[Congressional Record Volume 160, Number 132 (Tuesday, September 16, 2014)]
[House]
[Pages H7588-H7591]
FEDERAL RESERVE TRANSPARENCY ACT OF 2014
Mr. MEADOWS. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 24) to require a full audit of the Board of Governors of the
Federal Reserve System and the Federal reserve banks by the Comptroller
General of the United States, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 24
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Federal Reserve Transparency
Act of 2014''.
SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
(a) In General.--Notwithstanding section 714 of title 31,
United States Code, or any other provision of law, the
Comptroller General shall complete an audit of the Board of
Governors of the Federal Reserve System and the Federal
reserve banks under subsection (b) of such section 714 within
12 months after the date of the enactment of this Act.
(b) Report.--
(1) In general.--Not later than 90 days after the audit
required pursuant to subsection (a) is completed, the
Comptroller General--
(A) shall submit to Congress a report on such audit; and
(B) shall make such report available to the Speaker of the
House, the majority and minority leaders of the House of
Representatives, the majority and minority leaders of the
Senate, the Chairman and Ranking Member of the committee and
each subcommittee of jurisdiction in the House of
Representatives and the Senate, and any other Member of
Congress who requests the report.
(2) Contents.--The report under paragraph (1) shall include
a detailed description of the findings and conclusion of the
Comptroller General with respect to the audit that is the
subject of the report, together with such recommendations for
legislative or administrative action as the Comptroller
General may determine to be appropriate.
(c) Repeal of Certain Limitations.--Subsection (b) of
section 714 of title 31, United States Code, is amended by
striking the second sentence.
(d) Technical and Conforming Amendments.--Section 714 of
title 31, United States Code, is amended--
(1) in subsection (d)(3)--
(A) in subparagraph (A)--
(i) by striking ``or (f)'';
(ii) in clause (i), by striking ``or (f)''; and
(iii) in clause (ii), by striking ``or (f)''; and
(B) in subparagraph (C), by striking ``or (f)''; and
(2) by striking subsection (f).
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
North Carolina (Mr. Meadows) and the gentleman from Maryland (Mr.
Cummings) each will control 20 minutes.
The Chair recognizes the gentleman from North Carolina.
[[Page H7589]]
General Leave
Mr. MEADOWS. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and include extraneous materials on the bill under
consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from North Carolina?
There was no objection.
Mr. MEADOWS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, H.R. 24, the Federal Reserve Transparency Act, directs
the GAO to conduct a full audit of the Federal Reserve.
The Dodd-Frank legislation mandated a GAO audit of the Fed, but that
audit issued by the GAO in July of 2011 focused solely on certain
issues concerning emergency credit facilities. GAO remains restricted
under the current law from conducting a broader audit of the Fed that
includes, for instance, a review of the Fed's monetary policy
operations and its agreements with foreign governments and central
banks.
Under this bill, the GAO, as the investigative arm of Congress, is
allowed to conduct the audit that reviews all these transactions and is
required to report such findings of the audit to Congress.
Now, while Congress should not manage the details of monetary policy,
it needs to be able to conduct oversight of the Fed. The Fed was
created by Congress to be a central bank independent of influence of
the U.S. Treasury. It was never intended to be a second Treasury
Department.
In recent years, the Fed's extraordinary interventions into the
economy and financial markets have led some to call into question its
independence. The Fed remains ultimately responsible to the American
people and their elected representatives. This is why H.R. 24 has
strong bipartisan support, with 228 cosponsors on both sides of the
aisle. A version of this bill passed the House of Representatives last
Congress by a vote of 327-98.
I want to thank Chairman Hensarling for working with me to bring this
legislation to the floor. I will insert our letters of exchange in the
Congressional Record.
I encourage and urge my colleagues to support this legislation.
Mr. Speaker, I reserve the balance of my time.
House of Representatives,
Committee on Financial Services,
Washington, DC, September 12, 2014.
Hon. Darrell Issa,
Chairman, House Committee on Oversight and Government Reform,
Washington, DC.
Dear Chairman Issa: On July 24, 2014, the Committee on
Oversight and Government Reform ordered H.R. 24, the Federal
Reserve Transparency Act of 2013, as amended, to be reported
favorably to the House. As a result of your having consulted
with the Committee on Financial Services concerning
provisions of the bill that fall within our Rule X
jurisdiction, I agree to discharge our committee from further
consideration of the bill so that it may proceed
expeditiously to the House Floor.
The Committee on Financial Services takes this action with
our mutual understanding that, by foregoing consideration of
H.R. 24, as amended, at this time, we do not waive any
jurisdiction over the subject matter contained in this or
similar legislation, and that our committee will be
appropriately consulted and involved as the bill or similar
legislation moves forward so that we may address any
remaining issues that fall within our Rule X jurisdiction.
Our committee also reserves the right to seek appointment of
an appropriate number of conferees to any House-Senate
conference involving this or similar legislation, and
requests your support for any such request.
Finally, I would appreciate your response to this letter
confirming this understanding with respect to H.R. 24, as
amended, and would ask that a copy of our exchange of letters
on this matter be included in your committee's report to
accompany the legislation and/or in the Congressional Record
during floor consideration thereof.
Sincerely,
Jeb Hensarling,
Chairman.
____
House of Representatives, Committee on Oversight and
Government Reform,
Washington, DC, September 12, 2014.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
Washington, DC.
Dear Chairman: Thank you for your letter regarding the
Committee on the Financial Services' jurisdictional interest
in H.R. 24, the ``Federal Reserve Transparency Act of 2013,''
and your willingness to forego consideration of HR. 24 by
your committee.
I agree that the Committee on Financial Services has a
valid jurisdictional interest in certain provisions of H.R.
24 and that the Committee's jurisdiction will not be
adversely affected by your decision to forego consideration
of H.R. 24. As you have requested, Twill support your request
for an appropriate appointment of outside conferees from your
Committee in the event of a House-Senate conference on this
or similar legislation should such a conference be convened.
Finally, 1 will include a copy of your letter and this
response in the Committee Report and in the Congressional
Record during the floor consideration of this bill. Thank you
again for your cooperation.
Sincerely,
Darrell Issa,
Chairman.
Mr. CUMMINGS. Mr. Speaker, I yield myself such time as I may consume.
I rise, Mr. Speaker, in opposition to H.R. 24.
Let me be clear. I support transparency surrounding the operations of
the Federal Reserve. Transparency helps ensure that the Federal Reserve
is implementing policies that will achieve the objectives given to it
by Congress: supporting maximum employment, price stability, and
moderate, long-term interest rates.
I emphasize, however, that the Federal Reserve has been subject to
audit since 1978. Further, the Dodd-Frank Wall Street Reform and
Consumer Protection Act, which I supported, significantly expanded the
authority of the Government Accountability Office to examine the
Federal Reserve's operations.
It also required the Federal Reserve to make public a wider range of
data than it had previously disclosed. For example, Dodd-Frank
authorized GAO to begin auditing discount window operations and
required the Federal Reserve to begin releasing information about
emergency credit transactions and discount lending programs.
Critically, however, Dodd-Frank ensured that transparency surrounding
the Fed's operations was expanded in a way that would not compromise
the Fed's ability to review and alter monetary policy without fear that
its internal deliberations would be made public.
Mr. Speaker, if enacted, this bill would severely curtail the
independence that has been a hallmark for the Federal Reserve and has
been essential to its ability to strengthen our country. Specifically,
H.R. 24 would permit GAO to audit the communications that members of
the Federal Reserve's Board of Governors have with each other and with
staff regarding monetary policy.
The act would also permit GAO to audit transactions conducted under
the direction of the Federal Open Market Committee. Such audits, which
could be conducted on an almost real-time basis under this bill, could
have a chilling effect on the Fed. If board members know that their
statements may become public, they may be inhibited from speaking
candidly about the economic trends they are observing or the monetary
policies they believe would best respond to current conditions.
Further, simply by requesting that the GAO conduct certain audits,
Members of Congress could seek to influence the Fed's deliberations and
policy decisions.
The Federal Reserve is responsible for stewarding monetary policies
that will support our Nation's long-term growth. We should expand
transparency surrounding the Federal Reserve in a way that will ensure
short-term political considerations do not unduly influence the Federal
Reserve's monetary policymaking responsibilities.
The Oversight Committee has not held a single hearing or heard a
single witness regarding the far-reaching consequences that passage of
this legislation could have. I oppose this legislation, and I urge
Members to vote against it.
