The Wall Street reform bill headed for a test vote on the Senate floor Monday night will allow the Federal Reserve to continue to pump trillions of dollars into major banks largely in secrecy, the co-author of House language that would open the central bank to an audit charged in a memo to the Senate. “The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn’t do anything of the sort. I’m going to run down the details for you, and reprint the legislative language so you can read it yourself,” writes Rep. Alan Grayson (D-Fla.). It would not allow the GAO to look into the Fed’s massive purchase of toxic assets, its hundreds of billions in foreign currency swaps with other central banks or its open market operations, among other restrictions. Grayson and co-author Rep. Ron Paul (R-Texas) passed legislation through the House that would allow the Government Accountability Office (GAO) to audit the Federal Reserve and, after a delay, release the information to Congress. It was a remarkable victory, with a populist coalition beating back the combined lobbying efforts of the Treasury Department, the Fed and Wall Street banks. The Senate has been more hostile territory for the Fed audit provision. Banking Committee Chairman Chris Dodd (D-Conn.) opposes the Grayson-Paul version, but allowed a much more restrictive audit proposal from Sen. Jeff Merkley (D-Oregon) into his bill. Grayson, in his memo, outlines the shortcomings of the Senate bill. Walker Todd, who spent some 20 years as a counselor with the Federal Reserve Banks of New York and Cleveland, reviewed Grayson’s analysis and told HuffPost he concurs with it. The Seante bill would allow an audit of the TALF program and slightly expands authority to audit emergency lending conducted under section 13(3) of the Federal Reserve Act, but restricts it to very specific purposes. Meanwhile, it would not allow the GAO to look into the Fed’s massive purchase of toxic assets, its hundreds of billions in foreign currency swaps with other central banks or its open market operations, among other restrictions. Fed backers argue that requiring transparency would politicize monetary policy, though monetary policy and the Fed itself are already political — they regularly lobby Congress, after all — and would tempt lawmakers to pressure the Fed to inflate the currency to reduce the debt burden. Merkley said he agrees with Grayson’s analysis. “I appreciate Representative Grayson’s concerns over accountability at the Federal Reserve. I have been a strong proponent of Fed reform and voted against the re-confirmation of Ben Bernanke because the Fed has been so lax in using its regulatory powers,” Merkley said in a statement to HuffPost. “Moreover, I felt strongly that we need to act now to empower the GAO to audit the extraordinary emergency programs created by the Fed and I succeeded in getting that power into the Senate bill. Rep. Grayson points out, fairly in my mind, that we need to go even further to audit the Fed’s standing programs. I agree. While we need to protect the Fed’s independence to implement monetary policy, I think the structure and use of their standard programs should be transparent.” Read Grayson’s memo, followed by the legislative language: Memo to the Senate: Stop Secret Bailouts by the Fed Sometimes, you just know that you’ve struck a nerve. I knew it early last year, when a clip of my questioning the Inspector General of the Federal Reserve over the Fed’s balance sheet became the most viewed Congressional hearing in YouTube history. The Fed had lent out around $1 trillion, and I wanted to know what happened to the people’s money. So did the people. They were angry at the Fed, and they showed it. And because of that righteous anger, the financial reform bill in the House contains a provision to audit the Federal Reserve fully. If it passes the Senate, we will finally know to whom the Fed lent our money, how much, and what little we got in return. So it’s up to the Senate. The Senate has a provision in its reform bill that purports to audit the Fed. But, it really doesn’t do anything of the sort. I’m going to run down the details for you, and reprint the legislative language so you can read it yourself. But the story is simple; if the House version of a Fed audit passes, we will finally know to whom the Fed lent our money. If the Senate version passes, the Fed can continue to make sweetheart loans to whomever it wants, without telling Congress or the public. The way Congress oversees complicated government agencies is through the Congressional audit arm, the Government Accountability Office (GAO). The GAO does the actual auditing, and gives that information to Congress, which then holds hearings and makes policy. The House bill grants the GAO the authority to audit the Fed, and then releases that information to Congress with a six-month delay, to prevent traders from gaming the system. The Senate version only allows the GAO to audit a certain part of the Federal Reserve, its emergency lending