Audit request on Fed must be answered

People are getting fed up with the Federal Reserve.

“End the fed!” some say as the economy remains on shaky grounds, with a potential depression looming not far ahead. People are looking for answers.

Some of those answers may be found in the Federal Reserve Transparency Act of 2009 (HR 1207), which, if passed, would shed light on what the Fed is doing with our tax dollars through a full scale audit.

The Fed, the unelected central bank of the United States, has not been truly accountable to Congress since it was created in 1913. Protection of the value of our dollar was the principle rationale for its inception, which has lost more that 95 percent of its purchasing power since the Fed came into existence.

The actions of the Fed, when combined with the Department of Treasury and Congress, has thrust the national debt to more than $11 trillion and added on nearly $13 trillion thanks to recent bailouts and loans. One would think that a private bank such as the Fed – having the power to manipulate our money and potentially endanger the free market – would be subject to higher scrutiny by Congress and have more transparency.

Despite all this, the Fed still refuses to tell members of Congress and the American people which financial institutions have been given large amounts of funds.

Rep. Alan Grayson of Florida recently asked Ben Bernanke, chairman of the Federal Reserve Board, about which foreign banks were the recipients of Federal Reserve credit swaps of more than half a trillion dollars, which Bernanke answered with a telling, “I don’t know.”

“Half a trillion dollars and you don’t know who got the money?” Grayson responded.
It’s no wonder a majority of Americans are supporting the need for more transparency.
A recent poll conducted in July by Rasmussen Reports found 75 percent of Americans actually favor auditing the Federal Reserve and making the results available to the public.

Only 9 percent of adults think it’s a bad idea to audit the Fed and oppose it, while 15 percent said they weren’t sure. HR 1207, introduced by Rep. Ron Paul of Texas, has gained support from both republicans and democrats, with 307 co-sponsors since it was first introduced earlier this year, making this issue a bipartisan one. And how could it not be? Government waste of money agitates everyone.

Critics blame the current economic crisis on the Fed’s money manipulation through centrally planned interest rates and its non-stop printing of money, resulting in massive inflation; this will lead to the eventual destruction of the dollar, more bailouts and a rise in unemployment.

But Fed defenders say the Fed is already audited by Congress’ Government Accountability Office and other outside agencies. They are correct, but these audits are not detailed enough. They leave out a review of the Fed’s dealings with foreign central banks and governments, as well as the monetary policy decisions and agreements forged between them.

The Fed currently enjoys certain immunity from any effective oversight by the GAO simply because the GAO is limited in what they can actually audit when it comes to the most important issues: The ones that address the health of our nations’ financial system and directly affect the strength of the U.S. dollar.

HR 1207 would amend certain sections of the current laws to remove the restrictions on how the GAO can audit the Federal Reserve, allowing nearly unfiltered congressional oversight into the secretive nature of the Fed’s actions.

“What we do want, what we insist upon, is that no longer will decisions that carry so much economic weight be made in absolute secrecy,” wrote Rep. Ron Paul in his weekly column, Texas Straight Talk, on his Congressional Web site. “We want to know what arrangements the Fed makes with other governments and central banks. We want to know who is benefiting from the actions of the Fed and what deals are being made.”

“We need to know who the Fed deals with, what they buy, how much they spend, and who benefits,” Paul said. “As good as any step towards Federal Reserve transparency is, anything less than full disclosure at this point is unacceptable.”

Congress must answer the call and fulfill its responsibility to its constituents and its constitutional authority over monetary policy.

Should Congress keep a closer eye on the Fed or should it take a hands-off approach? Let Jeremy know at daj8@mail.uc.edu.