[Congressional Record Volume 157, Number 11 (Wednesday, January 26, 2011)]
[Extensions of Remarks]
[Page E128]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            INTRODUCING THE FEDERAL RESERVE TRANSPARENCY ACT

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                             HON. RON PAUL

                                of texas

                    in the house of representatives

                      Wednesday, January 26, 2011

  Mr. PAUL. Mr. 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 98% 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 largely 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 
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 because the Fed has operated swap lines with 
foreign central banks and provided hundreds of billions of dollars of 
bailouts to foreign commercial banks, the Fed's negotiations with the 
European Central Bank, the Bank of International Settlements, and other 
foreign institutions should face increased scrutiny, most especially 
because of their significant effect on foreign policy. Given the 
currency crisis in Europe and the prospect of the Fed propping up 
foreign governments or bailing out American banks invested in European 
debt, this issue is of especially pressing concern.
  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 that have allowed the Fed to keep financial asset prices 
artificially inflated and subsidize poorly performing financial firms 
should be scrutinized, as well as the Mortgage-Backed Securities 
Purchase Program, which has subsidized banks by transferring trillions 
of dollars of worthless debt off their books.
  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 2012, 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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