CONGRESSWOMAN ELISE STEFANIK
On Tuesday, July 24, 2012, the House is scheduled to consider H.R. 459, the Federal Reserve Transparency Act of 2012, under a suspension of the rules requiring a two-thirds majority for approval. The bill was introduced on January 26, 2011, by Rep. Ron Paul (R-TX), referred to the Committee on Oversight and Government Reform. The committee held a mark-up session on June 27, 2012 and ordered the bill to be reported by voice vote.
H.R 459 would direct the Government Accountability Office (GAO) to conduct an audit of the Board of Governors of the Federal Reserve System and the Federal Reserve banks within 12 months of the date of enactment, with a report to be delivered to Congress within 90 days of completion of the audit. The audit must include a detailed description of the findings of the audit with GAO's recommendations for legislative and administrative action.
The bill would also direct the GAO to conduct an audit of the files of certain residential mortgage loans in foreclosure in 2009 and 2010. The Federal Reserve has required regulated financial institutions which service these loans to hire independent consultants to undertake reviews of these files because they were found to have been improperly reviewed prior to putting them into foreclosure. Specifically, the bill would require the GAO to conduct an audit of the Federal Reserve's enforcement actions with regard to these loan file reviews and to make a report to Congress within six months of the date of enactment of this Act.
According to the Committee Report, H. Rept. 112-607: “The Federal Reserve System was created by Congress in 1913, and Congress has delegated to it the power, enumerated in Article I, Section 8 of the Constitution, to regulate the supply and value of money. The Federal Reserve struggled in its early years to achieve independence from the Executive Branch, in particular the Treasury Department, with respect to monetary policy. Independence from the Executive Branch is an essential safeguard against the manipulation of the money supply for short-term political gain. Congress also chose to impose certain restrictions on its own access to information about the Federal Reserve's actions with respect to monetary policy. These restrictions, however, hinder the ability of Congress--and ultimately the American people--to make informed decisions about the Federal Reserve's use of its congressionally delegated authority.
“H.R. 459 explicitly lifts these unnecessary restrictions on Congressional access to information about the Federal Reserve, thereby restoring the ability of the Legislative Branch to conduct oversight of the central bank's exercise of its constitutionally delegated authority. The intent of this legislation is to allow Congress to make informed decisions about the Federal Reserve's use of the powers delegated to it by lawmakers by increasing the transparency and accountability of the Federal Reserve to Congress.
“Increasing the transparency and accountability of the Federal Reserve to Congress has become all the more important in light of the expansion of the Federal Reserve's balance sheet since the financial crisis of 2008-2009. When Wall Street investment bank Lehman Brothers collapsed in September 2008, marking the start of the crisis, the balance sheet of the Federal Reserve stood at $900 billion, a sum accumulated over the prior 93 years of the central bank's existence. Yet, as a result of the Federal Reserve's unprecedented emergency actions in response to the crisis, within seven weeks of the collapse of Lehman Brothers, the Federal Reserve's balance sheet had doubled to $1.8 trillion, and within another six weeks it had reached $2.4 trillion. Even after the crisis abated, the Federal Reserve continued to expand its balance sheet, which stood at $3 trillion as of June 2012. This expansion occurred primarily through unconventional means of influencing the money supply, such as quantitative easing and the creation of dollar swap lines with the European Central Bank to provide assistance to failing European banks. These actions can profoundly affect the economic and fiscal health of the United States, and Congress should have greater access to information about them.”
According to the Congressional Budget Office (CBO), “The costs to conduct such audits and reports could vary depending on the level of detail included and the comprehensiveness of the audits. Based on information from GAO regarding the level of effort required for its previous audit of the Federal Reserve that was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203), CBO estimates that implementing H.R. 459 would cost $5 million over the 2013-2014 period. That cost would cover around 15 full-time and part-time GAO employees plus administrative expenses necessary to prepare the two audits required under the bill.”
Enacting H.R. 459 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.