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Update: The vote failed by a vote of 57-41. On April 27, the vote failed again by 57-41. The stalemate ended on April 28 after Democrats agreed to revise the section of the bill aimed at preventing future bailouts. Today (April 30) the Senate is debating the bill, and votes on amendments (including Bernie Sanders’ Audit the Fed amendment) will start next week.

As Alan Grayson points out below, and Ron Paul alerted supporters a few weeks ago, Chris Dodd’s financial reform bill in the Senate completely eliminates legislation to audit the Federal Reserve, which already passed in the House.

Sen. Bernie Sanders (I-Vt.) intends to introduce an amendment on the floor effectively adding the Grayson-Paul language to the Senate bill. The language is here and below is a summary from his office of the amendment:

Support the Sanders Federal Reserve Transparency Amendment to the Financial Reform Bill

The American people have a right to know who received over $2 Trillion in financial assistance from the Federal Reserve.

Since the beginning of the financial crisis, the Federal Reserve has provided over $2 trillion in taxpayer-backed loans and other financial assistance to some of the largest financial institutions and corporations in the world. Unfortunately, the Fed is still refusing to tell the American people or the Congress who received most of this assistance, how much they received or what they are doing with this money. This money does not belong to the Federal Reserve, it belongs to the American people, and the American people have a right to know where their taxpayer dollars are going.

Therefore, during the consideration of the financial reform bill, we will offer an amendment to increase transparency at the Federal Reserve. Specifically, our amendment:

• Requires the non-partisan Government Accountability Office (GAO) to conduct an independent and comprehensive audit of the Federal Reserve within one year after the date of enactment of the financial reform bill;
• Requires the GAO to submit a report to Congress detailing its findings and conclusion of their independent audit of the Fed within 3 months; and
• Requires the Federal Reserve within one month after the date of enactment to disclose the names of the financial institutions and foreign central banks that received financial assistance from the Fed since the start of the recession, how much they received, and the exact terms of this taxpayer assistance.
• Does not interfere with or dictate the monetary policies or decisions of the Federal Reserve.

59 Senators, 320 Members of Congress, and two federal courts have called on the Federal Reserve to become more transparent.

Our amendment is similar to an amendment that was offered to last year’s Budget Resolution that passed the Senate on a bi-partisan vote of 59-39 on April 1, 2009; S.604, the Federal Reserve Sunshine Act that now has 33 bi-partisan co-sponsors; and the Federal Reserve Transparency Act (H.R. 1207) that has 320 bi-partisan co-sponsors (a version of which passed the House Financial Services Committee by a vote of 43-28 and was incorporated into the financial reform bill that passed the House last December).

In August of 2009, the United States District Court for the Southern District of New York also ordered the Fed to disclose the recipients of this taxpayer assistance as a result of a Freedom of Information Act lawsuit filed by Bloomberg News. This decision was upheld by the U.S. Court of Appeals in Manhattan on March 19, 2010.

The Senate Financial Reform Bill does not do enough to make the Fed more transparent.

While the Senate financial reform bill attempts to address the lack of transparency at the Fed, as currently drafted, much of the information regarding the details of who received this financial assistance could be kept secret forever.

As long as the Federal Reserve is allowed to keep the information on their loans secret, we may never know the true financial condition of the banking system. The lack of transparency at the Fed could lead to an even bigger crisis in the future.

We now know that the lack of transparency in credit default swaps led to the $182 billion taxpayer bailout of AIG; the collapse of Lehman Brothers and precipitated the worst financial crisis since the Great Depression.

We know who received TARP funding.

Anyone with access to the internet can go onto the Treasury Department’s website and find out exactly who received a bail-out from the $700 billion TARP program. The American people have a right to know the same information from the Fed.

The Sanders Amendment does not undermine the Fed’s independence.

This amendment does not take away the “independence” of the Fed and it does not put monetary policy into the hands of Congress.

This amendment does not tell the Federal Reserve when to cut short-term interest rates or when to raise them. It does not tell the Federal Reserve what banks to lend money to and what banks not to lend money to. It does not tell the Federal Reserve what foreign central banks they can do business with and which ones it cannot do business with. It does not impose any new regulations on the Federal Reserve nor does it take any regulatory authority away from the Fed.

This amendment simply requires the GAO to conduct an independent audit of the Fed and requires the Fed to release the names of the recipients of more than $2 trillion in taxpayer-backed assistance.

For nearly nine decades, the GAO has a proven track record of conducting objective, fact-based, nonpartisan, non-ideological, fair, and balanced audits. Through these audits, the GAO helped save the American taxpayers $50 billion last year alone by rooting out waste, fraud, and abuse in the federal government.

Let’s not equate independence with secrecy. We cannot let the Fed operate in secrecy any longer. There is simply too much money at stake.

Read Alan Grayson’s memo, followed by the legislative language:

Continue reading “Audit the Fed Update: Senate Vote Tonight”

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