What's the Fed? Why they should be audited and a little history.

[Uncle Joe]

1. Require the Fed to disclose the entities it lends to. There’s no reason the public should be kept in the dark about who benefits when the Fed departs from its traditional interest-setting role and chooses to provide credit (or in Fed parlance, “open its discount window”) to particular companies or entities. To the contrary, a well-functioning capital market and a well-functioning democracy depend on full disclosure about who the Fed picks for such special treatment and why.

Senator Bernard Sanders, Independent of Vermont, pushed an amendment requiring that the Fed be subject to a public audit that reveals which specific companies and entities the Fed is supporting with extra loans. The measure drew support on both sides of the aisle, including conservative Republicans like David Vitter of Louisiana. But Sanders’s amendment met stiff opposition from the White House and the Fed. Both argued that it would undermine the Fed’s independence. That’s a red herring. Fed’s independence is important when it comes to basic decisions about monetary policy and short-term interest rates, but not about which companies and entities get special treatment.

Bowing to the pressure, Sanders has agreed to alter his proposal. He says his new amendment would still force the Fed to disclose many of its bank bailouts. But what why shouldn’t all of the Fed’s special machinations be disclosed? And why limit disclosure only to the banks that the Fed supports and not other firms or entities? Sanders shouldn’t retreat on this.[b/]

http://robertreich.org/post/580073091

Federal Reserve Officials Impair GAO Audits By Destroying Their Source Records


Both Republicans and Democrats have submitted bills to audit the Federal Reserve. Senator Rand Paul submitted an audit bill on January 27, 2015 for a General Accountability Office, GAO, audit of the nation's central bank: the "Federal Reserve Transparency Act of 2015". The 32 cosponsors were all Republicans except for Senator Mazie Keiko, (Democrat, Hawaii).

The Democrats tried to pass similar audit bills in the 1970s. The House Banking Committee (now called the Financial Services Committee) Chairman Henry Reuss, (1975 -1981, Democrat, Wisconsin) could not pass a GAO audit bill through his committee. That bill was then passed by the Government Reform Committee and became law in 1978 with substantial limitations:

"The exclusions under the Federal Banking Agency Audit Act for the GAO audit include 1.) foreign transactions with governments, central banks or non-private financing organizations; 2.) deliberations and decisions on monetary policy and open market operations; 3.) transactions made under the direction of the FOMC; and 4.) part of the discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to any of the previous three categories." (Auerbach, Deception and Abuse at the Fed, University of Texas Press, 2008, p. 238.)

In the 1970s, the Fed organized a massive lobbying campaign in the Congress against a GAO Fed audit, using officials from private banks they regulated Evidence of the Fed's orchestration of the lobbying campaign came into public view after Reuss negotiated with Fed Chairman Arthur Burns for six months. Reuss obtained three years of transcripts from secret meetings of all twelve district Federal Reserve Banks in December 1976. I assisted Reuss who spoke about these transcripts on the floor of the House of Representatives, May 24, 1977, "What the Secret Minutes of the Federal Reserve Banks Disclose."

(snip)

Donald Kohn [whom I worked with at the Kansas City Federal Reserve Bank and who became Vice Chairman of the Fed) sent a 2001 letter to me (at the LBJ School, University of Texas, Austin). He wrote that the Fed had notified Congress in 1995 that it would destroy the unedited FOMC transcripts, noting that the Fed "is not obligated to retain draft transcripts." The letter is on Huffington Post, here.

Have Fed officials, including Chairs Ben Bernanke and Janet Yellen, continued to destroy the source FOMC transcripts following the Greenspan Fed officials who voted to destroy them in 1995?

The FOMC source transcripts should be edited by experts at the National Archives. Continued destruction of the source FOMC transcripts will remove vital information from a GAO audit. That destruction obliterates almost all of the part played by individual unelected Fed officials who control the nation's money supply and who make loans to foreign countries without Congressional authorization.

http://www.huffingtonpost.com/robert-auerbach/federal-reserve-officials_1_b_6838810.html

[cali]

1. Thank you so much for this,

[Uncle Joe]

2. It was my pleasure, cali.

[bigtree]

3. I noticed there's no mention of the Rand Paul, tea party bill Sanders voted for

...this looks like a deflection from that.

[Uncle Joe]

5. Democrats supported auditing the fed long before Rand Paul and the only deflection is coming from

you as you're not addressing the substance of the OP.

[seaglass]

7. Then why is this in GDP? You should delete it and move it to GD if you don't want to relate

it to the primary which would then lead to an inconvenient discussion of who made the wrong vote today - Elizabeth Warren or Bernie Sanders.

