It has been said that any corporation that is not required to undergo regular financial audits, is almost certainly crooked. Considering that the Federal Reserve has never once in its entire history been audited, and given that the central bank is actively exchanging trillions of dollars of “good money” for the toxic waste of bad bank debt — many economists question whether or not the bank’s books would pass muster under any traditional financial audit.

Now a Congressional bill (H.R. 1207), “The Federal Reserve Transparency Act” is demanding a full audit of the books of the Federal Reserve. In our opinion this act is long overdue. While the Federal Reserve may claim that it is our nation’s best interest to be kept in the dark, these claims seem particularly disingenuous given the growing understanding that it was Greenspan’s Federal Reserve policies of low-interest rates and excessive financial de-regulation which led to the crisis in the first place.

Unfortunately, we also recognize that any “audit” conducted on the Federal Reserve would likely be as un-reliable as that highly publicized, cakewalk otherwise known as the “Stress Tests” which Treasury performed on our nations biggest banks.

Congressman Ron Paul introduced bill HR 1207, which now has swelling support from over 140 Congressional leaders.   His introduction included this somewhat disturbing insight:

The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing 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 when hundreds of billions of dollars of currency swaps have been announced and implemented, the Fed’s negotiations with the European Central Bank, the Bank of International Settlements, and other institutions should face increased scrutiny, most especially because of their significant effect on foreign policy. If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet the Fed avoids both fates.

Well said indeed, Mr. Paul.  We  support this bill wholeheartedly, and we hope our readers will encourage their representatives to do the same.

Here is the full text of H.R. 1207:

111th Congress – 1st Session

H.R. 1207

A BILL

To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.

1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the Federal Reserve Transparency Act of 2009.
SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

(a) IN GENERAL. – Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after ’shall audit an agency’ and inserting a period.

(b) AUDIT. – Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:

(e) AUDIT AND REPORT OF THE FEDERAL RESERVE SYSTEM. -
(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 sub-committee 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.

Sponsor
Rep. Ronald Paul [R-TX]
46 Cosponsors [as of 3/27/2009]
Rep Abercrombie, Neil [HI-1] – 2/26/2009
Rep Akin, W. Todd [MO-2] – 3/19/2009
Rep Alexander, Rodney [LA-5] – 3/10/2009
Rep Bachmann, Michele [MN-6] – 2/26/2009
Rep Bartlett, Roscoe G. [MD-6] – 2/26/2009
Rep Blackburn, Marsha [TN-7] – 3/16/2009
Rep Blunt, Roy [MO-7] – 3/24/2009
Rep Broun, Paul C. [GA-10] – 2/26/2009
Rep Buchanan, Vern [FL-13] – 3/17/2009
Rep Burgess, Michael C. [TX-26] – 3/19/2009
Rep Burton, Dan [IN-5] – 2/26/2009
Rep Castle, Michael N. [DE] – 3/17/2009
Rep Chaffetz, Jason [UT-3] – 3/6/2009
Rep Culberson, John Abney [TX-7] – 3/26/2009
Rep Deal, Nathan [GA-9] – 3/23/2009
Rep DeFazio, Peter A. [OR-4] – 3/9/2009
Rep Duncan, John J., Jr. [TN-2] – 3/6/2009
Rep Fleming, John [LA-4] – 3/18/2009
Rep Foxx, Virginia [NC-5] – 3/10/2009
Rep Franks, Trent [AZ-2] – 3/23/2009
Rep Garrett, Scott [NJ-5] – 3/5/2009
Rep Grayson, Alan [FL-8] – 3/11/2009
Rep Heller, Dean [NV-2] – 3/6/2009
Rep Jones, Walter B., Jr. [NC-3] – 2/26/2009
Rep Kagen, Steve [WI-8] – 2/26/2009
Rep Kingston, Jack [GA-1] – 3/6/2009
Rep Lummis, Cynthia M. [WY] – 3/19/2009
Rep Marchant, Kenny [TX-24] – 3/11/2009
Rep McClintock, Tom [CA-4] – 3/6/2009
Rep McCotter, Thaddeus G. [MI-11] – 3/19/2009
Rep Miller, Jeff [FL-1] – 3/24/2009
Rep Peterson, Collin C. [MN-7] – 3/19/2009
Rep Petri, Thomas E. [WI-6] – 3/10/2009
Rep Platts, Todd Russell [PA-19] – 3/19/2009
Rep Poe, Ted [TX-2] – 2/26/2009
Rep Posey, Bill [FL-15] – 2/26/2009
Rep Price, Tom [GA-6] – 3/10/2009
Rep Rehberg, Denny [MT] – 2/26/2009
Rep Rohrabacher, Dana [CA-46] – 3/6/2009
Rep Sessions, Pete [TX-32] – 3/23/2009
Rep Stark, Fortney Pete [CA-13] – 3/26/2009
Rep Stearns, Cliff [FL-6] – 3/6/2009
Rep Taylor, Gene [MS-4] – 3/6/2009
Rep Wamp, Zach [TN-3] – 3/16/2009
Rep Woolsey, Lynn C. [CA-6] – 2/26/2009
Rep Young, Don [AK] – 3/6/2009