WSJ: Senators Unveil New Bill to Audit the Fed

Proponents of auditing the Federal Reserve have a new bill to support their cause. Sen. Jeff Merkley (D., Ore.) and Sen. Bob Corker (R., Tenn.) introduced legislation today to require the Government Accountability Office to audit several of the central bank’s emergency lending programs that were created during the financial crisis.

The two junior senators are joining a movement that has drawn more than two-thirds of the House and a third of the Senate. But their legislation, the Federal Reserve Accountability Act, is intended to sidestep criticism that auditing the central bank would hinder the Fed’s independence in conducting monetary policy. The bill directs the GAO — the investigative arm of Congress — to audit emergency lending programs that aren’t already subject to government audits. (Institution-specific lending programs, such as those tied to AIG and Bear Stearns, are already open to GAO review, as are programs conducted jointly with the Treasury Department.)

To avoid disrupting markets, the legislation directs the GAO to redact from its reports the names of specific institutions using the programs and “identifying details regarding assets or collateral” held in the audited facilities. But that information would be released one year after each program is no longer used.

More at: http://blogs.wsj.com/economics/2009/10/20/senators-unveil-ne...