Senate Approves Auditing the Fed--At Least Once

With zero "no" votes, the Senate today approved a very mild version of the "audit the Fed" proposal, one that deviates from the version pushed by libertarian Republican Rep. Ron Paul and passed by the House. Details from the New York Times:

The Senate on Tuesday voted unanimously to require a one-time audit of the Federal Reserve’s emergency actions during and after the 2008 financial crisis as part of broad legislation overhauling the nation’s financial regulatory system...

The amendment, proposed by Senator Bernard Sanders, independent of Vermont...would require the Government Accountability Office to scrutinize some $2 trillion in emergency lending that the Fed provided to the nation’s biggest banks. The vote was 96 to 0....

Mr. Sanders, a professed socialist, has long demanded greater transparency at the central bank, and his original plan could have subjected the Fed to continuing audits of some routine operations. But he agreed to scale back the proposal in the face of opposition by the White House, the Fed, the Treasury and some Senate colleagues.

The critics said that more aggressive audits would impede the Fed’s independence and potentially interfere with its ability to set monetary policy....

While the Senate provision would require an audit of the Fed’s emergency operations beginning on Dec. 1, 2007, the House approved an even tougher audit requirement in its version of the financial regulatory legislation.

Senator David Vitter, Republican of Louisiana, put forward an amendment that would have mirrored the tougher House language, but it was rejected. The vote was 37 to 62....

The House bill, which was approved in December, included a proposal sponsored by one of the most conservative lawmakers, Representative Ron Paul, Republican of Texas, and one of the most liberal, Representative Alan Grayson, Democrat of Florida.

The Paul-Grayson proposal would allow audits by the Government Accountability Office of every item on the Fed’s balance sheet, including all credit facilities and all securities purchase programs, but would allow an exemption for unreleased transcripts and minutes of closed-door meetings. It also would establish a 180-day time lag before details of the Fed’s market actions could be released.

Ron Paul's attitude toward the milder Sanders version of the Fed audit. My November 2009 Reason magazine feature on the audit-the-Fed movement.

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  • MNG||

    "Senator David Vitter, Republican of Louisiana, put forward an amendment that would have mirrored the tougher House language, but it was rejected."

    Vitter then consoled himself by going to his favorite whorehouse.

  • ||

    *shrug*

    Is that supposed to be some kind of insult? I don't care about the personal lives of politicians, insofar as it doesn't affect policy. OTOH I notice that a lot of people who claim not to care get the same sort of self-righteousness when denouncing others, only they enjoy pretending that they're only attacking hypocrisy.

    Here's the rollcall on the Vitter Amendment.

    In general, conservative Republicans and moderate Democrats were for the Vitter Amendments (original Paul-Grayson language). Liberal Democrats and moderate Republicans were against.

  • MNG||

    Er, don't look now John but Vitter is a "family values" Southern Republican. One of his values includes whorehouses.

  • Mr. FIFY||

    So?

  • MNG||

    So I'm pretty sure that visiting whorehouses is not part of the morality he urges on others and works to enact as law.

  • Mr. FIFY||

    Why don't you mind your own business and stop bitching about the private lives of politicians, MNG?

    Or do we really need to bring up Bill Clinton again?

  • MNG||

    I'd like it if people like Vitter would mind their own business about the private lives of citizens, especially when they themselves violate the very principles they push on us.

  • ||

    Not to mention the diapers Vitter "violated" in the company of said whore.

    They don't call him a "mud blower" for nothing.

  • ||

    He voted for winding down Fannie and Freddie in two years, but shrike of course doesn't actually care about Fannie and Freddie so long as he can obsess about someone's sex life.

  • ||

    hey- Vitter is the hypocrite - not me.

    I personally support his right to shit his diapers in front of the whore of his choice.

  • The Libertarian Guy||

    And Bill Clinton's personal sex life is STILL off-limits, I take it?

  • ||

    I'd like it if people like Vitter would mind their own business about the private lives of citizens, especially when they themselves violate the very principles they push on us.

