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senate Bill S. 264

Does the Federal Reserve Need to be Audited?

Argument in favor

The Federal Reserve system is a mystery to the majority of Americans, but it plays an absolutely integral role in the U.S. economy. An audit would shed some light on a veiled part of our banking system.

Nicholas's Opinion
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08/01/2015
We already know they're corrupt. The question is how much longer until we can't save the federal reserve from tanking?
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ThomasParker's Opinion
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08/04/2015
The Federal Reserve needs to be shut down. Under its watch, the economic swings have been more volatile and unpredictable, not less. No single entity should consider themselves wise enough to be able to plan the economy, and as we have seen, the Fed is certainly not wise enough.
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jackson's Opinion
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08/03/2015
Many Americans are growing uneasy with the mysterious nature of the federal reserve. We should know more about the bureaucratic branch who regulates and dictates our currency.
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Argument opposed

Federal Reserve system already goes through audits, and it's making strides towards being more transparent. A Congressionally initiated audit will only cause more political influence on the Fed's actions.

ConcernedMember's Opinion
···
08/01/2015
I worked at the Fed and always averaged at least three separate audits going on at any given time. It is a gross waste of tax payer dollars to add yet another audit. How about using the results from all the current audits for what Congress is looking for?
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Christopher's Opinion
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08/02/2015
Only a little digging into the public records will reveal how the Fed works. It is not some sadistic cabal as some would make you think and performs a much needed stabilizing effect on the economy that needs to be protected from populist economic policies like you see in South America. This feels like a politically motivated witch hunt by libertarians who want to see monetary policy regress back to the 19th century.
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Robert's Opinion
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08/04/2015
The Federal Reserve goes through numerous audits already and a audit by the congress is a waste of money better spent on more important issues.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Banking, Housing, and Urban Affairs
    IntroducedJanuary 27th, 2015

What is Senate Bill S. 264?

This bill would direct the Comptroller General of the Government Accountability Office (GAO) to:
  • Audit the Federal Reserve System's Board of Governors and the Federal Reserve Banks within 12 months of this bill’s enactment.

  • Submit to Congress a detailed report of the audit’s findings and conclusions within 90 days of the audit’s completion.

The Federal Reserve system is in charge of controlling the U.S. money supply.

GAO would also report on and audit loan files from homeowners who were in foreclosure in 2009 or 2010 — a required part of enforcement actions taken by the Board against supervised financial institutions (i.e. banks that got bailed out).

The bill outlines that audits should include:

  • Guidance and advice on how to follow procedure when doing file reviews from the Board to the independent consultants connected to supervised financial institutions.

  • Factors that independent consultants should use when evaluating loan files and the results that come from those reviews.

  • Conclusions made by those consultants about the nature and extent of financial injury to each foreclosed homeowner — plus types of remedies offered.

Past limitations on audits of the Federal Reserve would be repealed by this bill.

Impact

GAO auditors, consultants, the Federal Reserve system, and Congress.

Cost of Senate Bill S. 264

A CBO cost estimate is unavailable.

More Information

In-Depth: The Chairwoman of the Federal Reserve Janet Yellen has fought attempts to audit and externally review how the Fed makes its decisions, for fear that it would “politicize monetary policy.” She has gone on record saying “I want to be completely clear, I strongly oppose Audit the Fed.”

Sponsoring Sen. Rand Paul (R-KY) disagrees, saying:

“A complete and thorough audit of the Fed will finally allow the American people to know exactly how their money is being spent by Washington. The Fed currently operates under a cloak of secrecy and it has gone on for too long. The American people have a right to know what the Federal Reserve is doing with our nation’s money supply.”
The Federal Reserve Board, the 12 Federal Reserve banks, and the Federal Reserve system as a whole are all subject to audits by the Government Accountability Office (GAO). The financial statements of the banks and the system in its entirety are audited by the Office of the Inspector General, which also investigates the Federal Reserve's operations. But current oversight has been deemed insufficient by some who want broader insight into the Federal Reserve's activities, despite fierce resistance.

Of Note: Since 1977 the Federal Reserve has operated under what is known as the 'dual mandate' which sets its goal as maximizing employment, while supporting stable prices (avoiding inflation), and maintaining moderate long-term interest rates.

In order to accomplish these goals, the Federal Reserve has three tools at its disposal:

  • Open Market Operations, which directly affect the money supply, include the buying and selling of U.S. Treasury bonds to influence the interest rate up or down — whichever is more desirable given economic conditions. When the Federal Reserve buys bonds, the money supply grows and interest decreases. Conversely, when it sells bonds, the money supply shrinks and interest rates rise.
  • Changes in the discount rate, i.e. the interest rate that Federal Reserve Banks charge depository institutions for short-term loans.
  • Modifying the reserve requirements for depository institutions — which is the ratio of reserves to deposits those institutions are required to maintain in their vaults or on deposit at a Federal Reserve Bank.

In general, if the economy is growing rapidly and there are concerns about inflation rising to a level that erodes consumers purchasing power, the Federal Reserve might raise interest rates and shrink the money supply. It can also attempt to rein in the availability of credit through reserve requirements and the discount rate.

On the flip side, if the economy is in recession or sluggish, the Federal Reserve will attempt to broaden the money supply and lower interest rates to encourage economic growth. Meanwhile it can make credit more available to businesses and consumers by easing reserve requirements.

There are several areas where Federal Reserve critics express their concerns. Free-market activists disagree with Federal Reserve's role in managing the economy. They argue that its manipulations distort interest rates from the market's true equilibrium — leading to 'bubbles' and over-investment. They point to examples like the dot-com bubble or the subprime mortgage bubble.

