In a puzzling editorial in Friday’s edition, the Washington Post blasted the Federal Reserve Transparency Act as “an unserious answer to a serious question.” The Post, which tends to be predictably liberal and quite bland in its editorial pronouncements, used unusually harsh language, calling the bill “wrongheaded in the extreme.” The Post fears the legislation “would destroy financial markets’ faith in the Fed and, by extension, the value of the U.S. dollar, just as surely as a political ‘audit’ of the Supreme Court’s deliberations would undercut public faith in the justice system.”
That’s rather like saying Postal Service letter carriers shoulddrive around in tanks, because the Army does and they both consist ofuniformed government employees. The Fed and the Supreme Court both have big marble buildings in downtown Washington, but that’s about all they have in common. The bill, H.R. 1207 in the House and, under the name the FederalReserve Sunshine Act, S. 604 in the Senate, would simply amend Title 31of the U.S. Code to remove restrictions on how the Government Accountability Office can audit the Fed. The GAO would be able to examine the Fed’s discount window operations, funding facilities, open market operations,and agreements with foreign banks and governments, and would berequired to tell Congress what it discovers by the end of 2010. That’s it. It would not shut down the Fed, or fire the Fed’s Board of Governors, or overrule the Fed’s decisions. The current legislation would just let us know what is going on in that big marble building. Strangely, this is what has the Post all in a dither. While thenewspaper has rightly called for transparency and open government onmany other matters, it believes the Fed should be exempt. Within thesame editorial, the Post says the Fed has recently “expanded its rolein the U.S. economy to an unprecedented extent,” and that current lawprovides “no clear mechanism to hold the Fed accountable.” The Post’seditorial board seems to see no contradiction in lamenting the lack ofaccountability while simultaneously trashing a basic attempt to merelygain information about possible misdoings. A dollar today is worth less than one-twentieth what it was worthon the day the Federal Reserve was created 96 years ago. Yet over allthat time, the unelected Fed has never had to face the full scrutiny ofour elected representatives that other powerful agencies must. Even ourintelligence agencies must report to Congress — but not the Fed, which has helped rack up an $11 trillion national debt, and an additional $13 trillion in dubious loans and bailouts. The Fed will not say where that money is going. Chairman Ben S.Bernanke has refused to tell Congress, and why should he? There is nomeans to compel him, and no way to find out what he’s been doing. TheFederal Reserve Transparency Act would change that. As Rep. Ron Paulsaid in introducing the bill in February, “Since its inception, theFederal Reserve has always operated in the shadows, without sufficientscrutiny or oversight of its operations. While the conventional excuseis that this is intended to reduce the Fed’s susceptibility topolitical pressures, the reality is that the Fed acts as a foil for thegovernment. Whenever you question the Fed about the strength of thedollar, they will refer you to the Treasury, and vice versa. TheFederal Reserve has, on the one hand, many of the privileges ofgovernment agencies, while retaining benefits of private organizations,such as being insulated from Freedom of Information Act requests.” Thankfully — and somewhat surprisingly — a majority of the Houseis tired of this century-long status quo. The Federal ReserveTransparency Act has 276 cosponsors — 177 Republicans and 99Democrats. So far in the Senate, the Federal Reserve Sunshine Act, introduced by independent Sen. Bernard Sanders in March, has 17 cosponsors. While 14 are Republicans, including 2008 presidential nominee John McCain, two of the three Democrats, Russell Feingold and Tom Harkin, are along with Sanders among the most liberal members of the upper chamber. The Post seems to think a little knowledge is a dangerous thing. These members of Congressknow that a little sunshine is a powerful thing. This legislation is afirst step toward reclaiming America’s economic freedom.