No government institution is more secretive than the Federal Reserve. Believe it or not, the Central Intelligence Agency (CIA) is more transparent than the central bank of the United States. This is a huge cause for concern as the Fed dramatically affects the lives of every single American.
The Fed has never been fully audited in its nearly 100-year history. The American people only got a small glimpse of what happens behind closed doors last July. A watered-down audit conducted by the Government Accountability Office (GAO) revealed $16 trillion in Fed bailouts to banks and corporations around the world at the height of the recent financial crisis.
To put that gigantic number in perspective, the gross domestic product (GDP) of the United States is roughly $15.09 trillion. This means that all of the Fed’s liabilities in a couple years time frame were worth more than the total annual economic activity within the United States.
These bailouts were so secret that even Congress had no idea. Besides the Fed chairman periodically testifying before congressional committees to create the illusion of transparency, members of Congress are not privy to the inner workings of the central bank, let alone the general public.
While the one-time audit mandated by the Dodd-Frank financial overhaul law is a step in the right direction, it isn’t anywhere near enough. The public has the right to know what exactly the Fed is doing with their money. The weak language in the law prohibited auditors from examining how the central bank sets interest rates, agreements with foreign central banks, and other important doings of the Fed.
The limited release of Fed bailout history emphasizes the need for a comprehensive audit where nothing is off-limits. Perhaps $16 trillion in secret bailouts is just scratching the surface of the central bank’s misdoings. The public won’t know for sure until a true audit the Fed bill like Ron Paul’s H.R. 459 is signed into law and enforced by the GAO.
This transparency bill, which he first introduced in 1983, now has 273 cosponsors and will be brought to the House floor sometime this week. With the Texas anti-Fed crusader Ron Paul retiring at the end of his term, the probable passage of his oft-introduced bill in the House will be a bittersweet tribute to his decades-long fight to expose the corruption and immorality of the Federal Reserve System.
Julie Borowski is a Policy Analyst at FreedomWorks, an organization dedicated to lower taxes, less government, and more freedom. Her writings on economic policy have appeared in numerous newspapers and online outlets. She is on the Board of Advisors for the Coalition to Reduce Spending and she launched an independent YouTube channel called TokenLibertarianGirl in June 2011.
She was previously selected to be a Charles G. Koch Summer Fellow with the Institute for Humane Studies where she worked at the Center for Competitive Politics. Most recently, she was a government affairs associate at Americans for Tax Reform.
Julie has volunteered for political candidates in Kentucky and in her home state of Maryland. She graduated Magna Cum Laude from Frostburg State University in May 2010 where she studied political science, economics and international studies. She is now located in Washington, D.C.