Time to end Fed­eral Re­serve se­crecy

The Washington Times Weekly - - Commentary -

Among the facts that the Fed­eral Re­serve would rather you didn’t know is that at the height of the fi­nan­cial tur­moil in 2008, when av­er­age Amer­i­cans were just be­gin­ning to suf­fer, the in­sti­tu­tion was pass­ing out sweet­heart deals to pro­tect the pow­er­ful and well-con­nected. Among the ben­e­fi­cia­ries were for­eign banks, Wall Street gi­ants and even the com­pany that then owned MSNBC.

Re­cently, my House sub­com­mit­tee on do­mes­tic mon­e­tary pol­icy held a hear­ing to ex­am­ine in­for­ma­tion dis­closed by the Fed­eral Re­serve about its bailout lend­ing dur­ing the 2008 fi­nan­cial cri­sis — dis­clo­sure that was re­quired by the Dod­dFrank Act and the Free­dom of In­for­ma­tion Act.

These Fed­eral Re­serve records, made avail­able to the pub­lic on Dec. 1, 2010, and on March 31 pro­vided a look at thou­sands of trans­ac­tions and tril­lions of dol­lars in lend­ing by the Fed­eral Re­serve.

The im­por­tance of this hear­ing can­not be over­stated.

The con­duct of the Fed and the op­er­a­tions of its lend­ing fa­cil­i­ties, es­pe­cially dur­ing the most crit­i­cal pe­ri­ods of the fi- nan­cial cri­sis, re­quire in­ten­sive over­sight and the ut­most trans­parency.

Had it not been for the ac­tions of grass-roots ac­tivists in­tent on hold­ing the Fed ac­count­able, none of this in­for­ma­tion would have seen the light of day. The Fed not only protested these trans­parency ef­forts ev­ery step of the way, but also pre­dicted fi­nan­cial disas­ter if de­tails on the re­cip­i­ents of those funds were re­leased.

Sev­eral months af­ter the dis­clo­sures, the only disas­ter is the con­tin­u­ing re­fusal of the White House and Congress to rein in an out-of-con­trol Fed and ex­er­cise ef­fec­tive over­sight of its mon­e­tary pol­icy.

In fact, as I pointed out dur­ing the hear­ing, much of the data we re­ceived in these dis­clo­sures were heav­ily edited by the Fed.

Like the ma­jor­ity of Amer­i­cans who sup­port my push for full trans­parency for the Fed’s mon­e­tary pol­icy, I want to know the whole story about the Fed’s ac­tions lead­ing up to the cri­sis and be­yond — not just the parts it chooses to dis­close. Count­less lives have been ru­ined by the havoc cre­ated by the Fed’s loose mon­e­tary pol­icy, and Congress owes it to those Amer­i­cans to pre­vent an­other fi­nan­cial cri­sis from hap­pen­ing.

Not hold­ing the Fed­eral Re­serve ac­count­able for its ac­tions is the epit­ome of neg­li­gence.

Un­like the story sold to the Amer­i­can peo­ple in 2008 — that the econ­omy would grind to a halt with­out tril­lions of dol­lars in bailouts — the truth has turned out to be very dif­fer­ent.

And let me tell you — Amer­i­cans will be out­raged when they see what the Fed has done.

For ex­am­ple, money was lent to ma­jor firms such as Gold­man Sachs at rates as low as 0.01 per­cent, es­sen­tially a free loan to the po­lit­i­cally well-con­nected. Non-banks such as Gen­eral Elec­tric and Verizon Com­mu­ni­ca­tions got Fed loans. Banks partly owned by the Chinese gov­ern­ment re­ceived bil­lions in loans.

We now know that at the peak of the cri­sis, the Fed was pro­vid­ing nearly 90 per­cent of its dis­count win­dow loans to for­eign banks and even lent bil­lions of dol­lars to a bank par­tially owned by the Bank of Libya.

Those ac­tions war­rant fur­ther in­ves­ti­ga­tion into how the Fed op­er­ates.

It is lit­tle won­der the Fed so ar­dently op­posed the grass­roots au­dit move­ment as it was dup­ing the Amer­i­can peo­ple into bail­ing out its Wall Street cronies and send­ing bil­lions of dol­lars over­seas.

While ev­ery­day Amer­i­cans suf­fered through the Great Re­ces­sion, Wall Street and po­lit­i­cally con­nected in­sid­ers ben­e­fited from their ties to re­ceive a re­prieve from the con­se­quences of their bad de­ci­sions — and Congress stood by and did noth­ing.

Given what we know now, we can­not af­ford to waste any more time and must take ac­tion right away to per­ma­nently lift the Fed’s veil of se­crecy.

I have rein­tro­duced my Au­dit the Fed leg­is­la­tion, the Fed­eral Re­serve Trans­parency Act, to re­quire full trans­parency and accountability from the Fed­eral Re­serve, and my sub­com­mit­tee will con­tinue to hold hear­ings on the Fed’s poli­cies. It is long past over­due that Amer­i­cans learned the truth about what hap­pens in­side the cen­tral bank that holds ab­so­lute power over the value of their money, the health of the econ­omy and the strength of the nation.

Rep. Ron Paul is a Texas Repub­li­can.

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