He also says, "Sanders Scores" in achieving a compromise with the White House to get his Fed audit amendment.
Under the deal, the Government Accountability Office (GAO) would undertake a full audit of the special facilities created by the Fed since December of 2007. GAO would make the findings from its audit available to the Congressional leadership. It would also make most of the details of the Fed's transactions available to the public.
To cope with the economic crisis, the Fed created 13 different special lending facilities. At their peak last year, these facilities had lent out more than $2 trillion. The Fed has only disclosed aggregate data about these facilities, telling us how much each one lent out month by month. It has refused to disclose any information about the specific loans and beneficiaries. This means that we have no way of knowing how much Citigroup, Goldman Sachs or anyone else benefited from these facilities.
Under the terms of the deal, by December 1 of this year the Fed will have posted on its website all the loans that were part of these facilities. Any interested journalist, academic, blogger or generic snoop can read through the data and find exactly how much money Goldman Sachs got, at what interest rate, with what collateral and when they paid it back. This is a big victory.
As with any compromise, though, there are trade-offs, as Baker notes.
The audit has an arbitrary cutoff date of December 2007. The special facilities date from the summer of 2007. It also only has the audit as a one-off proposition, rather than establishing GAO audits of Fed operations as an ongoing principle. The compromise also explicitly exempts open market operations - the Fed's daily buying and selling of short-term assets to control interest rates - from GAO scrutiny.
These concessions are unfortunate, the Fed is a creation of Congress and for that reason it should be subject to the same investigative procedures as any other federal agency, but they certainly are secondary compared with getting a full accounting of the money lent out through the special facilities. It is also important to note that in one very important way the Sanders compromise goes beyond the original Paul-Grayson language. Under the compromise, the information about the lending facilities will be made fully public where everyone can scrutinize it. The original bill would just have this information made available to the relevant congressional committees. They would then have to make a further decision about what information, if any, would be made public.
The key thing is getting this amendment into the bill, so that it's there when the House and Senate go to conference. There, it can be tweaked and potentially some of those concessions blunted. The amendment is still good, and has the potential to get better. But another element of this victory for Sanders is that it does assert the power of Congress to oversee the Fed as any other federal agency. Oversight and investigation of federal agencies has been a role that Congress has largely put by the wayside in general, and with the Fed in particular.
The vote on the amendment was postponed last night because the Republicans insisted upon it. One of their most vulnerable members, Utah's Bob Bennett, was already back home, fighting for his political life. This vote, he thinks, is going to be critical for him. So it will come up next week, probably on Tuesday, and will almost certainly pass with a large margin.