAL MAFIA – this is the ONLY thing that people agree on across the entire political spectrum, from the union/d-cRAT party-funded leftist extremist #occupy astroturf to the right-wing kook moRon PaulBOTS.

TeaPartyNation on July 25, 2012 at 5:49 PM

Hopefully, the Federal Reserve did not use Turbo-Tax.

We all know what happens when you use Turbo-Tax.

MessesWithTexas on July 25, 2012 at 5:52 PM

I am very happy! let see if it will pass the senate. there was another sotry today in congress, relating to the libor scandal:
http://www.politico.com/news/stories/0712/78952.html
this stuff is big and the dems are soon going to gain on it. see what Pocahontas is writing:

http://www.washingtonpost.com/opinions/elizabeth-warren-libor-fraud-exposes-a-rotten-financial-system/2012/07/19/gJQAvDnDwW_story.html

The Libor scandal is more than just the latest financial deception to come to light. It exposes a fraud that runs to the heart of our financial system.

The London interbank offered rate is a benchmark for a range of interest rates, and the misdeeds making headlines have to do with how those rates are set. If insiders can manipulate the basic measurement of a loan — the interest rate — there is rot at the core of the financial system.

The British financial giant Barclays has admitted to manipulating the rate from 2005 to at least 2009. When the bank made a bet on the direction in which interest rates would turn, the Barclays employees who submit data for calculating interest rates would fake their numbers to help Barclays traders win the bet. Day after day, year after year, bet after bet, Barclays made money by fixing bets for its own traders.

We don’t know who else was fixing bets. Other big banks, including some of the largest in the United States, are under investigation. Barclays doesn’t appear to have acted alone, and it is clear that its fixes weren’t secret deals by rogue traders. Traders put requests to manipulate the rates in writing and even joked about delivering champagne to those who helped them.

It is also clear that many of those who didn’t have a fixer — including consumers, community banks and credit unions — lost money. Barclays padded its bottom line by taking money from everyone else. It won when it shouldn’t have won — and others lost when they shouldn’t have lost. The amount of money involved is staggering. On any given day, $800 trillion worth of credit-related transactions are linked to Libor rates.

In most markets, consumers could simply take their business elsewhere once they learned that the scales were rigged. But interest rates are different. Everyone who borrows money on a mortgage, credit card, student loan, car loan or small-business loan — basically, everyone — is affected by a crooked market on Libor. According to the Federal Reserve Bank of Cleveland, in 2008 more than half of all adjustable-rate mortgages were linked to Libor. Even those who didn’t borrow but saved for retirement or their children’s future got hit with interest rates that had been faked.

It gets worse. During the financial crisis, Barclays and other banks also appear to have consistently manipulated Libor to show lower-than-real borrowing rates to convince the world — and their regulators — that the bank was stronger than it really was. In other words, they rigged the interest-rate reports so that no one would know exactly how much trouble they were in.

With a rotten financial system once again laid bare to the world, the only question remaining is whether Wall Street has so many friends in Washington that meaningful reform is impossible.

Real accountability would mean prosecuting the traders and bank officials who violated federal laws and prosecuting the executives who knew what they were up to. It would mean forcing executives to pay back any inflated compensation that was based on padded profits.

Going forward, the rules would be changed so that Libor is calculated on actual borrowing costs, not estimated or claimed costs. And enforcement agencies would have the resources they need to launch investigations, to fight the armies of private lawyers the banks hire and to prosecute the law-breakers.

But the heart of accountability lies deeper. It rests on acknowledging that we cannot trust Wall Street to regulate itself — not in New York, London or anywhere else. The club is corrupt. When Mitt Romney says he will move to repeal all of the new financial regulations, he supports a corrupt system. When members of Congress grill regulators for being too tough on Wall Street and slash the budgets of the regulators charged with overseeing Wall Street, they prop up a corrupt system.

Financial services are critical to the economy. That’s why everyone — every family and every business — has a stake in an honest system. The fantasy that reducing oversight of the biggest banks will make us safer is just that — a dangerous fantasy. The Libor fraud exposes rot at the core. Now, who will stand up to fix it?

how can we answer this rhetoric now? i not even sure if I disagree…

nathor on July 25, 2012 at 5:52 PM

Paul has been after this for many years. Many reps voted for it because they know it doesn’t have a “snowball’s chance” of passing the Senate. Paul is a quitter because now that he has finally become chair of the banking committee, he is quitting congress.– And don’t tell me that he has spent enough time serving our country, remember he ran for Pres; he wanted 4 more years. Now that he just can’t sit back and whine, he is quitting. He should have been reinvigorated by the 2010 win and laid out a whole strategy for getting the country’s money system back on track — and stayed in congress to make it happen.

