The Federal Reserve is the chief culprit behind the economic crisis. Its unchecked power to create endless amounts of money out of thin air brought us the boom and bust cycle and causes one financial bubble after another. Since the Feds creation in 1913 the dollar has lost more than 96% of its value, and by recklessly inflating the money supply the Fed continues to distort interest rates and intentionally erodes the value of the dollar. <\/p>\n
For the past 30 years, Congressman Ron Paul has worked tirelessly to bring much-needed transparency and accountability to the secretive bank. And in 2009 and 2010 his unfaltering dedication showed astonishing results: HR 1207, the bill to audit the Federal Reserve, swept the country and made the central bankers shudder at their desks. The bill passed as an amendment both in the House Financial Services Committee and in the House itself. <\/p>\n
But the usurpers of Americas future didnt take it lying down. They werent about to allow their secrets to be exposed and their magic money machine to be put under close scrutiny. They worked frantically behind the scenes to quietly derail all efforts to open up the Federal Reserve to an independent audit. <\/p>\n
A handful of Fed-loving U.S. senators led by Chris Dodd rewrote the Senate version of the Financial Reform Bill to strip out Ron Pauls Audit the Fed amendment and actually expand the Feds power over banks, lending and money. As Ron Paul commented on here, the Dodd bill completely eliminated legislation to audit the Federal Reserve, which had already passed in the House. <\/p>\n
Sen. Bernie Sanders (I-Vt.) introduced an amendment on the floor effectively adding the Grayson-Paul language to the Senate bill, but later changed his amendment under pressure by the Federal Reserve and the Obama administration. The altered Sanders amendment passed the Senate on May 11, 2010 by a unanimous 96-0 vote. <\/p>\n
Sen. Vitter reintroduced an amendment with the original Audit the Fed language. The Senate rejected the amendment on May 11, 2010 by a 37-62 vote. <\/p>\n
The House and Senate went to the conference committee which attempted to reconcile the differences between the two bills (and their amendments). Unfortunately, Ron Pauls tough language ended up not being included in the final bill. <\/p>\n
On June 30, 2010, the GOP introduced Ron Pauls Audit the Fed bill as a motion to recommit, which was the last chance to alter the financial regulation bill. Audit the Fed failed by a vote of 229-198. All Republicans voted in favor of the measure with 23 Democrats crossing the aisle to vote with Republicans. 114 co-sponsors of HR 1207, all Democrats, jumped ship and voted against Audit the Fed. <\/p>\n
But lets start from the beginning. Heres the fascinating history of Ron Pauls Audit the Fed bill: <\/p>\n
02\/2009: Ron Paul introduces bill to Audit the Federal Reserve <\/p>\n
On February 26, 2009, Ron Paul introduced HR 1207, the bill to audit the Federal Reserve: <\/p>\n
I rise to introduce the Federal Reserve Transparency Act. 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 95% of its purchasing power, aided and abetted by the Federal Reserves loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation. <\/p>\n
After a groundswell of grassroots support, HR 1207 and its counterpart in the Senate, S 604, went on to attract 320 and 32 co-sponsors respectively. <\/p>\n
10\/2009: Mel Watt Introduces Competing Placebo Amendment <\/p>\n
With HR 1207 gaining momentum, Congressman Mel Watt introduced a competing banker-approved placebo amendment that would have replaced HR 1207 and actually increased the Federal Reserves secrecy. <\/p>\n
11\/2009: Victory over Mel Watt Amendment <\/p>\n
On November 19, 2009, after a historic debate lasting several hours, Ron Pauls and Alan Graysons Audit the Fed amendment passed 43-26 in the House Financial Services Committee. The amendment called for a comprehensive audit of the Federal Reserve and replaced the opposing placebo amendment proposed by Mel Watt. <\/p>\n
How they voted on Ron Pauls Audit the Fed amendment (HR 1207 co-sponsors in bold): <\/p>\n
Note: Due to a clerical error, until 5\/26\/2010 this roll call erroneously listed Rep. Gary Miller (CA-42) as a Democrat who supposedly voted nay. However, the reality is that Rep. Miller is a Republican who was absent on the day of the vote. He is a co-sponsor of HR 1207. We apologize! <\/p>\n
12\/2009: Audit the Fed Passes in the House <\/p>\n