Mr. Speaker, I reserve the balance of my time.
{time} 2000
Mr. MEADOWS. Mr. Speaker, I yield such time as he may consume to my
distinguished colleague from the State of Georgia (Mr. Broun), a man
who has worked very hard on this particular issue.
Mr. BROUN of Georgia. Mr. Speaker, in the United States Constitution,
article I, section 8, where it enumerates the powers of Congress, one
of those powers is, as I am reading, ``to coin money, regulate the
value thereof, and of foreign coin.''
[[Page H7590]]
In 1913, Congress abdicated its responsibility and its duty over to
the Federal Reserve. It is unconstitutional that we have done so, and
it has caused some disastrous effects.
I thank my friend Mr. Meadows for yielding me time to speak on behalf
of H.R. 24, the Federal Reserve Transparency Act, better known as
``Audit the Fed.''
This is the same bill that passed the U.S. House in the 112th
Congress by an overwhelming bipartisan majority. This is a vital piece
of legislation that will help to usher in a new era of transparency in
this Nation's monetary policy, and I am pleased to speak on its behalf
with my colleagues.
Over the century, since its inception in 1913, the Federal Reserve
has controlled our Nation's monetary policy--and therefore our
economy--under a veil of secrecy. Throughout these last 100 years,
Congress has only exercised a relatively small degree of oversight over
the Federal Reserve. This lack of accountability has led to grievous
consequences, and this must end.
For instance, since the Federal Reserve establishment in 1913, the
value of the U.S. dollar has fallen 95 percent. In other words, the
value of today's dollar is approximately worth one nickel of what a
dollar was worth in 1913. What this does is cause a dramatic decline in
the value of the U.S. dollar, and it is driven by the easy money
policies of the Federal Reserve.
What does this mean in practical terms for the American people?
The steady decline of the U.S. dollar punishes thrift and savings,
erodes the value of those savings, and harms older Americans living on
fixed incomes. Just as bad, the expansion in money supply under the
Federal Reserve has led to an unstable environment of booms and busts
that have wrecked the financial security and stability of average
Americans. This hurts poor people and senior citizens and the middle
class the absolute most. Rich people will do fine with the policies of
the Federal Reserve's. Wall Street bankers and the big money folks are
fine, but the policies of the Federal Reserve hurt poor folks, they
hurt senior citizens, and they hurt the middle class. It is not fair.
Since the 2008 financial crisis, the Federal Reserve's balance sheet
has grown at an unprecedented rate, and it now contains $4 trillion
worth of assets. At the same time, the enactment of the Dodd-Frank
financial reform law has granted the Federal Reserve a greater role
than ever in managing our economy and in overseeing the regulation of
our financial system. Yet, in spite of the undeniable importance of the
Federal Reserve, current law specifically prohibits audits of the
Federal Reserve's deliberations, discussions, or actions on monetary
policy.
In 2011, a partial audit of the Federal Reserve, required by the
Dodd-Frank law, found that the Fed had loaned $16 trillion to financial
institutions, some of which were not even American, between 2007 and
2010. This incredible sum was quietly loaned out with no public notice
and no congressional oversight. If this is the sort of activity brought
to light by just a partial audit, then I believe this further
highlights the absolute necessity of a full audit. This bill will
require a full audit of the Board of Governors of the Federal Reserve
and of the Federal Reserve banks within 12 months of enactment.
The Federal Reserve is a creation of Congress, and it must therefore
be subject to the oversight and regulation of Congress.
I must recognize and commend the leadership and years of work by my
friend and colleague, Dr. Ron Paul, on this important issue. In the
last Congress, Dr. Paul's bill amassed a bipartisan coalition that saw
this legislation pass in a 327-98 vote. I am deeply honored to carry on
this legacy of Dr. Paul's.
I urge my colleagues here in the House to support this important
piece of legislation, and I urge our friends in the Senate to take up
this bill's counterpart by my medical colleague, Senator Rand Paul's S.
209.
Mr. CUMMINGS. Mr. Speaker, I continue to reserve the balance of my
time.
Mr. MEADOWS. Mr. Speaker, I yield 3 minutes to the gentleman from
Kentucky (Mr. Massie).
Mr. MASSIE. I thank the gentleman from North Carolina.
Mr. Speaker, I rise today in support of my friend and colleague
Congressman Paul Broun's Federal Reserve Transparency Act, otherwise
known as ``Audit the Fed.''
Our mutual friend and predecessor, Congressman Ron Paul, first
introduced this bill back in 1983. His often lonely voice and
courageous efforts to shed light on the secretive and harmful actions
of the Federal Reserve have finally paid off over 30 years later. In
July of 2012, Congressman Paul's ``Audit the Fed'' bill passed the
House of Representatives by an overwhelming vote of 327-98. Sadly, it
has yet to receive a vote in the Senate.
As Congressman Ron Paul stated here on the House floor in 2011, in
words that remain current and relevant today in 2014:
Throughout its nearly 100-year history, the Federal Reserve
has presided over the near-complete destruction of the United
States dollar. Since 1913, the dollar has lost over 98
percent of its purchasing power, aided and abetted by the
Federal Reserve's loose monetary policy. How long will we as
a Congress stand idly by while hardworking Americans see
their savings eaten away by inflation? Only big spending
politicians and politically favored bankers benefit from
inflation.
Since its inception, the Federal Reserve has always
operated in the shadows, without sufficient scrutiny or
oversight of its operations. While the conventional excuse is
that this is intended to reduce the Fed's susceptibility to
political pressures, the reality is that the Fed acts as a
foil for the government. Whenever you question the Fed about
the strength of the dollar, they will refer you to the
Treasury and vice versa. The Federal Reserve has, on the one
hand, many of the privileges of government agencies while
retaining benefits of private organizations, such as being
largely insulated from Freedom of Information Act requests.
The Federal Reserve can enter into agreements with foreign
central banks and foreign governments, and the GAO is
prohibited from auditing these agreements. Why should a
government-established agency, whose police force has Federal
law enforcement powers and whose notes have legal tender
status in this country, be allowed to enter into agreements
with foreign powers and foreign banking institutions with no
oversight?
Particularly because the Fed has operated swap lines with
foreign central banks and provided hundreds of billions of
dollars of bailouts to foreign commercial banks, the Fed's
negotiations with the European Central Bank, the Bank for
International Settlements, and other foreign institutions
should face increased scrutiny, most especially because of
their significant effect on foreign policy. Given the
currency crisis in Europe and the prospect of the Fed
propping up foreign governments or bailing out American
banks invested in European debt, this issue is of
especially pressing concern.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. MEADOWS. I yield the gentleman an additional 1 minute.
Mr. MASSIE. Thank you.
Congressman Ron Paul's words are even more true today than they were
then, and that is why I urge my colleagues to vote in favor of this
bill. It is time to force the Federal Reserve to operate by the same
standards of transparency and accountability to the taxpayers that we
should demand of all government agencies.
Mr. CUMMINGS. Mr. Speaker, I continue to reserve the balance of my
time.
Mr. MEADOWS. Mr. Speaker, at this point, I have no additional people
wishing to speak on this particular bill, but I would like to read one
statement from Senator Rand Paul. He said: ``It is time for more
transparency in virtually every part of our government.''
I think most Americans can agree on that, and the Fed is the most
logical place to start. I hope the House passes the ``Audit the Fed''
bill, and I look forward to pushing this bill in the Senate.
I reserve the balance of my time.
Mr. CUMMINGS. Mr. Speaker, I yield myself such time as I may consume.
Again, I will be brief, but I urge Members to vote against the
legislation. I think it is a giant step in the wrong direction.
I yield back the balance of my time.
Mr. MEADOWS. Mr. Speaker, I yield myself the balance of my time.
Tonight, we have heard from the distinguished gentleman from Georgia,
who not only has authored this legislation but has pushed at every
attempt to make sure that we have accountability and transparency. The
American people deserve that.
When much of the financial crisis was happening in 2008, this very
body debated over and over again on whether a stimulus should be put
forth to
[[Page H7591]]
stimulate the economy. At the same time, the Federal Reserve was making
investment dollars that made that stimulus package look very small in
comparison. Yet we are to assume that, like other government agencies,
they are doing everything correctly. We know, as history has shown us,
that that is not always the case.
I urge all of my colleagues to join me in supporting this particular
bill--to support transparency, to let the accountability be with the
American people.
I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from North Carolina (Mr. Meadows) that the House suspend the
rules and pass the bill, H.R. 24, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. MEADOWS. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________
