The House Oversight and Government Reform Committee voted unanimously Wednesday to authorize an investigation of the Federal Reserve in an attempt to increase the independent central bank’s accountability to lawmakers.
Texas Republican Rep. Ron Paul, a longtime critic of the Federal Reserve, is sponsoring the Federal Reserve Transparency Act. His son, Kentucky Republican Sen. Rand Paul, introduced similar legislation in January 2011.
“It is important that we get our economy growing again through savings and investment, not more debt and deficit spending,” Sen. Paul said. “But we can’t turn the economy around until we fix the root of the problem: an unaccountable Federal Reserve. A complete and thorough audit of the Fed will finally allow the American people to know exactly how their money is being spent by Washington.”
Federal law currently prohibits such a broad audit of the Fed, which consists of a board of governors and 12 regional banks. Congress created the Fed in 1913 to maintain the stability of the nation’s financial system, including employment, prices and interest rates.
If passed through Congress and signed by the president, the bill would require the Government Accountability Office to review the Fed’s decision-making and lending policies before the end of 2012. Any member of Congress would be able to review the audit.
Last July, the GAO discovered in a limited audit that the Fed “invoked emergency authority under the Federal Reserve Act of 1913″ several times in 2008 and 2009 to authorize a total of $1 trillion in outstanding loans, including loans to the housing market.
The oversight committee’s vote shot down an amendment by Maryland Democratic Rep. Elijah Cummings that would have kept the Fed’s internal board discussions off limits.
Sen. Paul said he “will continue to fight on the front lines of this battle to get Audit the Fed passed through Congress.”