Fed Transparency Bill Needs Full Republican Support
By Robert Romano
When Republicans lost power of Congress in 2006, conventional wisdom holds that it was because they had lost their way; that they were unwilling or unable to hold the government accountable they promised to reform in 1994.
Now, with a government that is completely unaccountable—responsible for more than $12.8 trillion of financial “rescues” in the past 22 months all on the taxpayers' tab—the need for a political party in Washington to find what, if anything, is left in the public treasury has never been more dire.
Most of the financial bailouts have been conducted by the Federal Reserve, and on February 26th, Congressman Ron Paul introduced the legislation that would require an audit of the Federal Reserve Board of Governors and the Federal Reserve Banks. Recent efforts at providing a clear insight—and oversight—have met with a stiff arm and stone wall. And there's a reason why.
It meets in secret. Its ledger is secret. The member banks' operations are a secret. Nonetheless, it wields vastly inordinate power over the nation's monetary policy. It alone can fix interest rates. And now its role has recently dramatically expanded as the Fed directly purchases mortgage securities, treasuries, and other bonds, as noted yesterday in the Wall Street Journal. These actions all without the consent of the people's representatives in Congress.
The “Federal Reserve Transparency Act of 2009,” HR 1207 is necessary to ensure that American taxpayers finally have a full accounting of the Fed's unaccountable, secret ledger that records trillions of federal dollars that have been kicked out the nation's back door.
So far, the Act has a remarkable 179 cosponsors, including, significantly enough, 33 Democrats and 146 Republicans. The truth is, it should have more, and in the least every single Republican in the House should agree with keeping consistent and public oversight to the world's most important central bank that is authorized by the people's representatives in Congress to exist—currently without anything even remotely resembling adequate oversight.
If all House Republicans were on board, there would be 210 cosponsors on HR 1207, and 211 all together supporting the bill (counting its sponsor, Dr. Paul). They'd be a mere 7 cosponsors away from a discharge petition that would force the legislation to come to the floor.
Here follows the list of 31 Republicans not yet on board:
John Boehner (OH-8)
Dave Camp (MI-4)
A. Joseph Cao (LA-2)
Mike Coffman (CO-6)
Mario Diaz-Balart (FL-25)
Jo Ann Emerson (MO-8)
Elton Gallegly (CA-24)
Jim Jordan (OH-4)
Steve King (IA-5)
Chris Lee (NY-26)
Howard Buck McKeon (CA-25)
Devin Nunes (CA-21)
Peter Roskam (IL-6)
Christopher Smith (NJ-4)
John Sullivan (OK-1)
C.W. Bill Young (FL-10)
Jo Bonner (AL-1)
Eric Cantor (VA-7)
Howard Coble (NC-6)
Lincoln Diaz-Balart (FL-21)
David Dreier (CA-26)
Rodney Frelinghuysen (NJ-11)
Darrell Issa (CA-49)
Peter King (NY-3)
Mark Kirk (IL-10)
Jerry Lewis (CA-41)
Gary Miller (CA-42)
Harold Hal Rogers (KY-5)
Jean Schmidt (OH-2)
Mark Souder (IN-3)
Frank Wolf (VA-10)
Now why is it so vitally important that these Republicans get on board and help push this bill to passage?
Well, the fact of the matter is: The Federal Reserve's record has been solely to inflate the currency. The money supply has generally only increased for the past century. As a result, the Fed has created asset bubble after asset bubble. It has ensured that the dollar would inflate, as have prices and the cost of living as Americans work longer hours for less pay. Importantly, it was the Fed that accommodated the housing bubble with easy money and cheap credit.
By keeping rates low and through other instruments, the money supply has more than doubled in the past two years.
It is the Fed, with its horrendous easy money policies, whose actions most greatly contributed to the Crash of 2008. Nonetheless, its role remains unaccounted for, as does over $7.76 trillion committed, lent or disbursed that Bloomberg News reports the Fed has put taxpayers on the hook for—in less than two years. Why? Because the Fed has resisted recent efforts at simple oversight. The money simply is not being accounted for, including nearly $2 trillion of loans made by the Fed—for no other reason than because the Fed refuses to disclose any information about the transactions.
Making matters worse, the Government Accounting Office, according to 31 USCA §714, cannot audit and exempts from public oversight of the Federal Reserve:
(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or
(4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to items.
According to PublicEye.org, in 1993 Wayne D. Angell, a former Board of Governor member of the Fed, testified that, “By excluding these areas, the Act attempts to balance the need for public accountability of the Federal Reserve through GAO audits against the need to insulate the central bank's monetary policy functions from short-term political pressures and to ensure that foreign central banks and governmental entities can transact business in the U.S. financial markets through the Federal Reserve on a confidential basis.”
In other words, they really do not think the American people need to—nor in fact have any right to—know what the Fed is doing with (and to) their money.
According to Bloomberg News, the $7.76 trillion that cannot be fully accounted for includes nearly $2 trillion in loans, although it is unclear who received these loans.
Also, according to Bloomberg, “The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return.” The Fed has argued it is actually allowed to withhold “internal” memos as well as commercial and trade secrets information. Bloomberg, on the other hand, has actively filed a Freedom of Information Act (FOIA) request, demanding the information.
Thus far, the Fed's Board of Governors has refused to comply with Bloomberg's FOIA requests. In addition, the Fed's regional banks are arguing that they are private institutions beyond the reach of the Freedom of Information Act.
In answering questions from Congressman Alan Grayson (D-FL) recently, Fed Inspector General Elizabeth Coleman testified she could not account for “$1 trillion-plus that the Fed extended and put on its balance sheet since last September…”
An email to Bloomberg by Coleman's office also revealed that “By law, we are the Office of Inspector General for the Board of Governors only… Consistent with our authority, we cannot conduct a direct audit of Reserve Bank operations.”
So, what is the Fed hiding? Most everything.
And it is the constitutional duty of all the members of the House, Republican and Democrat, to account for these trillions of taxpayer dollars, before it is too late, and before the nation is bankrupted.
For Republicans in particular—who have long claimed the mantle of fiscal responsibility—now is the time to move in a bold way to rebuild confidence in the nation's representative government and, in fact, the Party, itself. Moving this bill is one good way to do that—because now, perhaps for the first time since the Fed was created out of thin air on Jekyll Island, a bill in Congress has a genuine chance of bringing the Creature under control.
Robert Romano is the Senior Editor of ALG News Bureau.