    I'd like the first part. I don't give a shit about the "especially." The fact that you make such a big deal about it makes me think that you have exactly the same sort of prurient interest as the self-righteous prudes.

    The fact that you make a big deal about it makes me think that you would be extremely willing to legislate your own view of morality if you only got the chance. The only difference is in the details.

  • cynical||

    The "especially" is kinda important. So long as "the right sort of people" are protected from the law as typically enforced, or as enforced on the underclass, it's much harder to get change enacted, because cruelty or injustice is someone else's problem. We might be better off today if Clinton, Bush, or Obama got caught, tried, and hit with the maximum punishment for using drugs.

  • MNG||

    If Vitter wanted to see hookers and wanted that for everybody else I'd have no judgment. But that's not him bro.

  • The Libertarian Guy||

    MNG, I think you're just upset because Vitter doesn't support federally-subsidized hookers for those who can't afford them.

  • ||

    So I'm pretty sure that visiting whorehouses is not part of the morality he urges on others and works to enact as law.

    I'd be more convinced if you offered some evidence of him doing that rather than just being "pretty sure" based on generalizations.

    But I'm sure that he's done things I don't like on trying to enforce morality laws. However, I don't see the point of whether someone is a hypocrite or not. Would you really feel any better if all the people trying to enforce morality via legislation were pure in their private life?

    I don't understand your obsession.

  • MNG||

    You got me Thacker, I think people who push a standard on people that they themselves do not practice are bad. go figure!

  • CJ||

    Would you really feel any better if all the people trying to enforce morality via legislation were pure in their private life?

    I actually would. The only people who avoid ever being hypocrites are hard-line, uncompromising souls who can't be bought off and won't succumb to peer pressures. If nobody except those kinds of people were in power, virtually nothing would ever get done in the country.

  • The Libertarian Guy||

    With Bernie Sanders and Alan Grayson on-board, you just gotta know something is stuck in there to either help Democrats... or fuck the entire audit in the ass before it gets its pants on.

    But, hey, win-win for MNG!

  • ||

    Its pure populism.

    Cotton candy for the electorate.

  • Brett L||

    For once, I agree with shrike. Wind's blowing right, everyone's gotta tack if they wanna run.

  • shrike, simplified||

    Populism is okay when OUR side does it.

  • MNG||

    ARFARFARFARFARFARFARFARFARFARFARFARF

  • MNG||

    My goodness, he sticks with it with all his adolscent might! Adorable I tells ya!

  • cynical||

    If we're talking hypocrisy, let's remember that our dope smoking Democratic presidents past and present are the ones who run the branch that could, e.g., push the drug they abused with no ill effects in their youth down to a much lower schedule, and possibly stop some innocents from being blasted by an out-of-control SWAT team.

    As far as I know, prostitution law is not in Congress's ballpark, though I haven't heard of local law enforcement using SWAT teams on whores anyway.

  • MNG||

    er, yeah, and this President ordered the stopping of federal raids on medical MJ in states where it's legal.

    Did any recent GOP freedom luvin Prez's do that?

  • The Angry Optimist||

    Except he did not stick with it.

  • fish||

    FUCK BERNIE SANDERS!

    Milquetoast Socialist...a real socialist wouldn't take it up the poop chute from a capitalist! I wonder if cleans Lloyd orally after the deed is done?!

  • MNG||

    Just curious, did Sanders vote against the Vitter proposal?

  • ||

    Sanders voted for it, so I wouldn't blame him too much.

  • MNG||

    I thought as much. A guy who self-identifies as a socialist is not exactly a guy who is going to cave to political pressure a lot. I imagine his bill was in his opinion the best he thought he could get through.

  • The Libertarian Guy||

    MNG, anyone who self-identifies as a socialist, should not be allowed to make such weighty decisions.

  • MNG||

    I hate to tell you, but on this issue the guy agrees with you Conservative Guy.

  • The Libertarian Guy||

    I'm only conservative on spending, MNG. Socially, IMO government should keep its fucking noses out of our business.

