Ron Paul’s Amendment To Audit The Federal Reserve Approved
November 19, 2009
A key House panel approved the Paul-Grayson Amendment by an overwhelming 43-26 Thursday afternoon, which will give watchdogs new authority to audit the Federal Reserve.
Here is a summary of the Paul-Grayson Amendment:
Dear Financial Services Committee Colleague:
It is encouraging to see the issue of Federal Reserve transparency receiving so much attention during this current markup. Today we plan to offer an amendment to the Financial Stability Improvement Act that expands on the many extant proposals to enhance Federal Reserve transparency. Our amendment is based on HR 1207, the Federal Reserve Transparency Act, which has broad bipartisan and grassroots support. The bill is cosponsored by 309 Members of Congress, including all Financial Services Committee Republicans and 13 Financial Services Committee Democrats.
The amendment removes restrictions on GAO audits of the Federal Reserve, as HR 1207 does, but makes a few changes to take into account some of the concerns that the Fed has made known in public testimony. Specifically, the Paul/Grayson amendment:
* Exempts unreleased transcripts and minutes from meetings of the Board and FOMC to address the Fed’s concerns that free and open debate in their meetings would be stifled. * Sets a 180-day time lag for release of details of market actions the Fed has undertaken, to address the Fed’s concerns that Congress or GAO is second-guessing its actions. * Removes boilerplate language that allowed GAO to make recommendations on monetary policy and adds a section stating that nothing in the amendment shall be construed as interference in or dictation of monetary policy to the Fed.
Unlike proposals that target the Fed’s 13(3) facilities, the Paul/Grayson amendment opens up the entire $2 trillion Federal Reserve balance sheet to a GAO audit. The Fed’s recent purchases of nearly $800 billion in mortgage-backed securities (MBS) have occurred under the MBS Purchase Program, authorized under section 14(b) of the Federal Reserve Act. This program, which is expected to reach a size of $1.25 trillion, would remain exempt from audit even if all the current 13(3) audit proposals were to go into effect. Targeting facilities that are in the process of being drawn down and that are authorized under a specific subsection of the Federal Reserve while allowing other facilities to spring up in their place is counterproductive to true transparency. All purchases and loans that appear on the balance sheet should be subject to audit, without loopholes for the Fed to evade scrutiny.
More importantly, the Paul/Grayson amendment does not create any additional burdens. Some competing proposals, while making a good effort at expanding the number of 13(3) facilities open to audit, take a step backwards by imposing new restrictions on GAO that are more burdensome than the restrictions currently written into law. We cannot accept these new restrictions. Unlike competing proposals, this amendment amends existing restrictions on GAO audit authority, a necessary precondition for a complete audit. Competing proposals leave these restrictions in place, and even add new ones.
We also reject the false dichotomy between transparency and independence. The Paul/Grayson amendment would achieve the necessary transparency of the trillions of dollars of Fed interventions while keeping Congress from directly intervening in the decision-making process. Independence should not be synonymous with secrecy. We urge our colleagues to support the Paul/Grayson amendment.
Sincerely,
Ron Paul, Member of Congress Alan Grayson, Member of Congress
A key House panel approved the Paul-Grayson Amendment by an overwhelming 43-26 Thursday afternoon, which will give watchdogs new authority to audit the Federal Reserve.
Here is a summary of the Paul-Grayson Amendment:
Dear Financial Services Committee Colleague:
It is encouraging to see the issue of Federal Reserve transparency receiving so much attention during this current markup. Today we plan to offer an amendment to the Financial Stability Improvement Act that expands on the many extant proposals to enhance Federal Reserve transparency. Our amendment is based on HR 1207, the Federal Reserve Transparency Act, which has broad bipartisan and grassroots support. The bill is cosponsored by 309 Members of Congress, including all Financial Services Committee Republicans and 13 Financial Services Committee Democrats.
The amendment removes restrictions on GAO audits of the Federal Reserve, as HR 1207 does, but makes a few changes to take into account some of the concerns that the Fed has made known in public testimony. Specifically, the Paul/Grayson amendment:
* Exempts unreleased transcripts and minutes from meetings of the Board and FOMC to address the Fed’s concerns that free and open debate in their meetings would be stifled. * Sets a 180-day time lag for release of details of market actions the Fed has undertaken, to address the Fed’s concerns that Congress or GAO is second-guessing its actions. * Removes boilerplate language that allowed GAO to make recommendations on monetary policy and adds a section stating that nothing in the amendment shall be construed as interference in or dictation of monetary policy to the Fed.
Unlike proposals that target the Fed’s 13(3) facilities, the Paul/Grayson amendment opens up the entire $2 trillion Federal Reserve balance sheet to a GAO audit. The Fed’s recent purchases of nearly $800 billion in mortgage-backed securities (MBS) have occurred under the MBS Purchase Program, authorized under section 14(b) of the Federal Reserve Act. This program, which is expected to reach a size of $1.25 trillion, would remain exempt from audit even if all the current 13(3) audit proposals were to go into effect. Targeting facilities that are in the process of being drawn down and that are authorized under a specific subsection of the Federal Reserve while allowing other facilities to spring up in their place is counterproductive to true transparency. All purchases and loans that appear on the balance sheet should be subject to audit, without loopholes for the Fed to evade scrutiny.
More importantly, the Paul/Grayson amendment does not create any additional burdens. Some competing proposals, while making a good effort at expanding the number of 13(3) facilities open to audit, take a step backwards by imposing new restrictions on GAO that are more burdensome than the restrictions currently written into law. We cannot accept these new restrictions. Unlike competing proposals, this amendment amends existing restrictions on GAO audit authority, a necessary precondition for a complete audit. Competing proposals leave these restrictions in place, and even add new ones.
We also reject the false dichotomy between transparency and independence. The Paul/Grayson amendment would achieve the necessary transparency of the trillions of dollars of Fed interventions while keeping Congress from directly intervening in the decision-making process. Independence should not be synonymous with secrecy. We urge our colleagues to support the Paul/Grayson amendment.
Sincerely,
Ron Paul, Member of Congress Alan Grayson, Member of Congress
Comment
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Comment by Tara on November 20, 2009 at 8:28am
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This is absolutely the greatest news I've heard in a long time! The train of liberty is moving full speed ahead and hopefully one day choo choo over the printing press, the manipulations and machinations of the Fed who steal the wealth of a nation with a nod and grin. Kudo's to Paul and Grayson for standing on the right side of history and being the courageous freedom fighters that they are!
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Comment by truth on November 19, 2009 at 11:27pm
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Dear Friend of Liberty,
Thanks to your quick action in contacting Congress, the House Financial Services Committee earlier today rejected Representative Mel Watt's attempt to hijack Audit the Fed by voting 43-26 to pass Ron Paul's amendment to the financial regulatory reform bill.
Dr. Paul called me right after the vote to personally express his thanks to C4L members for all of your efforts!
It is an incredible testament to the growing power of the liberty movement that we were able to get such an audit passed by a major House committee, but this is by no means the end of our fight.
Financial Services leadership has seemed determined for several months that if an audit of the Fed were to get out of Committee, it should be attached to an overall regulatory reform package that would actually increase the powers of the Fed to interfere in our economy.
Congressman Paul's amendment gives the Government Accountability Office power to conduct a thorough audit of the Fed's entire $2 trillion balance sheet and replaces the Watt language that would have further restricted GAO audits of the Federal Reserve.
While this is a victory over an attempted hijacking of our cause, the audit authority is still being rolled into the Financial Stability Improvement Act, a bill that Campaign for Liberty will oppose.
This Act will be voted on as soon as the Committee returns from its Thanksgiving break, and we will then know if it will move to the floor.
And it's already becoming clear that Ron Paul's amendment may face challenges on the House floor.
Now is the time to turn up the pressure!
Keep contacting Congress and tell your representative that before Congress debates over giving the Fed any new powers, we need to know what they're doing with the ones they already have!
Urge your representative to support a standalone, up or down vote on Audit the Fed, H.R. 1207.
We've put too much work into this effort to see an audit bogged down in yet another Washington bureaucratic nightmare.
Make no mistake, though, the victory today proved we can get the votes to pass the thorough, historic audit we've been fighting for this past year. We have put the Federal Reserve on notice that the freedom movement is serious about reclaiming our country and that it is here to stay.
Thanks for all you do for the cause of freedom. Now, let's finish this fight!
In Liberty,
John Tate
"Destroying the New World Order"
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