Before the passage of Rep. Ron Paul’s (R-Texas) “Audit the Fed” legislation in the House, the consensus held that even if Paul’s token legislation were to pass in the lower chamber, the bill would still have an uphill battle in the Senate.
Senator Harry Reid, consensus held, was what was stood between the Senate version of the Federal Reserve Transparency Act, sponsored by Sen. Rand Paul (R-Ky.), and a vote on the Senate floor.
While it is believed that Reid will not bring the Senate version of the “Audit the Fed” bill to the floor, archived video from C-SPAN’s video library shows him vigorously speaking in favor of an audit of the Federal Reserve System 17 years ago.
On the Senate floor, on January 23, 1995, the Senate was debating unfunded mandate reform and an amendment sponsored by then-Senator Byron Dorgan (D-N.D.).
Reid spoke in favor of the amendment and praised Dorgan for “speaking out about the Federal Reserve for years.”
“I have sponsored legislation that would call for an audit of the Federal Reserve system,” Reid said. “I offer that amendment every year. Every year the legislation gets nowhere. I think it would be interesting to know about the Federal Reserve. I think we should audit the Federal Reserve.”
“It’s taxpayer’s money that’s being used there but we don’t do that. Senator Dorgan has spoke out on the secrecy of the federal reserve system.
He continued: “He’s spoken out on the federal reserve more than anyone that I know in either body. But even though there is no entity in the world that controls our lives more than the federal reserve system, his speeches go unnoticed I’m sorry to say. People just don’t care, it seems, about the federal reserve.”
Reid went on to say that the Federal Reserve affects the cost’s of borrowing for the federal government.
He also explained that all Americans are effected by the Federal Reserve’s ability to influence interest rates throughout the entire economy.
“There isn’t a person that’s listening to this debate or could listen to this debate that higher interest rates doesn’t impact them,” Reid said on the Senate floor 17 years ago. “It doesn’t matter if they’re homeless or they’re making a multimillion dollar transaction on Wall Street as we speak. Higher interest rates affects everybody in this country.”
He also suggested in a tongue-in-cheek way that since the cause of the Central Intelligence Agency receiving so much criticism at the time was because of its lack of secrecy, the federal government should combine the two agencies.
“Maybe we should combine them with the Federal Reserve Board,” Reid said. “What the Federal Reserve Board does nobody knows what they’re doing. CIA it seems that everyone has some idea what they’re doing so maybe we could combine the two, it might not be a bad idea.”
Congressman Paul recently appealed to the Federal Reserves System’s “secrecy” when defending his bill against House Democrats.
House Majority Whip Steny Hoyer (D-Md.) made the argument that an audit would “jeopardize the Fed’s independence” and Rep. Barney Frank (D-Mass.) warned that Congress will “politicize” the Fed interest-rate setting, which he argued would have a “destabilizing effect.”
“I think when people talk about independence and having this privacy of the central bank means they want secrecy, and secrecy is not good,” Paul added. “We should have privacy for the individual, but we should have openness of government all the time, and we’ve drifted a long way from that.”
Paul’s 2012 legislation calls for an audit of the Federal Reserves’ open market operations, its agreements with foreign central banks and governments, and Federal Open Market Committee policy decisions.
Currently, the General Accountability Offices audits the Federal Reserve’s annual financial statements, but is prohibited from shedding light on its monetary policy operations.