The Federal Reserve currently operates under a veil of secrecy and a myth of independence. Yet, the Federal Reserve is perceived as wielding immense power over the economy, and many economists cite the central bank’s loose monetary policy as playing a major role in the 2007-2008 financial crisis.
Although its ability to directly affect dollar valuation and market interest rates is often overstated, the Federal Reserve policy decisions still have ripple effects throughout the nation’s – indeed, the world’s – financial markets. Americans clearly deserve to know the logic behind the Federal Reserve’s decisions.
The Federal Reserve Transparency Act would require the Federal Reserve to provide information to the Government Accountability Office (GAO) that is currently excluded from audits under 31 USC 714(b). This would shed light on crucial monetary policy conversations over which there is presently no oversight, including discussions between the Federal Reserve and the Treasury Department, as well as transactions with foreign banks.
The bill also instructs the Comptroller General of the United States, who serves as the director of the GAO, to complete a full audit of the Federal Reserve within 12 months of its enactment. A report of the findings of the audit would be required within 90 days of its completion.
Nearly three-quarters of Americans support an audit of the Federal Reserve, and this exact bill passed the House by an overwhelmingly bipartisan, veto-proof majority in 2014, the last time it was allowed a vote in that chamber. The support from the American people, as well as the need to bring transparency and accountability to the Federal Reserve, are the reasons why we urge you to contact your representative and ask him or her to cosponsor the Federal Reserve Transparency Act.