The “audit the Fed” amendment just got a major boost toward passage, with some modifications that secured the support of Banking Committee chair Chris Dodd.

It’s unclear what those modifications are. But Bernie Sanders, the author of the amendment, agreed to the modifications, and subsequent speakers on the amendment haven’t wavered in their support, either. If I had to bet, I’d say this will pass now.

I’m trying to find out what the changes are. They appear to be tied to ensuring that “the Fed’s independence will not be undermined,” which is what Dodd basically said in offering his support. But the Fed’s independence would never have been undermined by the amendment to begin with. It’s possible that the changes just put that in writing.

More when I have it. By the way, that “Obama public opposition” never materialized.

UPDATE: Brian Beutler reports:

In order to allay some of the White House’s and the Fed’s concerns, Sanders has agreed to limit the scope of what the Government Accountability Office would be allowed to audit.

“The way you would do it is to make sure that the audit is not looking at the open market policy, where you’re not looking at how interest rates are set,” Sen. Bob Corker (R-TN) said in response to a question from TPMDC, after a floor vote on a different amendment. “What you’re doing is looking at the actual financial transactions that the Fed is involved in.”

“It’s my understanding he’s working very closely–I’ve talked to him on the floor–with the Fed to try to get that part right,” Corker said.

I really don’t think this is that much of a concession. People want to know what was done with their money. Nothing outlined here changes that.

I think these concessions aren’t a big deal.

UPDATE II: While I try to verify the nature of the changes, it occurs to me that they may be similar to what the White House wanted in terms of separating off monetary policy:

Sander’s amendment, (Treasury Department’s Neal Wollin) concluded, “take[s] down some barriers that have existed for some time now… with the respect of GAO not getting into the middle of monetary policy. That’s the kind of thing we are worried about.”

This is somewhere in between doing nothing and a full top-down GAO audit. I’m trying to determine where in between.

UPDATE III: Jane has the relevant transcript from Sanders and Dodd:

Let me just conclude by saying that I am very proud to say that we have been working with Senator Dodd’s office and some other offices and I’m going to ask that my amendment with modified with the changes are at the desk, and I’m proud to say that these modifications have been worked out by Senator — with Senator Dodd and would allow the GAO to conduct a top-to-bottom audit of all of the Federal Reserve’s emergency lending activities since December 1, 2007. In addition, the modifications require the Fed to put on its web site all of the recipients of over $2 trillion in emergency assistance since December 1, 2007.

Dodd then said: There was a concern about whether or not the independence of the Fed in any way would be compromised and he has guaranteed with his language here that that is no longer an issue whatsoever. And I want to thank him for it.

…So “emergency lending activities” would mean a restriction against anything considered an “open market operation,” which means anything in this System Open Market Account, incorporated Fannie and Freddie activities and foreign currency swaps. That’s a pretty large exemption. But the emergency lending totaled perhaps in the trillions, so we’ll still learn a lot.

UPDATE IV: Here is the relevant langauge:

(c) PUBLICATION OF BOARD ACTIONS.—Notwithstanding any other provision of law, the Board of Governors shall publish on its website, not later than December 1, 2010, with respect to all loans and other financial assistance it has provided during the period beginning on December 1, 2007 and ending on the date of enactment of this Act under the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Term Asset-Backed Securities Loan Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility, the Term Securities Lending Facility, the Term Auction Facility, Maiden Lane, Maiden Lane II, Maiden Lane III, the agency Mortgage-Backed Securities program, foreign currency liquidity swap lines, and any other program created as a result of the third undesignated paragraph of section 13 of the Federal Reserve Act.

That’s real stuff, folks. I don’t totally agree with Jane or Scarecrow on this. I think this is really all that the audit the Fed movement sought to find out – who got the money from the emergency lending facilities set up to basically take over the bailout from the TARP. Even the foreign currency swap lines are in here. Sometimes you have to accept victories.

David Dayen

David Dayen

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