Fed Documents Reveal Secret Lobbying Effort Against
Audit Provisions White House, Big Banks and Fed are desperately
trying to kill off moves for transparency
The Federal Reserve is secretly engaged in an intense lobbying
effort in an attempt to stave off moves to have the Government
Accountability Office audit it, internal documents reveal.
The Huffington Post has obtained the documents, which were
distributed to Senate offices by a Fed official, whose identity
the online news site agreed not to reveal.
"The effort to beat back the audit relies on playing two
members of the same caucus -- Sens. Bernie Sanders (I-Vt.) and
Jeff Merkley (D-Ore.) -- off each other." writes
Ryan Grim.
Today will see a possible first round of votes on on amendments
to Senator Christopher Dodd's financial-overhaul bill. One such
amendment is S
604 The Federal Reserve Sunshine act, the Senate
version of Congressman Ron Paul's Federal Transparency Act,
sponsored by Sen. Sanders. The amendmentcalls
for a full audit of the Fed.
The unnamed Fed official in the documents essentially acknowledges
support of a much more restrictive audit proposal by Sen. Merkley.
"I am sending some information on the effects of audits
of the Federal Reserve System as well as two additional documents
- one summarizes the GAO and related provisions in the Dodd
Bill as passed by the committee (Title XI, Sections 1151-1153)
and the other is a summary of the Sanders and Paul/Grayson amendments,"
the Fed official wrote in an e-mail accompanying the documents.
"As I mentioned, we believe that the bipartisan Corker-Merkley
provision in the Dodd Bill is quite strong and addresses issues
of transparency and disclosure without impinging on the independence
of monetary policy," the Fed official writes.
Ron Paul's Campaign For Liberty website has consistently addressed
the problem with this watering down provision, noting that it
guarantees
continued secrecy for the Fed.
Paul and Sanders have persistently
disproved the Fed's claim that their provisions
for an audit would interfere with monetary policy deliberations
and the Fed's overall independence.
Merkley's provision is essentially a Senate version of Congressman
Mel Watt's (D-NC) amendment to the House financial reform bill,
which would have severely limited the audit, and gutted Ron
Paul's H.R. 1207 bill.
Even Merkley himself notes that the provision weakens the prospect
of an audit of the Fed:
"I appreciate Representative [Alan] Grayson's concerns
over accountability at the Federal Reserve. I have been a strong
proponent of Fed reform and voted against the re-confirmation
of Ben Bernanke because the Fed has been so lax in using its
regulatory powers," Merkley said in a statement to HuffPost,
responding to an analysis
from Rep. Alan Grayson (D-Fla.) showing that the
Senate bill did not meaningfully expand transparency.
"Moreover, I felt strongly that we need to act now to
empower the GAO to audit the extraordinary emergency programs
created by the Fed and I succeeded in getting that power into
the Senate bill. Rep. Grayson points out, fairly in my mind,
that we need to go even further to audit the Fed's standing
programs. I agree. While we need to protect the Fed's independence
to implement monetary policy, I think the structure and use
of their standard programs should be transparent." Merkley
added.
A full audit of the Fed under the Sanders and Paul/Grayson
amendments would pave the way for disclosure of which financial
institutions received $2 trillion in public bailout funds, information
that the Fed refuses to make public and, along with the largest
commercial banks in the U.S., has
fought tooth and nail to keep secret.
The Sanders and Paul/Grayson amendments would ensure that such
lending could never again be done in secret.
Their efforts were boosted yesterday by the damning revelations
that former Fed chairman Alan Greenspan wanted
internal warnings over the housing bubble kept secret
in 2004, so that outsiders, whom he said did not fully understand
the situation, would not be able to interject in the debate.
In addition to the backlash from the Fed and the banks, the
audit provisions face
opposition from the White House, with the administration
trotting out the same argument that an audit would threaten
the independence of the Fed.
"It's likely, in fact, that the Obama administration will
be under intense pressure to veto the entire financial reform
bill if 'audit the fed' survives.", notes Brian Beutler.
The Federal Reserve is secretly engaged in an intense lobbying
effort in an attempt to stave off moves to have the Government
Accountability Office audit it, internal documents reveal.
