House Approves Legislation Requiring Audit of Federal Reserve

July 25, 2012

Bill previously approved by Oversight Committee Gained Bipartisan Support

WASHINGTON — Congressman Darrell Issa (R-CA) and a bipartisan majority in the House of Representatives today passed legislation requiring an independent audit of the Federal Reserve (Fed).  The bill was approved by a vote of 327 to 98.  The bill had previously advanced from the Committee on Oversight and Government Reform, of which Issa is Chairman, by bipartisan voice vote on June 27.

“Since the 2008 financial crisis, the Fed has tripled its balance sheet to $3 trillion, equivalent to 20% of the economy, through an unprecedented series of bailouts and economic interventions,” Chairman Issa said.  “Policy choices made by unelected Fed bureaucrats have the potential to dramatically affect the fiscal policy of the nation, the global economy, and the lives of everyday Americans.  The public has a right to understand how and under what terms decisions were made and who is responsible,” Issa added.

The bill, H.R. 459, will ensure that Federal Reserve decisions on monetary policy, transactions with foreign banks and Federal Open Market Committee transactions are made transparent to Congress and the public.

It requires a one-time audit to be completed by the Government Accountability Office (GAO), the government’s non-partisan watchdog agency.  It also requires that a report be submitted to Congress on the results of the audit within 12 months of enactment.

The “audit the Fed” bill makes changes to current law which prohibits GAO from conducting a full audit of key Fed operations.   It also allows for audits of not just financial statements, which are currently available, but also of the Fed’s balance sheet, which contains currently unaudited monetary policy operations and lending to foreign central banks.  The bill makes no changes to the Fed’s unique and independent reporting and decision-making authority.