WHAT I THINK....CHELSEA SCHILLING

A movement to audit the Federal Reserve – the private institution that virtually controls U.S. interest rates, money supply and other economic influences – is gaining momentum in the House and Senate while the Fed ramps up its efforts to thwart scrutiny of its books.
House Resolution 1207, the Federal Reserve Transparency Act, now has 260 co-sponsors with many members of the House Financial Services Committee – where the bill currently resides – signed on already.

Likewise, Senate Bill 604, Federal Reserve Sunshine Act, orders a complete audit of the Federal Reserve Board of Governors and the Federal Reserve Banks before the end of 2010. The bill, sponsored by Sen. Bernie Sanders, D-Vt., has eight co-sponsors and remains in the Senate Committee on Banking, Housing and Urban Affairs.

Members of the Senate recently blocked efforts by Sen. Jim DeMint, R-S.C., to vote on his amendment to a spending bill that provides money for Congress' own budget. DeMint's plan was to add an amendment to the spending bill that would have provided for an audit of the Fed to include information about its funding facilities, market operations and any agreements with foreign banks and governments, DeMint told senators, according to Reuters.

In a July 9 hearing, Rep. Ron Paul, R-Texas, questioned Federal Reserve Vice Chairman Donald Kohn about the Fed's transparency.

"I think the Federal Reserve has been quite transparent and has become much more transparent under Chairman Bernanke about what we're doing and why we're doing it," Kohn told Paul. "And I think we can retain our independence and your ability to trust what we're doing only by explaining to you what we're doing and why we're doing it."

Paul asked why the Fed cites "public interest" when it refuses to open up the central bank's most sensitive decisions to political scrutiny and release discretely recorded transcripts of its policy meetings in the next five years. Kohn made his case for continued Fed secrecy.

"I would be very concerned that releasing those transcripts would inhibit debate," Kohn said. "I think it's in the public interest that we have an unfettered debate within the Open Market Committee, that we are able to speculate among ourselves … that there be no inhibition on the back and forth within the Open Market Committee. Frankly, I've been at the Federal Reserve for several decades now. In my view, publishing the transcripts themselves have had a somewhat inhibiting effect on the way the debate is carried out. …