By Kathryn Watson
House Committee on Oversight and Government Reform members will mark up legislation Tuesday to give the Government Accounting Office (GAO) vastly expanded authority to conduct deep audits of the Federal Reserve System.
The Federal Reserve Transparency Act sponsored by Kentucky Republican Rep. Thomas Massie directs the Comptroller General of the United States, who heads GAO, to audit the Federal Reserve System’s Board of Governors and 12 regional Federal Reserve banks.
Independent accounting firms audit Federal Reserve financial statements now and GAO has limited auditing authorities, but current law doesn’t allow the investigative arm of Congress to examine monetary policy or transactions made by the Fed’s Open Market Committee, which has direct influence on consumer and corporate interest rates. Massie’s measure would expand GAO’s auditing authority to cover those areas, as well as the Fed’s transactions with foreign groups.
“The American public deserves more insight into the practices of the Federal Reserve,” Massie said in a statement. “Behind closed doors, the Fed crafts monetary policy that influences our currency and economy.”
Twelve people on the Federal Reserve System’s Board of Governors have made decisions about 300 million people’s credit and cash for decades, with little scrutiny, said Bill Bergman, director of research at nonprofit Truth in Accounting. Bergman worked at the Chicago Federal Reserve Bank for 13 years.
“I think one practical and perhaps productive outcome would be a stronger realization that the Federal Reserve’s independence might also inspire greater accountability to the public if they realize that independence doesn’t release them from scrutiny,” Bergman told The Daily Caller News Foundation.
The markup hearing is the first concrete legislative action on the bill since Massie introduced it in January, 2015. The House passed a related bill on auditing the Fed in November, but it failed in the Senate. Sen. Rand Paul, also a Kentucky Republican, introduced a similar bill in January of this year.
The Federal Reserve System is run by a central agency, the Board of Governors in Washington, D.C., and by 12 regional Federal Reserve Banks, located across the country.