By Yaël Ossowski | Florida Watchdog
TAMPA — In a rebuke of the nation’s central bank on Wednesday, 327 House members approved a bill requiring an extensive audit of the Federal Reserve, a long-awaited triumph for the original sponsor of the legislation, U.S. Rep. Ron Paul, R-Texas.
Paul, a three-time presidential candidate, has spent his 22 years in public office setting his sights on the nation’s lender of last resort, blaming it for economic cycles caused by manipulations in key short-term interest rates.
“It bails out all the wealthy, rich people, the banks, the big corporations, international and overseas banks, bailing out Europe and dealing with the central banks in Europe,” said Paul on the House floor on Tuesday.
The votes fell largely along party lines for the Florida delegation, co-sponsored by 17 GOP congressmen and rejected by all of the state’s Democratic representatives.
The office of U.S. Rep. Corrine Brown, D-District 3, told Florida Watchdog the congresswomen initially was leaning in favor of the bill, but she eventually joined her Democratic colleagues in opposing it.
The Federal Reserve Transparency Act, or ‘Audit the Fed,’ requires that the Fed, the 100-year-old quasi-private bank that sets the country’s monetary policy, undergoes a strict audit by the nonpartisan Government Accountability Office.
It stipulates that there must be specific focus on the actions of “independent consultants” working for large financial institutions who influenced much of the central banks emergency loans during the financial crisis that led to the 2008 economic collapse, according to the text of the bill.
A previous version of the ‘Audit the Fed’ bill, included in an amendment to the Dodd-Frank Wall Street Reform Act of 2010, revealed that companies such as General Electric, JPMorgan Chase and Goldman Sachs received hundreds of billions of dollars in low-interest Federal Reserve loans “at the same time that senior executives at these institutions served on the Federal Reserve’s regional board of directors,” U.S. Sen. Bernie Sanders, I-Vt., confirmed in a letter to Fed Reserve chairman Ben Bernanke in December 2010.
The audit also revealed that $3.3 trillion in emergency loans was given to other companies such as Citgroup, Toyota, McDonald’s and Harley Davidson at the peak of the economic crisis in 2007-2009.
Those programs have been met with increasing scrutiny not just in the U.S. House of Representatives, but also with the American public.
A poll conducted by Bloomberg in December 2010 found that nearly 55 percent of Americans polled believe the Fed should either be more accountable or outright abolished.
The survey was conducted with 1,000 U.S. adults and has a margin of error of 3.1 percent.
Mitt Romney, the presumptive GOP presidential nominee who initially downplayed concerns of the Federal Reserve in the primary debates, tweeted in support of Paul’s bill on July 18, once House Speaker John Boehner, R-Ohio, signaled it would come to a floor vote:
Ron Paul’s “Audit The Fed” bill is a reminder of his tireless efforts to promote sound money and a more transparent Federal Reserve.
— Mitt Romney (@MittRomney) July 18, 2012
“Once they start looking into the internal operations over specific lending decisions, that will end up being more problematic for the Federal Reserve,” said Mark Rush, professor of economics at the University of Florida.
He said that an audit of the bank would strip away its independence from politics, endangering monetary policy into the future, but admits that there still is much to be debated over in the years following the trillions of dollars of secret loan programs.
“There is still a lot of controversy among economists concerning the decisions the Fed undertook during the peak of the recession, but I still think that most would say that they took the right steps,” said Rush.