Last week the House of Representatives overwhelmingly passed my legislation calling for a full and effective audit of the Federal Reserve. Well over 300 of my Congressional colleagues supported the bill, each casting a landmark vote that marks the culmination of decades of work. We have taken a big step toward bringing transparency to the most destructive financial institution in the world.
But in many ways our work is only beginning. Despite the Senate Majority Leader's past support for similar legislation, no vote has been scheduled on my bill this year in the Senate. And only 29 Senators have cosponsored Senator Rand Paul's version of my bill in the other body. If your Senator is not listed at the link above, please contact them and ask for their support. We need to push Senate leadership to hold a vote this year.
Understand that last week's historic vote never would have taken place without the efforts of millions of Americans like you, ordinary citizens concerned about liberty and the integrity of our currency. Political elites respond to political pressure, pure and simple. They follow rather than lead. If all 100 Senators feel enough grassroots pressure, they will respond and force Senate leadership to hold what will be a very popular vote.
In fact, "Audit the Fed" is so popular that 75% of all Americans support it according to this Rasmussen poll. We are making progress.
Of course Fed apologists-- including Mr. Bernanke-- frequently insist that the Fed already is audited. But this is true only in the sense that it produces annual financial statements. It provides the public with its balance sheet as a fait accompli: we see only the net results of its financial transactions from the previous fiscal year in broad categories, and only after the fact.
We're also told that the Dodd-Frank bill passed in 2010 mandates an audit. But it provides for only a limited audit of certain Fed credit facilities surrounding the crisis period of 2008. It is backward looking, which frankly is of limited benefit.
The Fed also claims it wants to be "independent" from Congress so that politics don't interfere with monetary policy. This is absurd for two reasons.
First, the Fed already is inherently and unavoidably political. It made a political decision when it chose not to rescue Lehman Brothers in 2008, just as it made a political decision to provide liquidity for AIG in the same time period. These are just two obvious examples. Also Fed member banks and the Treasury Department are full of former-- and future-- Goldman Sachs officials. Are we really to believe that the interests of Goldman Sachs have absolutely no effect on Fed decisions? Clearly it's naïve to think the Fed somehow is above political or financial influence.
Second, it's important to remember that Congress created the Fed by statute. Congress therefore has the full, inherent authority to regulate the Fed in any way-- up to and including abolishing it altogether.
My bill provides for an ongoing, thorough audit of what the Fed really does in secret, which is make decisions about the money supply, interest rates, and bailouts of favored banks, financial firms, and companies. In other words, I want the Government Accountability Office to examine the Fed's actual monetary policy operations and make them public.
It is precisely this information that must be made public because it so profoundly affects everyone who holds, saves, or uses US dollars.