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Tuesday, April 12, 2011

Audit the FED

Over $10 trillion was given to the Federal Reserve and member banks and trillions more went to foreign banks. This information was disclosed thanks to the bill introduced by Congressman Ron Paul (R-Texas) which proposed making the Federal Reserve transparent and subject to audits but the final version had been stripped down.

Senator Bernie Sanders (I-Vermont), a self described socialist, had been responsible for gutting the bill but now may be having second thoughts. He stated, “Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations. As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions.”

Merrill Lynch got the biggest instant loan for $2 trillion but it still could not stay afloat and was aquired by Bank of America. The banking industry felt the actions were necessary to keep liquidity and stability in the financial system. Mortgage-backed securities and commercial paper were also added to the list of troubled assets that were purchased.

The foreign banks took advantage of this opportunity to dump their toxic assets on the Fed including Deutsche Bank for $300 billion, Credit Suisse for $290 billion for a total of over $1 trillion. The Federal Reserve Act’s “unusual and exigent circumstances” provision allowed them to also pay non-banking institutions. GE, McDonalds, and Harley Davidson got their take. Campaign for Liberty President, John Tate said, “It’s time to permanently end the Fed’s shroud of secrecy.”

Source: The New American (top): Ron Paul (bottom)

On June 30, 2010, Ron Paul’s attempt to audit the Federal Reserve, which was previously co-sponsored by 320 members of the House (HR 1207), failed by a vote of 229-198. All Republicans voted in favor of the measure with 23 Democrats crossing the aisle to vote with Republicans. 114 co-sponsors of HR 1207, all Democrats, jumped ship and voted against Audit the Fed.

The GOP had offered the Fed audit as the minority’s last chance to alter the financial regulation bill. The bill does have an watered-down audit provision in the conference report, but it is limited to loans made by the Fed during the height of the economic crisis. Ron Paul’s bill would have allowed a total examination of the Fed’s books.

Ron Paul: Well, what they’re going to find out is, that’s the first step. Once we get the audit bill passed and we can reveal what they are doing, I think the next step is to end the Fed. That’s why they don’t want that.