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Thread: John Boehner, Ron Paul, Dennis Kucinich: Audit the Fed

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    Elite Member witchcurlgirl's Avatar
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    Default John Boehner, Ron Paul, Dennis Kucinich: Audit the Fed

    Federal Reserve Audit Support Surging in House


    The effort to increase the transparency of the Federal Reserve's operations has picked up surprising momentum over the last month, with more and more rank-and-file members of Congress steadily signing on to a bill introduced in February by Rep. Ron Paul (R-Texas) to expand the authority of the Government Accountability Office to audit the Fed.

    The bill has surged past 200 cosponsors and is just five short of the 218 needed for passage. On Tuesday, Rep. John Boehner of Ohio, the Republican Leader, signed on.

    Fifty-one Democrats have joined 156 Republicans so far to back HR 1207. A similar bill sponsored by Rep. Dennis Kucinich (D-Ohio) also has momentum and is on pace for a congressional hearing soon in the House Oversight and Government Reform Committee, where Kucinich is a subcommittee chairman.

    The bill would authorize the GAO to audit the Fed's funding facilities, such as the Primary Dealer Credit Facility, Term Securities Lending Facility, and Term Asset-Backed Securities Lending Facility -- known as TALF.

    The Fed has expanded its liabilities and its balance sheet massively since September 2008, buying toxic assets and lending hundreds of billions to foreign central banks in unchecked swaps, then sending that foreign currency to U.S. banks.

    On CNBC Wednesday morning, in response to a question about the bill from guest host Arianna Huffington, Grant's Interest Rate Observer editor Jim Grant endorsed a comprehensive audit of the Fed, saying that if the Fed were subject to the treatment and auditing it gives other banks, it would be found insolvent.

    The House Financial Services Committee, said Chairman Barney Frank, plans to take a look at Paul's bill, HR 1207. "I think we should be moving in that direction," Frank said.

    Frank wants increased oversight of the Fed but also wants other nations to be assured that the Fed is independent in how it establishes monetary policy.

    "We're worried now that it might get people elsewhere worried that the Fed's losing autonomy on monetary policy. With regard to the TALF and stuff that obviously should all be out there, but this could cover the monetary policy setting," Frank said. Because the Chinese are already worried about the security of their investments in U.S. dollars, he said, "I am going to ask that we get to take a look at it from that standpoint, again, making sure that there is no perception that this will impinge on the monetary side of things."

    But Frank is willing to move forward. "Yes, the GAO should be able to audit," he said, however, "it would not be able to play into fears that we are losing independence in monetary policy. I don't think that we are, but maybe we need to put some safeguards into deal with that."

    Some of the critics of the Fed challenge the very notion that monetary policy should remain independent from Congress.

    "Monetary policy isn't independent. It just has independence from democracy," said one congressional aide whose boss is signed on to Paul's bill, meaning that the Fed is not independent from political forces, just from Congress.

    Such critics have challenged the power the Fed holds known as "section 13(3) authority," referred to as the most powerful paragraph in US law. That section, which grants the Fed nearly unlimited authority in "emergency" situations, could be reviewed as part of the "regulatory restructuring" that Congress and the administration are undertaking.

    Defenders of an independent monetary policy, which includes the political elite, argue that politicizing monetary policy would destabilize the financial system, devalue the dollar and lead to higher interest rates.

    "If monetary policy is seen as not being independent that could shake people's confidence in the dollar. I mean, we are dealing with a world of nervous people," said Frank.

    "To the extent that there's a political element in the monetary policy it would be seen as being very inflationary, and whether that's right or wrong, it would have a negative effect on the dollar, more than we would like on interest rates, on everything else."

    A politicized monetary policy is assumed to be inflationary because politicians have an incentive to run-up deficits and then inflate away the debt - a policy that would harm debt holders such as China.

    Paul spokesman Jesse Benton rejected the idea that the Fed is or should be independent, arguing it "wields tremendous power and should have full transparency and accountability to the American people. In response to the concerns about the Fed's 'independence, why would a body independent of politics' hire a lobbyist?"

    The twin leaders of the movement personify the right-left coalition pressing for Fed reform. Kucinich ran for president representing the Democratic left flank, while Paul ran representing the libertarian wing of his party. The GOP embrace of Paul's Fed skepticism is a signal of its movement in his direction.

    At Paul rallies, his criticism of the Fed always roused the crowd to its loudest ovation.

    Speaking at a counter-convention rally scheduled to compete with the Republican convention in Minneapolis, all Paul had to do to start chants of "End the Fed!" was note that the nation's prosperity was a mirage.

    "I haven't even gotten to that part yet," he told the crowd.

    Federal Reserve Audit Support Surging In House
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    Elite Member kingcap72's Avatar
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    They should've been doing this audit years ago.

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    Elite Member MohandasKGanja's Avatar
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    The irony of Republicans leading an effort to establish an expensive new government agency has not eluded me.

