Idaho Reps. Raul Labrador and Mike Simpson were among the 327 members of the U.S. House of Representatives to pass the Federal Reserve Transparency Act, H.R. 459, on Tuesday, legislation aiming to audit the central banking system that has been introduced by Rep. Ron Paul of Texas each year since 2009. The two Idaho congressmen have been outspoken advocates of Paul's legislation.
"Monetary policy decisions must be made in an open and transparent manner without regard to special interest groups and political influence," Labrador said in a press release. "The Federal Reserve is officially an independent organization within the government. Decisions made by the Fed are not subject to approval by the president or Congress but the system is subject to congressional oversight. I believe it is our obligation and right to see what the Fed is up to with our nation's money supply, particularly in such fragile economic times as these."
Simpson shared similar thoughts in an entry on his blog Tuesday.
"Increasing the transparency and accountability of the Federal Reserve to Congress has become more critical in light of the expansion of the Federal Reserve's balance sheet since the financial crisis of 2008-2009," Simpson said. "Decisions made by the Federal Reserve impact our nation's economic health and I believe the American people should have greater access to information about these decisions."
The legislation specifies that the comptroller general should complete an audit of the Federal Reserve banks and the system's board of governors before the end of 2012. A companion bill, S. 202, has been introduced in the Senate by Paul's son, Sen. Rand Paul of Kentucky. Although a Senate vote has not yet taken place, both of Idaho's U.S. senators have signaled their support for the bill, both in public addresses and by serving as bill co-sponsors.
Federal Reserve Chairman Ben Bernanke argued last week in testimony before the House Financial Services Committee that he believes the system is already transparent.
"I agree absolutely with Dr. Paul that the Federal Reserve needs to be transparent and it needs to be accountable," Bernanke was quoted as saying. "I would argue that at this point, we are quite transparent and accountable on monetary policy. Besides our statement, besides our testimonies, we issue minutes after three weeks. We have quarterly projections, I give a press conference four times a year, there's quite a bit of information provided to help Congress evaluate monetary policy as well as the public."
Paul, however, has insisted that the Federal Reserve's ordinary disclosures are not enough.
"While the Fed has recently released an unprecedented amount of information on its activities, there is still much that remains unknown," Paul wrote. "Predictably, every push towards transparency has been fought tooth and nail. It took disclosure requirements enacted within the Dodd-Frank Act to get the Fed to provide data on its emergency lending facilities. It took lawsuits filed by Bloomberg and Fox News to provide data on discount window lending during the worst parts of the financial crisis. And it will take further concerted action on the part of Congress, the media, and the public to keep up pressure on the Fed to become and remain transparent."
How well the Senate version of the bill will fare, or whether it will even be considered, remains to be seen. ABC News has reported that Senate Majority Leader Harry Reid of Nevada "has vowed not to put it to a vote."