  • The Libertarian Guy||

    And if you think I'm going to have any love for Bernie Fucking Sanders over ONE issue, MNG, then you're clearly deluded.
    I don't trust socialists with anything sharper than a broken crayon.

  • ||

    A guy who self-identifies as a socialist is not exactly a guy who is going to cave to political pressure a lot.

    He caucuses with the Democrats, is included with the Democrats for seniority purposes and committee assignments, and chairs a subcommittee (ok, yes, the silly Environment Subcommittee on Green Jobs and the New Economy).

    So he's not exactly some kind of outcast who stands apart. He's a Democrat in all but name.

  • MNG||

    That's a pretty big name though, you have to admit.

  • ||

    It is a pretty big name, though you have to remember that the primary system means that the central party leadership doesn't control nominations, and being a West Virginia Democrat is different from being a California Democrat. Alan Mollohan's primary loss isn't from being punished by the party leadership.

    The only thing that the Democratic Senate Leadership and Senate caucus can do to a Democratic Senator is exactly what they can do to Sen. Bernie Sanders. He has all the benefits of being a Democratic Senator, which gives them all the power to take that away.

  • ||

    The Senate Democrats have about the same level of political pressure on Sanders as they do on other Senators-- they could take away his committee assignments, seniority, and subcommittee chairmanship. When they have 57-58 other members, that's a fairly credible threat.

  • TP||

    Bullshit. I do blame him. That's the oldest trick in the book. He voted for it, because he knew the votes were not there for it to pass.

  • MNG||

    TP has looked into his soul and guessed his "true" motives, despite and apart from his actual actions!

  • ||

    The critics said that more aggressive audits would impede the Fed’s independence

    Heaven knows, that's the only thing which might impede the Fed's "independence".

  • ||

    "audit the Fed"

    How about 'Citizen-Louis-Capet-ize' the Fed?

  • Some Guy||

    The fact that this passed 96-0 pretty much guarantees that it must have been full of holes.

    Maybe something like the "audit" of the stimulus where they were required by law to report it a success based only on the assumption of a multiplier effect stipulated to them.

  • MNG||

    Can somebody here tell me what it is libertarians hate about the Fed?

  • The Libertarian Guy||

    What's to like?

  • MNG||

    What is it the Fed does that you dislike? I'm honestly curious. I honestly don't know much about the Fed and what it does.

  • Slippery Slopes||

    sure seem to have a lot of pompous opinions for a guy who is unsure of what the fed is or does.

    or is this some kind of concern trolling where you wait for someone to say something a little wrong and then you tell everyone they are idiots, per usual?

  • ||

    For one thing it is not transparent. They control literally trillions of dollars yet we cannot look at where and to whom that money is going.

    This is not a strictly libertarian argument which seems odd that you don't hold the same standard and could not work this out for yourself.

    Paul is an anti-fed guy...and what does he do to go after the fed? He tries to make them more transparent.

    gee i wonder why he did that?
    Any Idiot could have worked this out by simple observation.

    Which means you are a special kind of idiot. Gratz.

  • ||

    The Fed balance sheet is public info, dumbass.

    If they own 300 million ounces of gold why do you care where it came from?

  • ||

    Because we payed for it, you insipid buffoon.

  • MNG||

    I honestly don't understand what they do, and thus why you are so against it. Is it just transparency?

  • The Libertarian Guy||

    You first, MNG. Tell us why we should worship the Fed.

  • Brian Defferding||

    It's an unelected central bank that controls our fiat money supply and enables new financial disasters year after year.

    How's that?

  • MNG||

    I'm not being cute here, but how does it "control our fiat money supply?"

  • TP||

    It has an "authorized" printing press. It can print money at will, with little or no scrutiny. Socialists, like Sanders, would like to see that function taken over by the government. While Austrians, like Paul, would like to see the entire practice ended.

  • MNG||

    I can print with my crayon.

  • TP||

    I thought you said you weren't being cute. I guess you were really being ugly.

  • ||

    Cro-Magnon Libertarians wish for a privately issued 1840ish bank scrip form of money.

