Federal Reserve Transparency Act of 2009 (HR 1207)

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Federal Reserve Bank in New YorkRepresentative Ron Paul, Republican from Texas and long-time favorite of the Internets, introduced a bill earlier this year called the Federal Reserve Transparency Act of 2009 (H.R. 1207). HR 1207, which now has 303 co-sponsors and last saw action in committee hearings on September 25th, would call for a full audit of the Federal Reserve by the Government Accountability Office before the end of 2010. The audit would be reviewed by Congress.

I think accountability is fundamental and I agree with many that the secrecy of the Fed, protected by the U.S. Code under 31 USC 714 – Sec. 714, is not in keeping with the transparency and openness we should require of our public officials (I understand the Fed technically only quasi-public, but for all intents and purposes it’s public in my mind). I understand it when we need to keep things hidden for purposes of national security but I don’t think this extends to national financial security.

Under normal circumstances, I don’t see it necessary for the Fed to disclose the contents of their FOMC meetings. This creates a problem for the attendees because if they are 100% forthcoming in their meetings, it could come back to haunt them. This might make the “official” meeting a joke and push true discussion behind closed doors.

However, during this economic crisis, the Fed has given trillions of dollars in loan guarantees and hasn’t disclosed what they got in return. This is a problem because it’s those trillions belong to you, me, and our children (and our children’s children!). As the dollar hits historic lows versus other currencies and faces the real threat of losing reserve status, the money we’ve earned is worth less and less because of these actions.

I don’t want to increase the bureaucracy in Washington but I think transparency, in this particular case, is crucial.

The Senate version of this bill is S. 604, cheerily named the Federal Reserve Sunshine Act of 2009, has 30 sponsors and was last referred to the Committee on Banking, Housing, and Urban Affairs back in March (this means it’s most likely dead in that form).

What do you think about this bill? Should the Fed be more transparent (at least to Congress)? Or are we wasting time and scrutinizing too much?

(Photo: epicharmus)

{ 4 comments, please add your thoughts now! }

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4 Responses to “Federal Reserve Transparency Act of 2009 (HR 1207)”

  1. Jason says:

    Regulation, rules and transparency keep systems from descending to the lowest common denominator. I think whether or not some one sees this as ‘bureaucracy’ has to do with how the new rules affect them.

    The Fed is a very strange and unique institution with incredible power over our lives. I don’t think any level of transparency greater than we have now (almost none) would be bad.

  2. Yes, we absolutely need transparency of the federal reserve. When we have that it will become apparent what is going on in this crisis. Some people know why we are having this crash: massive expansion of the money supply causes malinvestment. The root of this problem is central banking (The Federal Reserve in the U.S.)

    Here is what happens in laymans terms (according to my understanding). New money is created (lowered interest rates). This signals that now is a good time to invest. Overinvestment occurs, resources run out due to overinvestment, massive correction and disruption of the economy.

    There is a school of economics that has predicted this crash: Austrian Economics. It makes sense, but is less known, because it is not endorsed by the federal reserve (go figure). 🙂

  3. Damon Day says:

    It is absolutely essential that we have this, but my guess is that even if this passes we will still not have real transparency at the fed. What has been done can be called nothing else but outright theft from the American people. They will never disclose the full extent of the damage they are causing our country.

  4. Bret says:

    The Federal Reserve needs to be audited and held accountable to American taxpayers. The current level of secrecy is a massive red flag, that can only signify problems or discrepancies. I recently read an article that claims if the Fed was audited, congress and taxpayers would demand that it be closed down.

    What is bizarre is that the Fed is grabbing for more power at every opportunity, despite the fact they have failed the American public. Their latest request is to regulate any industry they deem critical to the financial system. To give a quasi-public entity like the Fed unlimited discretion to regulate is both unwise and unconstitutional.

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