Federal Reserve Transparency Act of 2014

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 24) to require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous materials on the bill under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, H.R. 24, the Federal Reserve Transparency Act, directs the GAO to conduct a full audit of the Federal Reserve.

The Dodd-Frank legislation mandated a GAO audit of the Fed, but that audit issued by the GAO in July of 2011 focused solely on certain issues concerning emergency credit facilities. GAO remains restricted under the current law from conducting a broader audit of the Fed that includes, for instance, a review of the Fed's monetary policy operations and its agreements with foreign governments and central banks.

Under this bill, the GAO, as the investigative arm of Congress, is allowed to conduct the audit that reviews all these transactions and is required to report such findings of the audit to Congress.

Now, while Congress should not manage the details of monetary policy, it needs to be able to conduct oversight of the Fed. The Fed was created by Congress to be a central bank independent of influence of the U.S. Treasury. It was never intended to be a second Treasury Department.

In recent years, the Fed's extraordinary interventions into the economy and financial markets have led some to call into question its independence. The Fed remains ultimately responsible to the American people and their elected representatives. This is why H.R. 24 has strong bipartisan support, with 228 cosponsors on both sides of the aisle. A version of this bill passed the House of Representatives last Congress by a vote of 327-98.

I want to thank Chairman Hensarling for working with me to bring this legislation to the floor. I will insert our letters of exchange in the Congressional Record.

I encourage and urge my colleagues to support this legislation.

Mr. Speaker, I reserve the balance of my time.

House of Representatives,

Committee on Financial Services,

Washington, DC, September 12, 2014.

Hon. Darrell Issa,

Chairman, House Committee on Oversight and Government Reform,

Washington, DC.

Dear Chairman Issa: On July 24, 2014, the Committee on

Oversight and Government Reform ordered H.R. 24, the Federal

Reserve Transparency Act of 2013, as amended, to be reported

favorably to the House. As a result of your having consulted

with the Committee on Financial Services concerning

provisions of the bill that fall within our Rule X

jurisdiction, I agree to discharge our committee from further

consideration of the bill so that it may proceed

expeditiously to the House Floor.

The Committee on Financial Services takes this action with

our mutual understanding that, by foregoing consideration of

H.R. 24, as amended, at this time, we do not waive any

jurisdiction over the subject matter contained in this or

similar legislation, and that our committee will be

appropriately consulted and involved as the bill or similar

legislation moves forward so that we may address any

remaining issues that fall within our Rule X jurisdiction.

Our committee also reserves the right to seek appointment of

an appropriate number of conferees to any House-Senate

conference involving this or similar legislation, and

requests your support for any such request.

Finally, I would appreciate your response to this letter

confirming this understanding with respect to H.R. 24, as

amended, and would ask that a copy of our exchange of letters

on this matter be included in your committee's report to

accompany the legislation and/or in the Congressional Record

during floor consideration thereof.

Sincerely,

Jeb Hensarling,

Chairman.

Mr. Speaker, I yield such time as he may consume to my distinguished colleague from the State of Georgia (Mr. Broun), a man who has worked very hard on this particular issue.

Mr. Speaker, I yield 3 minutes to the gentleman from Kentucky (Mr. Massie).

I yield the gentleman an additional 1 minute.

Mr. Speaker, at this point, I have no additional people wishing to speak on this particular bill, but I would like to read one statement from Senator Rand Paul. He said: ``It is time for more transparency in virtually every part of our government.''

I think most Americans can agree on that, and the Fed is the most logical place to start. I hope the House passes the ``Audit the Fed'' bill, and I look forward to pushing this bill in the Senate.

I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

Tonight, we have heard from the distinguished gentleman from Georgia, who not only has authored this legislation but has pushed at every attempt to make sure that we have accountability and transparency. The American people deserve that.

When much of the financial crisis was happening in 2008, this very body debated over and over again on whether a stimulus should be put forth to

stimulate the economy. At the same time, the Federal Reserve was making investment dollars that made that stimulus package look very small in comparison. Yet we are to assume that, like other government agencies, they are doing everything correctly. We know, as history has shown us, that that is not always the case.

