Fed Audit Bill Gains Majority; ALG Calls for Discharge Petition

June 12th, 2009, Fairfax, VA—Yesterday, legislation that would audit the Federal Reserve Board of Governors and regional Reserve Banks gained a majority of members as cosponsors, totaling 222 total supporters. Americans for Limited Government President Bill Wilson today called upon Congressman Ron Paul (TX-CD14) to circulate a discharge petition for HR 1207 at the end of the month if the House Financial Services Committee does not put the legislation on the floor.

“Barney Frank must allow this to come up for a vote. Of the 71 members of the House Financial Services Committee, 36 are cosponsors of the Fed Audit bill, including 7 Democrats, and 35 are not,” Wilson said. “That’s a majority.”

All 35 members of the Financial Services Committee that are not cosponsors for the Fed Audit bill are Democrats, including Committee Chairman Barney Frank..

Wilson says the legislation is necessary “to account for more than $7.76 trillion committed by the Fed in just the past two years. The American people have a right to know why the nation’s central bank is moving trillions of dollars to foreign governments and banks, killing markets, and crashing the economy.”

“If the will of the majority of the Financial Services Committee, and now a majority of the members of the House is to be heard, HR 1207 must be sent to the floor,” Wilson said.

To date, 162 House Republicans and 59 House Democrats are cosponsoring the legislation. 222 members in total support the bill, including the bill’s sponsor, Congressman Paul. This means the bill has now garnered enough support swift passage, with 218 votes needed in the House of Representatives with its 435 members.

According to Bloomberg News, the Federal Reserve has committed over $7.76 trillion in the past 20 months, $1,67 trillion of which has already been disbursed. However, it is unclear who received these loans, or who will receive the remainder of the committed funds.

Wilson added, “Nobody can account for where nearly $2 trillion of loans made by the Fed is going—all because the Fed has consistently stonewalled the press, Congress, and anyone else. And because law exempts most of the institution from being audited by the GAO.”

Wilson cited that the Government Accounting Office, according to 31 USCA §714, cannot audit and exempts from public oversight the following activities of the Federal Reserve:

(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, 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 items.

On February 26th “Federal Reserve Transparency Act of 2009” was introduced. H.R. 1207 would require the Comptroller General to issue an audit of both the Board of Governors and Reserve Bank operations, which are run by member banks of the Fed. The audit would have to be issued to Congressional leadership by the close of 2010.

According to Bloomberg, “The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return.” The Fed has argued it is actually allowed to withhold “internal” memos as well as commercial and trade secrets information. Bloomberg, on the other hand, has actively filed a Freedom of Information Act (FOIA) request, demanding the information.

Thus far, the Fed’s Board of Governors has refused to comply with Bloomberg’s FOIA requests. In addition, the Fed’s regional Reserve Banks are arguing that they are private institutions beyond the reach of the Freedom of Information Act.

In answering questions from Congressman Alan Grayson (D-FL) recently, Fed Inspector General Elizabeth Coleman testified she could not account for “$1 trillion-plus that the Fed extended and put on its balance sheet since last September…”

An email to Bloomberg by Coleman’s office also revealed that “By law, we are the Office of Inspector General for the Board of Governors only… Consistent with our authority, we cannot conduct a direct audit of Reserve Bank operations.”

“Now that a majority of the House and a majority of the House Financial Services Committee supports this legislation, it must come to the floor for a vote. For Pelosi and Frank to block it now would be to thwart the express will of the American people.” Wilson concluded.