At a recent town hall, Rep. Barney Frank told his constituents he planned legislation to restrict the Federal Reserve’s emergency lending powers and to subject the central bank to a “complete audit.” He’s coming late to the party started by Rep. Ron Paul, whose bill to audit the Federal Reserve has the support of over half of the House of Representatives. Indeed, Frank indicated that he’d been working with Paul on compromise language, an indication that with broad support in the House and from bipartisan leadership, the chances of passage for this bill are becoming increasingly likely.
I agree with Barney Frank on virtually nothing, and while I commend Ron Paul for his strict fiscal discpline and respect for federalism and the separation of powers, much of his foreign policy espoused during his 2008 Presidential bid seemed too isolationist to be practical. That said, both men are to be commended for pushing for accountability in the Federal Reserve. No matter how you want to slice it, figuring out exactly how our money is being shuffled around is a healthy thing for our democracy and for our economy.
What would such an audit show? I couldn’t even begin to speculate. Conspiracy theories abound with nefarious plots by the Fed to enrich their board members. While I’m not ready to sign on to those, I have no doubt there’s been at least some level of mismanagement. With a bank system of that size, how could there not be? As a quasi-private entity operating with public funds, it’s my belief that the American people have a need to know what goes on behind the closed doors of the Federal Reserve.
The Fed audit, if it becomes a reality, may become the big story of the fall if health care reform continues to nosedive. In any event, it’s something worth watching, and I’ll be interested to see what, if anything, comes from this push, given more oomph by the support of Rep. Frank, who I am at this point assuming will follow through. That he’s negotiating with Paul on the language indicates to me that he’s at least slightly serious about pursuing this.