Other critics point to policies that they say help fuel economic inequality — where the wealthy see their assets grow at a faster rate, while the average person's income remains stagnant. Former Federal Reserve Chairman, Ben Bernanke, isn't persuaded by those claims though — he believes that remedying inequality isn't an attainable goal of monetary policy (other than through job creation). He also foists the blame onto other long-term structural causes of economic inequality like globalization, demographics, and technological progress.


Media:

Summary by Eric Revell
(Photo Credit: Flickr user Boston Public Library)

AKA

Federal Reserve Transparency Act of 2015

Official Title

A bill to require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States, and for other purposes.

    We already know they're corrupt. The question is how much longer until we can't save the federal reserve from tanking?
    Like (24)
    Follow
    Share
    I worked at the Fed and always averaged at least three separate audits going on at any given time. It is a gross waste of tax payer dollars to add yet another audit. How about using the results from all the current audits for what Congress is looking for?
    Like (23)
    Follow
    Share
    The Federal Reserve needs to be shut down. Under its watch, the economic swings have been more volatile and unpredictable, not less. No single entity should consider themselves wise enough to be able to plan the economy, and as we have seen, the Fed is certainly not wise enough.
    Like (20)
    Follow
    Share
    Many Americans are growing uneasy with the mysterious nature of the federal reserve. We should know more about the bureaucratic branch who regulates and dictates our currency.
    Like (16)
    Follow
    Share
    The Fed has WAY too much power to influence monetary policy, and WAY too little accountability to We The People--AUDIT THE FED!
    Like (9)
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    Only a little digging into the public records will reveal how the Fed works. It is not some sadistic cabal as some would make you think and performs a much needed stabilizing effect on the economy that needs to be protected from populist economic policies like you see in South America. This feels like a politically motivated witch hunt by libertarians who want to see monetary policy regress back to the 19th century.
    Like (6)
    Follow
    Share
    YES. Ever head of the Rothschilds? Richest Family In HISTORY?! The Federal Reserve is not owned by the Government. They have infiltrated All the Banks Around The World. Except, North Korea, Iran, and Cuba. Do you remember what happened recently in the news?! About, Cuba?! Over 50 Years later, We, The United States & Cuba, have supposed made an agreement to get rid of the Travel Ban and Embargo?! Why?! Because, the Rothschild's Family is already in the United States. They want Cuba, they want North Korea, and they want Iran. Iran Nuclear Deal?! United States is the Main Player of that Deal. We have already given them $150 Billion Dollars and we don't even know who they are. They are Controlling and Manipulating Every Country In The World. Their Puppet(s)? The Highest Authority or Organization Of The Country. United States - The President & Other High Authorities. Europe: The UN. But, that list of Countries that the Rothschild's doesn't have yet was longer. Afghanistan, Iraq, Sudan, Libya. They have already chosen Their Puppet at the Time. They wanted the United States to fulfill their plan. The public couldn't know the exact reason behind the Invasions. They needed a horrible excuse for America to go against The Middle East. 9/11. In 2001, We invaded Afghanistan, they are now under Rothschild. In 2003, we invaded Iraq, they are now under Rothschild. Now, Sudan & Libya. The last 2 countries in Africa that weren't under Rothschild. Which Countries or Group Of Countries have already Intervened in those Countries?! The U.N. The U.N. has already intervened in those countries. By 2011, Sudan & Libya's Central Banks were now Under Control of Rothschild. Instead of Using Force, the United States (Rothschild's Puppet) is trying to befriend those countries. But, what about North Korea? The United States is unable to befriend North Korea so they're doing exactly the same as before. Going Against like Afghanistan and Iraq. Trying to make The Public, THAT'S You, go against another country. That's why they are blaming North Korea for the Sony Pictures Hack. Trying to justify a 'Revenge' Attack that's only in place to extend Rothschild's Wealth & Power on Earth. They're manipulating you
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    The Federal Reserve goes through numerous audits already and a audit by the congress is a waste of money better spent on more important issues.
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    yes and then kicked out for treason for printing money not backed by gold
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    But the issue is just like the DoD they don't pay taxes so who's records are we looking at? The ones the make up?
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    Absolutely, is there really anything left in the vaults or is it all in the Clinton Foundation?
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    The fed is a private organization and has failed to perform its mandate. The fact that it is private and is so important is a huge reason why we should audit it...
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    Hell yes they need audited. Those numbskulls in DC have bankrupted this country because they have the morals of alley cats and godless heathens - and combined, they don't have the sense God gave a jack***. Only God knows what the books of the Federal Reserve say - but I can guarantee they've cooked our collective gooses. And they know it!
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    The most secretive institution on the planet that controls way too much. If there is nothing to hide we woudl not need a bill to audit.
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    The fed needs ended not just audited. We can never get out of debt when every dollar that is printed by this private bank is born with interest. The Federal Reserve is possibly the greatest atrocities ever accepted by the American people.
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    There's nothing wrong with an audit and getting a better idea where we are putting money. This is vital information congress and the American people need. I never voted for anybody in the Fed Reserve. I want to make sure those I did elect have a clear understanding of something as vital as the Fed Reserve. This is crucial information to us a democracy.
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    This bill is a first step toward politicalization of the FRB. IT IS A BAD IDEA. FRB has been working OK since its beginning and is already audited. Congress should leave it alone.
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    Absolutely. Accountability is crucial in all facets of government and business.
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    The FED lied about monetizing our debt. That fact alone should mandate an audit.
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    It's time to get rid of the federal reserve!
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