    See - Paul, Ron (idiot).

  • shrike, simplified||

    What the fuck is wrong with you people? Just keep printing money, raise taxes on Evil Rich People through the roof, and shut the fuck up when Obama speaks.

  • Brian Doherty||

    I know you don't actually care, but this from my Nov. 2009 Reason magazine feature that I link to at the end of every single goddamn blog post that mentions the Fed gets to the nub of it:

    "[Ron] Paul, like the economists he admires, thought it a mistake to have a giant government-run institution trying to fix prices—in this case, interest rates, or the price of loaned money, which is the Fed’s main mechanism for pursuing its stated goals of economic growth, high employment, and relatively stable prices. As a critic of state power, Paul also worries that once a government has total control over paper money that it can create at will, it becomes too easy and too tempting for the state to spend at will. Cash unbacked by gold will flow to help the government out of its jams, pay for its wars, and appease its most powerful private constituents.

    To Austrian-leaning libertarians like Paul, this danger makes the Federal Reserve, central banking, and “fiat” money the key libertarian issue. If the government can manufacture all the money it wants, the fight for limited government is over before it begins.

    Central to this critique is the Austrian business cycle theory, which helped win Hayek his Nobel Prize for economics in 1974. Hayek, Mises, and contemporary economists such as Roger Garrison of Auburn University and Steve Horwitz of St. Lawrence University argue that low interest rates set by the Fed fool investors and builders into thinking that consumer demand for future goods is higher than it actually is. Cheap money makes producers more likely to launch long-term projects and take on long-term expenses. When low rates are a product of government intervention, rather than a market expression of people’s desire for long-term goods as reflected in their willingness to save now in order to consume more later, those long-term projects—for example, building and buying homes—will turn out to be unsustainable “malinvestments.” Prices in those areas will plunge. Everyone will start to realize that resources were funneled to unprofitable ends. An exaggerated boom will turn into a catastrophic bust. "

  • ||

    I care but your comment is erroneous.

    The Fed doesn't fix end-borrower interest rates - the market does.

    The Fed discount rate is now .25% yet a mortgage is 5-6%.

    Back in the 90's the spread was only 1% - not the exorbitant spread we see today.

    Without Credit Easing (Bernanke's version of QE) we would be in the GD II.

  • TP||

    Where the Hell do these uninformed people come from? The Fed's creation was based on the fraud of fractional reserve banking. The Fed was to be the "lender of last resort" to protect banks from runs, and "bail them out". Banks ooperate with no real fear of bankruptcy, thanks to the Fed. Therefore, the Fed facilitates, or enables, these fraudulent practices with the blessing of the government.

    The Fed also facilitates the reckless spending of the government, mostly on wars. The Fed manipulates the interest rate on T-Bills by buying them with money it creates out of thin air.

    Whenever the Fed prints money, loans it at below natural market rates, or buys shit investments at face value, it devalues everybody's currency. These currency devaluations and interest rate manipulations are a direct redistribution of wealth.

    The most evil, hateful and spiteful economic policy ever created, is the policy of perennial creeping inflation. Real wages never keep up with real inflation.

  • ||

    Banks ooperate with no real fear of bankruptcy, thanks to the Fed.

    Tell WaMu, Wachovia and hundreds of other bankrupt banks.

    And what inflation? Are you nuts?

  • TP||

    Umm, they were absorbed, weren't they?
    Taken by the FDIC, another fraudulent institution, and handed over to Wells and JPM. The FDIC deemed that they were "insolvent". When actually, all banks are technically insolvent. But Wachovia is still in business, are they not?

    You must have CPI confused with the real loss of purchasing power of the dollar. CPI is by no means a true measure of real monetary inflation. Besides, price inflation lags monetary inflation.

  • ||

    Why don't you just short the dollar and shut the fuck up?

    I'll tell you why - you would lose your ass and you don't know shit.

  • TP||

    Besides, I'm too busy shorting the Euro, right now.

