Bennington Banner: Senate OKs Sanders' Fed Transparency Bill

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Senate OKs Sanders' Fed Transparency Bill

Source: Bennington Banner

By Neal P. Goswami

The U.S. Senate gave unanimous approval to a measure Tuesday that will force the Federal Reserve Bank to reveal the names of banks that accepted emergency taxpayer funds.

Sen. Bernie Sanders, I-Vt., the lead sponsor of the amendment to a larger financial reform bill, called passage of the measure a major victory for transparency and "a historic vote for the American people." The amendment calls for an audit of the Federal Reserve bank and will require the central bank to reveal which banks accepted more than $1 trillion in emergency aid lent to banks.

"This will lift the veil of secrecy on the Fed," Sanders said in a telephone interview.

According to the Sanders amendment, the Government Accountability Office, Congress' non-partisan investigative arm, will conduct a one-time, comprehensive audit of the emergency actions undertaken by the Fed since the outset of the financial crisis in 2007 that led to a worldwide recession.

Under the amendment, the GAO is specifically directed to investigate apparent conflicts of interest between the Fed and the CEOs of the largest financial institutions in the country.

The amendment, approved by a vote of 96 to 0, was a combined effort by conservative and progressive senators and a wide spectrum of grass-roots organizations, Sanders said. The wide margin of passage is somewhat misleading, though, he said.

"Many times when momentum is gained, suddenly the opposition kind of caves in," Sanders said.

In addition to the audit, the Fed will be required to reveal by Dec. 1 the identity of banks and other financial institutions that received more than $1 trillion in nearly zero-interest, short-term loans, Sanders said. The Fed lending program was meant to boost the liquidity of banks during the worst of the financial crisis.

However, Federal Reserve Chairman Ben Bernanke has repeatedly refused to reveal the names of the banks that received the loans, Sanders said.

"When trillions of dollars of taxpayer money are being lent out to the largest financial institutions in this country, the American people have a right to know who received that money and what they did with it," Sanders said. "We also need to know what possible conflicts of interest exist involving the heads of large financial institutions who sat in the room helping to make those decisions."

Sanders said the Fed is currently fighting federal court orders requiring that it divulge the information sought in Freedom of Information Act suits filed by Bloomberg and other news organizations.

The GAO audit was reduced in scope to help secure passage. Sanders said he made a "political decision" to clarify the time period to be audited.

"In order to win this thing I had to make that change. Right now, what the focus is on is 2007 to when the president signs the bill," he said. "In some ways I think it's stronger."

A growing number of senators, Republicans and Democrats alike, were concerned that granting the GAO open-ended authority to audit the Fed could allow the Senate to exert undue pressure on the central bank to "involve the Congress in the monetary policy of the Fed."

"It was never my intention to have Congress debating whether or not you raise interest rates," Sanders said.

The lending to be revealed by the Fed under the amendment is separate from the $700 billion bailout plan approved by Congress under the Troubled Asset Relief Program. Recipients of those funds have been posted on the Treasury Department's Website, Sanders said.

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