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Taxpayers to Fed: Show Us the Money

An analyst says the central bank is too secretive.

A bill that would give government auditors more access to the Fed's books is gaining momentum in Congress. Dean Baker, co-director of the Center for Economic and Policy Research, in Washington, D.C., supports the idea.

You've been an outspoken advocate of auditing the Fed. How come?
Think about all the concern over the $800 billion spent through the Treasury's Troubled Asset Relief Program. Yet the Fed has more than doubled its balance sheet to nearly $2 trillion. You can see on the Fed's Web site how much has gone to each of its lending facilities. But you don't know how much Citibank might have borrowed, or Goldman Sachs.

I don't understand all the secrecy. It's the public's money, not Ben Bernanke's. I don't assume the Fed has done anything improper -- but it's a huge amount of money and there's no accountability.

What do you want to see in an audit?
My main focus is what happened to that money in the bailout. Who got what, and under what conditions? What was the collateral? There's concern that the Fed relaxed standards for money it lent during the financial crisis. Are there banks that didn't pay it back? Banks behind in the payback schedule?


I don't want the Fed audited gratuitously, just an accounting at regular periods. If once a year is too onerous, then maybe once every two years.

Won't greater scrutiny discourage some companies from participating in relief programs or seeking needed emergency funds?
I'm willing to live with companies facing greater scrutiny. If they need a lifeline and don't take it, they'll have to explain why to their shareholders.

Is an expanded audit a threat to the Fed's political independence?
I have a hard time seeing how an audit would interfere with setting monetary policy. That is an area where the Fed is more open and transparent than it used to be anyway. And the Fed has independence in the sense that Bernanke and the other governors can't get fired easily. But they should have to explain their actions to Congress.

Over the past decade -- and probably further back -- the problem hasn't been that the Fed has been too influenced by Congress. The problem has been that it isn't sufficiently independent of Wall Street. An audit will shed more light on the relationships between the Fed and the banks it's doing business with.