  • George Soros||

    "Why don't you just short the dollar"

    Well, there's an idea!

  • TP||

    OOhhhh testy, are we? Go back to the pits and while you're at it, go suck Bernanke's cock, if he has one.

  • ||

    ARMs. The subprime mortgage crisis was largely an ARM crisis, and ARMs are closely correlated to the federal funds rate. You are correct to say "the Fed doesn't fix end-borrower interest rates," but the Fed has a lot more influence than you suggest.

  • ||

    The Fed discount rate is now .25% yet a mortgage is 5-6%.

    Back in the 90's the spread was only 1% - not the exorbitant spread we see today.

    Although of course the mortgage rate should be more closely related to the longer term Treasury rates. The 10 year to 3 month Treasury spread is also very large right now.

  • MNG||

    "I know you don't actually care"

    I do Brian. Thanks, this is something for me to think on.

  • ||

    Can everyone stop ganging up on poor MNG? He's just trying to understand things like the grown-ups. It's OK, sweety, heller will hold you in his arms and protect you.

  • ||

    There's two camps. The Friedmanites are okay with the fed, but want it to remain independent (pretty much as it is). The Rothbardians want it abolished and to allow private banks to print money. No national currency.

  • Steve Horwitz||

    Actually Hazel, there are at least three camps. You have the "Friedmanites" right, although even Milton toward the end was willing to consider getting rid of the Fed.

    The Rothbardians want it abolished, yes, but they argue for a 100% reserve system in which any paper money must be completely backed by gold.

    The third group are people like myself who favor abolishing the Fed and opening up the production of currency to competition, but who have no problem with fractional reserve banking. (FRB is a problem under central banking, but that's because of central banks not anything inherent in FRB). That currency would be redeemable in some commodity, perhaps gold perhaps not. Google Lawrence H. White or George Selgin for more on this third option.

  • ||

    Friedman said(paraphrased) that ideally the Fed would be replaced by a computer that only expanded money supply at a set/announced constant rate every year (say 2%), however humans, being power hungry beasts, would never allow this, they would always try to keep extra powers for themselves to manipulate the economy and this would probably be for the worst.

    So if a "Friedmanite" is OK with the Fed as most economist are, then it is only because they ignore Friedman.

  • MNG||

    I'm honestly bi-curious. I honestly don't know much.

    FTFM.

  • MNG||

    The 15 year olds have spoken!

  • Internet Cop||

    Sex with minors is a crime. You'll have to come with us, Mr. MNG.

  • ||

    Ron Paul is not a conservative, let alone "one of the most conservative". He wants to legalize drugs and prostitution for God's sake.

  • Oh no not this again||

    Is this sarcasm? Tulpa, do you have a problem with legalizing drugs and prostitution, and do you support spending more of our tax dollars on Pig welfare to boot?

  • ||

    I don't have a problem with legalizing drugs or prostitotion, just wild mischaracterizations of Ron Paul's political persuasion.

  • Oh no not this again||

    Ok, no problem, but what do you think is mischaracterized? Conservative or libertarian? Ron Paul is probably one of the few, maybe only, Republicans who would get my support or vote.

  • MNG||

    Ditto. The guy is the rare principled pol.

  • William F. Buckley||

    Tulpa, I speak from beyond the grave to remind you that not every conservative is a tight-ass about drug use.

  • ||

    However, I loved the presidents that escalated the drug war and gave some of the biggest drug czars a podium to preach from.

  • Barry Goldwater||

    Me too.

  • ||

    In related unfortunate bill failure news, McCain's amendment to force the government to come up with a plan to shut down Fannie and Freddie in two years failed 43-56. Every Republican voted for it, plus Feingold and Bayh. The Democrats and Sanders voted against.

  • cynical||

    I knew there was a reason I didn't completely hate Feingold and Bayh (despite McCain-Feingold, in the case of the former).

  • Kevin||

    This bill is such a scam. The Fed will simply declare anything remotely related to the bailout non-applicable to this law. That is how they will get around the audit if this bill is signed.

