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Fed Audit Legislation Gets Renewed Push From Ron, Rand Paul

Texas Representative Ron Paul, the Republican who advocates abolishing the Federal Reserve, joined by son Rand, a newly elected senator, renewed a push for a broad examination of the central bank’s activities.

The Pauls each introduced legislation today to require an audit of the Fed by the Government Accountability Office, and the bills are similar to Ron Paul’s proposal from the last two years, the lawmakers said in statements. Ron Paul said he is starting with 56 cosponsors after gaining 320 in his previous push. Rand Paul was elected to the Senate in November as a Republican from Kentucky.

Ron Paul’s Fed-audit bill passed the House last year as part of the broader overhaul of financial regulation before being rejected by the Senate and later by a committee of lawmakers negotiating language in the Dodd-Frank Act. Fed Chairman Ben S. Bernanke opposed Paul’s bill, saying it would infringe on the central bank’s independence in setting interest rates.

“I am optimistic about our prospects for a full and complete audit in the 112th Congress,” Ron Paul, 75, who this month became chairman of the House Financial Services subcommittee overseeing the Fed, said in his statement. He is the author of the 2009 book “End the Fed.”

Instead, Congress directed the GAO to audit the Fed’s emergency-aid programs from the financial crisis and review the system of directors of regional Fed banks for possible conflicts of interest. The Fed was also required to identify borrowers in crisis-lending programs. Since the Dodd-Frank law passed, Republicans won control of the House and narrowed Democrats’ majority in the Senate.

Congressional Shield

Bernanke objected to a provision in Ron Paul’s bill that would strip the Fed of a 1978 congressional shield from GAO reviews of monetary policy.

The Dodd-Frank Act calls for “an exhaustive audit of all the financial aspects” of the Fed, Bernanke said at a Jan. 7 hearing of the Senate Budget Committee. “Where ‘Fed audit’ is really a code for congressional intervention in monetary policy decisions, that is where I would be much less comfortable.”

Greg Valliere, chief political strategist at the Potomac Research Group in Washington, said in November that “in the highly unlikely event that an anti-Fed bill passed both houses, it would face an almost-certain veto” from President Barack Obama.

“We must take a critical look at the Fed’s monetary policy decisions, discount window operations, and a host of other things, with a real audit -- and not just pay lip-service to the idea of an audit,” Rand Paul said in a statement.

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