Wednesday, May 12, 2010

Audit The Fed

Tuesday, S.Amdt. 3738, Bernie Sanders' Amendment to S. 3217 (Restoring American Financial Stability Act of 2010), was passed by the Senate in a 96 — 0 vote.

Release: Senate Approves Fed Audit Sanders Amendment to End Fed Secrecy Passes
In a major victory for transparency at the Federal Reserve, the Senate today passed an amendment by Sen. Bernie Sanders to audit the Fed and make the central bank reveal which banks received more than $2 trillion in emergency aid during the financial crisis.

“The Fed can no longer operate in virtual secrecy,” said Sanders (I-Vt.).

Under his amendment, the Government Accountability Office would conduct a top-to-bottom audit of all emergency actions by the Fed since the start of the financial crisis in 2007. The non-partisan research arm of Congress specifically would be directed to investigate apparent conflicts of interest involving the Fed and CEOs of the largest financial institutions in the country.

In addition to the audit, the Fed for the first time would have to reveal by Dec. 1, 2010, the identities of banks and other financial institutions that took more than $2 trillion in nearly zero-interest loans.

Fed Chairman Ben Bernanke repeatedly refused to tell Sanders and others the names of the banks which took the loans.

“Let's be clear,” Sanders said. “When trillions of dollars of taxpayer money are being lent out to the largest financial institutions in this country, the American people have a right to know who received that money and what they did with it. We also need to know what possible conflicts of interest exist involving the heads of large financial institutions who sat in the room helping to make those decisions.”

The Rachel Maddow Show, hosted by Chris Hayes, Washington editor for The Nation:
Senate embraces 'audit the Fed'

May 11: Senator Bernie Sanders explains the scope and expected outcome of his "audit the Fed" amendment which passed the Senate Tuesday in a 96-0 vote. (8:35)

Senate Votes 96-0 to Audit Fed
"We are on the verge of lifting the veil of secrecy on perhaps the most important government agency in the United States of America,” said amendment sponsor Sen. Bernard Sanders, Ind.-Vt., "an agency which has control and spends trillions of dollars. They do it behind closed doors." [. . .]

The audit is the Senate's latest change to legislation that would overhaul the nation's financial regulatory system, making it easier for the government to break up ailing banks and provide a strong, independent consumer agency to help people with credit questions and problems.

The Senate debate is in its second week, with Democratic leaders hoping for a final vote later this week. Still to come are disputes over how to deal with derivatives, the exotic financial instruments that helped spur the 2008 economic collapse, as well as questions about how to deal with government-sponsored mortgage finance titans Fannie Mae and Freddie Mac.

If the Senate passes the legislation, next it will have to be reconciled with a similar bill that the House of Representatives passed last year, with final compromise terms then having to pass both houses of Congress before President Barack Obama could sign it into law.

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