The Audit the Fed amendment was attached to Barney Franks HR 3996, also known as the Financial Stability Improvement Act of 2009. That bill was later combined, along with several other bills, into The Wall Street Reform and Consumer Protection Act of 2009 Financial Stability Improvement Act of 2009 (HR 4173). The House passed the new bill on December 11, 2009 on a vote of 223-202. <\/p>\n
03\/2010: Treasury Officials Still Support Mel Watt Amendment <\/p>\n
On March 8, 2010 Huffington Post reporter Sam Stein participated in a bizarre meeting with unnamed high level treasury officials: <\/p>\n
The Treasury Department is vigorously opposed to a House-passed measure that would open the Federal Reserve to an audit by the Government Accountability Office (GAO), a senior Treasury official said Monday. Instead, the official said, the Treasury prefers a substitute offered by Rep. Mel Watt (D-N.C.), and would like to see it enacted as part of the Senate bill. <\/p>\n
The Watt measure, however, while claiming to increase transparency, actually puts new restrictions on the GAOs ability to perform an audit. <\/p>\n
03\/2010: Mel Watt Amendment Used in Senate Version of the Financial Reform Bill <\/p>\n
Ron Paul: In the Senate, we didnt get enough strong support over there and the Republicans didnt really fight for it and at the Senate side it is not included. Matter of fact, they have included Mel Wattss language. His language and my language competed in the House Financial Services Committee and of course we won that pretty easily. But they inserted that in so Mel Watt and the bankers were able to influence the senators enough to put their language in there. So what probably will happen is the two bills will be passed. Itll be in one bill and not the other and then the fight will be to put pressure on the conference to go with the House [bill] instead of the Senate. <\/p>\n
04\/2010: Bernie Sanders Introduces Audit the Fed Amendment in the Senate <\/p>\n
Sen. Bernie Sanders (I-Vt.) introduced an amendment on the floor effectively adding the Grayson-Paul language to the Senate bill. <\/p>\n
05\/2010: Bernie Sanders Sells Out, Senate Passes Watered Down Amendment <\/p>\n
On May 6, 2010 Bernie Sanders sold out to the bankers by modifying his amendment to the extent that it would allow the Fed to keep many of its activities secret. On May 11, 2010 the Sanders amendment passed the Senate by a unanimous 96-0 vote. <\/p>\n
05\/2010: David Vitter Comes To The Rescue But His Amendment is Defeated <\/p>\n
Sen. David Vitter reintroduced an amendment with Ron Pauls original Audit the Fed language. The Senate rejected the amendment on May 11, 2010 by a 37-62 vote. <\/p>\n
06\/2010: 114 Democrats Jump Ship and Vote Down Audit the Fed <\/p>\n
On June 30, 2010, Ron Pauls attempt to audit the Federal Reserve, which was previously co-sponsored by 320 members of the House (HR 1207), failed by a vote of 229-198. All Republicans voted in favor of the measure with 23 Democrats crossing the aisle to vote with Republicans. 114 co-sponsors of HR 1207, all Democrats, jumped ship and voted against Audit the Fed. <\/p>\n
The GOP had offered the Fed audit as the minoritys last chance to alter the financial regulation bill. The bill does have an watered-down audit provision in the conference report, but it is limited to loans made by the Fed during the height of the economic crisis. Ron Pauls bill would have allowed a total examination of the Feds books. <\/p>\n
Democrats, Republicans, HR 1207 Co-Sponsors <\/p>\n
YEA <\/p>\n
Aderholt Akin Alexander Austria Bachmann Bachus Barrett (SC) Bartlett Barton (TX) Biggert Bilbray Bilirakis Blackburn Blunt Boehner Bonner Bono Mack Boozman Boucher Boustany Brady (TX) Broun (GA) Brown (SC) Brown-Waite, Ginny Buchanan Burgess Burton (IN) Buyer Calvert Camp Campbell Cantor Cao Capito Carney Carter Cassidy Castle Chaffetz Childers Coble Coffman (CO) Cole Conaway Crenshaw Critz Culberson Davis (KY) Dent Diaz-Balart, L. Diaz-Balart, M. Djou Dreier Duncan Edwards (TX) Ehlers Emerson Fallin Flake Fleming Forbes Fortenberry Foxx Franks (AZ) Frelinghuysen Gallegly <\/p>\n
NAY <\/p>\n
Ackerman Adler (NJ) Altmire Andrews Arcuri Baca Baird Baldwin Barrow Bean Becerra Berkley Berman Berry Bishop (GA) Bishop (NY) Blumenauer Boccieri Boren Boswell Boyd Brady (PA) Braley (IA) Bright Brown, Corrine Butterfield Capps Capuano Cardoza Carnahan Carson (IN) Castor (FL) Chandler Chu Clarke Clay Cleaver Clyburn Cohen Connolly (VA) Conyers Cooper Costa Costello Courtney Crowley Cuellar Cummings Dahlkemper Davis (AL) Davis (CA) Davis (IL) Davis (TN) DeFazio DeGette Delahunt DeLauro Deutch Dicks Dingell Doggett Donnelly (IN) Doyle Driehaus Edwards (MD) Ellison Ellsworth Engel Eshoo Etheridge Farr Fattah Filner Foster Frank (MA) Fudge Garamendi <\/p>\n
