Reply from Senator McCaskill about FED AuditSubmitted by redstripe4u on Fri, 05/21/2010 - 22:13
May 21, 2010
Dear Mr. ,
Thank you for contacting me regarding transparency at the Federal Reserve. I appreciate hearing from you, and I welcome the opportunity to respond.
As you know, the Federal Reserve has been active in U.S. monetary policy and bank regulation since it was established in 1913. Its decisions regarding interest rates have a significant impact on inflation, growth, and other aspects of the economy. As such, the Federal Reserve was designed to be independent from political influence so it could set monetary policy without being subject to political game-playing. However, the actions of the Federal Reserve during the recent financial crisis have caused major concern.
As you know, to buoy the economy, the Federal Reserve used its emergency powers to keep afloat numerous ailing financial institutions. To accomplish this, the Federal Reserve took several actions, such as issuing guarantees on commercial paper and providing more than $2 trillion in credit to banks. I understand that the Federal Reserve had to use its emergency authority to stave off a prolonged recession, but I, like many Americans, am concerned about the lack of transparency the Federal Reserve exhibited during this process.
I believe that Americans have a right to know which institutions received special help from the Federal Reserve and why. At the same time, we have to be sure to protect monetary policy from the whims of politics. That is why, on May 11, 2010, I joined 95 other Senators in voting to pass bipartisan legislation to provide for an independent audit of the Federal Reserve's actions during the financial crisis.
Specifically, the measure I voted for requires the non-partisan Government Accountability Office to complete an audit within the next year of all loans and financial assistance provided by the Federal Reserve since December 1, 2007. The audit will thus bring to light the Federal Reserve's reasoning in determining who to assist, whether there were conflicts of interest, and how effective the Federal Reserve was at mitigating risk to taxpayers. Furthermore, the legislation I supported requires the Federal Reserve to publish on its website the identity of each entity that received financial assistance from the Federal Reserve and the amount and terms of the assistance provided.
With successful passage of this legislation, Americans will finally know how the Federal Reserve allocated trillions in taxpayer funds and who were the recipients. I look forward to working with my colleagues to assure that this measure makes it to the President's desk and is signed into law.
Again, thank you for contacting me. Please do not hesitate to contact me in the future if I can be of further assistance to you on this or any other issue.
United States Senator
P.S. If you would like more information about resources that can help Missourians, or what I am doing in the Senate on your behalf, please sign up for my email newsletter at www.mccaskill.senate.gov.