Eight years after Republican lawmakers sounded the battle cry “Audit the Fed,” the nonpartisan Congressional Budget Office has scored the latest legislation to boost Federal Reserve transparency: The bill by Rep. Thomas Massie, R-Ky., over five years would cost $6 million.
The Federal Reserve Transparency Act (H.R. 24), reintroduced this January, would repeal some statutory prohibitions on audits of the independent Federal Reserve System. It would direct the Government Accountability Office to prepare within 12 months an audit of the Board of Governors of the Federal Reserve System and the Federal Reserve banks.
Current law prevents GAO from auditing the Federal Reserve’s monetary policy and any of the Federal Reserve’s transactions involving a foreign central bank, the government of a foreign country, or a nonprivate international financing organization.
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First conceived in 2009 by then-Rep. Ron Paul, R-Texas, the plan as updated by Massie is needed because "the American public deserves more insight into the practices of the Federal Reserve,” Massie said in January statement. “Behind closed doors, the Fed crafts monetary policy that will continue to devalue our currency, slow economic growth, and make life harder for the poor and middle class.”
A version of the bill in the last Congress cleared the House Oversight and Government Reform Committee, and a companion bill in the Senate introduced by Sen. Rand Paul, R-Ky., drew some support from Democrats but was blocked in January 2016 before a floor vote. Former Fed Chair Ben Bernanke then testified against the bill, saying his former agency is already audited independently and that the effect of the Paul bill would be to subject monetary policy decisions to congressional review.
CBO based its April 18 analysis on information that GAO obtained after it was given new Fed auditing assignments under the 2010 Dodd-Frank Financial Reform Act. It said the $6 million cost from 2018-2022 would cover full-time and part-time GAO employees plus administrative expenses. Resulting increased costs for the Fed system employees to coordinate the audit would decrease federal revenues by $3 million from 2018-2027, CBO said. The added costs would be subject to congressional appropriations.