WASHINGTON -- In a rare moment of bipartisanship, the House overwhelmingly passed a bill by Rep. Ron Paul (R-Texas) to audit the Federal Reserve.
Paul teamed up with former Rep. Alan Grayson (D-Fla.) in 2010 to pass similar legislation that became part of the final Wall Street reform bill. But Paul has said new audit legislation is needed because the 2010 bill didn't go far enough. Specifically, he states on his website that the audit called for in the 2010 bill only focused on emergency credit programs and procedural issues, rather than on the substantive details of the lending transactions. The 2012 bill doesn't limit the focus of the audit.
Fed Chairman Ben Bernanke recently told the House Financial Services Committee that he agrees with the "basic premise" that the Fed should be transparent, but raised concerns that Paul's bill doesn't exempt monetary policy and deliberations from its reach.
Not including an exemption on this point could create "a political dampening effect on the Federal Reserve's policy decisions," Bernanke warned.
But Rep. Dennis Kucinich (D-Ohio) pointed out that the House vote on the bill comes on the same day that the Washington Post reported that the New York Fed "did not communicate in key meetings with top regulators that British bank Barclays had admitted to Fed staffers that it was rigging LIBOR,” the index which sets interest rates worldwide.
"The Fed creates trillions of dollars out of nothing and gives it to banks. Congress is in the dark. The Fed sets the stage for the subprime meltdown. Congress is in the dark. The Fed takes a dive on LIBOR. Congress is in the dark. The Fed doesn’t tell regulators what is going on. Congress is in the dark," Kucinich shouted on the House floor, just before the vote.
"It is time for us to bring the Fed into the sunshine of accountability," he said.
Despite the broad support in the House, a senior Senate Democratic aide signaled the bill isn't likely to go anywhere in that chamber in the near future.
"Not this work period," the aide said about the Senate acting on the bill ahead of the month-long August recess. "Don’t know about September, but I doubt it."
Another top Senate Democratic aide concurred that the bill likely won't go anywhere, but speculated it could resurface in a different form.
"We probably won’t bring it up," said the aide, adding that Paul's son, Sen. Rand Paul (R-Ky.), "will probably start insisting on this as an amendment to everything under the sun, so it's possible it comes up for an amendment vote at some point."
"It would not be the craziest amendment we've voted on," the aide said.
This post has been updated to include the House bill number.