Monday, September 22, 2014

READ: Rep. Kirkpatrick Lone AZ Holdout Against "Audit The Fed" Bill (2014); Says Opens Door To Meddling With Economic Growth

(Update, 10:20am: Adding the U.S. Code section that would be changed by the bill (if it becomes law) - at bottom of article. Also removed the words "some of" from the clause in the 4th graf "...would remove some of the exemptions..."; the bill removes all of the limitations. Added explanation of the code section changes.)

On Wednesday, the Republican-controlled U.S. House of Representatives overwhelmingly called for an audit of the Federal Reserve System's policy decisions regarding interest rates and monetary policy. Eight of Arizona's nine Representatives voted with the 333-92 majority; only Rep. Ann Kirkpatrick (D-CD1) did not.

Kirkpatrick is locked in one of the 15 pure toss-up House races in the nation, and the typical scenario is that those incumbents do not provide extra negative ad fodder this close to the election.  (In fact, that is unfortunately how the majority leadership in the Republican-controlled House and the Democratic-controlled Senate determine which issues to bring to the floor for votes.)

The Audit the Fed bill passed the House last week with its highest vote total ever*, and it still has little chance of seeing the light of day in the Senate.  But, it put Democrats on record (one Republican - Campbell in CA - voted nay, 106 Dems voted aye).

The Federal Reserve System ("the Fed") is audited, but only its central financial operations.  This bill would remove the exemptions that have been written into law to maintain separation between the Fed and the federal government.

Arizona's Politics asked Rep. Kirkpatrick to explain her lone nay vote, and this is how she replied:
"I strongly support increased transparency at the Federal Reserve. Since the financial crisis, Congress has already required increased transparency that balances proper oversight with protecting the Fed from a politicized process. I am concerned that the bill voted on by the House could subject monetary policy decisions made by the Fed to political pressure. As an independent government agency, the Federal Reserve should base decisions solely on economic considerations to maintain sound monetary policy.
As required by Congress, the GAO already regularly audits the Fed. However, this bill expands the GAO’s audit authority to the deliberations of the Federal Open Market Committee (FOMC) related to interest rate and monetary policy, beyond a traditional audit. I am concerned that an unintended consequence of this expansion could compromise the Fed’s independence and jeopardize our fragile economic growth."
The proposed bill would amend the U.S. Code section posted below.  It would eliminate all of the "may not includes" in subsection (b) and - under the term "technical and conforming amendments" - get rid of subsection (f), which not only contains other limitations but also provides for "delayed disclosure" of specific transactions.

* When the identical bill was voted on in the House in 2012, Arizona's entire delegation voted aye; Kirkpatrick was not in the House in 2012.

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