The Federal Reserve, the unelected central bank of the U.S., enjoys a monopoly over the flow of our nation’s money and credit but has never been completely transparent and accountable to Congress since its creation in 1913.
Over its nearly 100 year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar while Congress has kept its hands off and its eyes closed. Since 1913, the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy.
During the current economic crisis, Congress, the Treasury, and the Fed have put us on the hook for over $14 trillion in bailouts and loans. This is in addition to our over $16 trillion national debt. When testifying before Congress in 2009, Fed Chairman Ben Bernanke refused to disclose which institutions received trillions of dollars in these bailouts and loans or to give our representatives details about what deals are being made with foreign banks.
Despite the limited audit passed as a result of grassroots activism in the 111th Congress, the Fed still refuses to fully disclose key details of its emergency lending.
Although the Fed is currently audited by outside agencies, these audits are not thorough and do not include monetary policy decisions or agreements with foreign central banks and governments.
The crucial issue of Federal Reserve transparency requires an analysis of 31 USC 714, the section of US Code which establishes that the Federal Reserve may be audited by the Government Accountability Office (GAO) but which simultaneously severely restricts what the GAO may in fact audit. Essentially, the GAO is only allowed to audit check-processing, currency storage and shipments, credit facilities (limited) and some regulatory and bank examination functions, etc. The most important matters, which directly affect the strength of the dollar and the health of the financial system, are immune from oversight.
Currently, the GAO is prohibited from auditing:
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
3. transactions made under the direction of the Federal Open Market Committee; or
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 of US Code.
The GAO is also prevented from conducting on-site examinations of banks or bank holding companies without the written consent of the appropriate regulatory agency.
HR 459 and S 202, The Federal Reserve Transparency Act, would eliminate these restrictions and mandate a thorough GAO audit of the Fed, finally delivering answers to the American people about how our money is being spent.
Many politicians like to constantly laud the benefits of transparency but fail to turn their campaign rhetoric into results. With trillions of dollars and our nation’s monetary system at stake, the time to take action is now.
With Ron Paul serving as chairman of the House Domestic Monetary Policy Subcommittee and Rand Paul leading the fight in the Senate, our chance to pass Audit the Fed has never been better.
By opening all Fed operations to a GAO audit, HR 459 and S 202 would result in an historic level of transparency and accountability from the Federal Reserve.