House Decides to Audit the Fed

by: Washington

I have just received confirmation from a very credible Congressional source that the bill to audit the Federal Reserve is included in the House financial reform legislation which passed today. My source says:

The Fed audit provision which passed the Financial Services Committee a few weeks ago is part of the bill. This is a real milestone, as it means that the full House of Representatives has passed a bill that mandates a complete audit of the Fed.

The effort to audit the Fed - supported by 79% of the American people - is gaining traction.

UPDATE: Congressman Grayson has confirmed that the bill to audit the Fed passed:

The bill includes the Paul-Grayson amendment, which calls for the first independent audit of the Federal Reserve in the 96-year history of the central bank. Congressman Grayson teamed with Rep. Ron Paul to push for the “Audit The Fed” legislation. Congressman Grayson discovered that the Federal Reserve has conducted secret bailouts that range in the hundreds of billions of dollars since 2008. The bill grants authority to the non-partisan General Accountability Office to conduct the audit. “Exposing how the Federal Reserve operates is a crucial component to any meaningful reform. We need to find out what they’ve done and then we can figure out how to respond,” Congressman Grayson said.

My source says that it will take a couple of days for the GAO to assemble all of the amendments into a single text.

In the meantime, you can view the version of the bill provided by Congress' Thomas website here or here.

The New York Times has also posted what it claims is the final version of the bill (see below). If accurate, the relevant provisions appear to be the following.

SEC. 1000A. RESTRICTIONS ON THE FEDERAL RESERVE SYSTEM PENDING AUDIT REPORT.

    (a) In General- Notwithstanding any other provision of law, the Comptroller General of the United States shall perform an audit of all actions taken by the Board of Governors of the Federal Reserve System and the Federal reserve banks during the current economic crisis pursuant to the authority granted under section 13(c) of the Federal Reserve Act. Such audit shall be completed as expeditiously as possible after the date of the enactment of the Financial Stability Improvement Act of 2009.
    (b) Report-
      (1) REQUIRED- Not later than the end of the 90-day period beginning on the date the audit referred to in subsection (a) is completed, the Comptroller General of the United States shall submit a report to the Congress, and make such report available to the public.
      (2) CONTENTS- The report under paragraph (1) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.

***

SEC. 1008. OVERSIGHT BY GAO.

    (a) Authority to Audit- The Comptroller General of the United States may audit the activities and financial transactions of--
      (1) the Council; and
      (2) any person or entity acting on behalf of or under the authority of the Council, to the extent such activities and financial transactions relate to such person's or entity's work for the Council.
    (b) Access to Information-
      (1) IN GENERAL- Notwithstanding any other provision of law, the Comptroller General of the United States shall have access, upon request and at such reasonable time and in such reasonable form as the Comptroller General may request, to--
        ***
        (B) any records or other information under the control of a person or entity acting on behalf of or under the authority of the Council, to the extent such records or other information is relevant to an audit under subsection (a).

Section 1001 (b) (1) (B), in turn, makes the Chairman of the Federal Reserve a member of the Council:

SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ESTABLISHED.

    (a) Establishment- Immediately upon enactment of this title, there is established a Financial Services Oversight Council.
    (b) Membership- The Council shall consist of the following:
      (1) VOTING MEMBERS- Voting members, who shall each have one vote on the Council, as follows:
        ***
        (B) The Chairman of the Board of Governors of the Federal Reserve System.

Therefore, Section 1008 might also give the GAO additional audit authority over the Fed, although I will leave it to the lawyers to argue over an interpretation of Section 1008.


Call your Senator and demand that the Senate approve the bill to audit the Fed (and demand that the language be tightened up to close all loopholes).

Financial Services Regulatory Overhaul Bill of 2009