A Report on the Attempt to Audit the Federal Reserve 
By Jessica Bernier

On April 25th I called Welch's office again and I was informed by a staffer that there are thousands of bills that the congress must look at and that Peter Welch didn't have the time to consider this one which is "stuck in committee". I explained to the young lady that the bill had gained over 30 co-sponsors in the last week and was gaining momentum. HR1207 now has 109 co-sponsors. Later that afternoon I got one of these:

Dear Ms. Bernier.

Thank you for contacting me about H.R. 1207, the Federal Reserve Transparency Act of 2009. I appreciate hearing from you on this issue.

Introduced by Rep. Ron Paul, H.R. 1207 would eliminate restrictions on General Accounting Office (GAO) audits of the Federal Reserve to open up the Federal Reserve operations to enhanced scrutiny. H.R. 1207 was referred to the House Committee on Financial Services. I will be sure to keep your thoughts in mind the next opportunity Congress has to address this issue. Please continue to be in touch and I hope to see you in Vermont soon.

Sincerely,

PETER WELCH

To which I replied:
 

Dear Mr. Welch,

Thank you for your timely response to my inquiry about your position on HR 1207. Unfortunately you gave no indication of whether or not you intend to co-sponsor this bill which was my primary concern in contacting you.

It is apparent to me that the Federal Reserve needs to have some sort of oversight. HR 1207 puts in place an audit of the Fed. This is essential for transparency. At a time when Congress is approving hundreds of billions of dollars to shore up the financial sector the taxpayers deserve the assurance that the Federal Reserve is acting in their best interest.

I find it interesting that you sit on the Government Operations and Reform Committee, yet you are silent on this issue. I am sure that you know all about Reps. Kucinich and Towns' call for an expanded investigation into the Fed's role in the Bank of America acquisition of Merrill Lynch. It is clear to many that the Federal Reserve in cooperation with the Treasury and with the consent of Congress has exhibited behavior which is suspicious and potentially criminal.

I'm also sure that you are aware of the two bills senator Sanders has introduced in the Senate which seek the same ends. If you are in doubt about whether this type of legislation is necessary I suggest contacting him.

I urge you to take a position-- the side of the people of Vermont and the US-- on this issue and support HR 1207. This is a non-partisan issue. It is a straightforward bill which seeks to do one thing--audit the Federal Reserve.

Most businesses and government institutions are audited at some point in their operation. After 96 years, I feel it's about time for the Federal Reserve to open its books.

Please co-sponsor HR 1207, which now has 91 other co-sponsors.

Sincerely,

On April 28 (an official Campaign For Liberty action day) I made a last minute decision to pack up my 2yo and head for Burlington with some petitions. I only had a little over an hour to gather signatures but out of the 41 people I spoke with 35 signed. I headed over to Welch's office and dropped them off.

Yesterday I called Welch's office again and I was informed by a staffer that there are thousands of bills that the congress must look at and that Peter Welch didn't have the time to consider this one which is "stuck in committee". I explained to the young lady that the bill had gained over 30 co-sponsors in the last week and was gaining momentum. HR1207 now has 109 co-sponsors.

I again pointed out his committee position should give him additional insight as to the importance of the legislation. I again mentioned that his colleague in the Senate, Bernie Sanders had sponsored similar legislation there.  She politely informed me, again, that he was basically too busy to know about all the bills in Congress. So I asked her how Peter Welch justified co-sponsoring legislation that would honor the town of Pittsfield, MA for coining the term "baseball".

Today when I called I asked if he had co-sponsored the bill yet. I was told he did not. So I made sure to ask her how co-sponsoring "legislation" to honor Arnold Palmer with a gold medal for exhibiting sportsmanship in the game of golf was more beneficial to the American people than co-sponsoring a bill that would provide transparency over the Federal Reserve.

I talked to Peter Welch's financial policy staffer, Calvin Garner,  on May 4 and we had an interesting conversation. He said that Monday was the first time that he looked at the bill and he pointed out something he felt might be an issue.

The text of HR 1207:

111th CONGRESS
1st Session

H. R. 1207

To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

February 26, 2009

Mr. PAUL (for himself, Mr. KAGEN, Mrs. BACHMANN, Mr. BARTLETT, Mr. JONES, Mr. REHBERG, Mr. POSEY, Mr. BROUN of Georgia, Mr. POE of Texas, Mr. BURTON of Indiana, Mr. ABERCROMBIE, and Ms. WOOLSEY) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Federal Reserve Transparency Act of 2009’.

SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

(a) In General- Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after 'shall audit an agency' and inserting a period.

(b) Audit- Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:

(e) Audit and Report of the Federal Reserve System-

(1) IN GENERAL- The audit of the Board of Governors of the Federal Reserve System and the Federal Reserve banks under subsection (b) shall be completed before the end of 2010.

(2) REPORT

(A) REQUIRED- A report on the audit referred to in paragraph (1) shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such audit is completed and made available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each subcommittee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests it.

(B) CONTENTS- The report under subparagraph (A) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.'.

