I'm watching C-Span2, and so far, haven't seen a single Democrat or Republican vote no. This could be the single most important amendment to pass this year.
Final Tally: 96-0
This is from a statementreleased by Senator Sanders last week:
Under my amendment, for the first time the American people will know exactly who received more than $2 trillion in zero or near zero interest loans from the Federal Reserve and the exact terms of this assistance. A year ago, I asked Federal Reserve Chairman Ben Bernanke that question. He said he wasn't going to tell the American people. If we pass this bill, he will have to tell us.
For the first time, under this amendment, there would be a comprehensive top-to-bottom audit of the emergency actions that the Fed has taken since the financial crisis started. The amendment explicitly would require the Government Accountability Office (GAO) to investigate what many Americans believe were serious conflicts of interest involving the Fed and CEOs of the largest financial institutions in the country. For example, why was Goldman Sachs CEO Lloyd Blankfein at the New York Federal Reserve when the federal government decided to bailout AIG allowing Goldman to receive $13 billion?
In introducing a modified amendment, I addressed concerns that I heard from both Democrats and Republicans who did not want Congress to be involved in the day-to-day monetary policy of the Fed. I share that concern. That has always been my position. I believed that I had made it abundantly clear in the original amendment. Now we have made it even clearer.
Other changes in the amendment, which I do not consider significant, included setting a specific deadline - December 1, 2010 - for the Fed to make public the names of the financial institutions that received more than $2 trillion in what are now secret Fed loans. Also, we agreed - given that my interest was the recent, unprecedented activities of the Fed since 2007 - that the audit would cover the period since the economic crisis began and would be focused on the Fed's emergency provisions.
I support the legislation passed by the House of Representatives under the leadership of Congressmen Ron Paul and Alan Grayson. Frankly, some provisions in the House legislation are stronger than the language we have in the Senate. But there also are provisions in my amendment which are stronger than theirs, including a mandate that the names of financial institutions that received Fed loans, and the precise terms of the loans, will be made public.
The financial industry has been covering this mess up for the last couple of years, so that they can keep the game going. I'm guessing that once the facts about the extent of insider dealing at the Fed get out, the public backlash against Wall Street will only continue to grow, as will the backlash against the Fed, and the federal government's lack of oversight of the industry.
Dylan Ratigan has consistently argued that the Fed has secretly loaned out and bought off close to 25 Trillion dollars, and not merely the 2 million that Senator Sanders states were loaned. Ratigan includes not just loans, but also the toxic assets that the Fed purchased from banks, often at face value, when those assets true value might be no more than pennies on the dollar. It's not clear to me that those transactions will be part of this audit; but getting the camel's nose in the tent is BIG! IF Bernanke & Co. are pulling the same kind of off-sheet accounting with the Fed's books as Lehman Bros., Bear-Stearns, Enron, etc., were doing, this audit should uncover the evidence.
The Vitter Amendment, which was actually Sanders original amendment, is stronger in terms of the scope of the audit; unfortunately, that amendment does seem to be going down, as expected.
Even so, the limited audit might well uncover enough malfeasance and/or misfeasance to lead to legal action, and further calls for a more expansive audit, and more oversight of the Fed in the future. Further, this whole package is likely going to have to go to conference with the House version, and, as Sanders' notes, the House version may well have stronger provisions in some areas.
And the Vitter Amendment goes down.
Nevertheless, I'm happy to see some real progress on this. The financial reform package that is making its' way through is not something that I am terribly happy with, as I don't believe it goes anywhere near far enough; but the only way that further reform will gain any momentum is if the cockroaches are exposed in the light, for all to see. This amendment just may make that happen.
So, Bob Johnson, yes, we may be DOOOOOMED! But maybe we'll at least have a nice view of the scenery on the road to hell.
A few comments have been made regarding the allegedly meager scope of the audit. I'll quote this, from HuffPo:
Audit The Fed
The Federal Reserve is the chief bailout engine for the U.S. banking system, and it operates under conditions of almost complete secrecy. Since the crisis broke out, the central bank has pumped nearly $4.3 trillion into the nation's banks, but the taxpayers on the hook for these loans know almost nothing about them. We don't know who the Fed extended loans to, the terms of the loans, or what Fed officials signed off on them.
