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Father and Son Look to Chase
Moneylenders from ‘the Temple’



MAVERICK LEGISLATORS Rep. Ron Paul (R-Texas)and his son, Sen. Rand Paul (R-Ky.), introduced legislation in the House and the Senate in late January that calls for a complete audit of the privately owned and controlled U.S. central bank, the “Federal” Reserve, oft times called “the Temple.” The two bills, both titled the Federal Reserve Transparency Act of 2011, are more commonly referred to as “Audit the Fed.” They have been numbered H.R. 459 in the House and S. 202 in the Senate.

The bills are expected to be as popular as the measure introduced by the senior Paul in the last session. Last year, his call for a complete audit of the Fed garnered 320 cosponsors—more than half the entire House—before passing the House.Another 32 senators cosponsored a similar bill in the Senate. The Senate failed to pass that legislation, and the bill died on the floor.

Eventually, a compromise between representatives and senators was reached and a watered-down version was passed as part of the landmark Wall Street reform package. That measure only allowed a one-time audit of the Fed’s emergency lending facilities that had been created following the near-collapse of the U.S. economy in 2007.

The limited audit, however, is what could make a complete audit of the Fed so popular. The compromise audit was viewed by many as a sneak peek into the secretive Fed’s workings. The complete report of that probe, released in December 2010, uncovered an incredible 21,000 individual transactions valued at more than $2 trillion. These special deals were handed out to almost all the Wall Street financial institutions, as well many banks abroad. They included sweetheart loans with little to no collateral, asset guarantees on junk mortgages and, most troubling of all, handouts to foreign central banks.



Foreign banks dumped hundreds of billions of dollars worth of junk-bond mortgage-backed securities on the Federal Reserve, receiving in return loans with nearly zero-percent interest rates. When was the last time an everyday American received such a cushy deal for a loan to start a business or buy a home?

Following the Fed’s document dump right before Christmas, one financial columnist remarked: “Not since the populist movement of the 1890s has there been this much discussion of monetary structures among the public, and so much dissent about how money is created and circulated throughout the economy. It’s happening for a reason. The public is now paying attention to finance.”

The Paul family is counting on the momentum created by, and the public anger brought about as a result of, the limited audit of the Fed—a crack in the door that allowed the light of public scrutiny to stream in. “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,” the younger Paul said after introducing his bill. “At a time when we’re seeing great volatility in small Euro-zone economies like Greece, Portugal and Ireland, it is more crucial than ever that we have real transparency at our own central bank.“

Already H.R. 459 has picked up 56 bipartisan cosponsors. Sens. Jim DeMint (R-S.C.) and David Vitter (R-La.) have signed on to support S. 202. H.R. 459 has been referred to the Committee on Oversight and Government Reform, which is chaired by Rep. Darrel Issa (R-Calif.). S. 202 was sent to the Committee on Banking, Housing and Urban Affairs, headed by Sen. Tim Johnson (D-S.D.).