US Code Title 31 Section 714 states:

§ 714. Audit of Financial Institutions Examination Council, Federal Reserve Board, Federal reserve banks, Federal Deposit Insurance Corporation, and Office of Comptroller of the Currency

(a) In this section, "agency" means the Financial Institutions Examination Council, the Federal Reserve Board, Federal reserve banks, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. ?

(b) Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing. Audits of the Federal Reserve Board and Federal reserve banks may not include-

(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization; ?

(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;

(3) transactions made under the direction of the Federal Open Market Committee; or

(4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses

(1)-(3) of this subsection.

(c)

(1) Except as provided in this subsection, an officer or employee of the Government Accountability Office may not disclose information identifying an open bank, an open bank holding company, or a customer of an open or closed bank or bank holding company. The Comptroller General may disclose information related to the affairs of a closed bank or closed bank holding company identifying a customer of the closed bank or closed bank holding company only if the Comptroller General believes the customer had a controlling influence in the management of the closed bank or closed bank holding company or was related to or affiliated with a person or group having a controlling influence. ?

(2) An officer or employee of the Office may discuss a customer, bank, or bank holding company with an official of an agency and may report an apparent criminal violation to an appropriate law enforcement authority of the United States Government or a State.

(3) This subsection does not authorize an officer or employee of an agency to withhold information from a committee of Congress authorized to have the information. ?

(d)

(1) To carry out this section, all records and property of or used by an agency, including samples of reports of examinations of a bank or bank holding company the Comptroller General considers statistically meaningful and workpapers and correspondence related to the reports shall be made available to the Comptroller General. The Comptroller General shall give an agency a current list of officers and employees to whom, with proper identification, records and property may be made available, and who may make notes or copies necessary to carry out an audit. ?

(2) The Comptroller General shall prevent unauthorized access to records or property of or used by an agency that the Comptroller General obtains during an audit.

Calvin Garner is concerned that the power of the Comptroller General to audit or carry out an onsite investigation of any other banking institution would be limited, if not nullified by the new wording.

He also informed me that no matter how much steam this thing picks up the reality of the situation in Washington is that it will never make it out of committee. I told him that whether it makes it out or not if he and the congressman are satisfied (after researching the issue he brought up) that this bill would indeed support more transparency of the Federal Reserve and just who and where our money is going to I want him to co-sponsor it.

So I sent him this email:

Hi Calvin,

So I looked at the text of the code that HR1207 would change if it was adopted. There is no doubt in my mind that this bill would give more authority to the Comptroller by removing the "in writing" qualification from open insured banks and bank holding companies. An amendment could always be proposed to further clarify that those institutions be included in the definition of "agency" if the Congressman is still uncomfortable with it.

Despite your knowledge of Washington culture I feel that this bill is vitally important for transparency in government. The very fact that we have a supranational agency controlling money creation and distribution should be enough for all congressmen and women to recognize the necessity of an audit. This is not about Ron Paul or his desire to end the Federal Reserve. This is about the people knowing what is happening to their money.

As I mentioned before, HR 1207 now has 112 co-sponsors. Almost one-fourth of members of Congress agree that this is a very important piece of legislation. Last week senator Dick Durbin made a statement alleging that Congress is owned by banks. One could deduce that those 112 people who put their names to this bill are not owned by the banks. I would like to see Peter Welch's name on this list as well.

There is plenty of legislation that is neither here nor there to the American people. Arnold Palmer's gold medal last week is just one of the many trivial bills that Peter Welch has put his name on. In the grand scheme of things that legislation and medal will be long forgotten by all but the recipient and his heirs. In contrast HR1207 will have lasting and profound implications which will prove to the people of this nation one of two things: a) the Federal Reserve has been carrying out its duties faithfully and honorably on behalf of the American people or b) we've been had.

We deserve to know which it is.

Sincerely,

Garner reiterated that he was concerned that HR1207 would reduce the authority of the Comptroller General’s office. I respectfully disagreed and ended the conversation. Directly after this conversation I decided to find out whether or not his argument had any validity and called the General Accounting Office. I was put through to a lawyer who took the time to look up both HR1207 and the Code it would affect. He absolutely disagreed with Garner’s assertions, stating that the bill would provide a "significant expansion of the Comptroller’s authority in auditing monetary policy." HR1207 "doesn’t restrict at all but gives more work" to the GAO.

The lawyer and I had a really good conversation. He explained to me that Section 714 exists solely to provide protection of the Federal Reserves international dealings from scrutiny by the GAO. He was also quite surprised to learn that the majority of co-sponsors of HR1207 are Republicans. The count as of Friday morning is 147 co-sponsors, 18 of which are Democrats.

Please join me in urging Peter Welch to co-sponsor this legislation. We deserve to know who’s benefiting from Federal Reserve monetary policy and where that money is going. The phone number for Peter Welch’s Washington DC office is (202) 225-4115.

Jessica Bernier is the Washington County Coordinator of the Vermont Campaign for Liberty