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    Elite Member witchcurlgirl's Avatar
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    Paul and Kucinich have long been outspoken critics of the Fed.

    They're not looking to create a new agency, but to expand the authority of the GAO to give it oversight.

    The fact that the Fed is not open to audit is amazing, and of course the average american has no clue. They're more interested in who had the Palin baby, etc. Left wing, right wing, it's all a parlour game to keep people from finding out about the truth on things that really do affect them.
    It's no longer a dog whistle, it's a fucking trombone


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    Elite Member tkdgirl's Avatar
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    Quote Originally Posted by witchcurlgirl View Post
    Paul and Kucinich have long been outspoken critics of the Fed.

    They're not looking to create a new agency, but to expand the authority of the GAO to give it oversight.

    The fact that the Fed is not open to audit is amazing, and of course the average american has no clue. They're more interested in who had the Palin baby, etc. Left wing, right wing, it's all a parlour game to keep people from finding out about the truth on things that really do affect them.
    Agreed. So many gov't agencies go unchecked, even though there may be established protocols in place. The FED is one that has gone untouched far too long.

    A government big enough to give you everything you want,
    is strong enough to take everything you have. ~Thomas Jefferson

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    Elite Member chartreuse's Avatar
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    Quote Originally Posted by witchcurlgirl View Post
    Paul and Kucinich have long been outspoken critics of the Fed.

    They're not looking to create a new agency, but to expand the authority of the GAO to give it oversight.

    The fact that the Fed is not open to audit is amazing, and of course the average american has no clue. They're more interested in who had the Palin baby, etc. Left wing, right wing, it's all a parlour game to keep people from finding out about the truth on things that really do affect them.
    yes, yes, yes to everything that you said.
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    Elite Member MohandasKGanja's Avatar
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    Quote Originally Posted by witchcurlgirl View Post
    Paul and Kucinich have long been outspoken critics of the Fed.

    They're not looking to create a new agency, but to expand the authority of the GAO to give it oversight.

    The fact that the Fed is not open to audit is amazing, and of course the average american has no clue. They're more interested in who had the Palin baby, etc. Left wing, right wing, it's all a parlour game to keep people from finding out about the truth on things that really do affect them.
    They may not be looking to create a new agency, but it probably would be what they would be doing by the time they staffed up with enough people to audit it.

    If I remember correctly, the Fed is quasi-governmental. Does the GAO have authority to audit quasi-governmental institutions? It doesn't look like the GAO was taking much of a look at Fannie Mae or Freddie Mac, although I could certainly be wrong about that.

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    Elite Member witchcurlgirl's Avatar
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    The GAO does not currently have the authority to audit the Fed, that's what these proposed bills would do. Heres a good, brief piece on the fed from Greenwald:


    What "oversight" means in Washington

    (updated below)
    Since last September, the Federal Reserve has increased its balance sheet by more than $1 trillion, and has engaged in even much larger amounts of off-balance-sheet transactions. In January of this year, freshman Rep. Alan Grayson repeatedly asked Federal Reserve Vice chairman Donald Kohn the identity of the companies which had received those loans, only to be told that the Fed had no obligation and no desire to disclose that information to Congress. That obviously leads to the question of who exerts oversight over the Fed and the vast amounts of money it transfers.

    One answer -- the only real answer -- is that the Fed's activities are monitored by an Inspector General, which ostensibly "conducts independent and objective audits, inspections, evaluations, investigations, and other reviews related to programs and operations of the Board of Governors of the Federal Reserve System (Board)" which "promote integrity, economy, efficiency, and effectiveness; help prevent and detect fraud, waste, and abuse; and strengthen accountability to the Congress and the public." At minimum, then, one would assume that the Fed's Inspector General is actively monitoring the extraordinary actions in which the Fed has been engaging since September. After all, nobody else is monitoring or even can monitor any of that, since the Fed will not tell anyone what it is doing.

    Yesterday, the Fed's Inspector General, Elizabeth Coleman, appeared before the House Financial Services Committee and was questioned by Rep. Grayson about her office's oversight duties. Just watch this five-minute question-and-answer session to get a sense for the true breadth of decay and corruption in our political and financial classes and for what a sorry joke the concept of "oversight" is in Washington:

    As the Democrats' second-most-senior Senator, Dick Durbin, said about Congress, though it applies every bit as much to Washington generally: "the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

    UPDATE: Here is the Bloomberg article Grayson referenced that describes the trillions of dollars in off-balance-sheet transactions from the Fed. Here (.pdf) is a summary of just one of those off-balance-sheet transactions: a $320 billion commitment of taxpayer money to Citigroup. That is all above and beyond the $1.2 trillion added to the Fed's balance sheet since September.

    All of this obviously underscores the need for much greater transparency and oversight of the Fed. Ron Paul has introduced a bill [HR 1207] to accomplish exactly that, which has now been co-sponsored by more than 130 House members, including numerous Democrats such as Grayson. In essence, the bill requires an audit of the Fed's activity which shall be made available to Congress. What possible arguments exist against this bill? Who opposes an audit of the Fed's activities and why?


