Fed Audit Amendment Clears House Panel; Frank Delays Committee Vote

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, Nov. 20, 2009.

The House Financial Services Committee approved by 43 to 26 an amendment to broad financial reform legislation that would remove the current blanket restrictions on Government Accountability Office (GAO) audits of the Federal Reserve Board.

“This is a major victory for Federal Reserve transparency and government accountability,” said Rep. Ron Paul, R-Texas, a sponsor of the amendment. Rep. Alan Grayson, D-Fla., who co-sponsored the amendment, added, “the Federal Reserve has conducted secret bailouts that range in the hundreds of billions of dollars. Congress never voted on them, and the president never approved them. This cannot go on any longer.”

The amendment would allow for audits of every item on the Fed’s balance sheet, and sets a 180-day time lag before details of Fed market action can be released. The amendment also states that it should not be construed as interference in, or dictation of, monetary policy by Congress or the GAO.

Meanwhile, committee chairman Barney Frank, D-Mass., stated that a final committee vote on the underlying reform legislation will not occur until after the Thanksgiving recess, in order to address concerns from the Congressional Black Caucus regarding the economy.

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