Ron Paul wins a key battle in war to open Fed's books
Rep. Ron Paul, the Texas Republican who is perhaps the Federal Reserve’s most implacable enemy, scored a big win Thursday on Capitol Hill: The House Financial Services Committee approved adding to a financial-system reform bill Paul’s provision to begin federal reviews of the central bank’s operations, including its interest-rate decisions.
The vote on the audit provision amendment was 43-26.
Paul has for years asserted that the Fed, which by design is independent of the federal government, was corrupt and that its monetary policy would drive America to ruin by debasing the dollar.
He has sought to abolish the Fed entirely, but because that almost certainly would never fly in Congress, Paul has worked for Plan B: He wants the Government Accountability Office to have full power to audit the central bank’s operations -- a measure the Fed bitterly opposes.
"If we get the audit and get the books open, make them answer the questions, I am convinced that the American people will be so outraged that then we will have reform of the monetary system," Paul has said.
Fed Chairman Ben S. Bernanke told Congress in June that Paul’s audit provision "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 Fed is overreacting. Here's how he describes what the provision would do:
--- Removes blanket restrictions on GAO audits of the Fed;
--- Allows the audit of every item on the Fed’s balance sheet, all credit facilities, all securities purchase programs, etc.;
--- Retains limited audit exemption on unreleased transcripts and minutes;
--- Sets a 180-day time lag before details of Fed’s market actions may be released;
--- Provides that nothing in the amendment should be construed as interference in or dictation of monetary policy by Congress or the GAO.
The audit-the-Fed measure is part of the financial-system-overhaul bill that the Obama administration has sought. It remains to be seen whether Paul’s Fed provision can make it through the full House and the Senate.
A note to clear up any confusion: The Obama administration wants the financial-overhaul bill, but it isn't clear that it would support the addition of Paul's audit-the-Fed provision.
-- Tom Petruno
Image: Ron Paul's latest book, "End the Fed"