[Uncle Joe]

10. Bernie made the right vote on the substance of the issue.

Sanders released a statement explaining why he voted against most Democrats, saying:

“Too much of the Fed’s business is conducted in secret, known only to the bankers on its various boards and committees. In 2010, I inserted an amendment in Dodd-Frank to audit the emergency lending by the Federal Reserve during the financial crisis. As a result of this audit, we learned that an institution that was created to serve all Americans had been hijacked by the very bankers it regulates.

We must expand on that first review of the Fed’s activities. Requiring the Government Accountability Office to conduct a full and independent audit of the Fed each and every year, would be an important step towards making the Federal Reserve a more democratic institution that is responsive to the needs of ordinary Americans rather than the billionaires on Wall Street.”

[seaglass]

12. Got it. Elizabeth Warren and the majority of the Democrats are wrong. That's enlightening. n/t

[Uncle Joe]

14. Bernie was adhering to President Obama's last State of the Union speech before he even gave it.

But there are other areas where it's been more difficult to find agreement over the last seven years – namely what role the government should play in making sure the system's not rigged in favor of the wealthiest and biggest corporations. And here, the American people have a choice to make.

I believe a thriving private sector is the lifeblood of our economy. I think there are outdated regulations that need to be changed, and there's red tape that needs to be cut. But after years of record corporate profits, working families won't get more opportunity or bigger paychecks by letting big banks or big oil or hedge funds make their own rules at the expense of everyone else; or by allowing attacks on collective bargaining to go unanswered. Food Stamp recipients didn't cause the financial crisis; recklessness on Wall Street did. Immigrants aren't the reason wages haven't gone up enough; those decisions are made in the boardrooms that too often put quarterly earnings over long-term returns. It's sure not the average family watching tonight that avoids paying taxes through offshore accounts. In this new economy, workers and start-ups and small businesses need more of a voice, not less. The rules should work for them. And this year I plan to lift up the many businesses who've figured out that doing right by their workers ends up being good for their shareholders, their customers, and their communities, so that we can spread those best practices across America.

(snip)

What I'm asking for is hard. It's easier to be cynical; to accept that change isn't possible, and politics is hopeless, and to believe that our voices and actions don't matter. But if we give up now, then we forsake a better future. Those with money and power will gain greater control over the decisions that could send a young soldier to war, or allow another economic disaster, or roll back the equal rights and voting rights that generations of Americans have fought, even died, to secure. As frustration grows, there will be voices urging us to fall back into tribes, to scapegoat fellow citizens who don't look like us, or pray like us, or vote like we do, or share the same background.

We can't afford to go down that path. It won't deliver the economy we want, or the security we want, but most of all, it contradicts everything that makes us the envy of the world.


http://www.npr.org/2016/01/12/462831088/president-obama-state-of-the-union-transcript

[Hoyt]

13. Maybe Warren will explain why she didn't vote with Sanders and most GOPers.

[Uncle Joe]

15. I look forward to that, do you have any idea why the majority

of Democratic Senators voted against auditing the Fed?

[seaglass]

16. I admit I don't know a lot about this but the WH was against Paul's bill last year and it

appears that there is some language in it that raises fears that Congress will try to influence monetary policy in real time.

Sen. Sherrod Brown (D-Ohio), the ranking member of the Banking Committee, added ahead of the vote that the legislation “really solves nothing but to politicize the Fed.”

The White House last year called Paul’s proposal “dangerous.”

“What that bill is about is about Congress supplanting its judgment as to what monetary policy should be,” said Jason Furman, chairman of Obama’s Council of Economic Advisers. “Congress shouldn’t be telling the Fed what to do with monetary policy.”

http://thehill.com/blogs/floor-action/senate/265589-senate-rejects-pauls-audit-the-fed-push

I am reading around a little bit about this. You'd probably have to google to see whose breakdown of the bill you would trust or read the bill directly:

https://www.congress.gov/bill/114th-congress/senate-bill/2232/text

[Uncle Joe]

17. The thing is, the way I understand the Constitution, Congress is granted the power of the purse,

they're elected by the people, I see no such power granted to an un-elected, secretive and in many cases conflict of interest laden Federal Reserve.

If Congress is screws up its' role, theoretically the American People have the power to change it via, speech, protest, and ultimately the ballot box.

The FED is totally insulated and in many cases has an incestuous relationship with Wall Street to the detriment of Main St.

What's so dangerous about the Congress living up to its' Constitutional calling?

[seaglass]

18. Have no idea why anyone would be concerned about a majority of crazy Republicans being responsible

for this country's monetary policy.

[Uncle Joe]

19. I'm sure the Republicans would feel the same way if the Democrats were in control but it's in the

Constitution as to which branch controls the nation's purse.

