Before the 2008 financial crisis, many Americans did not know much about our country’s central banking system, the Federal Reserve. Since the financial crisis, the Federal Reserve has become a household name, tripling its balance sheet to $3 trillion and loaning out nearly $16 trillion, more than the GDP of the entire economy. Because of the huge impact these decisions have on all of our lives, a lot of Tennesseans want to see more transparency brought to the Fed.
The Federal Reserve’s financial statements are audited annually, but their monetary policy operations are exempt from these audits. Decisions relating to monetary policy currently take place behind closed doors, and minutes are released three weeks after the meeting. Current law actually prohibits the Government Accountability Office (GAO) from examining certain operations of the Federal Reserve. Simply put, the actions of the Federal Reserve affect all Americans, and taxpayers have a right to know where and how their money is being spent.
This week, with my support, the House passed bipartisan legislation to hold the Federal Reserve accountable to Congress. The Federal Reserve Transparency Act, of which I am a cosponsor, would allow the GAO to audit the Federal Reserve. This legislation also requires a full, one-time audit of the Fed within 12 months of enactment. Openness and transparency have been placed on the backburner in Federal Reserve proceedings, especially those that dealt with the financial crisis, and it is time for Congress to demand answers. It is clear to see that backroom dealings have never resulted in better legislation, and I am proud to see the American people taking a stand and rejecting this method of governance.
I was disappointed to hear Chairman Ben Bernanke say in his testimony before the House Financial Services Committee that allowing the GAO to audit the Federal Reserve could result in political pressures on the bank. I disagree with the Chairman. In my opinion, greater transparency leads to accountability and less political gaming. Without oversight, our country is setting a dangerous precedent for future generations. It is time we run this country as our Founding Fathers intended, with an open, transparent government that safeguards, not shortchanges, our individual liberties. Rest assured, I will continue to support legislation that ensures proper accountability and oversight.