    Thanks you whored-out, corporatist senators. What would we do without your wise leadership?

  • TP||

    Christ, hasn't anybody on this board read Palyi?

  • Thanks||

    for the tip.

  • Ghost of Schrödinger's cat||

    I haven't, actually. Could I get an executive summary?

  • Ghost of Schrödinger's cat||

    I kind of have trouble reading, especially big words. A pictorial explantion would be ideal. Thanks!

  • TP||

    Oh, piss off.

    Here:

    http://mises.org/books/inflation_primer_palyi.pdf

    Yeah, I'm too fucking lazy to embed it. Do you think you could copy and paste it? Or do you need a pictorial explanation of how do do that?

    :)

  • Ghost of Schrödinger's cat||

    Thanks man, anything from Mises I uncritically accept. I can get a friend to sound out the hard words.

  • TP||

    Oh, so this is a board on critical thinking. Damn, had me fooled.

  • MNG||

    critical thinking? hardly. I've never questioned my beliefs.

  • MNG||

    critical thinking? hardly. I've never questioned my beliefs.

  • Ghost of Schrödinger's cat||

    I hate it when I want to be clever posting as MNG and I post twice! Computers are hard, probably trolls! I'm going to post a recipe!

  • Ghost of Schrödinger's cat||

    I think critical thinking is great, Mises.com tells me how to think critically! Thanks!

  • Ghost of Schrödinger's cat||

    Tostito's Supreme

    1 bag of Tostito's
    1 bad of shredded cheese

    Wait until Mom and her boyfriend go into their room. Wipe away tears thinking of how lonely dad is. Put shredded cheese on Tostitos. Place in microwave. Heat until cheese is melted. Serve and cry quietly.

    Why, mommy, why?

  • MNG||

    Palyi is a hack.

  • TP||

    And you are?

  • MNG||

    I'm a hack, too, but I get away with it because I have a Democratic Party card.

  • MNG's Mother||

    MNG, time for your weekly bath!

  • Ghost of Schrödinger's cat||

    Sorry for this. My poor mom is actually no longer screwing around on dad, she's in a comma, only able to mutter "MNG, MNG, so big" I hate that guy and all liberals, so I take my crusade adolescently on this site.

    Why mommy, why? Daddy was a nice man, why was that not enough?

  • Ghost of Schrödinger's cat||

    I said stop calling me!

  • pantsfan||

    are you two lovebirds going to ruin another thread?

  • MNG||

    the cat started it, by invalidating my contributions with bland, tasteless recipes.

  • Mr. FIFY||

    That's assuming the bulk of your contributions are valid, MNG.

    Once in a great while, you let a pearl shine, but for the most part you post pabulum.

  • Ghost of Schrödinger's cat||

    I don't love men! I don't! Sometimes they seem pretty, but I don't love them, stop saying that, stop it!

    I'm going to post a recipe on you, a recipe I say!

    Why mommy, why?

  • CE||

    Three years ago, Ron Paul was considered a quack, fixated on the gold standard and the Federal Reserve. Now he's got a third of the US Senate and a majority of the House signing up to audit the Fed, and every US Senator realizing they need to do something to look like they agree with him somewhat.

    To top it off, his son is well on the way to joining the Senate, gaining 100 times more power than Ron Paul ever had.

  • ||

    Three years ago, Ron Paul was considered a quack, fixated on the gold standard and the Federal Reserve. Now he's got a third of the US Senate and a majority of the House signing up to audit the Fed, and every US Senator realizing they need to do something to look like they agree with him somewhat.

    Yeah, but that's because TARP happened and the Fed got unprecedented power and authority. If that hadn't happened, this wouldn't have passed.

    That's a pretty dark cloud to have to live with for your silver lining, no?

  • ||

    "TARP happened and the Fed got unprecedented power and authority. If that hadn't happened, this wouldn't have passed."

    This is my dream!...the red team will be back in power!...we will shrink the government this time, as soon as we win our global war on terror.

  • Barry Goldwater||

    Go fuck yourself.

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