    What "oversight" means in Washington - Glenn Greenwald - Salon.com


    The GAO also did not have the authority to audit Freddie/Fannie. HUD was in charge there (and a sub of HUD -the OFHEO). The GAO recommended back in 2004 that F & F should have stronger regulations, and greater oversight. Nothing was done, and F & F went on to expand into subprime mortgages. Now F & F are under the supervision of the Federal Housing Finance Agency.

    Broken Government | Failure: Lax Oversight of Fannie Mae and Freddie Mac

    This site has some great information on what has been going over the past 8 years.
    It's no longer a dog whistle, it's a fucking trombone


    All of God's children are not beautiful. Most of God's children are, in fact, barely presentable.


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    Elite Member tkdgirl's Avatar
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    Quote Originally Posted by witchcurlgirl View Post
    The GAO does not currently have the authority to audit the Fed, that's what these proposed bills would do. Heres a good, brief piece on the fed from Greenwald:


    What "oversight" means in Washington

    (updated below)
    Since last September, the Federal Reserve has increased its balance sheet by more than $1 trillion, and has engaged in even much larger amounts of off-balance-sheet transactions. In January of this year, freshman Rep. Alan Grayson repeatedly asked Federal Reserve Vice chairman Donald Kohn the identity of the companies which had received those loans, only to be told that the Fed had no obligation and no desire to disclose that information to Congress. That obviously leads to the question of who exerts oversight over the Fed and the vast amounts of money it transfers.

    One answer -- the only real answer -- is that the Fed's activities are monitored by an Inspector General, which ostensibly "conducts independent and objective audits, inspections, evaluations, investigations, and other reviews related to programs and operations of the Board of Governors of the Federal Reserve System (Board)" which "promote integrity, economy, efficiency, and effectiveness; help prevent and detect fraud, waste, and abuse; and strengthen accountability to the Congress and the public." At minimum, then, one would assume that the Fed's Inspector General is actively monitoring the extraordinary actions in which the Fed has been engaging since September. After all, nobody else is monitoring or even can monitor any of that, since the Fed will not tell anyone what it is doing.

    Yesterday, the Fed's Inspector General, Elizabeth Coleman, appeared before the House Financial Services Committee and was questioned by Rep. Grayson about her office's oversight duties. Just watch this five-minute question-and-answer session to get a sense for the true breadth of decay and corruption in our political and financial classes and for what a sorry joke the concept of "oversight" is in Washington:

    As the Democrats' second-most-senior Senator, Dick Durbin, said about Congress, though it applies every bit as much to Washington generally: "the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

    UPDATE: Here is the Bloomberg article Grayson referenced that describes the trillions of dollars in off-balance-sheet transactions from the Fed. Here (.pdf) is a summary of just one of those off-balance-sheet transactions: a $320 billion commitment of taxpayer money to Citigroup. That is all above and beyond the $1.2 trillion added to the Fed's balance sheet since September.

    All of this obviously underscores the need for much greater transparency and oversight of the Fed. Ron Paul has introduced a bill [HR 1207] to accomplish exactly that, which has now been co-sponsored by more than 130 House members, including numerous Democrats such as Grayson. In essence, the bill requires an audit of the Fed's activity which shall be made available to Congress. What possible arguments exist against this bill? Who opposes an audit of the Fed's activities and why?


    What "oversight" means in Washington - Glenn Greenwald - Salon.com


    The GAO also did not have the authority to audit Freddie/Fannie. HUD was in charge there (and a sub of HUD -the OFHEO). The GAO recommended back in 2004 that F & F should have stronger regulations, and greater oversight. Nothing was done, and F & F went on to expand into subprime mortgages. Now F & F are under the supervision of the Federal Housing Finance Agency.

    Broken Government | Failure: Lax Oversight of Fannie Mae and Freddie Mac

    This site has some great information on what has been going over the past 8 years.
    My only problem is this: does anyone really trust the government to audit the FED, especially after the F&F fiasco?

    A government big enough to give you everything you want,
    is strong enough to take everything you have. ~Thomas Jefferson

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    Elite Member Fluffy's Avatar
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    Quote Originally Posted by tkdgirl View Post
    My only problem is this: does anyone really trust the government to audit the FED, especially after the F&F fiasco?
    GAO has a very good reputation when it comes to audits.

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    Elite Member Grimmlok's Avatar
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    uh, fix your post
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    Elite Member witchcurlgirl's Avatar
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    I reported it, that's the second one from that poster I saw like that today.

    must be a spammer
    It's no longer a dog whistle, it's a fucking trombone


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    Why wouldn't they hire an independent accounting firm to do the audit? Like Arthur Anderson or Price Waterhouse?

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    Elite Member Fluffy's Avatar
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    ^Why would they need to go outside? GAO can do it, once given the authority.

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    This calls for a forensic audit. Bring em in.
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