The Senate approved an amendment from Sen. Bernie Sanders, I-Vt., that would subject the Federal Reserve's bailout operations to a one-time audit. The vote was 96 - 0 in favor of the measure.
A stronger audit, sponsored by Reps. Alan Grayson, D-Fla., and Ron Paul, R-Texas, cleared the House in December. The Grayson-Paul bill would subject all of the Fed's operations, including monetary policy, to an audit. The two measures will have to be reconciled once the Senate passes the overall Wall Street reform package.
But regardless of how broad the ultimate audit will be, this is a major victory for good government advocates. The Fed has pumped trillions of dollars in the U.S. banking system since 2008 with almost no public disclosure whatsoever. We don't know which banks received the money, under what terms, or who approved the transactions. No other government agency can spend trillions of dollars without saying what it spent it on. As William Greider empahsizes for The Nation , this is a fundamentally dirty business-- many top Fed officials are active in the banking industry, and the relationship between bankers and the Fed is fundamentally "incestuous."
The results from the audit of the Fed's bailout operations will dramatically increase pressure to audit the entire agency, and reform a deeply corrupt institution. The Senate Wall Street reform bill is now officially worth supporting.
UPDATE: Immediately following the Sanders vote, Congress shot down a broader Fed audit proposed by Sen. David Vitter, R-La., by a vote of 37 - 62.