KenInIL on July 25, 2012 at 5:42 PM

Paul is ostensibly quitting because redistricting eliminated his district, and he doesn’t think he can win in the newly drawn district.

stvnscott on July 25, 2012 at 5:53 PM

Harry Reid in 1995 said that we should audit the fed. We need to remind him of this. http://www.youtube.com/watch?v=oXOsZ7Ad7dM

iwasbornwithit on July 25, 2012 at 5:53 PM

At least paul did and has gotten his point across in the house. But dingy will let that set in the senate so long the paper will turn yellow! And bho/team WILL not be please the house got all constitutional on them?
L

letget on July 25, 2012 at 5:58 PM

ABOLISH THE AMERICAN FINANCIAL MAFIA – this is the ONLY thing that people agree on across the entire political spectrum, from the union/d-cRAT party-funded leftist extremist #occupy astroturf to the right-wing kook moRon PaulBOTS.

TeaPartyNation on July 25, 2012 at 5:49 PM

I agree so much! abolish the fed or break up the big banks or regulate or something… BUT DO SOMETHING THAT HURTS THOSE CORRUPT BASTARDS!

nathor on July 25, 2012 at 5:59 PM

Harry Reid in 1995 said that we should audit the fed. We need to remind him of this. http://www.youtube.com/watch?v=oXOsZ7Ad7dM

iwasbornwithit on July 25, 2012 at 5:53 PM

Ha. This video is hilarious!

Harry Reid isn’t going to do anything.

tetriskid on July 25, 2012 at 6:08 PM

Hopefully, the Federal Reserve did not use Turbo-Tax.

We all know what happens when you use Turbo-Tax.

MessesWithTexas on July 25, 2012 at 5:52 PM

by the way, did you now that turbo tax tim was today in congress answering about the libor scandal?
http://www.politico.com/news/stories/0712/78952.html

apparently hot air does not think this is worthy news to discuss.

nathor on July 25, 2012 at 6:11 PM

apparently hot air does not think this is worthy news to discuss.

nathor on July 25, 2012 at 6:11 PM

It’s really sad how HA ignores this. I don’t think it’s nefarious. I just think that the subject matter is above their heads.

iwasbornwithit on July 25, 2012 at 6:13 PM

by the way, did you now that turbo tax tim was today in congress answering about the libor scandal?
http://www.politico.com/news/stories/0712/78952.html

apparently hot air does not think this is worthy news to discuss.

nathor on July 25, 2012 at 6:11 PM

What’s LIBOR? /

tetriskid on July 25, 2012 at 6:15 PM

What’s LIBOR? /

tetriskid on July 25, 2012 at 6:15 PM

I think its an attack site aimed at Bill O’Reilly. They get more desperate every day!

sharrukin on July 25, 2012 at 6:18 PM

audit the Federal Reserve

It.Will.Never.Happen.

Too powerful and too corrupt.

MichaelGabriel on July 25, 2012 at 6:19 PM

Will he be pleased? He had a bill to do just that in 2009 with enough co-sponsors to make it veto proof and yet would not push it.

What is Mr. Munchkin going to do now?

Kermit on July 25, 2012 at 6:19 PM

Ceremonial.

Now you can retire.

FlaMurph on July 25, 2012 at 6:21 PM

It’s really sad how HA ignores this. I don’t think it’s nefarious. I just think that the subject matter is above their heads.

iwasbornwithit on July 25, 2012 at 6:13 PM

my guess is that with romney running, the repubs know that a scandal that lowers the reputation of big finance is bound to hurt mitt “king of bain” romney chances. and hot air bloggers as the good partisan lapdogs that they are, got the memo and are mum about it.

nathor on July 25, 2012 at 6:21 PM

What’s LIBOR? /

tetriskid on July 25, 2012 at 6:15 PM

LIBOR is the vas€lin€ that big banks use to scr€w you.

nathor on July 25, 2012 at 6:26 PM

LIBOR is the vas€lin€ that big banks use to scr€w you.

nathor on July 25, 2012 at 6:26 PM

Oh, I know what LIBOR is. It’s just funny how it’s being ignored.

tetriskid on July 25, 2012 at 6:28 PM

Oh, I know what LIBOR is. It’s just funny how it’s being ignored.

tetriskid on July 25, 2012 at 6:28 PM

i understood ;)

nathor on July 25, 2012 at 6:29 PM

Nice post, Erika.

