* Ron Paul's measure would open Fed monetary policy to
* 89 House Democrats vote for more central bank transparency
* Senate Democrats to stall measure, fret over politicizing
* Measure could resurface in Republican convention platform
By David Lawder
WASHINGTON, July 25 Legislation to subject the
Federal Reserve's monetary policy to audits sailed through the
U.S. House of Representatives on Wednesday although the measure
is expected to die in the Democrat-controlled Senate.
The legislation, written by Republican representative Ron
Paul, whose anti-Fed crusade prompted a presidential bid and his
grass-roots folk-hero status, passed the House by a 327-98 vote
on Wednesday, exceeding the two-thirds majority needed.
Eighty-nine Democrats joined 238 Republicans to approve it.
Fed officials have long fought the audit bill, arguing it
would compromise their independence. Chairman Ben Bernanke told
House lawmakers last week it would open the door to a "nightmare
scenario" of political meddling in monetary policy decisions.
The vote showed bipartisan support in the House for greater
scrutiny of the U.S. central bank's powers which, were expanded
to help it tackle the financial crisis.
"I don't know how anybody could be against transparency,"
Paul said during a debate on the floor on Tuesday, adding that
Americans deserved more details of the Fed's bank rescue deals
and support to foreign central banks.
"They're sick and tired of what happened in the bailout and
where the wealthy got bailed out and the poor lost their jobs
and they lost their homes," said Paul, who retires at year-end.
"It's time that we stood up to the Federal Reserve that
right now acts like some kind of high, exalted priesthood,
unaccountable to democracy," added Dennis Kucinich, a Democrat
who is losing his seat due to a primary defeat.
Many Republicans and some Democrats have criticized the
Fed's extraordinary measures to rescue banks and buy mortgage
and Treasury debt, saying the central bank strayed into
Congress' fiscal policy territory.
They say the Fed's actions to ease the 2007-2009 recession
may have planted the seeds of high inflation in the future.
The Fed asset purchases, aimed at lowering borrowing costs
and spurring economic growth, have swollen its balance sheet to
$2.8 trillion from around $800 billion before the crisis. It has
held interest rates at nearly zero for three and a half years
and has pledged to keep them extraordinary low until late 2014.
Paul's bill directs the Government Accountability Office, an
independent, nonpartisan congressional agency, to conduct a full
Fed review. It would remove an exemption that shielded from
audit the monetary policy and other decisions by the Federal
Open Market Committee.
NO VOTE IN SENATE
Paul's son, Republican Senator Rand Paul, has introduced a
companion bill, but the Democrats who control the Senate do not
intend to bring it to a vote, a senior Democratic aide said.
But the aide said Rand Paul was expected to try to force a
vote on it as an amendment to other legislation.
Some Democrats, generally less critical of the Fed, say such
audits would undermine the Fed's independence and erode market
confidence in the central bank.
"That will politicize the making of such policy, and I think
it's a bad way to go," said Steny Hoyer, the number-two Democrat
in the House.
SECOND CHANCE IN 2013?
Should Republicans win control of the Senate in November's
elections, the Paul audit measure will likely resurface in some
form next year. Rand Paul will continue in the Senate and will
succeed his father as Congress' top Fed critic.
His efforts to rein in the Fed's powers also could shift
next year to a campaign to replace Bernanke, whose four-year
term expires Jan. 31, 2014.
Ron Paul also may try to influence future Republican policy
toward the Fed by insisting that portions of the bill be
incorporated into the Republican economic platform at the
party's convention in Tampa in August.
"Paul has 158 delegates and it is not inconceivable that
some 'audit the Fed' language is prevalent in the Republican
platform when all is said and done," said Chris Krueger, senior
policy analyst at Guggenheim Partners in Washington.