March 25, 2009 03:25 AM UTC

HR 1207 -- Auditing the Federal Reserve

• 5 Comments
• by: bpilgram

Arguably, the policies, practices, actions and inactions of the Federal Reserve are among the root causes of the global financial crisis we are now living through.  Certainly, the Federal Reserve is taking a leading role in spending and committing beaucoups of public money to address the crisis.

Note that the Federal Reserve was established in 1913 to prevent economic crises, is not technically a government agency and is not answerable to the electorate.

Got a beef with the Federal Reserve’s economic or monetary policy?  Tough.  The public does not elect or have any voice in the election of Federal Reserve officers or Federal Reserve policies.  The best Congress can do is brow-beat the Chairman in a hearing room.

The mission of the Federal Reserve is fundamentally a government function.  It is a collection of unelected “experts” charged with overseeing the public’s economic welfare.

Here’s the Fed’s offical mission (from its web site) …

1.  Conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.

4.  Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

A very simple bill (HR 1207) was introduced in Congress to require the Comptroller General to audit the Federal Reserve.  There are 40+ co-sponsors.

I find it incredible that the Federal Reserve — which is charged with fundamental oversight of much of our economy has not been subject to a public audit.

Should the Fed be audited?

Should the Fed be accountable to the electorate?

Any predictions about whether HB 1207 will pass or be killed?

Here’s the text of HR 1207 …

`(1) IN GENERAL- The audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks under subsection (b) shall be completed before the end of 2010.

`(2) REPORT-

`(A) REQUIRED- A report on the audit referred to in paragraph (1) shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such audit is completed and made available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each subcommittee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests it.

`(B) CONTENTS- The report under subparagraph (A) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.’.