Rep. Ron Paul (R-Tex.) wins (again) the most significant victory of his congressional career. He has taken his pet issue since the 1970s–the unwarranted power and secrecy of the Federal Reserve–from something pretty much no one but him cared about six years ago, through a bestselling book and mass movement by 2009, through this afternoon, the second time he's gotten the House of Representatives to vote to widen the government's powers to audit the Fed's activities.
Huffington Post with details about the vote this afternoon, and on Paul's Democratic ally equally upset with the Fed's lack of transparency, Rep. Dennis Kucinich (D-Ohio):
In a rare moment of bipartisanship, the House overwhelmingly passed a bill by Rep. Ron Paul (R-Texas) to audit the Federal Reserve.
The bill, which has 270 co-sponsors, passed 327 to 98. All but one Republican voted for it, along with 89 Democrats…..
Fed Chairman Ben Bernanke recently told the House Financial Services Committee that he agrees with the "basic premise" that the Fed should be transparent, but raised concerns that Paul's bill doesn't exempt monetary policy and deliberations from its reach….
But Rep. Dennis Kucinich (D-Ohio) pointed out that the House vote on the bill comes on the same day that the Washington Post reported that the New York Fed "did not communicate in key meetings with top regulators that British bank Barclays had admitted to Fed staffers that it was rigging LIBOR," the index which sets interest rates worldwide.
"The Fed creates trillions of dollars out of nothing and gives it to banks. Congress is in the dark. The Fed sets the stage for the subprime meltdown. Congress is in the dark. The Fed takes a dive on LIBOR. Congress is in the dark. The Fed doesn't tell regulators what is going on. Congress is in the dark," Kucinich shouted on the House floor, just before the vote…
Paul explains the importance of the bill, and the fate of the last one that passed the House in 2010, in this FAQ. Highlights:
The Fed's financial statements are audited annually, but the Fed's monetary policy operations are exempt from audit. Congress' investigative arm, the Government Accountability Office (GAO), currently is prohibited by law from examining discount window and open market operations; agreements with foreign governments and central banks; and Federal Open Market Committee (FOMC) directives. It is precisely this information that should be made public…..H.R. 459 allows GAO to audit the Fed's monetary policy operations and directs GAO to report the audit results to Congress.
….Didn't the Dodd-Frank financial reform legislation passed in 2010 mandate a Fed audit?
Yes, but not a full or substantive audit. The audit mandated in the Dodd-Frank Act focused solely on emergency credit programs, and only on procedural issues (such as the effectiveness of collateral policies, whether credit programs favored specific participants, or the use of third-party contractors) rather than focusing on the substantive details of the lending transactions. H.R. 459 does not limit the focus of the audit.
….Hasn't the Fed already published details of its emergency bank lending?
Yes, but only partially. The Fed was required by the Dodd-Frank Act to disclose data from its emergency credit lending programs created during the financial crisis. Most of the data on its other activities, such as open market operations and discount window lending, have only been published as a result of lawsuits—not because of Congressional action. Dodd-Frank requires this information to be disclosed going forward, but with a two year time lag and with GAO restricted to auditing only the procedural components of any programs. H.R. 459 grants GAO and Congress access without special exemptions and ensures that ALL of the Fed's lending actions will be subject to oversight.
The Paulite grassroots activist organization Campaign for Liberty was sending out emails pushing its people to call their congressman in support of the bill multiple times a day for the past week.
The bill's fate in the Senate is uncertain, but not hopeful. Sen. Rand Paul (R-Ky.) issued this press release on passing of the bill in the House. Highlights:
"An audit of the Federal Reserve is more urgent than ever. A GAO report from July 2011 revealed the Fed bailed out banks and corporations to the tune of $16 trillion in taxpayer dollars. A full and thorough audit will finally bring transparency and accountability to the secretive institution that devalues Americans' savings, drives inflation, and enables big government. I applaud its passage in the House today," Sen. Paul said.
"I also congratulate my father, Rep. Ron Paul, who has long fought at the vanguard of this movement when he first introduced Audit the Fed in 1983. Now with 271 co-sponsors and having passed the House, I call upon Democrat leadership to allow a vote in the Senate on this much-needed transparency bill," he continued.
In January 2011, Sen. Rand Paul introduced companion legislation in the Senate, the Federal Reserve Transparency Act of 2011 (S.202), also calling for a full audit of the Federal Reserve.
The New York Times from 2010 on some of the ways the Federal Reserve uses its money power to help out its friends, in what it prefers to keep secret. Huffington Post on what some interpret as cronyish giveaways of Fed favors to friendly bankers.
Politico, before the vote this afternoon, wrote of this bill as Paul's congressional "swan song." More like "greatest triumph," and the way he's got Mitt Romney on board as being pro-Fed investigation indicates that his influence on this issue will survive him–and not just in his own Party. Paul in the Politico story:
Paul believes the traction on his Audit the Fed bill does validate his grass-roots, populist approach to monetary policy.
"I like to think of it more as verifying that my approach is a little bit different than just becoming a powerful player and having an influence, versus really changing people's minds," he said.
In the meantime: The Fed prepares for more stimulus, because that always works.
My 2009 Reason feature on the burgeoning anti-Federal Reserve movement. My new book, Ron Paul's Revolution: The Man and the Movement He Inspired.
Kucinich on audit the Fed: