It’s Time To Audit The Fed
How many times have you been told that fighting for a cause you hold dear won’t make any difference in Washington? That politicians will do what they want, and we’ll just have to keep dealing with it?
As someone who believes the Constitution matters, and liberty isn’t a whim the Founders acted on while they were bored one day, I’ve certainly heard more than my fair share of that familiar tune – even after I was elected to the U.S. Senate, which some also claimed could never happen!
But for those willing to keep an open mind on what’s possible, let me point to a bill called the Federal Reserve Transparency Act — more popularly known as “Audit the Fed.”
You can print this legislation out on only four pages (which I think would be a much better standard on Capitol Hill than the library that is the tax code or other “major” legislation), but what’s contained in those few words has sent the establishment’s head spinning, since passing it would go down as a momentous victory for accountability and transparency.
Audit the Fed removes the restraints on how the nonpartisan, independent Government Accountability Office (GAO) can audit the Federal Reserve System, requiring the GAO to conduct an audit within one year of the bill’s passage and report back to Congress within 90 days of finishing it.
This would open up the Fed’s agreements with foreign governments and central banks, its discount window and open market operations, its member bank reserves, and its Federal Open Market Committee (FOMC) directives to thorough examination by the people’s representatives — for the first time since its creation in 1913.
Considering that our nation’s central bank is one of the most powerful institutions in Washington, you could be forgiven for thinking the bill would forever be stalled. When my father reintroduced Audit the Fed in the U.S. House, that oft-repeated phrase reared its head again: “It’s a nice idea, but it won’t go anywhere.”
Grassroots Americans all across the country refused to listen, though, and they worked hard to make sure that if it wasn’t already on their legislators’ radars, it got there fast.
During my father’s final term in Congress in 2012, Audit the Fed passed the House by an astounding vote of 327-98. By 2014, its support further increased, leading to another successful House vote of 333-92.
On the Senate side, we missed reaching cloture by only seven votes in 2016.
The Fed has even been forced to lobby to combat the pressure in what seems to be a clear conflict of interest.
Now, you’ll hear critics say that Audit the Fed is an attempt by politicians to “take over” monetary policy, but I’ve met those driving this movement and witnessed their passion firsthand.
They are students, moms and dads, and other concerned Americans who look down the road and wonder how much of our nation’s prosperity and opportunity will be swallowed up by debt or lost in financial crises fueled by artificial market signals and central planners’ economic tinkering.
We have given enormous power to a relatively small number at the Federal Reserve to directly impact and shape the costs millions of Americans will pay now and for years to come, and we have tied the hands of Congress’ investigative arm to hold them fully accountable.
The Fed can create new money out of thin air and spend it on whatever financial assets it wants, whenever it wants — giving that money to whichever banks it wants – while the GAO has previously observed that, “We do not see how we can satisfactorily audit the Federal Reserve System without authority to examine the largest single category of financial transactions and assets that it has.”
In 2009, then-Fed Chairman Ben Bernanke was able to refuse to tell Congress who received over two trillion in Fed loans, and it took congressional action and a Bloomberg lawsuit to force the Fed to reveal the details of what it did in more than 21,000 transactions involving trillions of dollars during the 2008 financial crisis. A one-time audit of the Fed’s emergency lending mandated by Congress revealed even more about the extent to which the Fed put taxpayers on the hook.
In the coming weeks, Congress will turn to tax reform and the debt ceiling, areas where we must institute long-overdue reforms to give Americans back more of their own money and get spending under control by changing how government operates.
But with a Senate vote possible this fall to fill a vacancy on the Federal Reserve’s Board of Governors, and the Fed claiming it will start acting “relatively soon” to reduce its swollen, $4.5 trillion balance sheet, we will also have plenty of opportunities to speak out on monetary policy and call for an end to the Fed’s secrecy surrounding operations that prop up the powerful and well-connected at the expense of the rest of us.
We’ve been told over and over again it can’t be done, while defying those expectations each step of the way, and we now have a President who has indicated his support for Audit the Fed.
Let’s shock the establishment again by pushing it over the finish line.
Rand Paul serves as United States Senator from Kentucky.