This is a disgrace to democracy. Nowhere else in American government can public officials spend public money without detailed disclosure. Sen. Bernie Sanders, I-Vt., has authored a bill that would subject the central bank's bailout operations to a thorough and public audit. A more comprehensive audit authored by Reps. Alan Grayson, D-Fla., and Ron Paul, R-Texas, passed the House late last year. Both are worth supporting. If the Sanders amendment cleared the Senate, the audit could be widened in a conference with the House. But any effort to hold the Fed accountable is better than none.
Ryan Grim had this to say:
Moving on to the issue of auditing the Federal Reserve. Yes, Sanders compromised on the issue. But most observers following the issue see this as a solid compromise, not a cave-in: we got something real out of the deal in terms of looking at what went down over the last few years. And the House language they go into conference on is very strong. Rumor has it that Geithner is still trying to figure out how to unravel this deal, so we can't take anything for granted, but we have the momentum on this issue, and winning on it would be a very big deal.
I'm with V.P. Joe Biden: "This is a big f#@&ing deal."
UPDATE 2: TPM is reporting that Alan Grayson supports the Sanders Amendment and believes it to be sufficient in scope:
Though the measure was always popular, it faced extraordinary opposition from the White House, Wall Street and the Fed itself. Late last week, in a move that defused the opposition, and may have saved Wall Street reform legislation, Sanders agreed to limit the scope of the audit to emergency lending only, exempting other Fed activities.
That preserved the broad intent of the plan, which was always aimed at bringing the Fed's shadowy activities during the financial crisis into the daylight. Under the terms of the proposal, the Fed will also be required to make public which companies received upwards of $2 trillion in aide from the Fed, and under what terms.
In December, the House of Representatives adopted a similar provision--authored by Reps. Alan Grayson (D-FL) and Ron Paul (R-TX)--that would have required a comprehensive Fed audit. But Grayson has indicated that he supports the limits Sanders placed on the terms of the audit, and will back it when the House and Senate meet to resolve the differences between their two bills.
Now, if Alan Grayson supports the Sanders Amendment, are all you naysayers still convinced that the audit is worthless political posturing?
PostScript: Obligatory "Rec List? Lil 'ol Me?" Woohoo! Been awhile! Seriously, though, thanks to all who've stopped by, and for all the mojo!
UPDATE 3: Okay, last one. I just had to point out what this is all about, because a couple of people just don't seem to get why this is a big deal.
Published: Tuesday, 21 Jul 2009 | 9:43 AM ET
By: Floyd Norris
The New York Times
Just how much could the bailout of the financial system end up costing American taxpayers?
Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program set up by the Treasury Department, came up with the largest number yet in testimony prepared for delivery Tuesday to a House committee. "The total potential federal government support could reach up to $23.7 trillion," he stated.
Barofsky went on to testify that the $23.7 Trillion estimate was quite likely inflated; Dylan Ratigan has repeatedly brought up numbers similar to this, and is perhaps the most visible reporter on the issue, so I originally cited him, simply because I thought more people would recognize the name. Nevertheless, Bloomberg News did a very thorough investigation, and tallied up all of the various programs, last year, and in March, 2009, came up with a credible figure of $12.8 Trillion pledged by the federal government, the vast majority of which came from the Fed, with no oversight or accountability.
The $2 Trillion figure Sanders is using refers to specific authorization that Congress gave to the Fed to make loans to combat the crisis. The Fed has refused to give any accounting of that $2 Trillion, despite promising to do so before the authorization from Congress was received. The additional Trillions that the Fed has spent have been through various vehicles such as Maiden Lane, Maiden Lane II, etc. None of that has been disclosed either. Almost all of those programs were set up after December 1, 2007, so an audit going back that far should enable Congress and the country to at least know what the Fed did with an estimated $?????? Trillion in addition to the $2 Trillion Congress authorized. Everyone should understand that this could include contingent pledges and guarantees which the Fed may never have to pay off on; but I would hope (and believe that it will) also cover the "toxic assets" which the Fed has purchased through some of these vehicles such as Maiden Lane.
Thus, there are three fundamental questions that this audit might answer: 1) What happened to the $2 Trillion in loans that were authorized; and 2) What other loans and dubious acquisitions has the Fed made; and 3) Were there conflicts of interest in making any of the loans or other transactions?
That's all for me, folks. I'm outta here. Thanks again!