Sanders sells out on “Audit the Fed” amendment
Senate Democratic leaders cleared two major obstacles Thursday to winning passage of a Wall Street reform bill, beating back a Republican effort to curb the reach of a new consumer agency and striking a compromise on a watered-down bill to shine a light on Federal Reserve activities.
it took an aggressive last-minute lobbying effort by White House, Treasury and Federal Reserve officials to win a compromise on the Fed amendment. The original language called for a “comprehensive” audit of the Fed’s activities, most of which historically have been kept from public view.
Sen. Bernie Sanders (I-Vt.), the chief sponsor, struck a deal on the Senate floor to limit the scope of the one-time audit to only the Fed’s emergency lending to banks, allaying concerns that a review would have interfered with interest rate decisions.
“At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer. The American people have a right to know,” Sanders said. “This amendment is not a radical idea.”
Rep. Ron Paul (R-TX) says that Sanders sold out since the compromise, which can be read here, leaves out an audit of monetary policy. Sanders admits the version passed by the House was stronger, but still feels his compromise is meaningful.
Word broke over the weekend that Sen. David Vitter (R-LA) will step up and offer the stronger version on the floor of the Senate as the financial reform bill is taken up. Chances of passage are likely slim in light of the favored compromise.
[S]ome worry that an audit would undermine the claimed independence of the Fed. For instance, former Hartford insurance exec, now Obama Treasury official, Neal Wolin praised the compromise, claiming the original language would “threaten the central bank’s independence from Congress.” Sadly, Mr. Wolin is confused about the nature of the Fed. If there is a constitutional basis for the Fed, it is Article I, Section 8’s delegation to Congress of the ability “to coin money, regulate the value there of,” which Congress has delegated to the Fed. The supposed independence of the Fed is from the Executive branch, not Congress. And one of the very reasons for an audit is for the public to have a window into the dealings of the Fed with the Executive branch, most importantly the Treasury. What Mr. Wolin and others are trying to protect is the favored relationship between Treasury and the Fed. A GAO audit would shift the balance of power over the Fed away from the Executive and back to Congress, who despite its many problems, is directly accountable to the American public.
The gutting of the Sanders’ amendment is a huge win for both Wall Street and the Treasury (is there any longer a difference between the two?), and a massive loss and missed opportunity for the American public, and its representatives in Congress, to regain some control over an agency (the Fed) that has acted as a piggybank for both Presidents Bush and Obama.
It is true that politics is the art of compromise. It’s even more true that compromise, or bipartisanship, is just another way to stick it to taxpayers.