The US Senate added an amendment today to the Restoring American Financial Stability Act of 2010 (S 3217), sponsored by Sen Chris Dodd (D-CT), that calls for a one-time audit of emergency lending actions at the Federal Reserve. Senators passed in a 96-0 vote an amendment by Sen Bernard Sanders (I-VT) that requires the non-partisan Government Accountability Office (GAO) — the investigative arm of Congress tasked with evaluating and reporting on government programs and activities — to reveal the recipients of more than $2trn of federal funds. The independent audit, as prescribed by the Sanders amendment, would not interfere with monetary policy, according to a summary of the legislation. “[F]or the first time, the American people will know exactly who received over $2trn in zero or virtually zero interest loans from the Fed and they will know the exact terms of those financial arrangements,” Sanders said from the Senate floor today. He added: “[T]he GAO will be required to conduct a top-to-bottom comprehensive audit of every single emergency action that the Fed has undertaken since the financial crisis began. Under the Sanders amendment, for the first time, the GAO will investigate whether there were conflicts of interest surrounding the emergency actions of the Fed.” The Senate shot down with a 37-62 vote an amendment by Sen David Vitter (R-LA) that would have allowed the GAO to examine monetary policy decisions at the Fed. “Senator Vitter’s amendment, unfortunately, has as its basic purposes the disassembling of that independence,” said Sen Judd Gregg (R-NH), on the Senate floor today. “It would have the Congress the authority through the GAO to go in and investigate what happens with the open market community.” He warned the proposed amendment could have impeded the Fed’s decision-making process. “It would influence their ability to make decisions in the sense that they would be concerned about Congress coming in and investigating,” Gregg said. “It would open up activities which, if they are not done in some level of confidence, inevitably end up disrupting the markets.” Other amendments to the Dodd bill await Senate votes. Still pending a vote is the language sponsored by Sen. John McCain (R-AZ), the Government Sponsored Enterprise Bailout Elimination and Taxpayer Protection Amendment, that would call for a wind-down and resolution of the GSEs. Also pending is an amendment that would mandate greater oversight of the over-the-counter derivatives market. Write to Diana Golobay.

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