Iowa’s five U.S. House members helped approve one of Representative Ron Paul’s top legislative priorities yesterday.  

H.R. 459 would “require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States before the end of 2012.” House leaders brought the bill to the floor under a suspension of the rules, meaning it needed a two-thirds majority to pass. The roll call vote was 327 to 98. Tom Latham (IA-04) and Steve King (IA-05) joined the nearly-unanimous Republican caucus in supporting this bill. The Democratic caucus was divided, with 89 “yeas” and 97 “nays.” Bruce Braley (IA-01), Dave Loebsack (IA-02), and Leonard Boswell (IA-03) were all in the yes camp.

Paul would like to do more than audit the Federal Reserve system but views this legislation as a good first step.

Paul, who has yet to officially drop out of the 2012 presidential race, has long sought to dismantle the Fed based on arguments that the Fed’s power to create money has devalued the dollar. He also says the Fed hurts Americans by making them vulnerable to Fed-induced housing and stock market bubbles, and more recently, that the Fed reacted to the recession by creating billions of dollars to bail out financial institutions.

But with little appetite in Congress to abolish the Fed, Paul is hoping that increasing the transparency of the Fed’s monetary policy decision-making process can at least give Americans more understanding of the decisions it makes.

“The bill essentially removes the prohibitions against a full audit,” Paul said during Tuesday’s debate on the bill. He was referring to current rules that allow the Government Accountability Office to audit most aspects of the Fed, but not monetary policy decisions.

“To audit, we should know what kind of transactions there are,” Paul said. “We should know about the deals that they made when they were fixing the price of Libor. These are the kinds of things that have gone on for years that we have no access to.”

The New York Fed said this month that it knew London banks were under-reporting their borrowing costs, which altered the reported London Interbank Offered Rate (Libor) and was thought to be something that boosted profits for those banks.

While I don’t share Paul’s perspective on economic policy, I support more public scrutiny for the Federal Reserve. I disagree with Democrats who claim an audit would be viewed as political interference in monetary policy decisions. President Barack Obama has neither increased transparency at the Fed nor held Fed officials accountable for their failures. Timothy Geithner got promoted from head of the Federal Reserve Bank of New York to Treasury Secretary after he helped keep the public in the dark about the AIG bailout. Obama reappointed Ben Bernanke to a second term as Federal Reserve chairman despite the Fed’s flawed handling of the Wall Street bailout and its complicity in the housing and credit bubbles that sparked the “Great Recession.”

Unfortunately, Paul’s bill will be dead on arrival in the U.S. Senate.

Braley was the only Iowan in Congress to release a statement on this vote yesterday. He co-sponsored Paul’s bill and serves on the House Oversight and Government Reform Committee, which approved the Fed audit legislation last month.

Washington, D.C. – Rep. Bruce Braley (IA-01) today released the following statement after the House passed the Federal Reserve Transparency Act introduced by Rep. Ron Paul (R-TX). This legislation calls for an extensive audit of the Federal Reserve System before the end of 2012.

“This bill is a bipartisan, common-sense solution to make sure that there is transparency and accountability within the Federal Reserve and I’m proud to be a cosponsor.

“We look to the Federal Reserve to provide guidance on the stability of our economy, and as taxpayers we deserve to know that the Fed is handling its responsibilities in a fair and public way. Ensuring that the Federal Reserve undergoes an extensive audit is one way to make this happen.”

Rep. Ron Paul (R-TX) introduced the Federal Transparency Act of 2011 last year and Rep. Braley signed on as a cosponsor, joining 273 other representatives.

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