House 'Audit the Fed' bill persists, teeth intact.

From Politico:

The House Financial Services Committee has approved Rep. Ron Paul’s measure to drastically expand the government’s power to audit the Federal Reserve.

The measure, based on a Paul proposal that has attracted more than 300 co-sponsors, passed, 43-26, as an amendment to a financial reform bill. Florida Democrat and fellow Fed critic Alan Grayson co-sponsored the amendment with Paul and played a leading role drumming up support for it among committee members. The adoption of this amendment is an extraordinary victory for Paul, whose libertarian, anti-Fed leanings have often been dismissed by the political establishment.

[...]

The House Financial Services Committee will vote on approving the underlying bill after Thanksgiving recess.

This is precisely the kind of thing I'm talking about when I call for a tactical alliance of left and right in the interest of advancing populist measures.

True, I oppose the extreme laissez faire economic philosophy of Paul and the libertarian tendency. He favors a system with severe restrictions upon the regulation and oversight of markets. By contrast, I favor a social democratic model that protects ordinary people against the inescapable perils of market activity.

But so what? The fact is that left- and right-populism share the interest of instituting democratic checks against powerful, and currently insular and unaccountable, monetary policy-making agencies. As the poet said: in politics, the enemy of my enemy is my friend, and it has always been this way. I don't have to want to play cribbage with someone in order to share some or many of his political interests.

Screw the Federal Reserve.

Another reason to grind our teeth in the direction of the Federal Reserve, courtesy of a report appearing in Bloomberg, as discussed by Yves Smith in the blog Naked Capitalism [emphasis mine]:

It had generally been assumed that the AIG payouts of 100% on credit swaps (when the insurer was under water and bankrupt companies do not satisfy their obligations in full) was the result of some gap in oversight plus traders at AIG exercising discretion (they were unhappy about bonus rows and had reason to curry favor with dealers, who were potential employers).

The article [appearing in Bloomberg] makes clear that AIG had been negotiating to settle on the swaps prior to getting aid from the government, and was seeking a 40% discount. The Fed might not have gotten that much of a discount, but there was clearly no need to pay out at par.

This massive backdoor subsidy to the likes of Goldman, DeutscheBank was authorized by Geithner while he was at the New York Fed. [...]

[T]he fact that this was a backdoor rescue means the Fed is acting as an extra budgetary vehicle of the Treasury. This is a violation of the Constitution and shows how patently false the Fed’s claims of independence are. [...] The real issue is that the Fed BY DESIGN bailed out banks, including foreign banks, through a device not authorized by Congress.