According to the financial blog and sometimes forum for raving right-wing lunacy Zero Hedge, HR 1207, the House bill that would mandate an immediate audit of the Federal Reserve, has garnered 290 supporters. With 2/3rds of the chamber now game for some serious number crunching, this just about guarantees its passage there. And while the proposal's markedly meeker reception in the Senate likely dooms it to a slow death between the wings of the Capitol building, political momentum can be an unexpectedly revitalizing force.
Regardless of its prospects, what's interests me is the Coalition of Cognitive Dissonance that has rallied around this particular issue. HR 1207 was initially sponsored by Ron Paul. With his and Michelle Bachmann's name attached, alongside a who's-who list of D.C. crypto-fascists, you might feel temptation to stop reading.
But then dropping in from the far other side of the aisle are people like Alan Grayson and Dennis Kucinich. In the Senate, Russ Feingold has joined a Yay-team of otherwise staunchly conservative Republicans. Even Barney Frank has graced the bill with his tentative approval. It seems the financial crisis has managed to weld the outrage, if not the policy prescriptions, of the teabagginest fringes of Right to the Populist Left, to the extent that one actually exists.
On its face, the bill seems innocuous and apolitical enough:
(a) In General- Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after ‘shall audit an agency’ and inserting a period.
By the way, I have no idea where sections "c" and "d" went.(b) Audit- Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:‘(e) Audit and Report of the Federal Reserve System-‘(1) IN GENERAL- The audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks under subsection (b) shall be completed before the end of 2010.‘(2) REPORT-‘(A) REQUIRED- A report on the audit referred to in paragraph (1) shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such audit is completed and made available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each subcommittee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests it.‘(B) CONTENTS- The report under subparagraph (A) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.’. (source: GovTrack)
Sounds sensible enough. Except that the Federal Reserve is already audited at least annually by the Comptroller General. What Paul's bill attempts to do is to strike from current law the stipulation, as written in Section 714 of title 31, that...
Audits of the Federal Reserve Board and Federal reserve banks may not include—(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, and open market operations;(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 clauses (1)–(3) of this subsection. (source: Cornell Law)
The entire philosophy behind the Federal Reserve System is embodied in that caveat. If a legislative body, the GAO, is able to audit, for the purpose of "legislative or administrative action," Fed decisions as they pertain to monetary policy, you've potentially given Congress veto power over those decisions. This is generally assumed to be a bad move, policy-wise, given the temptation to keep money persistently cheap.
It's perfectly possible that the audit proposed here will leave that issue alone, and in fact, as I understand it Barney Frank made his support conditional on that fact. But then I wonder what the point of it all it. As far as I can tell, at best the bill does nothing at all. It provides an easy way for otherwise disinterested representatives to pretend to hold someone somewhere to account. Or even more productive, maybe this is a way for Congress to reign in the Fed's policy of admittedly radical quantitative easing.
But given Paul's clearly articulated feelings on the Federal Reserve System (namely, that it should be abolished), I can't help but wonder what the dominant underlying motive is.
It's perfectly possible that the audit proposed here will leave that issue alone, and in fact, as I understand it Barney Frank made his support conditional on that fact. But then I wonder what the point of it all it. As far as I can tell, at best the bill does nothing at all. It provides an easy way for otherwise disinterested representatives to pretend to hold someone somewhere to account. Or even more productive, maybe this is a way for Congress to reign in the Fed's policy of admittedly radical quantitative easing.
But given Paul's clearly articulated feelings on the Federal Reserve System (namely, that it should be abolished), I can't help but wonder what the dominant underlying motive is.
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