In 1995, Sen. Harry Reid took to the Senate floor and exclaimed, “For years, I have sponsored legislation that would call for an audit of the Federal Reserve system. I offer that amendment every year, and every year the legislation gets nowhere. I think it would be interesting to know about the Federal Reserve. I think we should audit the Federal Reserve.”
I can relate to the frustration that Mr. Reid must have felt in 1995. For three years, we have asked Mr. Reid, now the Senate majority leader, for a vote on the Federal Reserve Transparency Act, or “Audit the Fed,” but the Senate has not addressed it.
This bill currently has 27 co-sponsors in the Senate, including members from both political parties, and companion legislation introduced in the House of Representatives earlier this year currently has more than 100 co-sponsors. It passed in the House with a vote of 327 to 98 on July 25, 2012.
It is Congress’ job to monitor how the Federal Reserve operates. For years, Congress has abdicated this duty by allowing the Fed to operate free of rules, without any accountability.
The Federal Reserve might be the most secretive institution in our nation’s history. For decades, Fed officials, politicians and various “experts” have insisted that such secrecy was integral to its independence and, therefore, its effectiveness.
We cannot continue to ignore the role that the Federal Reserve has played in our economy’s downward spiral. Our nation simply cannot afford a national bank that is dedicated to seemingly unlimited money-printing and spending policies.
When the economy doesn’t improve, what is the Fed’s perpetual answer? Print even more money. Creating money out of thin air is not a sound way to help the economy.
The Federal Reserve has been purchasing — and monetizing the government’s debt — at a rate of $85 billion a month. In 2009, it was reported that the Fed could not account for $9 trillion in off-sheet balance transactions. That amount is more than half our national debt. Just this year, the institution has added more than $800 billion in debt to the government’s balance sheets.
This is unsustainable, and it is clear the Federal Reserve is structurally flawed. We need transparency and accountability. The American people deserve to know how their money is being managed.
This week, I informed Mr. Reid that I plan to hold the nomination of Janet Yellen as the chairman of the Federal Reserve until the Federal Reserve Transparency Act is brought to the Senate floor for a vote. My bill calls for the elimination of all restrictions placed on Government Accountability Office audits of the Federal Reserve. The Fed’s credit facilities, securities purchases and quantitative-easing activities would also be subject to congressional oversight.
The Federal Reserve needs to be audited and reformed to prevent Mrs. Yellen — or any other future nominee — from using the enormous power of the Fed to aid and abet the allies of big government.
The American people have a right to know what this institution is doing with the nation’s money supply. The Federal Reserve does not need prolonged secrecy; it needs to be audited.
Mr. Reid cannot stall this bill any longer, and I encourage every member of Congress to join me in supporting a thorough audit of the Federal Reserve.
Rand Paul is a Republican senator from Kentucky.