facilities. The GAO already has some of that authority. Amazingly, the Senate version forces the GAO to withhold this information from the public, and Congress, for as long as the Federal Reserve chooses. The details, and the specific legislative language, are below. Limited Audit Authority What the Senate bill allows: – The Senate language slightly expands existing authority to the GAO to audit only the emergency lending authority in section 13(3) of the Federal Reserve Act, but only for specific purposes. – The Senate language would grant the GAO authority to audit the TALF program. What the bill does NOT allow: – The Senate language does not allow audits of the mortgage backed security purchase program, a $1.25 trillion program that at this point comprises the bulk of the Fed’s balance sheet. This program includes Freddie and Fannie backed debt. – The Senate language does not allow audits of possible losses on foreign currency swap lines, of which there were more than $500 billion at the height of the crisis. This includes unlimited credit lines granted to central banks all over the world, solely through at the discretion of Federal Reserve and without the input of any elected official or the State Department. – The Senate language does not allow audits of open market operations, where there is ample room for errors, market manipulation, and insider trading violations. – The Senate language does not allow audits of possible losses on securities acquired through non-section 13(3) facilities. This includes looking for possible losses, seigniorage, political conflicts and costs to the Treasury. Federal Reserve Secrecy – In the Senate version, all audits must remain redacted. The GAO can’t even tell Congress to whom the Fed is lending money, the amounts it is lending, or any details about collateral or assets held in connection with any credit facility. – The GAO can never release a full version of any audit unless the Federal Reserve first chooses to shut down the audited credit facility. – Once the Federal Reserve shuts down the authority for the credit facility, the GAO still has to wait a year before it can release details about that facility. If the Fed simply chooses to stop making loans, but does not eliminate the authority to make loans, the GAO has to wait three years before it can release a full report. The Fed can at any point during this period choose to restart the facility, and thereby prevent the release of a full report. See for yourself. The legislative language in the Senate draft is here. Sec. 714. Audit of Financial Institutions Examination Council, Federal Reserve Board, Federal Reserve banks, Federal Deposit Insurance Corporation, and Office of Comptroller of the Currency (a) In this section, “agency” means the Financial Institutions Examination Council, the Board of Governors of the Federal Reserve System (in this section referred to as the `Board’), Federal Reserve Banks, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. (b) Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing. Audits of the Board and Federal reserve banks may not include – (1) transactions for or with a foreign central bank, government of a foreign country, or non-private international financing organization; (2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations; (3) transactions made under the direction of the Federal Open Market Committee; or (4) a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection. (c)(1) Except as provided in this subsection, an officer or employee of the Government Accountability Office may not disclose information identifying an open bank, an open bank holding company, or a customer of an open or closed bank or bank holding company. The Comptroller General may disclose information related to the affairs of a closed bank or closed bank holding company identifying a customer of the closed bank or closed bank holding company only if the Comptroller General believes the customer had a controlling influence in the management of the closed bank or closed bank holding company or was related to or affiliated with a person or group having a controlling influence. (2) An officer or employee of the Office may discuss a customer, bank, or bank holding company with an official of an agency and may report an apparent criminal violation to an appropriate law enforcement authority of the United States Government or a State. (3) Except as provided under paragraph (4), an officer or employee of the Government Accountability Office may not disclose to any person outside the Government Accountability Office information obtained in audits or examinations conducted under subsection (e) and maintained as confidential by the Board or the Federal Reserve banks. (4) This subsection shall not– (A) authorize an officer or employee of an agency to withhold information from any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee; or (B) limit any disclosure by the Government Accountability Office to any committee or subcommittee