The Senate unanimously approved a one-time historic audit of the Federal Reserve’s $2 trillion in emergency funding programs since Dec. 1, 2007, the onset of the financial crisis.
The measure, approved in a 96-0 vote, calls for the Government Accountability Office, the investigative arm of Congress, to thoroughly investigate the Central Bank’s accounting and risk mitigation practices; and any potential conflicts of interest or favoritism in its various credit facilities.
The programs were designed to prop up financial institutions during the U.S. economy’s most severe downturn since the Great Depression.
The audit, slated to be completed by Dec. 1, is part of the Senate’s financial oversight reform package, which is expected to be approved within weeks.
Fed Chairman Ben Bernanke has resisted taking part in such an audit to protect the integrity of the Central Bank’s procedures and internal policies, which have been mostly secretive for decades.
The Fed is fighting lawsuits filed under the Freedom of Information Act by Bloomberg News and other news organizations to divulge details behind the credit facilities issued over the past three years, including the identities of all recipients.
The audit amendment was introduced by Sen. Bernie Sanders, an Independent from Vermont.
“Let’s be clear,” Sanders said in a statement. “When trillions of dollars of taxpayer money are being lent out to the largest financial institutions in this country, the American people have a right to know who received that money and what they did with it. We also need to know what possible conflicts of interest exist involving the heads of large financial institutions who sat in the room helping to make those decisions.”
The information sought from the Fed is separate from the initial $700 billion in Wall Street bailouts approved by Congress under the Troubled Asset Relief Program, which is overseen by the U.S. Treasury.
The Fed audit will seek the following:
- The Federal Reserve’s operational integrity, accounting, financial reporting and internal controls;
- The effectiveness of the collateral policies in mitigating risk to the Federal Reserve and taxpayers;
- Whether one or more participants were inappropriately favored over the other;
- The policies governing the use, selection, or payment of third-party contractors by or for any credit facility;
- Whether there were conflicts of interest in the manner the credit facility was established or operated.