Alan Grayson and Ron Paul have teamed up to get over 2/3 of the US House on board – over 300 co-sponsors – for a bill to subject the Federal Reserve to an audit of their transactions with the financial industry since the crisis of 2008. They even got a version of this language into Sen. Dodd’s draft bill on financial regulatory reform. The banks, the Federal Reserve and the Treasury don’t want the Fed to be audited, lest the American people know what was done with trillions of their tax dollars. And they’ve enlisted support on Capitol Hill to kill the policy.
Ryan Grim reports that Mel Watt (D-NC) of the Financial Services Committee is readying an amendment that would serve as an alternative to the Grayson-Paul plan.
Watt pitched his amendment in a letter to colleagues circulated Tuesday. “While my amendment will certainly fall short of demands by those intent on destroying the independence (if not the existence) of the Fed, the critics of my amendment will have to concede…that my amendment will provide transparency of the Fed’s financial operations that will be completely unprecedented,” he wrote.
In fact, the critics are conceding no such thing. “The Watt Amendment, as written today, actually places new restrictions on the little authority that exists, such as it is, for independent auditing of the Fed,” Grayson said. “It keeps in place all existing restrictions and adds four more. So I don’t see why anybody would reasonably think that it creates unprecedented authority to audit the Fed.”
The amendment can be viewed here. It clearly adds a number of restrictions to audits that would effectively keep the Fed’s balance sheet secret. As economist Dean Baker puts it, we should actually want discovery on the Fed’s monetary policy, given their performance, and Watt’s claim that Grayson-Paul would “risk the independence of the Fed” is probably what needs to happen. Said Baker, “Watt is exactly right, we should think very carefully before we let Congress do anything that interferes with the Fed’s independent monetary policy. Who knows where that could lead us?”
It turns out that Mel Watt, the Democrat pushing this weak alternative to Grayson-Paul, has close ties to the American Bankers Association. His longtime chief of staff is lobbying for the ABA, and they are always one of Watt’s main contributors.
Watt is not alone in pushing this cover-up, he has the support of several “top economists,” all of whom have close ties to the Federal Reserve.
On the side of Grayson-Paul, along with over 300 members of the House, are grassroots financial reform groups and the AFL-CIO.
Yves Smith of Naked Capitalism has a list of Representatives who need to be called before this comes up for a vote. They’ve all expressed support for Grayson-Paul in the past, and should not be permitted to get away with supporting “auditing the Fed” while voting for Mel Watt’s bill, which closes off all possibility of that.
…keep in mind that the Federal Reserve has a core mission of pursuing “maximum employment, stable prices, and moderate long-term interest rates.” It’s unclear how enriching banks under cover of darkness fits with that mission, particularly the first bit about jobs.
