Our Analysis:

The Federal Reserve Transparency Act, also known as the “Audit the Fed” bill, was approved by the House Oversight and Government Reform Committee on June 27, 2012. The bill is expected to be considered on the House floor sometime in late July.

The bill would direct the Government Accountability Office (GAO) to prepare audits of the Board of Governors of the Federal Reserve System and the Federal Reserve banks. The first audit would cover all of the activities of the Federal Reserve, and the second would review loan files of foreclosed homeowners. Under current law, Congress cannot audit the Federal Reserve’s monetary policy decisions. The GAO is currently prohibited from examining discount window and open market operations; agreements with foreign governments and central banks; and Federal Open Market Committee Directives. The bill is similar to the Dodd-Frank Law of 2010, but Dodd-Frank focused solely on emergency credit programs, whereas the Federal Reserve Transparency Act would not limit the scope of the reviews.

The Congressional Budget Office (CBO) estimates that implementing H.R. 459 would cost $5 million over the 213-2014 period based on estimated labor-hours required by the GAO to perform the work. The bill has 263 bipartisan co-sponsors, and over $9 million has been given to House members from both conservative and liberal interest groups in support of the bill. 

Summary:

7/25/2012--Passed House amended. (This measure has not been amended since it was reported to the House on July 17, 2012. The summary of that version is repeated here.) Federal Reserve Transparency Act of 2012 - Directs the Comptroller General to: (1) complete, within 12 months of enactment of this Act, the required audit of the Board of Governors of the Federal Reserve System (Board) and of the Federal Reserve Banks; and (2) submit to Congress, within 90 days of audit completion, a detailed report of audit findings and conclusions. Repeals certain limitations placed upon such audit. Instructs the Comptroller General to audit and report on the review of loan files of homeowners in foreclosure in 2009 or 2010, required as part of the enforcement actions taken by the Board against supervised financial institutions. Prescribes audit contents, including: (1) the guidance given by the Board to independent consultants retained by the supervised financial institutions regarding procedures to be followed in conducting the file reviews, (2) the factors considered by independent consultants when evaluating loan files and the results obtained pursuant to those reviews, and (3) the determinations made by such consultants regarding the nature and extent of financial injury sustained by each homeowner as well as the level and type of remediation offered.

Actions: