Federal Reserve Transparency Act of 2012
Floor Speech
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Mr. ISSA. I yield myself such time as I may consume.
H.R. 459, 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 Government Accountability Office in July of 2011, focused solely on the 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. The bill remedies this situation by permitting GAO, the investigative arm of Congress, to conduct a nonpartisan audit that will review all of these transactions. The findings of the audit are to be reported to Congress.
It is particularly appropriate that we consider this legislation at this time. While Congress should not manage or micromanage 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 the influence of the U.S. Treasury. It was never intended to, in fact, be independent of Congress or independent of the American people.
In recent years, the Fed's extraordinary interventions into the economy and financial markets have led some to call into question its independence. We do not ask for an audit for that reason. We ask for an audit because the American people ultimately must be able to hold the Fed accountable; and to do so, they must know, at least in retrospect, what the Fed has done over these many years that it has been without an audit. That is why I support H.R. 459, a bipartisan bill with 273 other cosponsors.
I urge my colleagues' support, and I reserve the balance of my time.
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Mr. ISSA. As I introduced my good friend and leader on this issue, Mr. Chaffetz, I might note that when the word ``Democrat'' and ``Republican'' are used in this Hall, hopefully when there are 45 Democratic Members on this bill as cosponsors, we would recognize this is a bipartisan bill.
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Mr. ISSA. Mr. Speaker, the rules of the House prohibit going after someone's motivation. I'm very concerned that a bill that, in a substantially similar form, was placed into Dodd-Frank by then-Chairman Barney Frank is now being characterized as somehow ill-intended and mischievous activity by the proponent. I would trust that that is not the intent of the speakers on behalf of that side of the aisle about this bipartisan bill. It is virtually identical to the language that Barney Frank put into Dodd-Frank.
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Mr. ISSA. I yield myself 2 minutes.
Mr. Speaker, it appears as though we agree on certain things. We agree that some transparency is required. We certainly agree, on a bipartisan basis, that what the GAO did, under Dodd-Frank, at a minimum, was a good thing. I think there's no question my colleague who was here earlier, Mr. Frank, certainly would agree to the numbers, the expansion of the Fed in that period that Mrs. Lummis talked about between 2008 and now.
I think we would all agree the Federal Reserve is the people's bank. It is broadly owned by 316 or 320 million Americans.
I served on the board of a public company, one that I founded. I understand that if you have more than 500 stockholders, you have an obligation to considerable disclosure.
Although the Fed is audited to see whether, basically, some numbers are correct or not on a limited basis, the truth is the Federal Reserve is not open and transparent, not even years after they make decisions.
I think the American people have a piercing question right now, one that is not the question that Dr. Paul was asking when he first wanted to audit the Fed. The question is, Will we be like Greece? Will we be like Germany? Will we be like the trauma that's sweeping over the European Union?
Do we, in fact, know the true numbers? Do we know the extent of the leverage and the policies and the accuracy and the knowledge of the Federal Reserve?
I think calmly we have to ask that question. Do we know what we need to know, or are we willing to not know, in hopes that we won't be political because we don't know?
I've been in Congress for 12 full years at the end of this term, and I've learned one thing: Congress has a tendency to do two things well: nothing at all, and overreact. I trust today will be a day in which we're in between.
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Mr. ISSA. I yield myself an additional minute.
We would do something so that we would know more a year from now than we know today. We would not overreact. We would not want to stifle what the Fed has done historically, without an awful lot more study. Changes to an entity like the Central Bank should be done thoughtfully and over time.
My friend, Dr. Paul, would like to do more than this bill does; but this minimal effort, offered on a bipartisan basis, is offered today because we believe the American people have a right to know, an interest to know, and a need to know.
With that, I reserve the balance of my time.
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Mr. ISSA. Mr. Speaker, I won't use all of our time.
I have a slightly different opinion than the ranking member's. I believe regular order has been followed on this bill, followed and then some.
This is something that Dr. Paul has worked on, on a bipartisan basis, with Republican Presidents and Democratic Presidents, with Republican Congresses and Democratic Congresses. The support for this, as you saw here today, goes to Republicans and Democrats, Progressives, Conservatives, Blue Dogs.
The American people want to know. I don't believe the American people are afraid to know. Of course, the American people would not be comfortable with interference with the Fed, with micromanaging policy decisions, with tearing down the institution.
But, in fact, I think that the 9/11 of the financial market, if you will, the meltdown in 2008 and 2009, $1 trillion nearly in TARP money, and countless trillions in expansion of the balance sheet, have taught us one thing: what we don't know can hurt us.
Now, before 9/11 of the financial market, before the meltdown, before Lehman Brothers and Bear, Stearns evaporated, we would have thought, well, there are some very smart people on Wall Street, and we'd have been right. But smart people can be wrong.
We put very good people on the Federal Reserve Board. We choose very good chairmen. Chairman Bernanke was a choice of Republicans and Democrats alike.
But, ultimately, looking over the shoulder by Congress, by my committee, by the Financial Services Committee, just to ask the question, are those numbers undeniable truths brought down on tablets; or are they, in fact, open to second guessing after the fact, questioning of whether or not a model works or whether there is just a small, but meaningful, opportunity for tens of trillions of dollars to fall on the backs of the American people if they got it wrong?
That's the question the American people asked, and after 2008, it's a question Congress must ask.
When Chairman Frank voted for Ron Paul's bill, perhaps he didn't want it, but he voted for it as did countless Democrats. Ultimately, it was reduced--but not eliminated--in conference. There was some recognition that it needed to be audited.
Today, what we are doing is asking to send to the Senate a piece of legislation that more purely and clearly says: I believe the American people have a right to know. Perhaps the Senate will take up a slightly different version. Perhaps it will be truly a one-time audit. Perhaps it will be limited.
The American people need to hold us in the House and our counterparts in the Senate responsible, that we do know what we need to know and that we will never again say we rely on other people to be so smart that we shouldn't look over their shoulders. That's not the America that I grew up in. It's not the clear and transparent America the American people are asking for.
With that, I urge the passage of this bipartisan bill, and I yield back the balance of my time.
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