Monday, March 9, 2009

Garrett: Audit the Fed

Representative Scott Garrett has joined Representative Ron Paul and 19 other Representatives in co-sponsoring legislation to audit the Federal Reserve and it's branches. With $11.7 trillion in lending since the the financial crisis began, Garrett wants some transparency:
"I would assume that information would be shared by the Fed and the New York Fed," said U.S. Representative Scott Garrett, a New Jersey Republican. "At some point, the demand for transparency is paramount to any demand that they have for secrecy."
Basically, the legislation Garrett is backing gives the government the ability to audit the Fed. While we have the authority to do so, there are so many exceptions and ways for the Fed to get out of an audit, the power is useless. For instance, the Fed must agree to the audit. Paul's legislation that Garrett signed on to eliminates the exceptions.

Here are some of the other exceptions, from the US Code:
(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.
Yep, that's basically everything the Fed does being listed as off-limits for Congressional oversight. Garrett's joined the effort to change that, and should be applauded.

In addition to Garrett's efforts, Bloomberg (news, not the Mayor) is suing the Fed under the Freedom of Information Act to get the information we're entitled to.

At some point, seeing how this massive amount of money is being spent is going to happen. The Fed existed heading into the Great Depression, and we need more than their word that they're not making the same mistakes now that they made then. Transparency is key to preventing us from repeating the mistakes of the past, to learn from history. It's important that both the lawsuit and the legislation succeed.

No comments: