Senate demands one-time audit of the Fed

Senators demanded on Tuesday to be let in on what they called the most secretive, powerful federal agency in existence, voting overwhelmingly to force the Federal Reserve to undergo an audit of the loans and deals it made during the financial turmoil of the past several years.

The 96-0 vote reflects the growing distrust of government — fueled by both right-wing and left-wing activists who say they are challenging the Washington balance of power.

It also showed the overwhelming frustration senators feel at having been stonewalled by Fed Chairman Ben S. Bernanke on key questions about the secretive activities.

“The average American is beginning to wonder what goes on behind closed doors with the Fed,” said Sen. Bernard Sanders, the Vermont independent who sponsored the so-called “audit the Fed” amendment, which passed as part of the ongoing debate on the Senate’s financial regulation bill.

Mr. Sanders said he first introduced a proposal forcing the Fed to disclose its activities after Mr. Bernanke last year refused at a Senate Budget Committee hearing to answer questions.

The issue also has been championed for years by Rep. Ron Paul, Texas Republican, who ran a losing battle for the GOP presidential nomination in 2008 but who mined deep discontent with the secretive nature of the Federal Reserve.

Mr. Sanders’ proposal orders the country’s comptroller general to conduct a one-time examination of the Fed’s lending activities from Dec. 1, 2007, through to the present, and to report back this year. The amendment also requires auditors to see whether members of the Federal Reserve Board of Governors have a conflict of interest in how they do their jobs.

The House already has passed a broader proposal granting the comptroller general power to audit the Federal Reserve, which would mean more continuous scrutiny. Senators rejected going that far, voting 62-37 against that proposal on Tuesday.

The two versions will have to be squared in an eventual House-Senate conference, but Mr. Sanders, who also backed the broader proposal, said even if Congress agrees only to the one-time audit, once voters get a look at the Fed’s activities, he expects a growing call for more oversight.