I agree that the trillions of dollars deployed by the Federal Reserve to stabilize the economy should be accounted for. On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), which includes requirements for a complete audit of the Federal Reserve's emergency lending activities during the financial crisis. Specifically, this legislation requires that the Government Accountability Office (GAO) publish a full audit of the loans and other assistance provided to financial institutions during the economic crisis. The GAO is also empowered with ongoing audit authority over any future emergency lending activities, but is not authorized to directly review key monetary policies such as the setting of interest rates. I believe this legislation takes appropriate steps to prevent the politicization of monetary policy while still promoting transparency in the use of public funds.
Senator Rand Paul (R-KY) has introduced legislation that would require an additional audit of the Federal Reserve. The "Federal Reserve Transparency Act" (S. 202) would remove all existing restrictions on GAO audits, including confidentiality restrictions. I have some concerns that a more expansive audit, including a review of monetary policy, could prevent the Federal Reserve's Board of Governors from making key decisions free of outside political influence. This legislation is currently awaiting a vote in the Senate Banking Committee, of which I am not a member. However, please know that I have made careful note of your support for increased transparency of the Federal Reserve, and I will keep your thoughts in mind should this or other relevant legislation come before me for a vote.
Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator
