Texas Congressman and 2012 presidential candidate Ron Paul held hearings Tuesday into a recent and rare one off audit of the Federal Reserve’s crisis-response emergency lending programs of 2008.
In his role as chairman of the Domestic Monetary Policy subcommittee, Paul relished the glimmer of transparency that was afforded as part of the Dodd-Frank Act, signed into law last year.
“More people now are starting to realize that the Fed isn’t independent of political independence because indirectly and some times more directly it is involved in political decisions or at least private decisions to serve some political interest.” Paul told those gathered at the hearing.
Along with Paul, Republicans in attendance argued that the audit should pave the way for regular reviews of the Fed’s policies, as well as more complete disclosure of exactly who has received upwards of $27 trillion in bail out funds since 2008.
“Would it be much of a problem if we were doing this every year?” Paul asked.
Robert Auerbach, Professor of Public Affairs at the University of Texas, backed Paul up by putting the case that regular and ongoing audits would not affect the Fed’s independence in any major way.
“The Fed’s mythical flag of independence from politics, a favorite Fed mantra to avoid individual responsibility, is merely a shield intended to protect the institution from being forced to act in a more transparent fashion,” Auerbach testified.
Rep. Blaine Luetkemeyer, Republican of Missouri, expressed concern that although the GAO’s audit authority is now expired, some banks and firms that “borrowed” from the Fed, and by extension the American taxpaying public, as part of the Bear Sterns and AIG relief packages, have yet to pay back the funds.
Luetkemeyer also noted that the one time GAO audit was extremely limited in its scope.
Nevertheless, the GAO’s report found several instances of conflicts of interest and questionable practices involving Fed officials.
It was also revealed that the Fed made $16.1 trillion in secret loans to Wall Street firms at the height of the crisis.
The full hearing, beginning with Ron Paul’s opening statement, can be viewed below:
Congressman Ron Paul also appeared on Freedom Watch yesterday to discuss the economic situation, urging that politicians in Washington are “not offering a prescription”.
“We have too much spending and too much debt, so they’re trying to solve the problem with more debt. There’s not a chance that we can get out of the recession this way.” Paul told host Judge Andrew Napolitano.
“The people here don’t want to change because they have been conditioned by Keynesian economics. Where I’m encouraged is that people outside this place are getting the message. The answers are well known but how do you translate this new message that we have of free markets and the constitution, and get the people that are managing the affairs now out of office?” the Congressman stated.
Paul added that as president he would implement some immediate measures that would cut the deficit and reduce spending in a meaningful way.
“Immediately you could bring all our troops home and have them spend money here at home, that would give us some reprieve. We could change our foreign policy and indicate to the world that we are going to get our budget under control.” Paul said.
“We could remove taxation on all the money that is held overseas by our corporations and not double tax them. We could remove the interest paid by the Federal Reserve to the banks. The banks won’t invest their money because it’s too risky, but the Federal Reserve gives them their money, essentially, for free, and then they invest it back into Treasury bills, so they help monetize the debt too.”
“Those are a few things, but sending a signal will be most important, ‘we’re going to quit this spending’. Right now I’m working on a plan where in one year I want to cut a trillion dollars.” Paul revealed.
“The appetite for big government is the problem. The taxes and the Federal Reserve inflating, that is the symptom, and the budget problem is a symptom of the appetite for big government.” Paul continued.
“Too often the leadership is only in the business of preserving power… It’s a shame that despite all this arguing and bickering going on between the two parties, there is no difference. Regardless of which party it is they still don’t change the definition of entitlements, they don’t change the foreign policy and they don’t go after the Fed.”
The Congressman also reiterated comments he made earlier in the week regarding the unconstitutional killing in Yemen of the American born cleric Anwar al-Awlaki.
Watch the interview:
Article written by Steve Watson
October 5, 2011