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senate Bill S. 2232

Auditing the Federal Reserve

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.

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11/09/2015
The Federal Reserve is not Federally owned; private stock holders own the FED. It's the biggest counterfeiting operation in the history of mankind and is 120% UNCONSTITUTIONAL! They possess the power to create money out of thin air and hold the American people as collateral aka Slaves. http://youtu.be/j282JKnmeVo
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BTSundra's Opinion
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11/08/2015
All power should be questioned. I'd personally see to an audit of most/all federal agencies.
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AndrewGVN's Opinion
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11/09/2015
An audit will help the American people understand how their tax dollars are being spent, I see nothing wrong with the allowing of this audit on the Federal Reserve.
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Argument opposed

Federal Reserve system already goes through audits, and it's making strides towards being more transparent. An audit initiated by Congress will lead to increased political influence on the Fed's policies.

ConcernedMember's Opinion
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11/10/2015
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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TDJCatholicBlogger's Opinion
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11/11/2015
The Federal Reserve undergoes several audits a year from independent firms. I'm not sure what another audit would show.
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Tina's Opinion
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11/08/2015
The GOP just wants to use this as a political tool to try to give more influence over Fed policies to the GOP's Corporate masters.
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What is Senate Bill S. 2232?

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. The GAO would then submit  a detailed report of the audit’s findings and conclusions to Congress within 90 days of the audit’s completion.

The Federal Reserve system is in charge of controlling the U.S. money supply.
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. 2232

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: A scone for Alexander Kouts)

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.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
    IntroducedNovember 3rd, 2015
    The Federal Reserve is not Federally owned; private stock holders own the FED. It's the biggest counterfeiting operation in the history of mankind and is 120% UNCONSTITUTIONAL! They possess the power to create money out of thin air and hold the American people as collateral aka Slaves. http://youtu.be/j282JKnmeVo
    Like (129)
    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 (35)
    Follow
    Share
    All power should be questioned. I'd personally see to an audit of most/all federal agencies.
    Like (64)
    Follow
    Share
    An audit will help the American people understand how their tax dollars are being spent, I see nothing wrong with the allowing of this audit on the Federal Reserve.
    Like (39)
    Follow
    Share
    Hell Yes!!! The Fed is so shady and the epitome of the economic evil creating the gap between the top 1% and the middle class. I want the law that put them in control that was passed in 1913 repealed and the money given back to the government AND the people. Furthermore I'd like a thorough audit of the Fed's actions over the last 100 years and jail time for any ethical misconduct produced from its members. The Fed is a disgrace, destroying any hope for economical freedom in America. They've made a mockery of the American Dream. They're disgusting and I want them gone, today!
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    The Federal Reserve undergoes several audits a year from independent firms. I'm not sure what another audit would show.
    Like (15)
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    Audit and then dismantle the Federal Reserve. They print money we don't have. Back to the gold standard. Let's stop the smoke and mirror financial practices.
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    What does the federal reserve do? All I know is it controls the prime rate that sets other interest rates. We need a public audit not one that is classified
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    We need to know more about this organization!
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    The GOP just wants to use this as a political tool to try to give more influence over Fed policies to the GOP's Corporate masters.
    Like (9)
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    This bill will audit monetary policy decisions by the federal reserve's board, which is not currently done by the GAO. Furthermore, this bill only allows transparency, not political influence by Congress, so it still avoids political meddling.
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    Federal reserve failed to prevent the Internet bubble and the subsequent real estate bubble and therefore is not doing adequate job of protecting our financial system. The audit would help us understand why the Fed failed in the past and learn how to avoid future failures. We need to learn from our mistakes and the first step is to understand how and why we made them.
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    If we are to have a private group of banks controlling the money, we should at the very least have transparency and a regular audit.
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    I say we not only audit the Fed Reserve but we shut its doors and print our own money. Why should the people pay interest on money when the constitution states that it's the job of congress to do so. There again the Federal Reserve act is very unconstitutional and was never passed congress by vote
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    Maybe citizens should audit the whole government.
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    The Federal Reserve has gotten way too BIG for its britches. They own us-- when I say us I mean the people, the government, everyone
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    Eliminating would be better, but this is a great start. And call it the Ron Paul Act.
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    Yes! The Feds audit our banking system so it seems logical that taxpayers can audit the Federal Reserve
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    We need to audit the Fed, then end it.
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    Perpetually!
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