[Congressional Record Volume 155, Number 34 (Thursday, February 26, 2009)]
[Extensions of Remarks]
[Page E502]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  THE FEDERAL RESERVE TRANSPARENCY ACT

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                             HON. RON PAUL

                                of texas

                    in the house of representatives

                      Thursday, February 26, 2009

  Mr. PAUL. Madam Speaker, I rise to introduce the Federal Reserve 
Transparency Act. 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 95% 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 
hard-working Americans see their savings eaten away by inflation? Only 
big-spending politicians and politically favored bankers benefit from 
inflation.
  Serious discussion of proposals to oversee the Federal Reserve is 
long overdue. I have been a longtime proponent of more effective 
oversight and auditing of the Fed, but I was far from the first 
Congressman to advocate these types of proposals. Esteemed former 
members of the Banking Committee such as Chairmen Wright Patman and 
Henry B. Gonzales were outspoken critics of the Fed and its lack of 
transparency.
  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 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 
or even seeing 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 when hundreds of billions 
of dollars of currency swaps have been announced and implemented, the 
Fed's negotiations with the European Central Bank, the Bank of 
International Settlements, and other institutions should face increased 
scrutiny, most especially because of their significant effect on 
foreign policy. If the State Department were able to do this, it would 
be characterized as a rogue agency and brought to heel, and if a 
private individual did this he might face prosecution under the Logan 
Act, yet the Fed avoids both fates.
  More importantly, the Fed's funding facilities and its agreements 
with the Treasury should be reviewed. The Treasury's supplementary 
financing accounts that fund Fed facilities allow the Treasury to 
funnel money to Wall Street without GAO or Congressional oversight. 
Additional funding facilities, such as the Primary Dealer Credit 
Facility and the Term Securities Lending Facility, allow the Fed to 
keep financial asset prices artificially inflated and subsidize poorly 
performing financial firms.
  The Federal Reserve Transparency Act would eliminate restrictions on 
GAO audits of the Federal Reserve and open Fed operations to enhanced 
scrutiny. We hear officials constantly lauding the benefits of 
transparency and especially bemoaning the opacity of the Fed, its 
monetary policy, and its funding facilities. By opening all Fed 
operations to a GAO audit and calling for such an audit to be completed 
by the end of 2010, the Federal Reserve Transparency Act would achieve 
much-needed transparency of the Federal Reserve. I urge my colleagues 
to support this bill.

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