The Federal Reserve’s history of opposing transparency

Roger Auerbach, University of Texas Professor of Public Affairs and expert on aspects of the Federal Reserve’s past that the Fed would prefer to keep hidden, has published a must-read article in the Huffington Post exploring the  Federal Reserve’s history of  keeping the public in the dark about monetary policy.

Professor Auerbach discuss how the “non-political” Fed lobbied to limit the General Accountability Office (GAO)’s ability to audit its operations in the 1970s:

In the 1970s, the Fed organized a massive lobbying campaign in the Congress against a GAO Fed audit, using officials from private banks they regulated Evidence of the Fed’s orchestration of the lobbying campaign came into public view after Reuss negotiated with Fed Chairman Arthur Burns for six months. Reuss obtained three years of transcripts from secret meetings of all twelve district Federal Reserve Banks in December 1976. I assisted Reuss who spoke about these transcripts on the floor of the House of Representatives, May 24, 1977, “What the Secret Minutes of the Federal Reserve Banks Disclose.”

One example was: “On February 19, 1974, President Frank E. Morris of the Boston Federal Reserve Bank called on his board of directors to contact the members of Congress to promote the Federal Reserve’s position on an earlier version of the GAO audit bill. ” (Auerbach, Chapter 10, “The Myth of Political Virginity, page 157).

Professor Auerbach also examines how the Fed was so desperate to hide the notes of the Federal Open Market Committee meetings form Congress that they destroyed their records:

“The seventeen-year lie began. Fed chairman Arthur Burns notified House Banking chairman Wright Patman in 1974 that he could not give Congress the FOMC transcripts because ‘they are routinely disposed of after the Committee has formally accepted the memorandum of discussion for the meeting in question,’ …” (Auerbach, page 89)

House Banking Chairman Henry B. Gonzalez called a hearing in 1993 to question the Fed District Bank presidents and the Board of Governors They did not explain the existence of 17 years of FOMC transcripts even though they had been informed about them at a secret Fed meeting four days before. Later, one district Fed bank broke ranks and notified Gonzalez about the transcripts. Gonzalez sent me to the Board of Governors with a committee lawyer and several staff members. They showed us the transcripts in a room right around the corner from Chairman Alan Greenspan’s office.

In 1995 a majority or more of the FOMC members voted to destroy the transcripts:

“A subcommittee of the FOMC reported its deliberations. The subcommittee chair, Governor Alan Blinder, characterized the discussion at the FOMC meeting: “I did not hear any consensus–maybe someone else heard a consensus. Maybe we should just have a vote on whether there should be an ‘off the tape’ portion. Do you agree?” Greenspan replied: “I agree.” He later added: “I am not going to record these votes because we do not have to. There is no legal requirement.” The vote was taken without recording members’ names. Greenspan announced: “The ‘Ayes’ have it.” (Auerbach, page 104, reprinted from the FOMC transcript January 31-Februaqry 1,1995)

Read the whole article here.

Ironically, the Fed’s desperation to protect its secrecy, strengthens the argument for Audit the Fed. After all, as Campaign for Liberty Chairman Ron Paul has said, if the Fed has nothing to hide, they have nothing to fear from an Audit. Audit the Fed would also create a legal requirement to preserve their records, since destroying them would be interfering with a mandated GAO Audit.

The Federal Reserve may be even more determined to kill the Audit the Fed bill than they where in the 1970s. In addition, the fallout of the 2008 financial crisis and the Dodd-Frank bill has increased the Fed’s power (in typical DC fashion Congress decided the best way to prevent future crises was to give more power to the organization responsible for the crisis in the first place). This means the Fed has even more lobbying muscle on its side than it did in the 1970s.

This is why it so important you help Campaign for Liberty put as much pressure as possible on the Senate. If you have not done so yet, please sign the Audit the Fed petition to the Senate and ask your pro-Audit friends and family to so so as well. As a thank you, everyone who signs the petition will be entered to win an AR-15.