Sen. Bernie Sanders' proposal to audit the Federal Reserve is rolling toward passage this evening as support in Washington grows.
The amendment, long sought by independent Sen. Sanders and House libertarian Republican Ron Paul, was tweaked today to narrow its scope, a move that helped it gain the backing of Senate Majority Leader Harry Reid, Banking Committee boss Chris Dodd, and the White House. It will be attached to the Wall Street reform bill.
Deputy Treasury Secretary Neal Wolin this evening said the administration now supports the amendment after changes were made to ensure that the Fed’s independence on monetary policy would not be compromised.
In a paper statement released this evening, Wolin said, “We appreciate the work of Senator Sanders and Senator Dodd to work together on a strong amendment that ensures full and open transparency regarding emergency lending programs, without compromising the Federal Reserve's full independence with respect to the conduct of monetary policy."
"Senator Sanders’ revised amendment provides for a comprehensive GAO audit of the Federal Reserve Board’s operations in response to the recent financial crisis, while preserving the existing protections of the Federal Reserve’s independence with respect to monetary policy," Wolin said. "We are confident that the revised amendment proposed by Senator Sanders strikes the appropriate balance: providing full transparency of lending programs while protecting the bedrock principle of central bank independence on monetary policy that has served our nation so well.”
Earlier today Wolin emphasized that the administration supported transparency for the Fed.
"We think that's an incredibly important principle, and one that, frankly, is well embedded in the Dodd approach, and in the approach that the president has put forward," he said at the White House briefing. "What we want to make sure at the same time, though, is that the provision doesn't, in a sort of an unintended way or whatever, get in the — into the area of monetary policy that encroaches on the central bank's independence, or has the perception of that. Where that has happened in various places, it's not been — it's not been a pretty picture.”
The updated Sanders amendment…
• Requires a one-time GAO audit of the Federal Reserve’s loans and other financial assistance provided between December 1, 2007 and date of enactment. The Sanders amendment would borrow language from the Dodd bill to require GAO audit to assess: (1) operational integrity, accounting, financial reporting, and internal controls of the credit facility; (2) the effectiveness of the collateral policies established for the facility in mitigating risk to the relevant Federal reserve bank and taxpayers; (3) whether the credit facility inappropriately favors one or more specific participants over other institutions eligible to utilize the facility; (4) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility; and (5) whether there were conflicts of interest with respect to the manner in which such facilities was established or operated;
• Requires a GAO audit of the governance of the Federal reserve bank system, including how bank directors are appointed; and
• Similar to the filed Sanders Amendment, requires the Federal Reserve to publish information on its website on all loans and financial assistance provided between December 2007 and date of enactment under a number of Fed facilities. The information would be required to provide the identify of those receiving assistance, the type of assistance provided, the value of assistance, the date of assistance, the terms of repayments required from the assistance recipient, and the rationale for providing the assistance. Such information would need to be provided by December 1, 2010.
The Senate is expected to vote on the measure later tonight.