http://www.marketwatch.com/story/house-passes-ron-pauls-audit-the-fed-bill-2012-...

July 25, 2012, 3:22 p.m. EDT
House passes Ron Paul’s audit-the-Fed bill
Retiring Fed critic savors triumph, but bill faces long odds in Senate

By Robert Schroeder and Greg Robb, MarketWatch
WASHINGTON (MarketWatch) — A bill authored by Rep. Ron Paul that would open up previously secret Federal Reserve deliberations to scrutiny by members of Congress passed the House of Representatives on Wednesday, but the measure faces long odds in the Senate.

The bill from Texas Republican Paul, a persistent Fed critic, would remove all restrictions on the Government Accountability Office’s ability to examine the central bank’s deliberations. Fed Chairman Ben Bernanke opposes the bill, and argued last week that the Fed’s discussions about monetary policy should be protected.

The House vote was a moment of triumph for Paul, who announced earlier this year that he won’t seek another term. He has long sought to shed light on the Fed’s operations, and the full House vote put his once-obscure quest in the national spotlight. Read about bill on Paul's web site.

“The Fed needs transparency and [my bill] would provide it,” Paul said earlier this month.

The measure passed overwhelmingly, garnering 327 yes votes, and 98 no votes. It had 274 co-sponsors, including 45 Democrats.

“The Fed should not be permitted to operate in the dark without oversight by Congress and accountability to the people. The American people deserve no less than a full and complete audit,” said Rep. Dennis Kucinich, an Ohio Democrat, in a statement on Tuesday, when the main debate on the bill was held.

But most Democrats disagree. Rep. Barney Frank, the Massachusetts Democrat who co-authored the bank reform bill, said the legislation could potentially destabilize markets.

“[Wall Street] will see it as political interference, not with the contracting procedures, not with the budget, not with how many cars they have, but with how they decide on interest rates. And the perception that the Congress is going to politicize the way in which interest rates are set will in itself have a destabilizing effect,” Frank said.

The bill now faces long odds in the Democrat-controlled Senate. Mark Calabria, director of financial regulation studies at the libertarian Cato Institute, said that a few Republican senators are trying to find a way to get a floor vote for the measure. But he added he thinks Democrats don’t have any desire to bring it up for a vote.

The Fed argues that members of Congress who oppose an interest-rate move by the central bank could launch an audit and put its officials under political pressure.

“It’s a mistake to eliminate the exemption for monetary policy and deliberations which would effectively, at least to some extent, create a political influence or a political dampening effect on the Federal Reserve’s policy decisions,” Bernanke told a House Financial Services Committee hearing last week.

The Fed now releases a summary of its meetings after three weeks, but does not release a full transcript for five years.

The GAO is now prohibited by law from examining the Fed’s discount window and open-market operations, as well as its agreements with foreign governments and interest-rate decisions.

Robert Schroeder is a reporter for MarketWatch in Washington.
Greg Robb is a senior reporter for MarketWatch in Washington.

http://newyork.newsday.com/news/nation/audit-the-fed-bill-u-s-house-passes-measu...

Audit the fed bill: U.S. House passes measure that would open Fed policy to scrutiny
Originally published: July 26, 2012 8:28 AM
Updated: July 26, 2012 8:50 AM
By REUTERS


Photo credit: AP | U.S. Rep. Ron Paul, R-Texas wrote the 'Audit the Fed' bill, which would open the Federal Reserve's monetary policy to scrutiny and which was passed by the U.S. House on July 25, 2012. In this file photo, taken Aug. 5, 2012, Paul speaks at the University of California in Berkeley, Calif.

Legislation to subject the Federal Reserve's monetary policy to audits sailed through the U.S. House of Representatives on Wednesday although the measure is expected to die in the Democrat-controlled Senate.
The legislation, written by Republican representative Ron Paul, whose anti-Fed crusade prompted a presidential bid and his grass-roots folk-hero status, passed the House by a 327-98 vote on Wednesday, exceeding the two-thirds majority needed.
Eighty-nine Democrats joined 238 Republicans to approve it.
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Fed officials have long fought the audit bill, arguing it would compromise their independence. Chairman Ben Bernanke told House lawmakers last week it would open the door to a "nightmare scenario" of political meddling in monetary policy decisions.
The vote showed bipartisan support in the House for greater scrutiny of the U.S. central bank's powers which, were expanded to help it tackle the financial crisis.
"I don't know how anybody could be against transparency," Paul said during a debate on the floor on Tuesday, adding that Americans deserved more details of the Fed's bank rescue deals and support to foreign central banks.
"They're sick and tired of what happened in the bailout and where the wealthy got bailed out and the poor lost their jobs and they lost their homes," said Paul, who retires at year-end.
"It's time that we stood up to the Federal Reserve that right now acts like some kind of high, exalted priesthood, unaccountable to democracy," added Dennis Kucinich, a Democrat who is losing his seat due to a primary defeat.
Many Republicans and some Democrats have criticized the Fed's extraordinary measures to rescue banks and buy mortgage and Treasury debt, saying the central bank strayed into Congress' fiscal policy territory.
They say the Fed's actions to ease the 2007-2009 recession may have planted the seeds of high inflation in the future.
The Fed asset purchases, aimed at lowering borrowing costs and spurring economic growth, have swollen its balance sheet to $2.8 trillion from around $800 billion before the crisis. It has held interest rates at nearly zero for three and a half years and has pledged to keep them extraordinary low until late 2014.
Paul's bill directs the Government Accountability Office, an independent, nonpartisan congressional agency, to conduct a full Fed review. It would remove an exemption that shielded from audit the monetary policy and other decisions by the Federal Open Market Committee.
NO VOTE IN SENATE Paul's son, Republican Senator Rand Paul, has introduced a companion bill, but the Democrats who control the Senate do not intend to bring it to a vote, a senior Democratic aide said.
But the aide said Rand Paul was expected to try to force a vote on it as an amendment to other legislation.
Some Democrats, generally less critical of the Fed, say such audits would undermine the Fed's independence and erode market confidence in the central bank.
"That will politicize the making of such policy, and I think it's a bad way to go," said Steny Hoyer, the number-two Democrat in the House.
SECOND CHANCE IN 2013? Should Republicans win control of the Senate in November's elections, the Paul audit measure will likely resurface in some form next year. Rand Paul will continue in the Senate and will succeed his father as Congress' top Fed critic.
His efforts to rein in the Fed's powers also could shift next year to a campaign to replace Bernanke, whose four-year term expires Jan. 31, 2014.
Ron Paul also may try to influence future Republican policy toward the Fed by insisting that portions of the bill be incorporated into the Republican economic platform at the party's convention in Tampa in August.
"Paul has 158 delegates and it is not inconceivable that some 'audit the Fed' language is prevalent in the Republican platform when all is said and done," said Chris Krueger, senior policy analyst at Guggenheim Partners in Washington.





Audit the Fed is UNSTOPPABLE!

this thread has now been moved

to finance and economics

so be it