Gonzalez Gordon (TN) Green, Al Green, Gene Grijalva Gutierrez Hall (NY) Halvorson Hare Harman Hastings (FL) Heinrich Herseth Sandlin Higgins Hill Himes Hinchey Hinojosa Hirono Holden Holt Honda Hoyer Inslee Isra-el Jackson (IL) Jackson Lee (TX) Johnson (GA) Johnson, E. B. Kagen Kanjorski Kaptur Kennedy Kildee Kilpatrick (MI) Kilroy Kind Kissell Klein (FL) Kosmas Kucinich Langevin Larsen (WA) Larson (CT) Lee (CA) Levin Lewis (GA) Loebsack Lofgren, Zoe Lowey Lujn Lynch Maffei Maloney Markey (MA) Marshall Matheson Matsui McCarthy (NY) McCollum McDermott McGovern McMahon Meek (FL) Meeks (NY) Melancon Michaud Miller (NC) Miller, George Mollohan Moore (KS) Moore (WI) Moran (VA) Murphy (CT) Murphy (NY) Murphy, Patrick Nadler (NY) <\/p>\n
Napolitano Neal (MA) Oberstar Obey Olver Ortiz Owens Pallone Pascrell Pastor (AZ) Payne Perlmutter Peters Peterson Pingree (ME) Polis (CO) Pomeroy Price (NC) Quigley Rahall Rangel Reyes Richardson Rodriguez Rothman (NJ) Roybal-Allard Ruppersberger Rush Ryan (OH) Salazar Snchez, Linda T. Sanchez, Loretta Sarbanes Schakowsky Schauer Schiff Schrader Schwartz Scott (GA) Scott (VA) Serrano Sestak Shea-Porter Sherman Shuler Sires Slaughter Smith (WA) Snyder Speier Spratt Stark Stupak Sutton Tanner Thompson (CA) Thompson (MS) Tierney Tonko Towns Tsongas Van Hollen Velzquez Visclosky Walz Wasserman Schultz Waters Watson Watt Waxman Weiner Welch Wilson (OH) Wu Yarmuth <\/p>\n
Not Voting <\/p>\n
Bishop (UT) Taylor Wamp Woolsey Young (AK) <\/p>\n
Ron Pauls legislation is aimed at pulling back the curtain from a secretive and unaccountable Federal Reserve. Congress and the American people have minimal, if any, oversight over trillions of dollars that the Fed controls. <\/p>\n
With recent bailouts and spending decisions shining a spotlight on the actions of the Federal Reserve, more and more pressure is bearing down on Congress to take action and demand accountability and transparency. <\/p>\n
Auditing the Fed is only the first step towards exposing this antiquated insider-run creature to the powerful forces of free-market competition. Once there are viable alternatives to the monopolistic fiat dollar, the Federal Reserve will have to become honest and transparent if it wants to remain in business. <\/p>\n
Ron Paul introduced bill H.R. 1207 on February 26, 2009 with the following speech to Congress: <\/p>\n
Madame Speaker, <\/p>\n
I rise to introduce the Federal Reserve Transparency Act. 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 95% of its purchasing power, aided and abetted by the Federal Reserves loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation. <\/p>\n
Serious discussion of proposals to oversee the Federal Reserve is long overdue. I have been a longtime proponent of more effective oversight and auditing of the Fed, but I was far from the first Congressman to advocate these types of proposals. Esteemed former members of the Banking Committee such as Chairmen Wright Patman and Henry B. Gonzales were outspoken critics of the Fed and its lack of transparency. <\/p>\n
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 Feds 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 insulated from Freedom of Information Act requests. <\/p>\n
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 Feds 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. <\/p>\n
More importantly, the Feds funding facilities and its agreements with the Treasury should be reviewed. The Treasurys supplementary financing accounts that fund Fed facilities allow the Treasury to funnel money to Wall Street without GAO or Congressional oversight. Additional funding facilities, such as the Primary Dealer Credit Facility and the Term Securities Lending Facility, allow the Fed to keep financial asset prices artificially inflated and subsidize poorly performing financial firms. <\/p>\n
The Federal Reserve Transparency Act would eliminate restrictions on GAO audits of the Federal Reserve and open Fed operations to enhanced scrutiny. We hear officials constantly lauding the benefits of transparency and especially bemoaning the opacity of the Fed, its monetary policy, and its funding facilities. By opening all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much-needed transparency of the Federal Reserve. I urge my colleagues to support this bill. <\/p>\n
This is the bill itself, H.R. 1207: <\/p>\n
111th Congress 1st Session <\/p>\n
H.R. 1207 <\/p>\n
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. <\/p>\n
1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, <\/p>\n
SECTION 1. SHORT TITLE. This Act may be cited as the Federal Reserve Transparency Act of 2009. <\/p>\n
SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. <\/p>\n
(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. <\/p>\n
(b) AUDIT. Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection: <\/p>\n
(e) AUDIT AND REPORT OF THE FEDERAL RESERVE SYSTEM. <\/p>\n
(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. <\/p>\n
(2) REPORT <\/p>\n
(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. <\/p>\n
(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.. <\/p>\n
In this speech to Congress, Ron Paul refutes Ben Bernankes interpretation of HR 1207, the bill to audit the Federal Reserve, and explains why only an audit will protect the publics interest. <\/p>\n
Date: 7\/30\/2009 <\/p>\n
Ron Paul: Mr. Speaker, the big guns have lined up against HR 1207, the bill to audit the Federal Reserve. What is it that they are so concerned about? What information are they hiding from the American people? The screed is: transparency is okay except for those things they dont want to be transparent. <\/p>\n
Federal Reserve Chairman Ben Bernanke, argues that HR 1207, the legislation to audit the Federal Reserve, would politicize monetary policy. He claims that monetary policy must remain independent, that is; secret. He ignores history because chairmen of the Federal Reserve in the past, especially when up for reappointment, do their best to accommodate the president with politically driven low interest rates and a bubble economy. <\/p>\n
Former Federal Reserve Board Chairman Arthur Burns, when asked about all the inflation he brought about in 1971 before Nixons reelection, said that the Fed has to do what the president wants it to do, or it would lose its independence. That about tells you everything. <\/p>\n
Not by accident Chairman Burns strongly supported Nixons program of wage and price controls the same year, but I guess thats not political. Is not making secret deals with the likes of Goldman Sachs, international financial institutions, foreign governments and foreign central banks politicizing monetary policy? <\/p>\n
Bernanke argues that the knowledge that their discussions and decisions will one day be scrutinized will compromise the freedom of the Open Market Committee to pursue sound policy. If it is sound and honest and serves no special interest, whats the problem? <\/p>\n
He claims that HR 1207 would give power to Congress to affect monetary policy. He dreamt this up to instill fear, an old statist trick to justify government power. HR 1207 does nothing of the sort. He suggested that the day after an FOMC meeting, Congress could send in the GAO to demand an audit of everything said and done. This is hardly the case. The FOMC function under HR 1207 would not change. <\/p>\n
The detailed transcripts of the FOMC meetings are released every 5 years, so why would this be so different and what is it that they dont want the American people to know? Is there something about the transcripts that need to be kept secret, or are the transcripts actually not verbatim? <\/p>\n
Fed sycophants argue that an audit would destroy the financial markets faith in the Fed. They say this in the midst of the greatest financial crisis in history brought on by none other than the Federal Reserve. In fact, Chairman Bernanke stated on November 14th 2007, A considerable amount of evidence indicates that Central Bank transparency increases the effectiveness of monetary policy and enhances economic and financial performance. <\/p>\n
They also argue that an audit would hurt the value of the U.S. dollar. In fact, the Fed, in less than a 100 years of its existence, has reduced the value of the 1914 dollar by 96%. <\/p>\n
They claim HR 1207 would raise interest rates. How could it? The Fed sets interest rates and the bill doesnt interfere with monetary policy. Congress would have no say in the matter and besides, Congress likes low interest rates. <\/p>\n
It is argued that the Fed wouldnt be free to raise interest rates if they thought it necessary. But Bernanke has already assured the Congress that rates are going to stay low for the foreseeable future. And again, this bill does nothing to allow Congress to interfere with interest rate setting. <\/p>\n
Fed supporters claim that they want to protect the publics interest with their secrecy. But the banks and Wall Streets are the opponents of HR 1207, and the people are for it. Just who best represents the publics interest? <\/p>\n
The real question is: why are Wall Street and the Fed so hysterically opposed to HR 1207? Just what information are they so anxious to keep secret? Only an audit of the Federal Reserve will answer these questions. <\/p>\n
