Fed Audit Under Fire

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It
doesn’t come as too much of a surprise that the measure to
audit the Federal Reserve is coming under continuous fire from the
central bank and its cronies. For the first time since the Federal
Reserve was created nearly a century ago, they have hired an actual
lobbyist to pound the pavement on Capitol Hill. This is a desperate
effort to hang on to the privilege of secrecy and lack of accountability
they have enjoyed for so long. Last week showed they are getting
their money’s worth in the Senate.

At the very
last minute on the floor of the Senate, supposed compromise language
was agreed to and substituted in the Sanders Amendment to the Financial
Reform Bill. This language was acceptable to the administration,
committee leadership, and to the Fed. The trouble is, 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.

The new language
of the Sanders Amendment requires a one-time disclosure from the
Fed of 13(3) facilities, foreign currency swaps and mortgage-backed
securities. 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 its not nearly enough.

Taxpayers are
sick and tired of bailing out privileged, dysfunctional institutions
that should be allowed to fail in order to stop their ability to
wreak havoc on our economy. Perpetuating these corporations at taxpayer
expense is not just wasteful, it is actively harmful. It would be
good to know what went on in the past, but what about accountability
in the future? A one-time disclosure now will not do us a lot of
good down the road when the cycle repeats itself and friends of
the Fed find themselves in trouble again.

More importantly,
agreements with foreign central banks are not touched by the new
Sanders Amendment language. At a time when Greece, Portugal, Spain
and other countries are experiencing dire financial crises and have
their hands out to the international community, we need to know
if our Federal Reserve is at all involved in bailing them out. As
weary as we are of bailing out companies, the American people would
not stand for bailing out entire countries. Our government is wasteful
enough in its own affairs without contributing to the waste of other
countries. Yet the Fed currently has the tools it needs to do just
this, and to do it in secret.

If we cannot
take away the Fed’s ability to waste trillions of taxpayer
dollars on failing companies and failing countries, at the very
least, we can take away their ability to do this with no transparency
or accountability to the American people. While the Sanders Amendment
no longer contains a full audit, Senator David Vitter has introduced
an amendment which contains the Audit the Fed language that passed
the House last fall. The Senate must pass the Vitter amendment for
full disclosure and full accountability going forward.

See
the Ron Paul File

May
11, 2010

Dr. Ron
Paul is a Republican member of Congress from Texas.

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