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Why We Must Audit the Federal Reserve

November 20, 2009

In this video from a June, 2009 hearing, Congressman Alan Grayson (D)-FL asks Federal Reserve Chairman Ben Bernanke to explain why one half a TRILLION dollars was taken from the U.S. Federal Reserve  and payed out to undisclosed European institutions. As seen above, Bernanke’s initial response was that ‘he didn’t know who the money went to.”

After the worst economic collapse in modern history took place with the assistance of horrid monetary policy by former Federal Reserve Chairman Alan Greenspan, whose insistence on keeping interest rates dangerously low contributed greatly to the sub-prime housing crisis, it is now evident that action must be taken to to closely monitor the actions of the Federal Reserve. Hence, Congress has moved to pass legislation allowing an audit of the financial institution most responsible for the current economic condition of our nation: The Federal Reserve Bank.

As stated here:

A group of House Democrats are stepping up demands for greater transparency from the Federal Reserve after reports that the Fed mishandled the bailout of insurance giant American International Group Inc.

The group, led by Rep. Elijah Cummings, D-Md., wants a congressional review of the Federal Reserve system. They want to allow congressional audits of the Fed as part of financial rules being debated by the House Financial Services and Senate Banking committees, according to a letter Wednesday to the committees’ chairmen.

“Real financial regulatory reform cannot occur without an examination into the structure” of the Federal Reserve system, the letter says.

Details on which banks benefited from AIG’s bailout never would have become known without demands from Congress, and a recent report shows flaws in the Fed’s structure as a regulator, the lawmakers wrote.

The letter follows sharp criticism Monday of the Federal Reserve Bank of New York and Federal Reserve in a report from Neil Barofsky, the special inspector general for the $700 billion financial bailout fund. Barofsky said the Fed may have paid billions more than necessary to banks including Goldman Sachs Group Inc. and Merrill Lynch, now part of Bank of America Corp., to cancel AIG’s contracts with them.

Treasury Secretary Timothy Geithner, then president of the New York Fed, signed off on decisions that weakened the government’s bargaining position and made it difficult to pay the banks less than face value for securities AIG had insured, the report says.

A group of House Democrats are stepping up demands for greater transparency from the Federal Reserve after reports that the Fed mishandled the bailout of insurance giant American International Group Inc.

Finally, as stated in Politico:

The House Financial Services Committee has approved Rep. Ron Paul’s measure to drastically expand the government’s power to audit the Federal Reserve.

The measure, based on a Paul proposal that has attracted more than 300 co-sponsors, passed, 43-26, as an amendment to a financial reform bill. Florida Democrat and fellow Fed critic Alan Grayson co-sponsored the amendment with Paul and played a leading role drumming up support for it among committee members.

Perhaps now we’ll finally see someone in government deliver some “change we can believe in.”

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