November 25, 2009
Audit the Fed: Support Paul-Grayson AND H.R. 1207
By Jim Babka

Rep. Ron Paul's Federal Reserve Transparency Act is making progress . . .

* The House version of the bill (H.R. 1207) has 313 co-sponsors
* The Senate  version (H.R. 604) has 30 co-sponsors

And last week, Ron Paul along with Rep. Alan Grayson introduced a version of the bill as an amendment to H.R. 3996, Rep. Barney Frank's mammoth banking regulation bill.

In spite of Chairman Frank's opposition, the Paul-Grayson amendment passed the House Financial Services Committee 43-26!

This is reason to celebrate, but it's also the first stage in a long process. Unless we keep up the pressure on Congress, this amendment could be stripped from the bill in later negotiations.

And there's a catch: the larger bill, H.R. 3996, is awful. Ron Paul will probably oppose this bill even if his amendment is included.

With this in mind, please write a letter to Congress demanding an audit of the Fed.

The hardwired portion of the letter at begins,

"I support H.R. 1207, the Federal Reserve Transparency Act of 2009, and S. 604, the Federal Reserve Sunshine Act of 2009. Please pass legislation requiring an audit of the Fed."

Here's the rest of the letter I sent to Congress . . .

I also insist that you preserve the Paul-Grayson amendment to H.R. 3996.

Paul-Grayson calls for an audit of the Fed, but it also allays some (probably unfounded) fears about interfering with the Fed's independence . . .

* it provides for a 180-day wait before public disclosure of the Fed's individual market actions
* it also clarifies that a Fed audit will not give Congress, or the Government Accountability Office, any control over monetary policy

Rep. Paul has said that those who claim they want to protect the Fed's "independence" really want to protect its secrecy. The Paul-Grayson Amendment would protect the Fed's independence but also provide transparency.

Given the Fed's power to set interest rates and cause inflation, no branch of government impacts the lives of all Americans, every day, quite like the Fed does. The American people have the right to know what is happening to their dollars.

That said, I still oppose H.R. 3996 overall, and want you to vote against it (or against a similar measure in the Senate):

* It provides mechanisms for more bailouts
* More regulations are not the answer because they punish the innocent with compliance costs and can do nothing to prevent miscalculation or fraud
* It gives the Fed more powers, even though Fed policy is largely to blame for the boom-and-bust cycle, inflationary bubbles, and the recent collapse of the economy

Paul-Grayson must be included in the final bill that comes before a vote in Congress. Although I urge defeat of H.R. 3996, the Paul-Grayson amendment will make it less bad.

But the best way to get a Fed audit is to pass H.R. 1207 and S. 604.

Whatever you do, remember that the American people will be watching.


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Let's Downsize DC!

Jim Babka
President, Inc.

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