Possibly today, but if not today then soon, the Senate will decide whether or not to follow the House’s lead and adopt a provision requiring government auditors to open up the books at the Federal Reserve. The measure enjoys a great deal of popularity on both the left and the right, but is so fiercely opposed by powerful interests that it could nonetheless become a stumbling block in the way of financial regulatory legislation.
Right now Sen. Bernie Sanders (I-VT) is trying to round up 60 or more votes to overcome a likely filibuster and include an “audit the Fed” provision in the Senate’s bill. There are just a few small obstacles: the White House, major financial institutions, and the Fed itself. Their resistance is fierce—but the measure is so popular that killing it will be difficult for them and that, in their eyes, threatens to put a grenade at the center of efforts to to tighten the rules on Wall Street.
The pushback is reminiscent, in a way, of the executive branch’s institutional opposition to oversight of the nation’s intelligence agencies and operations. The Fed has always been shrouded in secrecy, and its leaders (in both the private and public sector) continue to insist on keeping their activities opaque, in order, they say, to protect complicated monetary policy from the political process.
It is believed that the Fed loaned major financial institutions upwards of $2 trillion during the financial crisis. Sanders’ legislation would require the Government Accountability Office to conduct a comprehensive audit of the central bank, and force it to make public which companies received that money, and under what terms. Chairman Ben Bernanke opposes the latter on the grounds that exposing the institutions that required dramatic assistance would be counterproductive to the goal of restabilizing the financial system.
It’s likely, in fact, that the Obama administration will be under intense pressure to veto the entire financial reform bill if “audit the fed” survives.
That’s why, according to the Wall Street Journal they’ll “fight to stop it at all costs.” The White House is hoping to cut off “audit the Fed” in the Senate, so that they’ll have a stronger hand when House and Senate negotiators meet to iron out the differences between their regulatory reform bills. If the Senate bill does not include Sanders’ amendment, then the House will be in a weak position vis-a-vis the Senate and White House and the provision could be easily stripped.
If Sanders prevails, then the White House will be all but out of options and President Obama will likely be left with the choice of vetoing the legislation, or signing it and raising the ire of very powerful people. Stay tuned.
Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at firstname.lastname@example.org.