US House to debate Ron Paul’s ‘Audit the Fed’ bill

By Stephen C. Webster

Published: June 11, 2009

After months of activism and lobbying by Congressman Ron Paul’s supporters, House Resolution 1207, the Federal Reserve Transparency Act, will move out of committee to be debated by the full House of Representatives.

In a show of cross-party unity, Ohio Democratic Congressman Dennis Kucinich became the bill’s 218th co-sponsor, pushing it over the threshold for debate in Congress.

The bill, which achieved its 222nd co-sponsorship on Thursday, has been in consideration by the House Financial Services Committee since Feb. 26.

Congressman Kucinich, along with Rep. Edolphus Towns (D-NY), announced Tuesday that the House Financial Services Committee will subpoena the Federal Reserve to ascertain the details of the Fed’s agreements with Bank of America in the institution’s acquisition of Merrill Lynch.

“The full committee and Domestic Policy Subcommittee, under the leadership of Chairman Dennis Kucinich (D-OH), have been investigating the circumstances surrounding the federal government’s bailout of the Bank of America-Merrill Lynch transaction,” Kucinich’s office noted in a Tuesday release. “Specific documents subpoenaed include emails, notes of conversations and other documents.”

While the bill enjoys some Democratic supporters, the vast majority of H.R. 1207 co-sponsors are Republican.

“The tremendous grass-roots and bipartisan support in Congress for HR 1207 is an indicator of how mainstream America is fed up with Fed secrecy,” said Congressman Paul in a Thursday media advisory. “I look forward to this issue receiving greater public exposure.”

Though the move from committee to full House is sure to hearten supporters, the Senate also has pending before it a bill which would have originally given Congress greater oversight of the Federal Reserve. But in its present form, notes Huffington Post writer Ryan Grim, a recent, every-so-slight modification essentially ‘neutered’ the bill.

“Thanks to an overlooked document posted on the website of Sen. Charles Grassley of Iowa, the top ranking Republican on the Finance Committee, voters can virtually watch the water being dumped into the brew that Grassley had hoped to force the Fed to drink,” he wrote.

“On page five of Grassley’s amendment, he intends to give the Comptroller General of the Government Accountability Office power to audit “any action taken by the Board under…the third undesignated paragraph of section 13 of the Federal Reserve Act” — which would be almost everything that it has done on an emergency basis to address the financial crisis, encompassing its massive expansion of opaque buying and lending.”

Grim adds: “Handwritten into the margins, however, is the amendment that watered it down: ‘with respect to a single and specific partnership or corporation.’ With that qualification, the Senate severely limited the scope of the oversight.”

Congressman Paul, in defense of his proposal to audit the bank which controls America’s currency, argues not just for transparency. He wants to close it down.

“Detractors have [...] argued that the Fed must remain immune from the political process, and that that more congressional oversight would distort their very important decisions,” Paul wrote in an editorial titled, ‘Audit the Fed, Then End It!’ “On the contrary, the Federal Reserve is already heavily entrenched in the political process, as the Fed chairman is a political appointee. High-level officials routinely make the rounds between positions at the Fed, member banks, Treasury and back again, taking care of friends and each other along the way.”

He continued: “As far as the foolishness of placing complex monetary policy decisions in the hands of politicians – I couldn’t agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over. It is frankly beyond me why we ever agreed to try it again.

“To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have. They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability. Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so.”