Excerpt from Ron Pauls 4\/22\/2009 appearance on Judge Andrew Napolitanos Freedom Watch: <\/p>\n
Ron Paul: After we came back yesterday from our 2-week break, I think have 15 new people signed on and somebody came up to me and says, I signed on your bill this morning because I went to my town hall meetings, I went four of them and in every meeting people were there and say, Its time that we have transparency of the Fed.' <\/p>\n
But I call them the Fourth Branch of government. Some people dont think of them as part of the government because theyre so secretive. But we created it, we can end it, we take no responsibility to supervise it, and look at what theyre doing. We spend hundreds of billions, but the Fed deals in trillions, and they dont have any responsibility to tell us about it. So theres a lot of power there and it deserves looking at. <\/p>\n
And I think I have to say Barney Frank has been sympathetic with this. Hes for transparency. Hes not for hard money and the type of monetary policy Im talking about. He believes that we should have more transparency of the Fed, so whether this bill gets passed or something very similar, the mood in the country is such that not only do they want us to be better in handling the appropriated fund and knowing where these TARP funds went, the American people have awakened to this whole idea of what the Federal Reserve does behind the scenes. <\/p>\n
So Im delighted. Ive been pushing this monetary issue for more than 30 years believing it was THE significant economic issue of our time, and I think people are starting to realize this and were going to keep hearing about it and theres a good chance that it will eventually make it to the floor. <\/p>\n
Excerpt from Ron Pauls 3\/5\/2009 appearance on Judge Andrew Napolitanos Freedom Watch: <\/p>\n
Judge Napolitano: Before we switch gears, Congressman Paul, how did Ben Bernanke react to the legislation that you introduced calling for an audit of the Fed. Did he give you a call on the phone? <\/p>\n
Ron Paul: Oh yes, he called me, wanted to congratulate me and he wanted to support my bill. You know, interestingly, just recently, I cannot name his name but I was talking to a former member of the Federal Reserve board and told him about the bill and he was friendly enough. <\/p>\n
I said, What do you think of that? He said, I think its not a very good idea. And I said, Do the people at the Federal Reserve ever talk about, are concerned about the dollar. I said, you know, Im always talking about the dollar and what this is going to do to the dollar. And I said, Do they know that all this debt and inflation could hurt the dollar? He says, Yes, they do. He confirmed it. He said, They absolutely do. He says, But they cant answer your questions in public because it would cause panic. <\/p>\n
Judge Napolitano: This administration came to power and we all knew the words that they used, hope and change. But one of the words that they really used was transparency. I would think the President himself should be in favor of transparency at the Fed if he wants to be ideologically consistent. What are they afraid we will find out, Congressman Paul? <\/p>\n
Ron Paul: Well, what theyre going to find out is, thats the first step. Once we get the audit bill passed and we can reveal what they are doing, I think the next step is to end the Fed. Thats why they dont want that. <\/p>\n
You know, we had some very good comments made by our Senator Bernie Sanders yesterday from Vermont. I talked with him this morning and were going to be talking a lot about the need for having transparency. <\/p>\n
And I think the mood is right. The mood is right both with the Democrats and the Republicans, because they dont know exactly what is going on but they know the American people are sick and tired of just throwing money out there, whether its to the Treasury and nobody knows where it goes, whether they send it to Iraq and nobody knows where the bundles of money go, or whether the Federal Reserve can create 2 trillion dollars, and they dont even have to tell us. <\/p>\n
As a government all onto itself, its bigger than the whole U.S. Congress. They create trillions in a day, you know, in a short period of time, and in the Congress we do talk a little bit when we pass 400 million or 800 million. But the Fed is a much bigger problem. <\/p>\n
Excerpt from Ron Pauls 3\/10\/2009 interview with Alex Jones: <\/p>\n
<\/p>\n
Read more: The Federal Reserve is the chief culprit behind the economic crisis. Continue reading
\nAudit the Federal Reserve - Ron Paul .com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"