Earlier I received an email from AuditTheFed.com:
Dear Supporter of Transparency,
According to our sources on the Hill, Senator Bernie Sanders has unfortunately given in to pressure from the White House and Chris Dodd and stripped out the Paul-Grayson language from his Fed transparency amendment.
What Sanders is now proposing is essentially the Watt amendment the Audit the Fed Coalition opposed last year in the House.
Talking Points Memo reports that, “In order to allay some of the White House’s and the Fed’s concerns, Sanders has agreed to limit the scope of what the Government Accountability Office would be allowed to audit–but his plan will still require thorough review of all the Fed’s emergency lending, beginning December 1, 2007.”
Call Senator Sanders’ office at (202) 224-5141 and tell him how you feel about this last-minute compromise.
Click here for contact information for your senators and urge them to oppose this compromise. Tell them it’s time to support a standalone vote on S. 604, Audit the Fed.
A vote could come even late tonight or early tomorrow. Let your senators know where you stand right away.
The American people deserve a full, thorough audit.
Sincerely,
The Audit the Fed Coalition
The Wall Street Journal writes Plan for Congressional Audits of Fed Dies in Senate:
Last-minute maneuvering in the Senate allowed the Federal Reserve to sidestep legislation that would have exposed its interest-rate decision-making to congressional auditors.
Pressure from the Obama administration led Senate lawmakers to alter a provision pushed by Sen. Bernie Sanders (I., Vt.) that was gaining momentum despite opposition from the Treasury and the Fed. It would have largely repealed a 32-year-old law that shields Fed monetary policy from congressional auditors.
The compromise, endorsed by Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and the Treasury, would require the Fed to disclose more details about its lending during the financial crisis. It would also require a one-time audit of those loans and a one-time review of Fed governance. A formal vote was pushed back until next week.
Thursday’s Senate showdown came after senators on the left and right joined forces to support Mr. Sanders’ provision.
“At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer,” Mr. Sanders said. “The American people have a right to know.”
But Fed Chairman Ben Bernanke, while insisting on a commitment to “openness” at the Fed, said in a letter to Congress the Sanders measure would “seriously threaten monetary policy independence, increase inflation fears and market interest rates, and damage economic stability and job creation.”
More* Letter: Bernanke Outlines His Opposition
* Letter: Volcker Outlines His OppositionJournal Community
Deputy Treasury Secretary Neal Wolin, in a statement, endorsed the revisions to the Sanders provision, saying they would provide a comprehensive audit of the Federal Reserve Board’s operations in response to the financial crisis, “while preserving the existing protections of the Federal Reserve’s independence with respect to monetary policy.”
A House bill sponsored by Rep. Ron Paul (R., Texas) that passed in December contains a proposal similar to the original Sanders measure. If the Senate bill passes, it will need to be reconciled in a conference committee. That keeps the pressure on the Fed alive for the coming months.
The original Sanders measure stated that it shouldn’t be “construed as interference in or dictation of monetary policy.” But the Fed and administration warned that would allow auditors to interview Fed policy makers and staffers about monetary policy, thereby allowing congressional critics to pressure the Fed and undermine its independence.
Like most other capitalist democracies, U.S. politicians have given the central bank considerable latitude to control interest rates on the theory that elected politicians are prone to keep rates too low to get more growth during their terms at the cost of more inflation later. Although sponsors of legislation insisted that wasn’t their intent, the Fed and its allies said otherwise.
“It’s a chilling kind of circumstance,” former Fed Chairman Paul Volcker, an Obama adviser, said in an interview. “The more you have no clear boundaries about what’s appropriate and what’s inappropriate, you castrate the decision-making process. That’s true for any organization, but it’s particularly true when you get into the sensitivities of monetary policy that can generate speculative waves in financial markets and speculation in people’s minds,” said Mr. Volcker, who also urged lawmakers to eliminate the audit provision.
Who’s Who in the Senate Financial OverhaulLearn more about key players in the Senate’s discussion.
View Interactive
Anil Kashyap, an economist at the University of Chicago’s Booth School of Business, stressed that independent central banks need to be insulated from politics and make decisions several months ahead of expected trends.
“There are times when you have to start raising interest rates before the economy’s recovering. If you’re going to get audited while you do that, you know you’re going to be slower—meaning we’re going to tolerate higher inflation.”
