On Wednesday, the House of Representatives overwhelmingly passed Rep. Ron Paul’s “Audit the Fed” bill, in a capstone moment for the Congressman’s career. However, despite bi-partisan support in the House, the bill companion bill is not expected to pass the Senate, potentially halting the “Audit the Fed” movement.
In a 327 to 98 blowout, the Federal Reserve Transparency Act, H.R. 459, which came to the floor with 270 co-sponsors, passed under the suspension of normal House rules, meaning it required at least a two-thirds majority to pass and would be considered without any amendments. All but one Republican and 89 Democrats voted in favor of the bill, which grants the Government Accountability Office (GAO) broad authority to examine the operations of the Federal Reserve System—the central bank of the United States which has never received a full audit.
Congress established the Federal Reserve in 1913 in order to act as a lender of last resort to the country’s banking system, promote stable inflation rates, and promote economic growth and employment. Congress protected the board’s decision-making in order to give the agency independence; but after the recent financial collapse, lawmakers have begun to question the Federal Reserve’s activity and motivations.
Federal Reserve Chairman Ben Bernanke and top Democrats criticized the bill, claiming that a full audit by the Congress will politicize the central bank.
Still, the ultimate fate of the bill is uncertain. Senator Rand Paul introduced a companion bill to the Senate with 22 Republican co-sponsors and no Democrat sponsors, but Senate Majority Leader Harry Reid, despite having supported measures to audit the Federal Reserve in the past, says he does not have any intentions of bringing the companion bill to a vote.
So while the vote in the House was a triumph for Paul, who first introduced an audit the Federal Reserve bill in 1983, the vote appears to be largely symbolic.
Here is Senator Harry Reid in 1995, supporting an audit of the Federal Reserve:
“I have sponsored legislation every year that would call for an audit of the Federal Reserve system. I offer that amendment every year, every year it gets nowhere,” Reid says. “I think it would be interesting to know about the Federal Reserve. I think we should audit the Federal Reserve — it’s taxpayer’s money that’s being used there. But we don’t do that.”