Ron Paul Introduces Bill to Audit the Fed

February 26, 2009

Madame Speaker,

I rise to introduce the Federal Reserve Transparency Act. Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar. Since 1913 the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation.

Serious discussion of proposals to oversee the Federal Reserve is long overdue. I have been a longtime proponent of more effective oversight and auditing of the Fed, but I was far from the first Congressman to advocate these types of proposals. Esteemed former members of the Banking Committee such as Chairmen Wright Patman and Henry B. Gonzales were outspoken critics of the Fed and its lack of transparency.

Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations. While the conventional excuse is that this is intended to reduce the Fed’s susceptibility to political pressures, the reality is that the Fed acts as a foil for the government. Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests.

The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight? Particularly when hundreds of billions of dollars of currency swaps have been announced and implemented, the Fed’s negotiations with the European Central Bank, the Bank of International Settlements, and other institutions should face increased scrutiny, most especially because of their significant effect on foreign policy. If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet the Fed avoids both fates.

More importantly, the Fed’s funding facilities and its agreements with the Treasury should be reviewed. The Treasury’s supplementary financing accounts that fund Fed facilities allow the Treasury to funnel money to Wall Street without GAO or Congressional oversight. Additional funding facilities, such as the Primary Dealer Credit Facility and the Term Securities Lending Facility, allow the Fed to keep financial asset prices artificially inflated and subsidize poorly performing financial firms.

The Federal Reserve Transparency Act would eliminate restrictions on GAO audits of the Federal Reserve and open Fed operations to enhanced scrutiny. We hear officials constantly lauding the benefits of transparency and especially bemoaning the opacity of the Fed, its monetary policy, and its funding facilities. By opening all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much-needed transparency of the Federal Reserve. I urge my colleagues to support this bill.

111th Congress – 1st Session

H.R. 1207

A BILL

To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.

1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the “Federal Reserve Transparency Act of 2009”.

SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

(a) IN GENERAL. – Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after “shall audit an agency” and inserting a period.

(b) AUDIT. – Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:

“(e) AUDIT AND REPORT OF THE FEDERAL RESERVE SYSTEM. –

“(1) IN GENERAL. – The audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks under subsection (b) shall be completed before the end of 2010.

“(2) REPORT –

“(A) REQUIRED. – A report on the audit referred to in paragraph (1) shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such audit is completed and made available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each sub-committee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests it.

“(B) CONTENTS. – The report under subparagraph (A) 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.”.

Sponsor

Rep. Ronald Paul [R-TX]

Cosponsors

The number of co-sponsors keeps growing! Check out the latest list here.

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  • rc

    Hi all,

    just learning about this and I am looking to write an article on it in the student paper..

    Upon my research I found that the Fed. has been audited regularly over the years..

    So why do people say the Fed. has never been audited?
    What will this bill do different/accomplish?

    thanks– looking for info.

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    • Nate Y

      http://www.newyorkfed.org/aboutthefed/fedpoint/fed35.html

      Read it carefully

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      • rc

        Thanks for the response.

        I’ll have to reread that a couple of times, but basically the Fed controls the parameters of their audit and their foreign affairs are not subject to any audit?

        Is this the gist of it?

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        • Nate Y

          Basically yes. However I wouldn’t say “foreign affairs”. Best to keep with slightly more precise language.

          From the link…”GAO auditors are restricted by law from reviewing monetary policy operations and transactions carried out by the Federal Reserve on behalf of foreign central banks.”

          Which is why Ron Paul’s states in his speech “The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight?”

          Why indeed.

          »crosslinked«

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          • Nate Y

            Before someone comes in and states that those transactions aren’t audited because (from the link) “This restriction was imposed by Congress to assure the independence of the Federal Reserve from political influence.” Let me just state that this is complete nonsense. The Fed is currently very much subject to political influence. Keeping the people from knowing its actions does not remove political influence. Indeed, it does the exact opposite.

            You want to know what is free of political influence? I kinda already gave it away in the question. The unhampered FREE market!

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          • rc

            thank you

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        • Nate Y

          No problem. Would you post your article? Maybe we can help with the editing and stuff.

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          • rc

            I appreciate help, but I would rather edit the article over email and not on a public forum. Is it safe to post email addresses on here?

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  • Jack Schitt

    Maybe Congressman Ron Paul can use some of his $74 million earmark money from the omnibus bill to by some credibility.

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  • http://romancoinsforsale.com/ MikeJaeger

    If you read this post…. Please do one thing, subscribe to http://www.ronpaul.com email… it is free and share them as they come with 3 different friends each time. Share them with your friends by forwarding them and add a personal note about what you think concerning http://www.ronpaul.com / Lets get this bill buzzin on the internet! SY…. big yahoo mike blog yahoo.com

    Ron Paul Tells The Truth More Often, More Often Than Our Other Members of Congress, At Least.
    Should add excellent post. Looking forward to seeing your next one!

