Our nation’s troubled financial industry has spurred calls
for greater transparency, tougher accounting rules and greater oversight
by federal regulatory agencies. Given what we now know about the
irresponsible – and sometimes criminal – behavior of the executives of
many of these institutions, such calls are justified. But there is
another, larger, more powerful and less transparent institution that
continues to operate in relative secrecy, and that is the Federal
Reserve. I believe it is time to apply the same standards of
transparency and oversight to the Federal Reserve as we are beginning to
apply to other financial institutions.
For nearly 100 years the Federal Reserve has manipulated our
nation’s monetary policy through its ability to establish the “value” of
our money. While the Constitution very clearly gives this power to
Congress, the Congress surrendered that authority to the Federal Reserve
in 1913. It is interesting to note that the purchasing power of the
dollar has decreased by ninety-five percent during that period of time.
At the very least, Congress ought to exercise its Constitutional
responsibilities with respect to our monetary policy by authorizing a
thorough audit of the Federal Reserve.
Since its inception, the Federal Reserve has grown massively beyond its
original size, scope and purpose. It wields significant power and
authority and yet it is allowed to operate in secrecy. The institution
has the power to sign agreements with foreign banks and negotiate fiscal
policy with foreign governments. The Government Accounting Office (GAO)
has neither the right to audit, or even see, these agreements.
In addition to manipulating America’s monetary policy, the Federal
Reserve also has significant authority to allow the Treasury to provide
funds to major U.S. banks with no Congressional or GAO oversight. Many
of these banks are the same ones seeking federal assistance and being
called upon to provide greater transparency themselves.
With a struggling economy and confidence in our financial industries at
an all time low, Americans are rightfully demanding that the largest
financial regulatory institution be subject to stricter and more
transparent scrutiny. This is why I recently became a co-sponsor of
H.R. 1207, the Federal Reserve Transparency Act. This is a bill that
would eliminate restrictions on the GAO and allow its’ Comptroller
General to audit the Federal Reserve’s operations. The bill also
mandates that the audit be completed by the end of 2010 and that the
findings be made available to the public.
Reining in the Federal Reserve is no small task. But with our nation
facing inflation, reduced purchasing power and a devalued dollar, the
list of financial woes has grown far too long. American taxpayers have
been excluded from the conversation about where their money is going and
how it is being spent by the Fed for far too long. It’s clear the
Federal Reserve has grown too powerful, too expansive, and completely
unaccountable. It’s time to pull back the curtain and for Congress to
reclaim its Constitutional responsibility for our nation’s monetary
policy. Auditing the Federal Reserve is a good place to start.
