Representative Ron Paul won a major battle on Capitol Hill last week to shed light into the Federal Reserve’s activities with an amendment in the House Financial Services Committee’s financial-system reform bill that would begin federal reviews of the central bank’s operations, with a 43-26 vote.
For years, Ron Paul has asserted that the Federal Reserve has been riddled with corruption and that its monetary policy would destroy the US economy over the long term by devaluing the economy.
Previously, Paul had sought to abolish the Fed entirely, but since that wouldn’t be politically feasible, Paul has instead fought to allow the Government Accountability Office to have full power to audit the central bank’s moves, a measure fiercely opposed by the Federal Reserve.
Current Federal Reserve Chairman, Ben Bernanke, told Congress in June that Ron Paul’s legislation “would effectively be a takeover of policy by the Congress . . . [and] would be highly destructive to the stability of the financial system, the dollar and our national economic situation.”
Paul contends that the Federal Reserve is over-reacting. His amendment would remove blanket restrictions on GAO audits of the Fed and allow for the audit of every item on the Federal Reserve’s balance sheet including all credit facilities and all securities purchase programs. His amendment would also provide for a limited audit exemption on unreleased transcripts and minutes and would set a 180-day time lag before details of Fed’s market actions may be released.
Paul’s amendment also stated that nothing in it should be construed as interference in or dictation of monetary policy by Congress or the GAO.
The audit-the-fed measure is part of a larger overhaul of the financial system that the Obama administration sought before it has come into office. Congress has since taken the legislation as its own and made significant revisions to the Obama administration’s proposals. It remains to be seen whether or not Paul’s legislation will survive on its own or pass as part of a larger overhaul of the financial system.