Audit the Fed Wins Big in the Senate

The Eccles Building (wikimedia)

The Eccles Building (wikimedia)

Yesterday, Senator Bernie Sanders of Vermont struck a deal with Chris Dodd and the White House over his “audit the Fed” proposal that allowed the measure to be adopted by the Senate. I saw last night on Twitter that this led to Jane Hamsher denouncing Sanders as a sellout, which I noted led to a bit of a credibility mismatch between a veteran progressive legislator and a media entrepreneur whose specialty niche is never taking yes for an answer on anything. Obviously, though, I’m a well-known centrist sellout but maybe actual left-wing economist Dean Baker can persuade some folks that Sanders knows what he’s doing:

These concessions are unfortunate, the Fed is a creation of Congress and for that reason it should be subject to the same investigative procedures as any other federal agency, but they certainly are secondary compared with getting a full accounting of the money lent out through the special facilities. It is also important to note that in one very important way the Sanders compromise goes beyond the original Paul-Grayson language. Under the compromise, the information about the lending facilities will be made fully public where everyone can scrutinize it. The original bill would just have this information made available to the relevant congressional committees. They would then have to make a further decision about what information, if any, would be made public.

There has been a long ongoing battle with the Fed over its policy of excessive secrecy. Over the years, Congress has pushed back at efforts to treat the Fed as a holy temple outside of democratic control. It has made progress at holding the Fed accountable through measures like requiring the semi-annual Humphrey-Hawkins testimony by the Fed chair before Congress, the release of full transcripts of Fed open market meetings (with a 5-year lag), and now this public audit of its special facilities. There will be further battles and we have a long way to go before the Fed is as democratically accountable as it should be, but the Sanders compromise is a big step forward.

This is what progress looks like. You have an idea. The idea gets some sponsors. Activists push for the idea. It gains momentum. The forces of the status quo fight back. Activists push further forward. Ultimately the forces of the status quo decide they want to try to strike a deal. Then you bargain for a bit. When you achieve a deal that marks meaningful progress, you say yes. That’s the win. Then you try for more wins on more topics in the future. In politics, you’re either moving forwards or you’re moving backwards. When you’re moving forwards, you’re winning. For the past 18 months conservatives have been winning.

Meanwhile, Tim Fernholz rounds up yesterday’s other amendment action. The failure of Kaufman & Brown’s bank size cap is too bad (but expected) but progressives seem to have won all the other fights.