The Senate on Tuesday blocked legislation calling for tougher audits of the Federal Reserve, rebuffing an attempt by Republican presidential candidate Rand Paul to give lawmakers greater oversight of the central bank’s moves on interest rates.
The 53-44 vote fell short of the threshold to overcome a Democratic filibuster. But the Kentucky Republican, who is seeking the GOP’s nomination for president, was joined by Democratic Sen. Bernie Sanders, a White House hopeful who occupies the opposite end of the political spectrum from Paul.
The measure calls for the Government Accountability Office, a watchdog agency for Congress, to scrutinize the Fed’s monetary policy and offer recommendations to lawmakers on ways to address any perceived problems.
Congress, the White House and Treasury officials have traditionally been careful to steer clear of questioning the Fed’s independence to set policy, and current law blocks the GAO from reviewing the way the agency conducts monetary policy or reviewing internal deliberations.
“Nowhere else but in Washington, D.C., would you find an institution with so much unchecked power,” Paul said.
The legislation is opposed by the White House and the Federal Reserve itself. Fed Chairman Janet Yellen wrote senators last week to warn that the legislation “would undermine the independence of the Federal Reserve and likely lead to an increase in inflation fears and market interest rates.”
Supporters of the bill say that the Fed has kept interest rates artificially low for decades, punishing risk-averse savings, prompting businesses to hoard cash and fueled booms — and busts — in the housing and stock markets.
“The Federal Reserve has the ability to create new money and spend it on whatever financial assets it wants, whenever it wants, while giving the new money to whichever banks it wants,” Paul said. “Low-income workers do not get the luxury of receiving the Fed’s newly created money first, nor do they do have the luxury of receiving the near-zero interest rates that the wealthy do.”
Sanders supported the legislation but approached it from a different perspective than Republicans. He says the Fed was too quick to raise interest rates last month.
“Big bankers and their supporters in Congress have been telling us for years that runaway inflation is just around the corner. They have been dead wrong each time,” Sanders said in a recent op-ed in The New York Times. “Raising interest rates now is a disaster for small business owners who need loans to hire more workers and Americans who need more jobs and higher wages.”
Opponents of the legislation warned that it would invite meddling by Congress.
“This legislation’s about 535 members of Congress getting involved in federal monetary policy,’ said Sen. Sherrod Brown of Ohio, top Democrat on the Banking Committee. “I can’t imagine that the American people want a Federal Reserve where Congress is so involved that it’s disruptive.”
Under current law, the Fed’s financial statements are audited annually by an independent accounting firm and the GAO has authority to audit Fed actions on bank supervision and regulation.
Companion legislation passed the House in November almost entirely along party lines and earned a White House veto threat.
“Subjecting the Federal Reserve’s exercise of monetary policy authority to audits based on political whims of members of the Congress — of either party — threatens one of the central pillars of the nation’s financial system and economy, and would almost certainly have negative impacts on the Federal Reserve’s work to promote price stability and full employment,” the official administration policy statement said.
“This Fed monetary policy has contributed significantly to expanding income and wealth inequality,” countered bill supporter Sen. Pat Toomey, R-Pa. “This Fed policy has been pretty good for stocks — stock prices have gone up generally. It’s been terrible for people with a bank account.”
The Associated Press contributed to this article.
The Federal Reserve has the ability to make money backed by the full faith and credit of the United States. They need to be audited to make sure the citizens of this country aren’t being plundered by a few well-positioned thieves. The fact the Fed doesn’t want to be audited is a good indication that they probably need to be audited. An audit might reveal the Fed has followed the same principles as Bernie Madoff and Enron.
Maybe Congress should spare citizens from being audited by the IRS. If the Fed’s word is good enough for them to avoid an audit, a taxpayers’ word should be good enough for the IRS.
I suspect the United States’ monetary system is a house of cards with nothing to back up our financial system other than the willingness of the participants to believe it has value.
More proof that CONgress approves MORE of this…
A Country Founded by Geniuses but Run by Idiots! AND TYRANTS!!!
If you can get arrested for hunting or fishing without a license, but not for entering and remaining in the country illegally — you might live in a nation that was founded by geniuses but is run by idiots.
If you have to get your parents’ permission to go on a field trip or to take an aspirin in school, but not to get an abortion — you might live in a nation that was founded by geniuses but is run by idiots.
If you MUST show your identification to board an airplane, cash a check, buy liquor, or check out a library book and rent a video, but not to vote for who runs the government — you might live in a nation that was founded by geniuses but is run by idiots.
If the government wants to prevent stable, law-abiding citizens from owning gun magazines that hold more than ten rounds, but gives twenty F-16 fighter jets to the crazy new leaders in Egypt — you might live in a nation that was founded by geniuses but is run by idiots.
If, in the nation’s largest city, you can buy two 16-ounce sodas, but not one 24-ounce soda, because 24-ounces of a sugary drink might make you fat — you might live in a nation that was founded by geniuses but is run by idiots.
If an 80-year-old woman or a three-year-old girl who is confined to a wheelchair can be strip-searched by the TSA at the airport, but a woman in a burka or a hijab is only subject to having her neck and head searched — you might live in a nation that was founded by geniuses but is run by idiots.
If your government believes that the best way to eradicate trillions of dollars of debt is to spend trillions more — you might live in a nation that was founded by geniuses but is run by idiots.
If a seven-year-old boy can be thrown out of school for saying his teacher is “cute,” but hosting a sexual exploration or diversity class in grade school is perfectly acceptable — you might live in a nation that was founded by geniuses but is run by idiots.
If hard work and success are met with higher taxes and more government regulation and intrusion, while not working is rewarded with Food Stamps, WIC checks, Medicaid benefits, subsidized housing, and free cell phones — you might live in a nation that was founded by geniuses but is run by idiots.
If the government’s plan for getting people back to work is to provide incentives for not working, by granting 99 weeks of unemployment checks, without any requirement to prove that gainful employment was diligently sought, but couldn’t be found — you might live in a nation that was founded by geniuses but is run by idiots.
If you pay your mortgage faithfully, denying yourself the newest big-screen TV, while your neighbor buys iPhones, time shares, a wall-sized do-it-all plasma screen TV and new cars, and the government forgives his debt when he defaults on his mortgage — you might live in a nation that was founded by geniuses but is run by idiots.
If being stripped of your Constitutional right to defend yourself makes you more “safe” according to the government — you might live in a nation that was founded by geniuses but is run by idiots.
If the media panders to your openly socialist leader while the IRS targets groups with dissenting views— you might live in a nation that was founded by geniuses but is run by idiots.
If your government ‘cracks down’ on legal gun sales to law abiding citizens while secretly supplying illegal guns to Mexican drug cartels— you might live in a nation that was founded by geniuses but is run by idiots.
If your local government (Chicago) outlawed gun ownership for ‘the safety of its citizens’ and now boasts the worst murder rate in the country — you might live in a nation that was founded by geniuses but is run by idiots.
What a country!
How about we give God a reason to continue blessing America?
This was borrowed from another blog, authors unknown, please spread it far and wide!
I am not a big fan Paul but this was and is a good idea, really should be done every other yr. on all governmental offices including the W.H. And We the People need to demand the end of excitive orders, and tax payers paying anyone’s vacation including the W.H. we have to pay for our own, and most can’t afford to take a vacation some thanks to taxes and the gov.
And he knew it would be rejected. They don’t put bills on the table until they have enough commitments on the table. He’s just playing his campaign game, like every other member of congress, none of whom should ever slither into the Oval Office,