What’s the Establishment Got to Hide?

In a puzzling editorial in Friday’s edition, the Washington Post blasted the Federal Reserve Transparency Act as “an unserious answer to a serious question.” The Post, which tends to be predictably liberal and quite bland in its editorial pronouncements, used unusually harsh language, calling the bill “wrongheaded in the extreme.” The Post fears the legislation “would destroy financial markets’ faith in the Fed and, by extension, the value of the U.S. dollar, just as surely as a political ‘audit’ of the Supreme Court’s deliberations would undercut public faith in the justice system.”

That’s rather like saying Postal Service letter carriers should drive around in tanks, because the Army does and they both consist of uniformed government employees. The Fed and the Supreme Court both have big marble buildings in downtown Washington, but that’s about all they have in common.

The bill, H.R. 1207 in the House and, under the name the Federal Reserve Sunshine Act, S. 604 in the Senate, would simply amend Title 31 of the U.S. Code to remove restrictions on how the Government Accountability Office can audit the Fed. The GAO would be able to examine the Fed’s discount window operations, funding facilities, open market operations, and agreements with foreign banks and governments, and would be required to tell Congress what it discovers by the end of 2010.

That’s it. It would not shut down the Fed, or fire the Fed’s Board of Governors, or overrule the Fed’s decisions. The current legislation would just let us know what is going on in that big marble building.

Strangely, this is what has the Post all in a dither. While the newspaper has rightly called for transparency and open government on many other matters, it believes the Fed should be exempt. Within the same editorial, the Post says the Fed has recently “expanded its role in the U.S. economy to an unprecedented extent,” and that current law provides “no clear mechanism to hold the Fed accountable.” The Post’s editorial board seems to see no contradiction in lamenting the lack of accountability while simultaneously trashing a basic attempt to merely gain information about possible misdoings.

A dollar today is worth less than one-twentieth what it was worth on the day the Federal Reserve was created 96 years ago. Yet over all that time, the unelected Fed has never had to face the full scrutiny of our elected representatives that other powerful agencies must. Even our intelligence agencies must report to Congress — but not the Fed, which has helped rack up an $11 trillion national debt, and an additional $13 trillion in dubious loans and bailouts.

The Fed will not say where that money is going. Chairman Ben S. Bernanke has refused to tell Congress, and why should he? There is no means to compel him, and no way to find out what he’s been doing. The Federal Reserve Transparency Act would change that.

As Rep. Ron Paul said in introducing the bill in February, “Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations. While the conventional excuse is that this is intended to reduce the Fed’s susceptibility to political pressures, the reality is that the Fed acts as a foil for the government. Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests.”

Thankfully — and somewhat surprisingly — a majority of the House is tired of this century-long status quo. The Federal Reserve Transparency Act has 276 cosponsors — 177 Republicans and 99 Democrats. So far in the Senate, the Federal Reserve Sunshine Act, introduced by independent Sen. Bernard Sanders in March, has 17 cosponsors. While 14 are Republicans, including 2008 presidential nominee John McCain, two of the three Democrats, Russell Feingold and Tom Harkin, are along with Sanders among the most liberal members of the upper chamber.

The Post seems to think a little knowledge is a dangerous thing. These members of Congress know that a little sunshine is a powerful thing. This legislation is a first step toward reclaiming America’s economic freedom.