I urge all of my colleagues to join me in supporting this particular bill--to support transparency, to let the accountability be with the American people.

I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I rise today in opposition to H.R. 24, a bill that would undermine the Federal Reserve's independence and politicize its monetary policy decision making.

Mr. Speaker, this so called ``Federal Reserve Transparency Act'' has little to do with bringing transparency and accountability to the Federal Reserve. The truth is--this bill is nothing more than an effort to pressure and discourage the Fed from ever again being able to take the extraordinary action it has taken in recent years--action which has lowered unemployment, stabilized prices, and kept our economy from entering a second Great Depression.

Mr. Speaker, the Federal Reserve is already subject to extensive transparency, oversight and disclosure requirements, including regular audits with limited exemptions.

The fact is, since 1982 the Government Accountability Office has had the authority to audit the books of the Federal Reserve Board and the Federal Reserve Banks. And in 2009, as part of the Dodd-Frank Act, Congress required GAO to audit the emergency lending facilities created in response to the financial crisis. This has already been accomplished and the results of the audit are posted on the Federal Reserve's website.

If that wasn't enough, the Board's financial statements are audited on an annual basis by an outside auditor--and the results are published in the Board's Annual Report.

In addition to audits of its financial statements and emergency lending programs, the Federal Reserve provides comprehensive communication on monetary policy deliberations--releasing statements, publishing minutes and issuing transcripts following the completion of Federal Open Market Committee Meetings.

Furthermore, since 2011 the Chairman of the Federal Reserve has held regular press conferences to discuss the outlook for the economy and explain the rationale for its Federal Reserve policy decisions.

I find it baffling that we are here debating whether the Federal Reserve should be more open and transparent--even as Janet Yellen is scheduled to hold a press conference to discuss the outlook for monetary policy tomorrow afternoon.

While the Fed's decisions are--and must continue to be--transparent, it is also imperative that monetary policy decision making remain insulated from short-term political pressures--in order to promote economic growth and keep inflation in check.

But Mr. Speaker, this legislation would empower the GAO to investigate any and all policy decisions made by members of the Federal Reserve's rate setting committee, including decisions about when, and how, to unwind the Federal Reserve's ongoing stimulus program.

Doing so would wipe out all of the statutory protections that ensure deliberations, decisions, and actions on monetary policy matters are shielded from second guessing.

By empowering the GAO to challenge the decisions of Fed policy experts, and make legislative or administrative recommendations to the Congress, this measure aims to inject political pressure into monetary policy decisions--something that would undermine Fed's ability to make the tough--and sometimes unpopular--decisions that are necessary for the good of the economy.

But this is not the Republican Majority's first politically motivated assault on the Federal

Reserve's independence. We've seen this time and again.

Earlier this year Financial Services Committee Republicans took up and passed the ``FRAT Act'', a bill which virtually eliminates any discretion the Fed has to set monetary policy--by forcing it to make decisions in accordance with a mathematical formula and by requiring GAO to investigate any deviation from it--even in the case of changing economic conditions.

Such absurd constraints on the Federal Reserve would inevitably increase uncertainty surrounding policy decisions, and decrease the public's confidence that the Fed can act appropriately in response to new economic realities.

In closing I would reiterate that it is important for the American people to understand that these bills are not designed to address real problems, or a lack of transparency. Rather, the FRAT Act--and the bill before us today--are unnecessary.

They will cause needless uncertainty and undermine the Fed's ability to conduct monetary policy in an independent manner.

I urge my colleagues to oppose this legislation.

Mr. Speaker, in the United States Constitution, article I, section 8, where it enumerates the powers of Congress, one of those powers is, as I am reading, ``to coin money, regulate the value thereof, and of foreign coin.''

In 1913, Congress abdicated its responsibility and its duty over to the Federal Reserve. It is unconstitutional that we have done so, and it has caused some disastrous effects.

I thank my friend Mr. Meadows for yielding me time to speak on behalf of H.R. 24, the Federal Reserve Transparency Act, better known as ``Audit the Fed.''

