Posted by Brad @ 11:41 am on November 20th 2009

“Audit the Fed” Passes Committee

After a lot of wrangling in which a counter-“Audit the Fed” amendment which would have allowed a multitude of loopholes and watering downs was proposed but ultimately defeated by the version Ron Paul himself authored, “Audit the Fed” has passed through the House Financial Services Committee relatively unscathed by a vote of 43 to 26. Now the committee will vote on the full bill (expected to pass), at which point it kicks to the chamber at large.

The measure was approved by the House Financial Services Committee as it considered broad bank regulatory reform legislation, and included a package of other measures weakening the Fed’s power and capping how much it can lend or guarantee.

The committee is now poised to pass the entire bill and has scheduled its final vote on the legislation for December 1.

Lawmakers also agreed to provisions that would require the Fed to work with other regulators before acting as a lender-of-last-resort.

“If you care about transparency of the Fed, you would allow a look at monetary policy,” Paul said. “We’re dealing with trillions of dollars that doesn’t get audited. There is no reason why the world can’t know, eventually, what the Fed is doing.”

Paul’s measure, which was approved by a vote of 43 to 26, would require the Government Accountability Office to audit the central bank’s interest rate policy, agreements with foreign governments, foreign central banks and the International Monetary Fund. It also would permit audits of a roughly $800 billion Fed mortgage-backed securities purchase program, which could grow to $1.25 trillion, Paul said.

The GAO would be instructed to complete a Fed audit within 12 months of passage of the bill.

The Financial Times also has a writeup.

By any reckoning, an enormous success for Paul, wherein his not-mainstream view of the Fed nevertheless find expression in a timely, common sense bill focused on accountability. This is exactly how you hope a guy like Paul winds up operating. Using his seat to launch broad swipes at the ideological underpinnings of everything, but also, occasionally, expressing that in good legislation that seems obvious but never would have come from anybody but him.

And good politics too. It will be very hard for any Republican or Democrat to explain to their constituents why they were against this bill, and Paul is just the type, if he winds up in, say, another GOP primary for President, to hammer at it over, and over, and over again. A nice sleeper issue for him with all upside at this point.

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