Congressman Tom Cole - For Immediate ReleaseOur nation's troubled financial industry has spurred calls for greater transparency, tougher accounting rules and greater oversight by federal regulatory agencies. Given what we now know about the irresponsible - and sometimes criminal - behavior of the executives of many of these institutions, such calls are justified. But there is another, larger, more powerful and less transparent institution that continues to operate in relative secrecy, and that is the Federal Reserve. I believe it is time to apply the same standards of transparency and oversight to the Federal Reserve as we are beginning to apply to other financial institutions.
For nearly 100 years the Federal Reserve has manipulated our nation's monetary policy through its ability to establish the "value" of our money. While the Constitution very clearly gives this power to Congress, the Congress surrendered that authority to the Federal Reserve in 1913. It is interesting to note that the purchasing power of the dollar has decreased by ninety-five percent during that period of time. At the very least, Congress ought to exercise its Constitutional responsibilities with respect to our monetary policy by authorizing a thorough audit of the Federal Reserve.
Since its inception, the Federal Reserve has grown massively beyond its original size, scope and purpose. It wields significant power and authority and yet it is allowed to operate in secrecy. The institution has the power to sign agreements with foreign banks and negotiate fiscal policy with foreign governments. The Government Accounting Office (GAO) has neither the right to audit, or even see, these agreements.
In addition to manipulating America's monetary policy, the Federal Reserve also has significant authority to allow the Treasury to provide funds to major U.S. banks with no Congressional or GAO oversight. Many of these banks are the same ones seeking federal assistance and being called upon to provide greater transparency themselves.
With a struggling economy and confidence in our financial industries at an all time low, Americans are rightfully demanding that the largest financial regulatory institution be subject to stricter and more transparent scrutiny. This is why I recently became a co-sponsor of H.R. 1207, the Federal Reserve Transparency Act. This is a bill that would eliminate restrictions on the GAO and allow its' Comptroller General to audit the Federal Reserve's operations. The bill also mandates that the audit be completed by the end of 2010 and that the findings be made available to the public.
Reining in the Federal Reserve is no small task. But with our nation facing inflation, reduced purchasing power and a devalued dollar, the list of financial woes has grown far too long. American taxpayers have been excluded from the conversation about where their money is going and how it is being spent by the Fed for far too long. It's clear the Federal Reserve has grown too powerful, too expansive, and completely unaccountable. It's time to pull back the curtain and for Congress to reclaim its Constitutional responsibility for our nation's monetary policy. Auditing the Federal Reserve is a good place to start.