This is the same bill that passed the U.S. House in the 112th Congress by an overwhelming bipartisan majority. This is a vital piece of legislation that will help to usher in a new era of transparency in this Nation's monetary policy, and I am pleased to speak on its behalf with my colleagues.

Over the century, since its inception in 1913, the Federal Reserve has controlled our Nation's monetary policy--and therefore our economy--under a veil of secrecy. Throughout these last 100 years, Congress has only exercised a relatively small degree of oversight over the Federal Reserve. This lack of accountability has led to grievous consequences, and this must end.

For instance, since the Federal Reserve establishment in 1913, the value of the U.S. dollar has fallen 95 percent. In other words, the value of today's dollar is approximately worth one nickel of what a dollar was worth in 1913. What this does is cause a dramatic decline in the value of the U.S. dollar, and it is driven by the easy money policies of the Federal Reserve.

What does this mean in practical terms for the American people?

The steady decline of the U.S. dollar punishes thrift and savings, erodes the value of those savings, and harms older Americans living on fixed incomes. Just as bad, the expansion in money supply under the Federal Reserve has led to an unstable environment of booms and busts that have wrecked the financial security and stability of average Americans. This hurts poor people and senior citizens and the middle class the absolute most. Rich people will do fine with the policies of the Federal Reserve's. Wall Street bankers and the big money folks are fine, but the policies of the Federal Reserve hurt poor folks, they hurt senior citizens, and they hurt the middle class. It is not fair.

Since the 2008 financial crisis, the Federal Reserve's balance sheet has grown at an unprecedented rate, and it now contains $4 trillion worth of assets. At the same time, the enactment of the Dodd-Frank financial reform law has granted the Federal Reserve a greater role than ever in managing our economy and in overseeing the regulation of our financial system. Yet, in spite of the undeniable importance of the Federal Reserve, current law specifically prohibits audits of the Federal Reserve's deliberations, discussions, or actions on monetary policy.

In 2011, a partial audit of the Federal Reserve, required by the Dodd-Frank law, found that the Fed had loaned $16 trillion to financial institutions, some of which were not even American, between 2007 and 2010. This incredible sum was quietly loaned out with no public notice and no congressional oversight. If this is the sort of activity brought to light by just a partial audit, then I believe this further highlights the absolute necessity of a full audit. This bill will require a full audit of the Board of Governors of the Federal Reserve and of the Federal Reserve banks within 12 months of enactment.

The Federal Reserve is a creation of Congress, and it must therefore be subject to the oversight and regulation of Congress.

I must recognize and commend the leadership and years of work by my friend and colleague, Dr. Ron Paul, on this important issue. In the last Congress, Dr. Paul's bill amassed a bipartisan coalition that saw this legislation pass in a 327-98 vote. I am deeply honored to carry on this legacy of Dr. Paul's.

I urge my colleagues here in the House to support this important piece of legislation, and I urge our friends in the Senate to take up this bill's counterpart by my medical colleague, Senator Rand Paul's S. 209.

I thank the gentleman from North Carolina.

Mr. Speaker, I rise today in support of my friend and colleague Congressman Paul Broun's Federal Reserve Transparency Act, otherwise known as ``Audit the Fed.''

Our mutual friend and predecessor, Congressman Ron Paul, first introduced this bill back in 1983. His often lonely voice and courageous efforts to shed light on the secretive and harmful actions of the Federal Reserve have finally paid off over 30 years later. In July of 2012, Congressman Paul's ``Audit the Fed'' bill passed the House of Representatives by an overwhelming vote of 327-98. Sadly, it has yet to receive a vote in the Senate.

As Congressman Ron Paul stated here on the House floor in 2011, in words that remain current and relevant today in 2014:

Throughout its nearly 100-year history, the Federal Reserve

has presided over the near-complete destruction of the United

States dollar. Since 1913, the dollar has lost over 98

percent of its purchasing power, aided and abetted by the

Federal Reserve's loose monetary policy. How long will we as

a Congress stand idly by while hardworking Americans see

their savings eaten away by inflation? Only big spending

politicians and politically favored bankers benefit from

inflation.

