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Dodd and Gregg Block Audit-The-Fed Amendment, Frank Tells Committee

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A House-passed provision to open up the Federal Reserve to an audit by the Government Accountability Office is unlikely to be included in the Senate reform package, Barney Frank told a meeting of House Financial Services Committee members Wednesday, according to people in the room.

Frank, chairman of the committee, told the members that Senate Banking Committee Chairman Chris Dodd (D-Conn.) told him that he had assured Sen. Judd Gregg (R-N.H.) that it wouldn't be a part of the bill. Gregg has been a strident opponent of the effort to open the Fed to an audit.

Last November, Gregg said that "passage of the Paul Amendment by the House Financial Services Committee is a dangerous move by this Congress to pander to the populist anger currently directed against our central bank, the Federal Reserve," in a statement after the committee approved an amendment sponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.).

On Wednesday, Gregg told HuffPost he wasn't aware that the Fed audit provision wouldn't be part of the final package.

"I'm not aware this happened. I've not been involved in this negotiation, so I'm probably the wrong person to talk to, because I don't know anything about it," Gregg said.

Dodd is negotiating the Fed-audit provision directly with Sen. Richard Shelby (R-Ala.). Spokespersons for Dodd and Shelby didn't respond to requests for comment.

Steve Adamske, a spokesman for the House committee, was in the meeting and confirmed that Frank delivered the message that Dodd told him he had backed off as part of an agreement with Gregg. "We'll fight for every provision that's in the House bill," including the Fed-audit measure, said Adamske. "Everything will be subject to negotiation."

With a rising populist tide, Democrats are looking for ways to burnish their pitchforks. Several Democrats during the meeting Wednesday pushed for a stronger populist agenda, which includes the audit-the-Fed provision. But it remains to be seen if those pitchforks will shatter against the wall that is the United States Senate.

"Whether the Fed-audit provision survives or not is up to the gods at this point," said Adamske.

UPDATE: HuffPost caught up with Gregg again Thursday and asked him again what discussions he'd had with Dodd. "Well, the Fed gets audited. Let's get the nomenclature right. The Fed is subject to extensive and very thorough auditing on everything except the monetary policy and the open-market-window activity, and if this Congress gets into auditing those two activities, then the Congress is in the business of money supply. And you do not want an elected body in the business of money supply, and I will do whatever is necessary to keep that from happening, if I have the ability to do that," he said.

Asked if Dodd had assured him there would be no audit, Gregg said, "He has not assured me on this issue. He may have said it to somebody. I've heard him represent what his thoughts are, but the term 'assurance' is a little different than what I've -- I think Senator Dodd understands this issue, and I can't speak for him, but I believe he agrees that Congress should not be involved in monetary policy."

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