Otherwise you're leaving the too big to fail banks and Financial Institutions in charge via a secretive, conflict of interest laden Fed aka; the Fox guarding the hen house.

But as we fight among-st ourselves along "partisan" divisions, absolutely not trusting the other party nor the process of elections, the less than 1% laugh all the way to the bank.

[Uncle Joe]

20. P.S. Why would anyone believe that crazy Republicans are limited to the Congress, do you believe

they couldn't make inroads to the Fed?

[underthematrix]

27. Let me say I love this thread because it's about substance

You wrote:

"it appears that there is some language in it that raises fears that Congress will try to influence monetary policy in real time."

To me, this is the problem in the nutshell. The unintended consequences could be significant and this is from someone who is not that familiar with the inner workings of the Fed.

[RichVRichV]

30. The entire argument against this is nonsense.

There is nothing in any of these bills that would cede any control of the federal reserve to congress that they don't already have.


The entire basis of fear over this is that by allowing Congress and the US citizens to see the inner workings of the Federal Reserve it may cause the Fed to change how they work. Auditing the Federal Reserve doesn't grant congress any power to go in and dictate how the Fed can function. Sure people in congress will politicize and rail against any part they disagree with from the audit. They already do that to anything they disagree with. Hundreds of government agencies withstand this scrutiny every day. I'm curious what makes the Fed so delicate.


The reason why this line of thinking is so ridiculous is simple. Why should an entity that has such wide reaching impact on our entire economy be doing anything in private that it's unwilling to do under scrutiny? Why should it be allowed to?


I can tell you exactly why Bernie Sanders is in favor of the audit (regardless of which party proposes it), he is in favor of transparency. He believes the American citizens have a right to know how their government is operating. And if exposure to public review influences how the government operates that is a good thing.

[seaglass]

31. So this would be where Bernie and Elizabeth Warren part ways, she is clearly not in favor of

transparency. I guess.

[RichVRichV]

32. little too strict on the logic there.

You're looking for absolutes (That Bernie 100% backs everything in a bill because he votes for it, and EW 100% rejects a bill because she votes against it). The world is usually full of grey. A person can be for transparency and still vote against a transparency bill if they don't agree with what all is in it.

They're not the same person. They don't always agree on everything. That doesn't make either of them a bad person or wrong. Her history says she is for transparency. I don't know why Warren voted against it. She usually has a good reason for what she does. So does Bernie. They're both well educated on their votes. Why don't you go ask her why she voted against it?

[seaglass]

33. I don't need to ask her why she voted agaainst it, her comments have already been posted. I am only

using arguments that many Bernie supporters have used about this topic - insinuating anyone who didn't vote for this bill doesn't want to audit the fed. I am more of a grey thinker than black and white which is one of the reasons I am undecided about who I will vote for in my primary.

In this particular case though, I tend to trust Elizabeth Warren and the majority of Democrats over Bernie, Rand Paul and the majority of Republicans.

[Hoyt]

21. Because the "Fed is evil" is one of those right wing conspiracy theories. I guess Sanders buys into

it. Next he'll be calling for a return to the Gold Standard, that attract a bunch of right wingers.

[Uncle Joe]

22. Were the Democrats of the 70s also right wing conspiracy theorists?

Should Congress have adequate oversight of the Fed?

[leftofcool]

29. Let me guess. Warren is not tea party?

[Autumn]

28. It's in GDP because this is about Bernie's vote and outrage of some here. Like Hill's IWR vote

and who was wrong on that vote and the deadly consequences to millions of people fits right here in GDP. Because they are both candidates.

[mmonk]

4. Thanks Uncle Joe.

Glad you took the time. I personally am tired on explaining some positions because of my age I suppose.

[Uncle Joe]

6. It was my pleasure, mmonk.

Peace to you.

[LexVegas]

8. Michelle Bachmann? nt

[Proserpina]

9. Unfortunately, the Senate just rejected the latest Audit Bill

Sorry to bring bad news, Uncle Joe. Maybe we will be luckier next time, under President Sanders.

[Uncle Joe]

11. I already knew that Proserpina but the struggle goes on.

Peace to you.

[beam me up scottie]

23. So if we agree the fed should be audited we're not tea partiers?

Good to know, after reading some of the threads here today I was getting worried that we were all closet right wing nut jobs.

[Uncle Joe]

24. Well I do like tea and am occasionally fond of a good party...so who knows, maybe my teapartiness

is buried in my deep subconscious?

[beam me up scottie]

25. I KNEW IT!

Good op, thanks for the research, Uncle Joe!

[Uncle Joe]

26. Thank you, beam me up scottie.

Peace to you.