No politician has been more closely associated with the populist assault on the Fed over the last few decades than Dr. Ron Paul, the libertarian-leaning Republican congressman from Texas. So when Paul came out hard on Thursday night against a compromise amendment negotiated by Sen. Sen. Bernie Sanders (I-Vt.), proponents of Fed transparency had good reason to worry that the Fed had gutted the effort. It didn't look any better when the compromise was backed by Banking Committee Chairman Chris Dodd (D-Conn.) and the Treasury Department -- both well known to be active opponents of Paul's audit amendment.
"Any time you find out Senator Chris Dodd is in support of something -- watch out," read a hastily prepared action alert blasted out by Paul's organization, Campaign for Liberty, as word of the compromise got out. "According to our sources on the Hill, Senator Bernie Sanders caved to pressure from the White House and Chris Dodd and stripped out the Paul-Grayson language from his Fed transparency amendment."
Paul himself piled on. "I'm not a bit surprised that the Federal Reserve got to the Senate. I had expected Bernie Sanders to offer S 604, which was the same as HR 1207, which is the Audit the Fed Bill, and at the last minute he switched it and watered it down, and really, it adds nothing. There's a possibility that it even makes the current conditions worse," he said. "This is essentially the bill plus more of the bill we beat in the House Financial Services Committee; the Mel Watt bill. But this is so disappointing to me that this happened, especially since for months now I've worked with Bernie on this and he introduced the bill in our language, which was HR 1207."
Now that Paul has had time to digest the compromise, it's sitting a little bit better. "The new language of the Sanders amendment requires a one-time disclosure from the Fed of 13(3) facilities, foreign currency swaps and mortgage-backed securities. Basically, their sins of the past would be revealed and Americans would know more about who got bailed out by the Fed and under what terms," he said in a video message to supporters. "This would be good, but it's not nearly enough."
What the compromise offers, however, is not really an audit, Paul concluded. "In fact, rather than still calling the Sanders amendment an audit, maybe it should instead be called more of a disclosure at this point," he said. "If we cannot take away the Fed's ability to waste trillions of taxpayer dollars on failing companies and failing countries, at the very least, we can take away their ability to do this with no transparency or accountability to the American people. While the Sanders Amendment no longer contains a full audit, Senator David Vitter has introduced an amendment which contains the Audit the Fed language that passed the House last fall. The Senate must pass both of these amendments in order to achieve full disclosure of the past and full accountability in the future."
Indeed, the amendment would require the one-time disclosure of who received trillions of dollars in Fed money doled out since December 1, 2007. The hope among backers of a broader audit is that the exposure of that information would create the political conditions that could allow for a deeper look, which would be followed by reform of the way the Fed does business.
Meanwhile, an ally of Sanders' original amendment is fighting on: Sen. David Vitter (R-La.) will introduce the original Paul amendment, cosponsored by Rep. Alan Grayson (D-Fla.), as an amendment to Wall Street reform. Vitter, however, is perhaps the last champion that any amendment would want. Unpopular within his own party for both personal and political reasons, he also has little pull with Democrats, since it's doubtful at best that he'll vote for the final Wall Street reform package regardless of whether it includes his amendment. A spokeswoman for Dodd didn't immediately respond to a request for comment, though it's a long shot that he'll get a vote.
There's also no certainty yet that Sanders' amendment will garner the votes needed to pass. Picking up the backing of Obama cuts both ways: Republicans looking to score political points by supporting an initiative the White House opposed now have less incentive to vote for it.
On Friday, Sanders said he was pleased with the compromise, rejecting the notion that he had "sold out."
Ron Paul backers "will find out quite the contrary that we did not sell out. It's a very, very strong amendment that I hope can garner 60 votes," he said.
UPDATE: Sanders will get a vote on his amendment Tuesday at 11:30 a.m., followed by a vote on Vitter's more comprehensive amendment. Paul is urging a yes vote on both. Splitting the action into two votes could give Fed defenders an opportunity to split the bipartisan coalition, with Republicans generally voting for the Vitter amendment and Democrats generally voting for Sanders -- leaving neither with enough to get over the top.