Could someone please explain to me

[cali]

why a full audit of the Fed by the GAO and greater transparency is a bad thing? Why do the vast majority of Senate democrats oppose it? Why do most republican senators support it? It seems counterintuitive. One of the Fed's mandates is oversight of banks. Why wouldn't I want to know more about it.

I trust dems way, way more than republicans. I'm flummoxed on this.

[jeff47]

1. IMO, there's two categories of Democratic opposition.

First, there's the "If Republicans propose it, it must be bad" camp. Negligible in elected office, but much more common on places like DU.

Second, auditing the Fed would show just how much the fed has spent in stimulus spending. And with Republicans blocking virtually all fiscal stimulus in response to 2008, the Fed was the only remaining option to "helicopter drop" money into the economy in order to stop the slide.

That must have cost a fortune, since the Fed's options are far less cost-effective than "normal" stimulus. Which means the audit will show enormous amounts of money spent/created. Which the Republicans will rail against as "debasing the dollar" and other bullshit. And since the vast majority of elected Democrats wouldn't know what to do with a spine if it was duct-taped to their backs, they will not be effective in fighting off this Republican attack.

Which means the Republicans will be successful in taking away the Fed's ability to rescue the economy. Which will leave no options to fend off a depression, since spinelessness also means Democrats won't effectively fight for future fiscal stimulus.

So they vote to keep it all under the covers, because they know they are too cowardly to do the right thing.

[cali]

2. thank you very much.

[yeoman6987]

3. Michelle Bachman always used that in 2012.

Just hearing audit the fed reminds me of her. That's enough to stay out of it. What would the results end up used for? Would we close an agency if they weren't perfect?

[cali]

4. That doesn't explain a thing. I try to understand issues.

[jonno99]

7. So, because MB was for something - at one time - we should just be content to keep our heads

stuck in the sand?!!

Because....well, we should simply trust the fed and the big banks to do the right thing?!

Because... well, the alternative is that things could go wrong if we found out that... well, things are going wrong?

This is pretzel logic at it's finest here at DU...

[sonofspy777]

5. Lotsa reasons : Secrecy!

The bill was designed to “pull back the curtain and uncover the cloak of secrecy” at the Fed, Paul said on the Senate floor. He said there had not been a full accounting for the swelling of the Fed’s balance sheet — to $4.5 trillion from roughly $800 billion before the financial crisis.


The bulk of the measure’s opposition came from Democrats.

http://www.marketwatch.com/story/audit-the-fed-bill-fails-despite-support-from-paul-sanders-2016-01-12

Sen. Sherrod Brown, an Ohio Democrat who is the ranking member on the Senate Banking Committee, said Congress should “keep its hands out of monetary policy.”

Fed Chairwoman Janet Yellen called the bill “a grave mistake” and warned the measure could lead to higher market interest rates.

Republicans said the Fed’s bond-buying policies in the wake of the financial crisis showed the need for more Congressional oversight of the central bank.

“I think that the dangerous behavior the Fed has engaged in for years now means they have squandered the right to be independent,’ said Sen. Pat Toomey, a Republican from Pennsylvania and supporter of the measure.

Toomey called the bill a “good beginning step” to reform the U.S. central bank.

The vote was not strictly along party lines.

Democratic presidential candidate Bernie Sanders, an independent senator from Vermont, voted for the measure.

Florida Republican Senator and presidential candidate Marco Rubio also voted in favor of Paul’s legislation.

[cali]

6. Thanks. Not sure why Congress should keep its hands out of monetary policy.

[jeff47]

8. Well, the politicians massively fuck-up fiscal policy

so there's little reason to think they wouldn't fuck up monetary policy.

In theory, the Fed is supposed to be looking at unemployment and inflation, and tweak their rates based on those statistics. They are supposed to not give a damn about politics because they have an enormous amount of power to affect politics.

For example, jack up rates now and you crash the economy. That would elect a Republican in November. Slash rates now and you create an unsustainable boom. That would elect a Democrat in November (who would then have to deal with the recession caused by that boom collapsing, but they'd be in office)

So in theory, the Fed is supposed to be boring and only reacting to statistics. Adding more Congressional oversight means a lot more politics.

[jonno99]

9. And I'm not sure that congress should neccessarily have control over the fed, but at the very

least it seems to make sense that the fed be responsible to - well, somebody!

[NCTraveler]

10. Politicize monetary policy even more.

Brilliant.

I hear congress is also brilliant when it comes to fiscal policy. lol

[cali]

11. How does transparency threaten the Fed mission?

Monetary policy is a broad mandate, Doesn't the Fed have oversight of banking?

[NCTraveler]

12. Transparency is a bullshit meme foisted on us by the Pauls and republicans with respect to this.

That is well known. Hence why all but one democrat in the senate voted against it.

[jonno99]

14. Why is transparency a bad thing? I'm not convinced that congress should have oversite,

but what is the argument against transparency?

IOW - how does secrecy benefit us?

[jonno99]

13. It seems to me that if the fed chairs are appointed by the president,

then the executive branch (at least) should be able to periodically review (audit) the fed's actions.

From Wiki:
As stipulated by the Banking Act of 1935, the President of the United States appoints the seven members of the Board of Governors; they must then be confirmed by the Senate and serve for 14 years only.[6] Once appointed, Governors may not be removed from office for their policy opinions.[1]

The nominees for chair and vice-chair may be chosen by the President from among the sitting Governors for four-year terms; these appointments are also subject to Senate confirmation.[7] By law, the chair reports twice a year to Congress on the Federal Reserve's monetary policy objectives. He or she also testifies before Congress on numerous other issues and meets periodically with the Treasury Secretary.

https://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve

[bigtree]

15. this effort is actually a foot in the door for political control of the Federal Reserve

Last edited Wed Jan 13, 2016, 02:44 PM - Edit history (1)

...do you believe in an independent Federal Reserve?

Do you want Congress micromanaging monetary policy?

Aren't there already an number of 'audits' of the Fed?

the Federal Reserve System as a whole are all subject to several levels of audit and review:

The Government Accountability Office (GAO) conducts numerous reviews of Federal Reserve activities.

The Board's financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the Office of Inspector General (OIG).

The Board's OIG audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. Completed and active GAO reviews and completed OIG audits, reviews, and assessments are listed in the Board's Annual Report. (Before 2002, the reviews were listed in the Board's Annual Report: Budget Review.)

The financial statements of the Reserve Banks are also audited annually by an independent outside auditor.

Each week, the Federal Reserve publishes its balance sheet and charts of recent balance sheet trends, as well as provides an interactive guide to the Fed's balance sheet. The balance sheet is included in the Federal Reserve's H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks."

In addition, the Reserve Banks are subject to annual examination by the Board. The Board's financial statements and the combined financial statements for the Reserve Banks are published in the Board's Annual Report.


here's Bernie remarking on an audit in 2011:

Thursday, July 21, 2011

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study.

more: http://www.sanders.senate.gov/newsroom/press-releases/the-fed-audit

[jonno99]

16. So if the IG already audits the fed, what was the problem with the new bill?

IOW - do you know how this new bill was different than the current practice?

[jonno99]

17. I saw your new OP - thx

edit: add the link
http://www.democraticunderground.com/12511002901