May 12, 2010 in Business

Senate OKs Federal Reserve audit

Details of who got what in bailout would be made public
David Lightman McClatchy Newspapers
 

WASHINGTON – The Senate voted 96-0 Tuesday to authorize a congressional audit of the secretive Federal Reserve Board’s emergency aid program and full disclosure of who got the money, a plan that could reveal more details about government help for embattled investment firm Goldman Sachs.

“We are on the verge of lifting the veil of secrecy on perhaps the most important government agency in the United States of America,” said independent Vermont Sen. Bernard Sanders, the proposal’s chief sponsor, “an agency which has control and spends trillions of dollars. They do it behind closed doors.”

Under his plan, Congress’ Government Accountability Office would conduct “a top-to-bottom audit of all the Federal Reserve’s emergency activities” since the economic crisis began in December 2007. The Fed also would have to post on its website all recipients of money from the more than $2 trillion in emergency aid that’s been disbursed since then.

The GAO also would look into whether the financial deals involved conflicts of interest.

The White House and Fed Chairman Ben Bernanke had pushed hard to thwart the Fed audit, saying it would compromise the agency’s independence. But it became clear that Sanders had the votes, and they relented after he agreed to two changes.

Sanders’ concessions mean the audit would only be done once and that the list of funding recipients wouldn’t appear on the Web until Dec. 1, rather than 30 days after enactment.

The auditors also wouldn’t be allowed to probe how the Fed sets interest rates or monetary policy, its central power for managing the economy.

The audit is the latest Senate change to legislation that would overhaul the nation’s financial regulatory system.

The Senate debate is in its second week, with Democratic leaders hoping for a final vote later this week. If the measure passes, it would be reconciled with a similar bill that the House of Representatives passed last year. The merged measure then would require passage from both houses of Congress before it could be enacted into law, which is unlikely before June at the earliest.


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