03/18/2010 05:12 am ET | Updated May 25, 2011

Audit The Fed Bill Introduced In Senate With Bipartisan Support

A bipartisan Senate pair introduced a bill to audit the Federal Reserve's emergency lending programs on Tuesday. The Federal Reserve Accountability Act would not intrude, the senators said, on the Fed's monetary policy or its role as "lender of last resort," but would authorize a Government Accountability Office investigation into actions it has taken to stabilize the global financial system.

"Transparency and accountability are fundamental principles of representative government," said freshman Sen. Jeff Merkley (D-Oregon). "During this financial crisis, Federal Reserve credit contributed greatly to the stabilization of the system. In doing so, the Federal Reserve departed significantly from its traditional relationship with markets and took on unprecedented new risks. Such a significant change in the Federal Reserve's traditional activities demands responsible, robust oversight. The Federal Reserve Accountability Act strikes the right balance between protecting taxpayer dollars and respecting the central bank's responsibility to manage monetary policy. "

The bill is co-sponsored by GOP Sen. Bob Corker of Tennessee, widely respected within his caucus as an authority on financial affairs.

"The Federal Reserve has provided our financial system with emergency credit during this time of financial hardship, and in the course of doing so, has seen a $1.4 trillion increase in its balance sheet. Despite its independence, these are still taxpayer dollars at risk, and many Americans have called for an audit of the Fed," Corker said.

The bill would require the GAO to audit all remaining emergency lending programs not already subject to audit. The GAO, however, would be required to redact the names of the specific institutions involved in the lending. Finding out who the Fed has given money to is a principal goal of advocates of more transparency at the Fed. Those names would, however, be made available one year after each emergency program is no longer used.

The House is considering a more aggressive bill, sponsored by Rep. Ron Paul (R-Texas), which has overwhelming support in the chamber and may be voted on later this year.

UPDATE: Paul's bill passed the House and he is no fan of the Merkley/Corker effort. WATCH:

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