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  • http://bigyahoMikeakabyMike@yahoo.com MikeJaeger

    If you read this post…. Please do one thing, subscribe to http://www.ronpaul.com email… it is free and share them as they come with 3 different friends each time. Share them with your friends by forwarding them and add a personal note about what you think concerning http://www.ronpaul.com / Lets get this bill buzzin on the internet! SY…. big yahoo mike blog yahoo.com

    Ron Paul Tells The Truth More Often, More Often Than Our Other Members of Congress, At Least.

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  • where are you now

    MY FRIENDS SAY IF THEY CANT ACCOUNT FOR THE SPENDING OF OUR MONEYS THEN THE BEST THING TO DO IS NOT GIVE THEM ANY MORE THAN ABSOLUTLY NECESSARY IF EVEN THAT MUCH. THE MORE THEY GET THE MORE CONTROL OVER THE WORLD AND US THEY CREATE , WEVE ACCIDENTLY CREATED A MONSTER AND NEED TO REGAIN CONTROL OF IT SOMEHOW AND ITS BECOME VERY UNRULLY TOWARDS ITS ORIGINAL CREATORS ,= THE PEOPLE.

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  • where are you now

    where are you now how to contact you and help rallying or VOTE ON ISSUES PETITIONS and the like.
    please start a way for us to help the cause.
    rebirth our constituion for the peoples freedom and protection from a self appointed government.

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  • DownWithTheNWO

    GO RON PAUL!!!! BEST BILL EVER!!!

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  • Mike Jaeger

    Hey Flag man… send me your email chain letter with congressmen and senator email addresses and I’ll send it out plus I’ll write one with some talk show radio and tv host email address and send it to you so you can forward it on tro your friends… I wonder how many people will send email mto their congressmen and senators and media people… If we ask them to and do it as an easy do chain letter??
    sy by mike.

    You can use these XHTML tags:

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  • Mike Jaeger

    What is the staus of the bill as of March 10, 2009.

    How much support does it have?

    How can we help? Can you publish the email adresses of every congressman ? Will radio talk show hosts support it? Will television political commentators support it? Can we get the email adresses of these people emailed to us ? Can we get a copy of the bill with a link to RonPaul.com embedded in it, sent to us as a pdf doc attached to an email containing those email addresses we need? If so I’ll send a copy to eveyone in my address book… I’ll ask them to read the bill and send an emails requesting passage to their congressmen, senators, and their favoite media persons passing this bill would be a historic step towards freedom, liberty,and prosperity….. How many other of you will do the same thing??? hmmm…. maybe it could work!!
    SY by mike

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  • Flag Mann

    Take it to the NEXT LEVEL…If you are REALLY SERIOUS about this…

    Get on ALL of the News Channels TV and Radio and start making a BIG DEAL about it…To introduce a bill doesn’t mean DICK – Grow a SET and PUSH IT! Otherwise what differentitates you from GW…? OR step aside and let someone with BALLS do it.

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  • g miller

    Dr. Paul:

    You have have had many good ideas to improve liberty and fiscal responsibility for the U.S., but never seem to get anything passed. How much of this is because of elite opposition and how much is due to your, supporters’ and The People’s failure to effectively organize and communicate to get it done?

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  • Jay Thatcher

    First of all, I want to thank you for bringing light to so many topics that are left in the dark. An audit of the Federal Reserve seems only right. If they don’t have anything to hide, then why would they refuse an audit? The government has really lost its way, and with people such as you, is the only way the government will find its way back. It takes great citizens to have a great country, not an overbearing government. My representatives will be notified to support your new bill.

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  • Dusin Smith

    Dr. Ron Paul
    I am only 16 years old and have only been following you for about a year but I believe you are the type of politician that we need more of. I don’t like Obama and I believe that we are in just as much trouble if not more under his administration. If you don’t run for President in 2012 then please let us know who you would support the most.

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  • jamaica

    i will pass this onto my friends and family but this stuff could get ugly if other countries used this against us, but the people need to know.

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  • Jason Fanning

    Dear Dr. Paul thank you for the battle against the crooked internally audited federal reserve. This country is due a bank war sir. Not since Jefferson and Jackson has a politician been so courageous in a struggle against those who control. I have written my House Rep. District and encouraged his office to vote yea on H.R. 1207, please continue the good fight, I now write my Senators and Congressmen because you proved to me liberty is not dead. It’s just hibernating. Thank you.

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  • faraz

    MR. Ron you are doing right. GO AHEAD. WISH YOU BEST OF LUCK

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  • http://ebuzz927@aol.com BUZZY K.

    Dr. Paul, Keep the Flag held high, please. WE need men and women like yourself to keep our constitutional rights secure and our liberties as Americans in tact. TOGETHER WE STAND OR DEVIDED WE FALL. As for me, I will stand with you on any front to preserve the America we know and love. STAND STRONG, DR. PAUL, STAND STRONG, WE NEED YOUR LEADERSHIP.

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