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Restoring American Financial Stability Act of 2010

Floor Speech

By:
Date:
Location: Washington, DC

BREAK IN TRANSCRIPT

Mr. VITTER. Madam President, on the Senate side, I have been a strong cosponsor and supporter of S. 604 and Senator Sanders' amendment on this bill. I present this different amendment because Senator Sanders decided to modify his amendment late last week, and I thought there was a continuing need to have this language exactly as it now appears in the House bill, as it was included in the House bill by a strong bipartisan vote in the house committee.

First, let me say I support the Sanders amendment. I will vote for it. It is a very important and useful look in the rearview mirror, if you will, a one-time audit of significant Federal Reserve activity, particularly in 2008 and 2009. I welcome that.

That should not be the end of the matter, and it should not be recognized as all we need because it clearly is not. We need to look in the rearview mirror at those important events. That was a very significant period. But we also need to look forward because these events and these debates and these opportunities for bailouts and other actions absolutely continue. The Vitter amendment addresses that--a look forward as well as that important one-time look back.

If we needed any reason to think we need this ability to continue to look forward and look at the detailed provisions of Fed activity, it is in the news right now--absolutely right now--in terms of the Greek and European economic crisis.

Although Chairman Bernanke assured Congress in recent testimony that ``we have no plans to be involved in any foreign bailouts or anything of that sort,'' very recently, in the last few days, the Fed has announced the opening of significant facilities to central banks in Europe that certainly involve it, at least at the margin, in that activity.

I do not know enough about those recent deals and currency exchange swaps to comment on whether they are a good idea or a bad idea, or to comment a clear conclusion about the extent to which they put U.S. taxpayers at risk. But clearly they are a significant event. Clearly, there is significant action of the Fed. And clearly, they are a perfect and very recent example of why we need to look in detail at what the Fed is doing on an ongoing basis.

With Greece, Portugal, and Spain, all possibly on the cusp of financial crisis, with this significant decision of the Fed, we must go beyond the Sanders amendment. We must look forward and not just one time back to ensure the American people that we all know what our Federal Reserve is doing and exactly why it is doing it.

This Vitter amendment does that. It will bring real reform and accountability to the Federal Reserve. That is essential, given the historic, major actions the Fed has undertaken in the last few years and continues to announce, even as we speak, activities that would not be covered by the Sanders amendment.

There has been a lot of rhetoric about all of the evil and dangerous things my amendment would do at the Fed. Let me directly address and dispel these notions.

First, there has been a lot of suggestion that this will politicize individual monetary policy decisions; that this will have individual Members of Congress bringing undue influence on those decisions. I truly think there are enormous protections in this amendment that will clearly avoid that situation.

Let's start with the clear language of the amendment:

Nothing in this subsection shall be construed as interference in or dictation of monetary policy to the Federal Reserve System by the Congress or the Government Accountability Office.

It is a very clear, very broad, very strong statement. The amendment goes even farther. The other specific language of the amendment is very careful to ensure the audits that the amendment will require will not include unreleased transcripts or minutes of meetings of the Federal Reserve Board of Governors or of the Federal Open Markets Committee.

In addition to the extent any audit deals with an individual market action, such as a change in interest rates, the audit will only be released 180 days after the action occurs.

If this is an attempt for any Members of Congress, any individuals to control individual decisions, to have a direct impact on an individual decision, such as an interest rate decision, it is a pretty dumb, ineffective way to do it because the audit will not be out for half a year. Clearly, it will have no impact on that decision.

Under these protections, the Federal Reserve will still operate monetary policy independently, but it is reasonable that those actions, after an appropriate lag of time in some cases will be transparent, will be fully understandable and fully open to the American people and to Congress.

Again, I think it is very important to dispel these notions that are flying about that are untrue. I have talked with Chairman Bernanke several times about these proposals. Always, invariably, his stated concern is the opportunity for an audit to try to impact an individual decision, such as an interest rate decision. We have addressed that very directly in the way I explained.

In addition, the GAO cannot review many actions such as discount window lending--direct loans to financial institutions--open market operations and any other transactions made under the direction of the Federal Open Market Committee.

GAO also, under the clear terms of this amendment, cannot look into the Fed's transactions with foreign governments. This, again, is plenty of protection against the concerns annunciated prior to this debate and vote.

What this comes down to is: Do the American people deserve full information about Federal Reserve decisions or is somehow this beyond the capability of Congress and the American people to digest?

In Federal Reserve Board minutes that were only recently released--these minutes go back to 2004--Alan Greenspan said this:

We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand.

It is somewhat amazing to me, but that is a verbatim, direct quote. More than any statistic, more than any other quote, more than any fact, that direct quote is about what this debate and what this amendment is about.

Is this an area of governance that affects all of our daily lives that we should leave purely up to the elites without ever having full transparency and a full opportunity for debate? Alternatively, is this still America, and do Congress and the American people deserve full openness?

Let me read this quote again because it goes to the heart of the issue:

We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand.

If you adopt that offensive, in my opinion, elitist attitude, vote against the Vitter amendment. If you think we should have much greater openness and transparency and the opportunity for a full debate, with all of the protections of the individual, interest rate, and other decisions I have laid out, please vote for the Vitter amendment.

Again, Madam President, I will support the Sanders amendment. It is an important and appropriate one-time look back, one-time look in the rearview mirror about a very important period of time, particularly 2008-2009 when the Fed was busier and more active with more aggressive policy than ever before. But the opportunity for that aggressive policy is not over. We see that this week, with the Fed participating with European national banks in the crisis in Europe. We need this opportunity on an ongoing basis. We need the Vitter amendment. In addition, we need a full audit, and with all of the protections included, we need that opportunity continuing for full openness and transparency.

Madam President, with that, I yield the floor.

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Mr. VITTER. Mr. President, I stand to join with a bipartisan group of colleagues supporting the Sanders amendment and also in support of the Vitter side-by-side amendment. These are not mutually exclusive alternatives. Both Senator Sanders and myself and many others will strongly support both. I urge all my colleagues, Democrats and Republicans, to do the same.

Particularly since the financial crisis, the American people have been demanding several things. One of them clearly has been openness and transparency about U.S. economic policy, including at the Federal Reserve. That has been a major theme, particularly since the financial crisis. That has
been a clear demand of the American people, certainly of Louisianans, particularly since the financial crisis.

Most of us have voted and spoken in strong support of that. If we truly want to make it happen and if we truly want to preserve that record, we need to vote for the Sanders amendment and the Vitter amendment today to get that done.

If we want to continue to support the same push as in the stand-alone Sanders Senate bill, we need to vote for both amendments. If Members want to continue to support their position, if they voted for the Sanders budget amendment a few months ago--and a strong majority of this body did--they need to vote for both amendments. If they want to support the position of the House which, in a bipartisan way, supported exactly the same language as contained in my amendment through an amendment in the Banking Committee, a strong bipartisan vote, they need to support both amendments. Supporting one, walking on the other, is not good enough and will surely be recognized as not good enough.

I urge all my colleagues to support both amendments, to have full openness and accountability and transparency, with all the protections included against politicizing individual Fed decisions.

In many ways, I think it comes down to this one quote by Alan Greenspan from 2004:

We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard, it is possible to lose control of a process that only we fully understand.

Imagine, Congress, the American people joining in on the debate. God forbid. Imagine the moneyed elites losing complete control of the process. God forbid. If Members share that Alan Greenspan view of democracy, vote against my amendment. But if they share a very different view, which I believe is embodied in this institution and our Constitution, please support both the Sanders and Vitter amendments.

I yield my time.

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