A Take I Trust on Audit the Fed

Dean Baker, co-director of the CRPR, looks at the deal that Bernie Sanders cut with Chris Dodd, and declares it a victory for the little guy and a big step to making the Federal Reserve accountable, though he does also note the downside of the compromises:

Sanders did make some compromises. The audit has an arbitrary cutoff date of December 2007. The special facilities date from the summer of 2007. It also only has the audit as a one-off proposition, rather than establishing GAO audits of Fed operations as an ongoing principle. The compromise also explicitly exempts open market operations - the Fed's daily buying and selling of short-term assets to control interest rates - from GAO scrutiny.

These concessions are unfortunate, the Fed is a creation of Congress and for that reason it should be subject to the same investigative procedures as any other federal agency, but they certainly are secondary compared with getting a full accounting of the money lent out through the special facilities. It is also important to note that in one very important way the Sanders compromise goes beyond the original Paul-Grayson language. Under the compromise, the information about the lending facilities will be made fully public where everyone can scrutinize it. The original bill would just have this information made available to the relevant congressional committees. They would then have to make a further decision about what information, if any, would be made public.

My guess is that the December, 2007 cutoff date is not "arbitrary", and that even as we speak, the Fed is frantically backdating transactions to November 2007, but if this is a step in the process, then it appears to be a good thing.

Previous post here.