of jurisdiction of Congress, or any member of such committee or subcommittee. (d)(1) To carry out this section, all records and property of or used by an agency, including samples of reports of examinations of a bank or bank holding company the Comptroller General considers statistically meaningful and workpapers and correspondence related to the reports shall be made available to the Comptroller General. The Comptroller General shall have access to the officers, employees, contractors, and other agents and representatives of an agency and any entity established by an agency at any reasonable time as the Comptroller General may request. The Comptroller General may make and retain copies of such books, accounts, and other records as the Comptroller General determines appropriate. The Comptroller General shall give an agency a current list of officers and employees to whom, with proper identification, records and property may be made available, and who may make notes or copies necessary to carry out an audit. (2) The Comptroller General shall prevent unauthorized access to Records, copies of any Record, or property of or used by an agency that the Comptroller General obtains during an audit. (3)(A) For purposes of conducting audits and examinations under subsection (e), the Comptroller General shall have access, upon request, to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things or property belonging to or in use by– “(i) any entity established by any action taken by the Board described under subsection (e); “(ii) any entity receiving assistance from any action taken by the Board described under subsection (e), to the extent that the access and request relates to that assistance; and (iii) the officers, directors, employees, independent public accountants, financial advisors and any and all representatives of any entity described under clause (i) or (ii); to the extent that the access and request relates to that assistance; (B) The Comptroller General shall have access as provided under subparagraph (A) at such time as the Comptroller General may request. (C) Each contract, term sheet, or other agreement between the Board or any Federal reserve bank (or any entity established by the Board or any Federal reserve bank) and an entity receiving assistance from any action taken by the Board described under subsection (e) shall provide for access by the Comptroller General in accordance with this paragraph. (e) Notwithstanding subsection (b), the Comptroller General may conduct audits, including onsite examinations when the Comptroller General determines such audits and examinations are appropriate, of any action taken by the Board under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343); with respect to a single and specific partnership or corporation.’ (f) REVIEWS OF CREDIT FACILITIES OF THE FEDERAL RESERVE SYSTEM.– (1) DEFINITION.–In this subsection, the term ‘credit facility’ means any utility, facility, or program authorized by the Board of Governors of the Federal Reserve System under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343), including any special purpose vehicle or other entity established by or on behalf of the Board of Governors or a Federal reserve bank, that is not subject to audit under subsection (e), including– (A) the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility; (B) the Term Asset-Backed Securities Loan Facility; (C) the Primary Dealer Credit Facility; (D) the Commercial Paper Funding Facility; and (E) the Term Securities Lending Facility. (2) AUTHORITY FOR REVIEWS AND EXAMINATIONS.–Subject to paragraph (3), and notwithstanding any limitation in subsection (b) on the auditing and oversight of certain functions of the Board of Governors of the Federal Reserve System or any Federal reserve bank, the Comptroller General of the United States may conduct reviews, including onsite examinations, of the Board of Governors, a Federal reserve bank, or a credit facility, if the Comptroller General determines that such reviews are appropriate, solely for the purposes of assessing, with respect to a credit facility– (A) the operational integrity, accounting, financial reporting, and internal controls of the credit facility; (B) the effectiveness of the collateral policies established for the facility in mitigating risk to the relevant Federal reserve bank and taxpayers; (C) whether the credit facility inappropriately favors one or more specific participants over other institutions eligible to utilize the facility; and (D) the policies governing the use, selection, or payment of third-party contractors by or for any credit facility. (3) REPORTS AND DELAYED DISCLOSURE.– (A) REPORTS REQUIRED.–A report on each review conducted under paragraph shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such review is completed. (B) CONTENTS.