Merkley, Corker Introduce Legislation to Audit the Fed, Protect Taxpayer Dollars

Merkley, Corker Introduce Legislation to Audit the Fed, Protect Taxpayer Dollars


WASHINGTON, D.C. – In the wake of the Federal Reserve’s extraordinary actions last year to stabilize the financial system, U.S. Senators Jeff Merkley (D-OR) and Bob Corker (R-TN), members of the Senate Banking Committee, today introduced legislation that will require the Government Accountability Office (GAO) to conduct an audit of the Fed’s emergency lending programs.  The Federal Reserve Accountability Act will monitor and protect taxpayer dollars without intruding upon the Federal Reserve’s independent monetary policy or its role as lender of last resort. 

“Transparency and accountability are fundamental principles of representative government,” Merkley said.  “During this financial crisis, Federal Reserve credit contributed greatly to the stabilization of the system.  In doing so, the Federal Reserve departed significantly from its traditional relationship with markets and took on unprecedented new risks.  Such a significant change in the Federal Reserve’s traditional activities demands responsible, robust oversight.  The Federal Reserve Accountability Act strikes the right balance between protecting taxpayer dollars and respecting the central bank’s responsibility to manage monetary policy.”

“The Federal Reserve has provided our financial system with emergency credit during this time of financial hardship, and in the course of doing so, has seen a $1.4 trillion increase in its balance sheet.  Despite its independence, these are still taxpayer dollars at risk, and many Americans have called for an audit of the Fed,” Corker said.  “This bill is the way to do it. We give the Government Accountability Office the authority to audit the Fed's emergency credit facilities without inappropriately compromising the independence of the Fed or politicizing its role in crafting monetary policy.”

The Federal Reserve Accountability Act would require the GAO to audit all remaining emergency lending programs not already subject to audit.  To protect against the risk that disclosure of the participation of particular institutions could disrupt markets, the GAO would be required to redact the names of the specific institutions.  Names would, however, be made available one year after each emergency program is no longer used.  In addition, to encourage greater accessibility for the average taxpayer, the Fed would be required to place these GAO audits along with additional audit materials on its website under a new “Audit” section.