Before the last-minute compromise, the Fed’s foes appeared to be winning, and got a major boost when Senate Majority Leader Harry Reid (D., Nev.) said he would side with Mr. Sanders.
Mr. Bernanke, meanwhile, returned to Washington Thursday afternoon after a morning speech in Chicago to continue pressing for changes to the Sanders bill. In the past few days, Mr. Bernanke has spoken to at least a half-dozen senators to argue the Fed’s case that the bill would deeply damage the Fed’s credibility and ability to make tough decisions about interest rates.
At least half a dozen Obama administration officials joined the blitz, including Treasury Secretary Timothy Geithner—a former Fed official—and Rahm Emanuel, the White House chief of staff. Administration aides credited Mr. Dodd with pushing back against the original amendment and developing an acceptable alternative.
New York Fed President William Dudley also advocated to scale back the scope of the auditing. He was among those arguing that ongoing reviews of the Fed’s regular lending to financial institutions would stigmatize the program and cripple the Fed’s role as the nation’s lender of last resort.
The Senate beat back another amendment with populist tinges, defeating 61-33 a provision that would have put strict caps on the size of the nation’s banks. Offered by a bloc of liberal Democrats, it would have capped at 10% the limit on the nation’s total insured deposits any single bank holding company could carry. It would have also set a 6% leverage limit for banks and capped their non-deposit liabilities at 2% of U.S. gross domestic product.
I think it is about time to realize how ridiculously funny this whole farce is. First off: The gang that is the Congress is not going to push through measures that will seriously jeopardize its beautiful money printing machine. It’s simply inconceivable for to happen in any meaningful way. I once thought they could, too, I have come to realize that they won’t.
The temptation of political action is enormous. I, too, fell for it for a long time. The alternatives are hard to accept and just as counter-intuitive as many libertarian solutions seem to unenlightened people in the realm of economics.
We are all perfectly aware of the mechanism of credit expansion and how the Fed is at the root of financial crises that will occur again and again. But do you seriously think president Obama or any other one of these narcissistic, self aggrandizing officials will ever give a flying rats ass?? Haha, it’s unthinkable!
An article such as the one above is just another display of the blatant and shameless lies and falsehoods that politicians and clueless academics will deliberately spread with no reservations whatsoever. We’ve heard this nonsense again and again and it’s just about time we stop pretending that this is a debate. It’s not. It’s a bunch of clowns frantically taking mental craps into the minds of a deluded populace to justify a ponzi scheme that will collapse sooner or later of its own accord. It’s funny at best. But it’s not deserving of a shred of our precious time that we could spend educating those around us about the truth and living our principles in our own lives!
By pretending that it is an intellectual debate we sanction a fundamentally corrupt process. This is not what we should be doing. We shouldn’t justify the systematic looting, theft and defrauding of the majority of the people, in short government, via attempts to participate in it. It hasn’t worked for centuries and trying it over and over again is really the mother of all abusive relationships.
The Audit The Fed efforts are a particularly tragic example. Here we are, fighting day in day out, donating enormous amounts of money, effort, etc. … for what? In order to get the government to deign to have it’s counterfeiting institution to produce a few more pieces of paper to report Congress? Do you seriously think this is going to strip this gang off its powers even one tiny bit?? Even if it did, all it would do introduce 1000s of new “regulations” that will grant more powers.
Millions of innocent and poor people have died over he past years in unconstitutional wars, millions have been thrown in to prison cells for owning or selling some piece of vegetation, our and our kids’ futures have been mortgaged off to foreign nations, corrupt union thugs, and bureaucrats, around 40% of our income per year is taken from us at the point of a gun to support the gaping black hole that is the playground of bureaucratism, and we are fighting tooth and nail about a few pieces of paper? And on top of that, paper that will be submitted to Congress??
I think we reasonable people should not degrade ourselves like that. It costs too much time, effort, and nerves. The purpose of life is happiness. We should live our values, educate our friends and family, get the bad people out of our lives, make sure we raise loved, educated, reasonable children, and over time we will change the whole world in a way that is much more fundamental than adding to the demand for the business of paper production. :)
Not particularly professional or insightful.
I know, I should add “Rants” to my category list. This article would fall right under it :)
Luckily I have explained the matter in a professional and hopefully insightful manner many times before :)