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House pushes for sweeping audit of the Fed

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Bipartisan effort aims to get peek into secretive U.S. central bank

WASHINGTON - House lawmakers want to pry open the books of the famously secretive Federal Reserve with legislation that would subject the U.S. central bank to a sweeping congressional audit.The effort is overwhelmingly bipartisan. Hardline conservatives and liberal Democrats have banded together in their criticism of the Federal Reserve as a major power broker in the financial system that does not answer to Congress.

Friday's debate comes as lawmakers consider a proposal by President Barack Obama that would give the Fed new powers to prevent another economic crisis.

"Nobody in my district thinks that the Fed has done such a wonderful job of running the economy that we should continue to cloak them with secrecy for the purpose of protecting them from second-guessing criticism," said Rep. Brad Sherman, D-Calif.

The Fed is pushing back, warning that its ability to stabilize prices and monitor interest rates would be compromised if it knew politicians were looking over its shoulder.

The House proposal would "cause the markets and the to public to lose confidence in the independence and the judgments of the Federal Reserve," Scott Alvarez, the board's top lawyer, told the House Financial Services Committee in testimony.

The legislation is championed by Rep. Ron Paul, a Republican whose extreme libertarian bent usually does not generate consensus in Congress. But as of Friday, Paul's legislation had attracted 295 co-sponsors with a range of political philosophies, including liberal Rep. Neil Abercrombie, D-Hawaii, and Rep. Jeb Hensarling, R-Texas, an outspoken conservative.

The bill would direct the Government Accountability Office, the congressional watchdog agency, to complete by the end of 2010 an audit of the Fed's Board of Governors and its banks. Current law shields the Fed from scrutiny of its work on monetary policy and its dealings with foreign banks.

295 co-sponsors :sparkle:



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