The Federal Reserve is Already Audited

Economics Economics Questions
1

In 1978 Congress passed the Federal Banking Agency Audit Act (31 USCA §714). It placed the Federal Reserve System back under the auditing authority of the GAO. The Act significantly increased the access of the GAO to the Federal Reserve Banks, the Board, and the Federal Open Market Committee (the FOMC). Since then, the GAO has conducted over 100 financial audits and performance audits of the three Federal Reserve bodies.3

Some of the more important GAO performance audits of the Fed have been in the areas of bank supervision, payment systems activities, and government securities activities. In the first area, the GAO examined how well the Fed was enforcing its regulatory powers over its member banks. In 1992 it drew attention to the Fed’s sluggish compliance with regulatory reforms mandated by the Foreign Bank Supervision Act of 1991. In examining the Fed’s payment system activities, the GAO made the Fed aware of how its pricing policies for such services as check-clearing affected private suppliers of check-clearing services, and also suggested ways to speed up the process of check collections. Security markets for government debt is a crucial market, and GAO performance audits of the Fed have lead to more openness in the primary dealer system, particularly concerning the disclosure of price information. The GAO is also involved in several ongoing performance audits of the Fed such as analysis of risks and benefits of interstate banking, regulation of derivatives, and the budget of the Federal Reserve system.2

Why do columnists at lewrockwell.com act as though it would be a breakthrough to pass Ron Paul’s bill so GAO can audit them?

2

its already audited…how many audits do we need of the federal reserve?

3

Not every activity of the Fed is open to an audit. Why do they make such a big deal about it? I think partly because it is one way to get the public interested in the Fed. It will also probably reveal a lot of activity that will no doubt be interpreted as corrupted. Whether this strategy will bring more economic stability and freedom in the long run is debatable.

Let’s not forget that one excuse for a central bank is that the treasury cannot be trusted to handle the money supply directly. It seems that the public never accepts the idea that the problem is government as a principle and not just this agency or that agency. When regulations fail, it is always blamed on bad regulations or too few regulations. Never on regulations per se. So, it is perfectly reasonable to expect that a Fed destroying the currency will be replaced by perhaps 2 Feds or maybe 3 Feds.

4

The point of RP and those here who believe this to be a big deal is that the FED decides how it is audited. The GAO and Congress have very limited power to audit the notes of their meetings and get data on their dealings with other central banks.

I do not in any way believe that the bill by RP or any other lowly politician will change the FED. I doubt it will slow it down. It would be nice to see the Congress have to sue the Fed for information but that is just more theater.

There is only one solution to this issue and that is to either dissolve the FED and but that is not possible. The only other alternative other than destitution is to have states leave the union.

5

" I think partly because it is one way to get the public interested in the Fed. It will also probably reveal a lot of activity that will no doubt be interpreted as corrupted. Whether this strategy will bring more economic stability and freedom in the long run is debatable. "

The End the FED movement is what sort of introduced me to all of this economic non-sense. Not that I’ve progressed a whole lot in learning about the economy because it’s so complicated for me to understand but now I realize it’s something I’d like to go to college to learn about.

6

I think this is one topic that you can learn much more about outside of college.

7

Don’t bother with college, just read this website’s material. It’ll probably take a decade to read it all… The only possible reason to go to college to “learn economics” would be to gain “credibility” in the eyes of organizations who employ people with such degrees, or possibly to better discredit mainstream modern economists, but it’s controversial whether or not any of that is really effective. Personally I don’t feel it’s possible to defeat Keynesian economists on their own grounds.

RP does want to “End the Fed” (title of his latest book isn’t it?), not just audit it, he’s just going about it by the only means he feels is available at the moment. As long as it doesn’t backfire (create more regulation, “competing” central banks (lol), or other silly stuff) it’s worth a shot since the alternative is to yell “thief!” etc. and continue to be ignored.

As for the last suggestion, there is the Free State Project…

8

I could, but I am almost always in a position where I need to ask a million questions to understand a single concept.