Plan to audit secretive Federal Reserve revived

U.S. Rep. Ron Paul, R-Texas

A proposal by Rep. Ron Paul, R-Texas, to audit the Federal Reserve has been revived with the approval by the House Financial Services Committee of an amendment to a larger bill that reportedly is intended to address federal government management of large or failing financial institutions.

According to a statement this afternoon from Paul, the Texas congressman worked with Rep. Alan Grayson, R-Fla., on the plan based on the original Fed audit proposal, H.R. 1207.

The amendment, on a 43-26 committee vote, was added to H.R. 3996 by Rep. Barney Frank, D-Mass. It has not yet been made available to the public.

The National Association of Federal Credit Unions has said Frank's bill "originally provided for the wind-down by FDIC of large, failing nonbank financial firms."

"This would be allowed even if the firms in question appear to be well-capitalized and healthy," Rep. Paul Kanjorski, D-Pa., explained, according to the organization.

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Paul said the new amendment would remove restrictions on General Accountability Office audits of the Federal Reserve, the shadowy, private panel that sets interest rates and money supply policy for the U.S. The bill would allow an audit of every item on the Fed's balance sheet, credit facilities and securities purchase programs.

It also sets a 180-day time period to pass between an audit and the release of the information to the public, as well as a disclaimer that the audits are not intended as interference in monetary policy.

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"While H.R. 3996, if passed, will grant sweeping new powers to the Federal Reserve, at least with this amendment attached, it won't be acting in secret anymore," Paul said. "This is a major victory for Federal Reserve transparency and government accountability."

Paul's earlier proposal, which already had gathered support from a majority of House members, was gutted in the committee, and the congressman blamed Rep. Mel Watt, D-N.C., the chairman.

Paul said at the time the bill had been stripped of provisions that closed loopholes protecting the Fed, including exemption from audits of transactions with foreign central banks and protected communications between the Board, reserve banks and staff.

Watt's congressional district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender.

Further investigation through OpenSecrets.org reveals the largest share of Watt's campaign contributions in the 2008 election cycle came from the finance, insurance and real estate industries.

Paul long has been a critic of the secrecy of the Federal Reserve.

"Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar," he said earlier. "Since 1913, the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve's loose monetary policy."

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"Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations," Paul said when the original plan to audit the Fed was introduced. "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."

Paul has warned, "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."

WND previously reported the Fed, despite being ordered to disclose to whom it awarded some $2 trillion in discount "stimulus" loans, continues its fight for secrecy.

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