U.S. Senator Rand Paul (R-Kentucky) has reintroduced bipartisan legislation that calls for more transparency from the U.S. Federal Reserve Board of Governors, according to an announcement on Paul's website.
The Federal Reserve Transparency Act of 2015, or S. 264, commonly known as Audit the Fed, calls for elimination of the restrictions placed on the Government Accountability Office (GAO)'s audits of the Fed. The bill also mandates that several divisions of the Fed be subject to Congressional oversight, including credit facilities, securities purchases, and quantitative easing activities.
"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," Paul said. "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 time to act is now."
One of the provisions of the bill calls for an audit of the review of the loan files of homeowners in foreclosure: "The Comptroller General of the United States shall conduct an audit of the review of loan files of homeowners in foreclosure in 2009 or 2010, required as part of the enforcement actions taken by the Board of Governors of the Federal Reserve System against supervised financial institutions."
Conservatives have criticized the Fed's methods of attempting to stimulate the economy since the 2008 financial crisis and have repeatedly called for more transparency from the central bank. Legislation similar to the bill introduced by Paul on Wednesday has been proposed before by former U.S. Representative and Senator Paul's father, Ron Paul (R-Texas) in 2009, and Representative Paul Broun (R-Georgia) last year. Broun's bill easily passed in September 2014 with bipartisan support in the House by a 333 to 92 vote (with 106 Democrats and 227 Republicans voting in favor) but died when it was not voted on in the Senate before the end of the session. A similar bill was introduced in the House earlier this month by Representative Thomas Massie (R-Kentucky).
Senator Rand Paul's new Audit the Fed bill has 30 co-sponsors, only one of which – Mazie Hirono of Hawaii – is a Democrat. One of the new bill's co-sponsors is Senator Ted Cruz (R-Texas).
"At long last, it's time for a complete audit of the Federal Reserve, so the American people can fully understand the scope and consequences of the agency's extraordinary monetary policy since 2008," Cruz said in a prepared statement. "The Fed has expanded its balance sheet fivefold, yet economic growth is still tepid, businesses are sitting on cash, and median income and household wealth are depressed. . .Enough is enough. The Federal Reserve needs to fully open its books so Congress and the American people can see what has been going on. This is a crucial first step to getting back to a more stable dollar and a healthy economy for the long term."
Another of the Fed's policies conservatives have criticized is the near-zero savings interest rates. The Fed announced during the first Federal Open Market Committee meeting of the year on Wednesday that it is in no hurry to raise those interest rates, saying, "Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy."
"Americans are living with near-zero interest rates on their savings while entrepreneurs and small businesses report credit is still hard to get," Cruz said. "Quantitative easing has contributed to the dollar's volatility in recent years, which destabilizes the financial system and distorts investment. Other than elevating the stock market and key prices such as oil until lately, the Fed's policies have not resulted in a long-term cure for our sick economy."
Democrats have repeatedly resisted any legislation that calls for further scrutiny of the Fed's activity. Last month, Fed Chair Janet Yellen said she would "forcefully" oppose any type of Audit the Fed bill, telling reporters that "I do think central bank independence is very important. . . to make sure we can make the decisions we think are best."