Since its inception, the Federal Reserve has always

operated in the shadows, without sufficient scrutiny or

oversight of its operations. While the conventional excuse is

that this is intended to reduce the Fed's susceptibility to

political pressures, the reality is that the Fed acts as a

foil for the government. Whenever you question the Fed about

the strength of the dollar, they will refer you to the

Treasury and vice versa. The Federal Reserve has, on the one

hand, many of the privileges of government agencies while

retaining benefits of private organizations, such as being

largely insulated from Freedom of Information Act requests.

The Federal Reserve can enter into agreements with foreign

central banks and foreign governments, and the GAO is

prohibited from auditing these agreements. Why should a

government-established agency, whose police force has Federal

law enforcement powers and whose notes have legal tender

status in this country, be allowed to enter into agreements

with foreign powers and foreign banking institutions with no

oversight?

Particularly because the Fed has operated swap lines with

foreign central banks and provided hundreds of billions of

dollars of bailouts to foreign commercial banks, the Fed's

negotiations with the European Central Bank, the Bank for

International Settlements, and other foreign institutions

should face increased scrutiny, most especially because of

their significant effect on foreign policy. Given the

currency crisis in Europe and the prospect of the Fed

propping up foreign governments or bailing out American

banks invested in European debt, this issue is of

especially pressing concern.

Thank you.

Congressman Ron Paul's words are even more true today than they were then, and that is why I urge my colleagues to vote in favor of this bill. It is time to force the Federal Reserve to operate by the same standards of transparency and accountability to the taxpayers that we should demand of all government agencies.

Mr. Speaker, I yield myself such time as I may consume.

I rise, Mr. Speaker, in opposition to H.R. 24.

Let me be clear. I support transparency surrounding the operations of the Federal Reserve. Transparency helps ensure that the Federal Reserve is implementing policies that will achieve the objectives given to it by Congress: supporting maximum employment, price stability, and moderate, long-term interest rates.

I emphasize, however, that the Federal Reserve has been subject to audit since 1978. Further, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which I supported, significantly expanded the authority of the Government Accountability Office to examine the Federal Reserve's operations.

It also required the Federal Reserve to make public a wider range of data than it had previously disclosed. For example, Dodd-Frank authorized GAO to begin auditing discount window operations and required the Federal Reserve to begin releasing information about emergency credit transactions and discount lending programs.

Critically, however, Dodd-Frank ensured that transparency surrounding the Fed's operations was expanded in a way that would not compromise the Fed's ability to review and alter monetary policy without fear that its internal deliberations would be made public.

Mr. Speaker, if enacted, this bill would severely curtail the independence that has been a hallmark for the Federal Reserve and has been essential to its ability to strengthen our country. Specifically, H.R. 24 would permit GAO to audit the communications that members of the Federal Reserve's Board of Governors have with each other and with staff regarding monetary policy.

The act would also permit GAO to audit transactions conducted under the direction of the Federal Open Market Committee. Such audits, which could be conducted on an almost real-time basis under this bill, could have a chilling effect on the Fed. If board members know that their statements may become public, they may be inhibited from speaking candidly about the economic trends they are observing or the monetary policies they believe would best respond to current conditions. Further, simply by requesting that the GAO conduct certain audits, Members of Congress could seek to influence the Fed's deliberations and policy decisions.

The Federal Reserve is responsible for stewarding monetary policies that will support our Nation's long-term growth. We should expand transparency surrounding the Federal Reserve in a way that will ensure short-term political considerations do not unduly influence the Federal Reserve's monetary policymaking responsibilities.

The Oversight Committee has not held a single hearing or heard a single witness regarding the far-reaching consequences that passage of this legislation could have. I oppose this legislation, and I urge Members to vote against it.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I continue to reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Again, I will be brief, but I urge Members to vote against the legislation. I think it is a giant step in the wrong direction.

I yield back the balance of my time.