Federal Reserve

The Sane Case for Auditing the Fed


Just a couple of weeks ago, the House of Representatives passed The Federal Reserve Transparency Act by an overwhelming vote of 333-92; a majority of House Democrats voted for an audit while just one Republican voted against the bill.

Yet despite overwhelming public and congressional support for an audit, it's just not going to happen.

For that, you can blame Senate Majority Leader Harr Reid (D-Nev.), who's just not interested in putting the legislation up for a vote in the country's upper chamber.

That's a shame, I argue at The Daily Beast, because we really should know a lot more about how the United States' central bank does what it does. In fact, if a 2011 GAO report is any indication, nobody outside the Fed even knows what it's doing on a regular basis. And there's this:

[A new] Pro Publica bombshell story about funny business at the Federal Reserve Bank of New York [should] only increase calls for a truly wide-ranging, independent audit.

Bank examiner Carmen Segarra, who the Fed tasked with monitoring Goldman Sachs in an effort to learn how and why the 2008 financial crisis unfolded, was fired from her post after seven months. She walked away with 46 hours of secretly recorded conversations and other documentation amounting to an "unignorable truth," in the words of journalist Michael Lewis: that one of America's biggest investment banks had co-opted its supposed overseer.

"You sort of knew that the regulators were more or less controlled by the banks," Lewis wrote. "Now you know."

Whole thing here.