Despite shrieking opposition from Federal Reserve insiders and a handful; of Democrat lawmakers, a House panel passed a measure to get the ball rolling on Audit the Fed legislation earlier this year. House Republicans have further signaled their intention to provide transparency at the Federal Reserve by including an audit provision in the massive Financial Choice Act under consideration this week.
According to a summary of the bill, Section 1010 of the Financial Choice Act would provide: “Audit reform and transparency for the Board of Governors of the Federal Reserve System.”
It would do so by directing the Government Accountability Office to conduct an annual audit of the Fed’s board in addition to all Federal Reserve banks in an effort to increase congressional oversight of the central banking system.
The provision shows up in the bill as a side note to a much broader package of reforms aimed at rolling back Obama-era financial regulations such as the Volcker Rule and other provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Critics of the effort say that the GOP is working to undermine the Consumer Financial Protection Bureau created by the Obama administration, a move they contend would open the doors to predatory lending practices and other financial consumer abuses.
Proponents, meanwhile, say reining in Dodd-Frank regulations will provide more economic flexibility for lenders and reverse burdensome mandates on smaller financial institutions. The end result, they wager, will be much needed reinvestment in the U.S. economy.
Despite expected unanimous opposition among Capitol Hill Democrats, the bill will likely pass the House with little trouble. In the Senate, however, things are expected to become a little more complicated. In addition to Democrat opposition, top members of Senate’s Banking Committee have expressed bipartisan support for a less dramatic reform effort that would ease tensions on smaller community banks without attempting to reform the entire financial industry in one blow.
Unfortunately for Americans hoping that GOP control of both legislative chambers and the White House meant they’d witness rapid implementation of a conservative agenda, this is a continuation of an emerging trend in the Senate. Despite having a simple majority, the GOP is unable (or, in some cases, unwilling?) to come up with the 60 votes needed for cloture.
Still, there may be a path to success for a Federal Reserve Audit if Congress ultimately takes an a la carte approach to rethinking financial regulations because of Senate difficulties.
A version of Audit the Fed legislation similar to that which Rep. Thomas Massie and Sen. Rand Paul are currently proposing passed in the House during previous Congresses– and there’s no reason to believe that it would fail a vote today.
And in the Senate, as well as the White House, new bright spots for the bill have emerged.
Previous iterations of Paul’s legislation have only narrowly failed to receive unanimous GOP support. A vote last year ended in only two Republican senators failing to deliver a “yea” for the legislation– Sen. Bob Corker of Tennessee voted against the measure and Sen. Ted Cruz of Texas didn’t show up.
Since that vote, retirements and the ouster of two Senate incumbents haven’t exactly hurt the legislation’s chances of moving forward. And Sen. Bernie Sanders support for the legislation when it last came up could serve to sway some Democrats to the cause.
Of course, successful passage of an audit bill will remain reliant on whether it’s previous supporters were actually genuine and not simply reading massive public support for an audit to get some cheap political points.
Past votes for an audit occurred at a time when President Barack Obama made no secret that he’d veto the legislation. Trump has expressed support for an audit.
But even if the bill isn’t successful under the current Congress, the outcome will still be good for the American public. If previous legislative supporters flip or fail to bring the legislation to a vote, voters will have a pretty clear picture of the disparity between what many lawmakers say and what they do on behalf of the folks for whom they really work. Ditto for Trump if he dares to veto such legislation– though given the amount of heat a Fed audit would likely draw from his administration, that’s probably not going to happen.
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