Nearly 100 years ago, Congress created the Federal Reserve System to address disruptions in our financial system. At the time, our country was recovering from a string of panics that had left many banks with no money. The creation of the Fed restored confidence in our financial system. But as our country grew, so did the role of the Fed.
Today, this powerful financial institution plays a large role in everyday life here in Washington state. Whether it is setting interest rates on new home purchases, placing value on the money in our wallets, ensuring our local banks have money to lend, or deciding how quickly the money in our savings and retirement accounts grow, decisions made by the Fed impact families in Central Washington and across the nation.
The series of checks and balances written into the Constitution is a key part of the strength of our government. Among these is Congress's constitutional responsibility to conduct oversight of executive agencies. However, despite wielding great influence over our economy, Congress has historically had very little oversight of the day-to-day operations of the central banking system.
I was pleased to support legislation authored by Congressman Ron Paul that authorizes the Government Accountability Office, which is the investigative arm of Congress, to conduct a full audit of the Fed within a year of enactment. This bill passed the House of Representatives with strong bipartisan support by a vote of 327 to 98.
Since the height of the financial crisis in 2008, the role of the Fed has expanded even more. In an effort to stabilize the national and global economies, the Fed lent nearly $16 trillion to both national and international banks and corporations with no oversight from Congress. An audit of this dominate institution will shed light on the decision making process of the Fed and will create a system of accountability within the central banking system.
As our economy struggles to recover, Americans deserve to know how decisions that directly impact their finances are made. In my view, an audit of the central banking system is long overdue and I am hopeful that the Senate acts soon on this important bill. Ensuring that Congress has the proper oversight of the Fed will bring transparency to a system that has operated behind closed doors for far too long.