–The report under subparagraph (A) shall include a detailed description of the findings and conclusions of the Comptroller General with respect to the matters described in paragraph (2) that were reviewed and are the subject of the report, together with such recommendations for legislative or administrative action relating to such matters as the Comptroller General may determine to be appropriate. (C) DELAYED RELEASE OF CERTAIN INFORMATION.– (i) IN GENERAL.–The Comptroller General shall not disclose to any person or entity, including to Congress, the names or identifying details of specific participants in any credit facility, the amounts borrowed by specific participants in any credit facility, or identifying details regarding assets or collateral held by, under, or in connection with any credit facility, and any report provided under subparagraph (A) shall be redacted to ensure that such names and details are not disclosed. (ii) DELAYED RELEASE.–The non-disclosure obligation under clause (i) shall expire with respect to any participant on the date on which the Board of Governors, directly or through a Federal reserve bank, publicly discloses the identity of the subject participant or the identifying details of the subject assets or collateral. (iii) GENERAL RELEASE.–The Comptroller General shall release a non redacted version of any report on a credit facility 1 year after the effective date of the termination by the Board of Governors of the authorization for the credit facility. For purposes of this clause, a credit facility shall be deemed to have terminated 24 months after the date on which the credit facility ceases to make extensions of credit and loans, unless the credit facility is otherwise terminated by the Board of Governors. (iv) EXCEPTIONS.–The nondisclosure obligation under clause (i) shall not apply to the credit facilities Maiden Lane, Maiden Lane II, and Maiden Lane III.
return him to the art-historical forefront? A successful little Moore show at Kew Gardens a couple of years ago suggested a revival is possible. One problem for any gallery exhibition of Moore is that his major works tend to look much better outdoors than in. Ofili Assessed On the contemporary-art front, Tate Britain offers a mid- career assessment of Chris Ofili (Jan. 27 to May 16), the painter whose Virgin Mary, with applique elephant dung, caused a kerfuffle when “Sensation” was shown in New York in 1999. (It passed largely without comment in London). The question is, has an artist born in 1968, as Ofili was, had time to produce enough to sustain an exhibition of this size and prominence? No such questions can be asked in the case of Lucian Freud , born in 1922. This giant of contemporary British art has an exhibition at the Pompidou Center , Paris, this spring (March 10 to July 19). Freud may feel, as his old friend Francis Bacon did on a similar occasion, that acceptance by the Parisian art world is the ultimate accolade. This season, Tate Modern is presenting a couple of shows devoted to 20th-century classics. “Van Doesburg and the International Avant-Garde” (Feb. 4 to May 16) looks at the Dutch painter/architect who was one of the most idealistic modernists of the 1920s. The exhibition also includes work by contemporaries who shared Van Doesburg’s idealization of simple geometric form. Expect plenty of straight lines, squares and angular objects. Gorky’s Abstracts “Arshile Gorky” (Feb 10. to May 3), also at Tate Modern, will investigate a different and slightly later variety of avant-gardism. Gorky (circa 1904-1948) was one of the leading abstract expressionists, his work full of flowing brush-strokes and soft forms: half abstract, half organic. More geometric patterns, and, surprisingly, contemporary art turn up in “Quilts 1700-2010” at the V&A (March 20 to July 4), which will range from 18th-century bedding to the expletives-not-deleted efforts of Tracy Emin . The photographic show of the season looks likely to be “Irving Penn Portraits” (Feb. 18 to June 6), a big retrospective at the National Portrait Gallery devoted to the celebrated American master of the camera who died last year. Edith Piaf to Pablo Picasso are also among those featured. Ife Sculptures At the British Museum, “Kingdom of Ife: Sculptures from West Africa” ( March 4 to June 6 ) doesn’t have such a stellar historical character at its center as the museum’s current “Moctezuma.” It may be a more beautiful exhibition because the bronzes and carvings made in Ife (part of modern Nigeria) in the 12th to 15th centuries are a high point of art history. Michael Landy’s “Art Bin” at the South London Gallery (Jan. 29 to March 14) may be the most eccentric show of early 2010. The gallery will be transformed into a garbage tip for the disposal of unwanted works of art — or, as Landy calls it, “a monument to creative failure.” It’s a safe prediction that, as always, there’ll be plenty of that to report in 2010. ( Martin Gayford , the author of books on Van Gogh and Gauguin and on Constable, is chief art critic for Bloomberg News. The opinions expressed are his own.) To contact the writer on the story: Martin Gayford in London at martin.gayford@googlemail.com . 
