Tuesday, May 11, 2010

Watered-Down Version of "Audit the Fed" Bill Passes Senate

Better than nothing, I suppose.

With the Vitter amendment which called for wider, continuous audit defeated earlier, the Senate unanimously voted for the Sanders amendment which had been watered down to only a one-time audit of the Fed's emergency lending programs between December 2007 and the date of the bill's enactment. Senator Sanders apparently buckled under pressure.

The audit wouldn't be for anything else, and one time only. And this is exactly what Ben Bernanke, the Fed chairman, has said he would support. I guess the ex-Enron lobbyist that the Fed hired has been successful.

Senate Votes to Audit Fed Emergency Steps, Rejects Wider Probe
(5/11/2010 Bloomberg)

"May 11 (Bloomberg) -- The Senate approved an amendment to the regulatory-overhaul bill authorizing a one-time audit of the Federal Reserve’s emergency-lending programs, and defeated a second proposal that would have allowed continuous inquiries.

"Lawmakers voted 96-0 today for Senator Bernard Sanders’s proposal to let a congressional watchdog conduct an audit of every Fed emergency action since December 2007. The Senate rejected a measure from Louisiana Republican David Vitter that would have permitted unlimited reviews.

"The Sanders amendment is closer to what Federal Reserve Chairman Ben S. Bernanke told legislators he would support. The Fed chief, during a February hearing, invited an audit of emergency loan programs, while raising concerns that broader audit authority could result in reviews of monetary policy.

"“The Sanders amendment gives perfect political cover to senators who are eager to punish the Fed for its secrecy and forays into fiscal policy, but are not eager to take any blame for intervening in the Fed’s setting of interest rates,” said Sarah Binder, a senior fellow at the Brookings Institution.

"Sanders last week narrowed his amendment in response to concerns raised by Bernanke, the Treasury Department and senators that his call for broader audit could threaten the central bank’s independence. The change drew support from Senate Banking Committee Chairman Christopher Dodd, the Connecticut Democrat who wrote the main financial-regulation bill.

"‘Lobbying Power’

"“There was a tremendous amount of lobbying power placed on senators” to avoid audits of monetary policy, said Mark Calabria, director of financial regulation studies at the Cato Institute and a former Senate Banking Committee staff member. “Dodd wasn’t in favor of it, the White House wasn’t in favor of it, and Treasury was absolutely opposed to it.”" [Emphasis is mine. The article continues.]


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