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Federal Reserve Transparency Act of 2009 (HR 1207)

Representative 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) [3]. 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 [4] 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 [5], 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 [6])