Audit the Fed Hearing Note (2)

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Hearing over. But Mr. Woods, that microphone is still live.

Rep. Royce: We're compounding the boom-bust cycle.

Mr. Woods: The Federal Reserve creates "moral hazard" because it can create money as much as they want. Why equity ratio is so low in the financial industry? Because they have the lender of last resort [the Federal Reserve].

Rep. Royce is citing the Richmond Fed's study that 40% of bad assets is backed by the Fed (?), and mentions "moral hazard".

Rep. Brad Sherman is asking about the loans that the Fed has extended and which the Fed hasn't disclosed the detail of the loans. Handing out risky loans on the concessionary term and tell the public "don't worry" doesn't seem like a good way.

Rep. Michele Bachmann is for tightening the scope of the Fed operation.

Someone was showing a U.S. dollar bill right behind Mr. Woods, and Rep. Watt and Chairman Frank told him to stop.

Chairman Frank is asking if the [audit] information should be made public instantaneously.

Rep. Ron Paul again.

Rep. Melvin Watt is insisting if Mr. Woods distinguish between the policy audit and the audit (opening the book), and saying the discussion is not of any substance.

Thomas Woods: we don't support any watered-down version of the bill. It would be the dignified way for the Fed if they simply accept the audit. Otherwise, people would increasingly wonder what the Fed may be hiding.

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