Dusty on July 25, 2012 at 6:34 PM

Well, after a quarter century in Congress, Herr Doktor finally got something done.

Good for him.

catmman on July 25, 2012 at 6:38 PM

I’m honestly not sure if this is good, bad, or irrelevant.

Count to 10 on July 25, 2012 at 6:40 PM

Why in the Hell does it take an act of congress to audit these people???

Seems to me this should be something that is required by law to happen at least annually…

BigWyo on July 25, 2012 at 6:42 PM

Paul is ostensibly quitting because redistricting eliminated his district, and he doesn’t think he can win in the newly drawn district.

stvnscott on July 25, 2012 at 5:53 PM

BS!! Don’t see Sheila Jackson Lee or Louie Gohmert quitting!! All he needs have done was to challenge in a district containing the people that voted for him off and on for 30+ years.

KenInIL on July 25, 2012 at 7:05 PM

Nice to see “Dances With Nazis” get something quasi-useful done rather than lying for islamofascist terrorist groups.

Alberta_Patriot on July 25, 2012 at 7:12 PM

It will go nowhere. It is unlikely Harry Reid will be able to find time to get it into the Senate schedule.

US Senators are some of the most hard working productive people in the country.

CorporatePiggy on July 25, 2012 at 7:14 PM

KenInIL on July 25, 2012 at 7:05 PM

You are in Illinois and don’t know the geography/demographics.

Paul’s district was a bigtime union district and the boundaries have changed so that he would be running in the OTHER Texas union area, long a solid old time AFL-CIO Dem district.

He has only been able to stay in office by bringing home the bacon in a huge way, for NO OTHER REASON.

Kermit on July 25, 2012 at 7:24 PM

He has only been able to stay in office by bringing home the bacon in a huge way, for NO OTHER REASON.

Kermit on July 25, 2012 at 7:24 PM

Clearly you are ignorant of American politics (and probably a lot of other things, too).

Ron Paul’s constituents voted for him largely because he extended a great amount of his office’s resources to what is known as constituency service… chasing down lost war medals, helping senior citizens navigate the SS bureaucracy, and making appearances at HS graduations and 100th birthday parties. Politics, the old fashioned way, you know.

Oh, wait… you don’t know, because your knowledge of American politics clearly amounts to what you can read off of a cereal box top. Such is the way of political illiterates.

JohnGalt23 on July 25, 2012 at 7:50 PM

This is historic: the first substantive bill in nearly 30 years ‘The Good Doctor’ has sponsored brought to the floor. As an added historical footnote, it passed!

socalcon on July 25, 2012 at 8:09 PM

It’s really sad how HA ignores this. I don’t think it’s nefarious. I just think that the subject matter is above their heads.

iwasbornwithit on July 25, 2012 at 6:13 PM

I think they are waiting for the investigation to name names.

Libor Arrests in US “Imminent”

Fallon on July 25, 2012 at 9:21 PM

I’m honestly not sure if this is good, bad, or irrelevant.

Count to 10 on July 25, 2012 at 6:40 PM

Of course it’s irrelevant. This issue isn’t about Planned Parenthood, Chik-Fil-A, or voter Id requirements.

Just some nonsense about trillions of dollars, international banks, and multinational firms and agencies. All a waste of time, so lets get to the real important issues like Obama saying “you didn’t build it”.

V-rod on July 25, 2012 at 10:35 PM

V-rod on July 25, 2012 at 10:35 PM</

This * 10.

iwasbornwithit on July 25, 2012 at 11:16 PM

Oops….a Ronulan thread.

*backs out of room slowly with back to wall and closes door softly on way out*

98ZJUSMC on July 26, 2012 at 6:40 AM

Why in the Hell does it take an act of congress to audit these people???

Seems to me this should be something that is required by law to happen at least annually…

BigWyo on July 25, 2012 at 6:42 PM

The irony here is hilarious. You do realize that laws get put into place via an act of congress, right? So, if you think that annual audits should be required by law, then an act of Congress is most certainly needed.

blink on July 26, 2012 at 2:04 AM

Your answer was trite and fairly useless.

Has the fed ever been audited? If not, why not? Don’t you think that should have been in it’s original charter? If it wasn’t, why the hell not?

Any entity with the kind of power the fed has over our daily lives should be as transparent as possible. Why should it take an act of congress to make it so?

runawayyyy on July 26, 2012 at 4:36 PM