In an unprecedented defeat for the Federal Reserve, an amendment to audit the multi-trillion dollar institution was approved by the House Finance Committee with an overwhelming and bipartisan 43-26 vote on Thursday afternoon despite harried last-minute lobbying from top Fed officials and the surprise opposition of Chairman Barney Frank (D-Mass.), who had previously been a supporter.
The measure, cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), authorizes the Government Accountability Office to conduct a wide-ranging audit of the Fed’s opaque deals with foreign central banks and major U.S. financial institutions. The Fed has never had a real audit in its history and little is known of what it does with the trillions of dollars at its disposal.
“The Watt amendment will fully obliterate everything 1207″ — Paul’s measure — “is intended to do,” said Paul during Thursday’s debate.
For anyone remaining confused, the debate was further clarified by the central bank itself: Federal Reserve Vice Chair Don Cohn and General Counsel Scott Alvarez spent much of the day calling committee members, urging them to oppose the Paul-Grayson amendment in favor of Watt’s, a member of Congress who asked for confidentiality told HuffPost.
Paul’s opponents also placed a letter from former Fed chairmen Alan Greenspan and Paul Volcker on the seats of every committee member. Such a move is in violation of House rules and Grayson was able to have the letters removed.
As the day wore on and support held for the Paul-Grayson side, the Fed still could hope that both would pass. Watt’s amendment, which included additional restriction, would then trump Paul’s.
To counter that possibility, the Paul-Grayson side moved to fully replace Watt’s amendment with theirs, leaving only one amendment to vote on. The motion carried and the amendment passed in a landslide.
The GOP broadly backed the amendment, though Frank chided them for finding their love of Fed transparency only after they lost power, noting that Paul has been introducing some version of the measure since 1983.
Frank said he was opposing the Paul amendment because it could be perceived as influencing monetary policy, which can have inflationary pressure. “Perception is very important in monetary policy,” said Frank.
Great to see out of committee without Watt’s neutering. Too bad Frank either entirely ignorant of the fact that the market already knows that the monetary policy is influenced by Congress and government, too blind to see the immense harm the FED does therefore justifying such an action, or is just another shrill for the banking cartel.