Barney Frank Once Again Sides With Bernanke, Announces Proposed Fed Audit Will Be Materially Curbed

Barney Frank has released the House "offer" language on various issues to be discussed tomorrow during the House-Senate Conference Committee, which will convene at 11am in Rayburn Room 2128.  While some of the items on the docket relating to Investor Protection and Executive Compensation, are largely irrelevant, Barney will also discuss such critical issues as the Fed Audit, the Fed's emergency lending power, and Foreign FX swaps. Ignoring that 80% of the S population demand an end to fed secrecy, the just released proposed language also appears to peddle exclusively to Bernanke and his Wall Street superiors, in that items under debate for the audit will not include monetary policy, and  it will be America's sad fate to extinguish under a 0% interest rate, never knowing how such lunacy can have come to be, until such time as the banking system blows itself up once again. This way the American public will never know whether someone like Goldman Sachs (in addition to Jerome Kerviel) has had any influence in determining monetary policy.

Full language of the completely uncorrupt Congressman's proposal as it relates to the Fed audit:

Title 11 of base text: Fed audit and governance, and emergency liquidity provisions

The House proposes the following amendments to the Base text:

•    Amend Senate provision regarding Federal Reserve 13(3) lending to insert requirement from House-passed bill that the Federal Reserve Board and Secretary of Treasury have reasonable cause to believe that the security or other collateral policies for any emergency lending program or facility provide 99% confidence that funds disbursed under the facility or program and interest will be repaid. (Senate bill §1101, Page 1724, lines 16-19).

•    Amend Senate Provision regarding ongoing Federal Reserve audit requirements to add discount window and open market transactions to items to be reviewed by GAO.   (Senate bill § 1102, Page 1730 line 7 –  Page 1733, line 23).

•    Amend Senate Provisions requiring public disclosure of emergency credit facilities information to also require public disclosure of Federal Reserve open market operations and discount window transactions three years after the transactions have been entered into. (Senate bill § 1103, Page 1735, after line 17).

•    Strike Senate provisions regarding emergency liquidity guaranties and replace with House provisions on emergency liquidity guaranties.  (Replace Senate bill §§ 1104-1106, Page 1735, line 18 – Page 1751, line 7, with House bill §§§ 1109-1111).

•    Strike Senate Provision on appointment of Federal Reserve Bank of New York President and limiting eligibility to vote for or serve as a Federal Reserve Bank director, and replace with provision removing the authority of the member banks’ representatives on each regional board of directors (Class A directors) from appointing/voting for the President of the Reserve Bank (Senate bill § 1107, Page1751, line 20 – 1752, line 6).

•    Add House Provision on no financial stability authority in the bill being delegated to Federal Reserve Bank Presidents to Senate Provision on no delegation of supervisory policymaking to reserve banks.  (House bill § 1114, Page 132, line 3-14; Senate bill § 1108, Page 1754, line 17).

•    Add House Provision adding new restrictions to the Federal Reserve’s foreign currency swap authority (House Bill, §1702, Page 517, line 1-15). 

Full proposed "offer" language.