Effort to expand audits of Fed picks up steam in Senate
Wednesday, May 5, 2010
A contentious effort to expand audits of the Federal Reserve that sailed through the House despite heavy criticism appears to be picking up steam as the Senate considers broad new financial regulations.
Sen. Bernard Sanders (I-Vt.) is pushing an amendment to the financial overhaul bill before the Senate that would broaden the Government Accountability Office's power to audit the Fed and compel the central bank to disclose details about the firms that received emergency federal aid during the financial crisis.
"The American people have a right to know who has received $2 trillion of their money, and they have a right to have the GAO do an audit about potential conflicts of interest," Sanders said Tuesday. The Fed has "operated in secrecy forever, and they are now playing a role significantly different than they have in the past. I think the American people want to know what is going on," he added.
Sanders's measure reflects legislation introduced by Rep. Ron Paul (R-Tex.) -- who has harshly criticized the Fed for decades -- and approved overwhelmingly by the House last year.
The movement against the Fed has collected a diverse collection of supporters. Sanders's amendment has drawn more than a dozen co-sponsors from both parties. A petition encouraging the bill has the support of groups as disparate as FreedomWorks, a conservative activist group that has helped organize Tea Parties, and liberal organizations such as the Campaign for America's Future and prominent progressive blogs.
But plenty of opposition remains.
In information provided recently to Senate staffers and obtained by The Washington Post, Fed officials asserted to lawmakers that the Sanders provision would "directly interfere with monetary policy" and "would permit the GAO to audit monetary policy decisions and the decision-making process itself." Federal Reserve Chairman Ben S. Bernanke and numerous economists have argued strenuously against such a measure, saying it could subject such vital decisions to short-term political pressures.
Sanders and his aides said Tuesday that the amendment would do no such thing. They pointed to a line that reads, "Nothing in this [amendment] shall be construed as interference in or dictation of monetary policy to the Federal Reserve System by the Congress or the Government Accountability Office."
Administration officials are searching for ways to address complaints about transparency at the Fed while balancing fears about overreaching. They are backing an amendment similar to one proposed in the House by Rep. Melvin Watt (D-N.C.) that would allow additional scrutiny of the Fed, but not auditing of monetary policy. Watt's amendment failed to pass.
Despite bipartisan backing, Sanders's effort also has drawn criticism from lawmakers on both sides.
"I'm looking at it," Sen. Claire McCaskill (D-Mo.) told reporters Tuesday. "But I think it may have more potential to politicize the Fed than it does opportunity to really change anything that average Americans are looking for."
Sen. Bob Corker (R-Tenn.),while not condemning Sanders's Fed provision outright, said some of the proposed amendments to the financial regulatory bill had turned into a process of "who can out-populist the next person."
Added Sen. Richard Burr (R-N.C.), "I think it goes too far. It expands the auditing beyond what I think we need."
Assuming the Sanders amendment makes it into the final version of the Senate's bill, the unusual coalition supporting it could complicate any effort to strip the Fed provision when the bill goes to conference, as is often done to controversial amendments with populist appeals. The House already has passed it, and many of those who supported the push in the Senate are in heated reelection contests.
Sanders sounded confident Tuesday that the proposal would at least get a fair hearing on the Senate floor, in spite of the opposition from various government officials.
"We've got a lot of support," he said. "We're going to get a vote."