During the height of the financial crisis, the Federal Reserve received unprecedented authority to meddle in the economy without any semblance of taxpayer protection or accountability. Despite Federal Reserve officials’ fierce defense of their complete lack of transparency, the shroud of secrecy was finally lifted this week as the Government Accountability Office released their audit report on the Federal Reserve’s emergency lending programs. And what they uncovered is shocking.
Buried on page 131 of their 266 page report was the information officials were so eager to hide from the taxpaying public. As Americans struggled to make ends meet in the midst of financial meltdown, the Federal Reserve handed out $16 trillion in loans to Wall Street titans like CitiGroup, Bank of America, and Goldman Sachs. If that wasn’t bad enough, about 65% of those “emergency loan” handouts went to foreign companies and banks. On behalf of American taxpayers, the Federal Reserve took on an unprecedented portfolio of risky financial liabilities to prop up foreign firms, without Congress’s knowledge.
It’s no wonder Fed officials resist calls for transparency so ardently. If they didn’t blink at sending trillions of dollars overseas, what other risky decisions have they made behind closed doors? The GAO’s audit only extended to the Fed’s emergency programs and the bulk of the Fed’s policies remain closed to the public. The fact that even a limited search resulted in such shocking revelations is further evidence that a transparent audit of the Fed without any special exemptions is the only way to truly discover what reckless decisions the Fed is making on taxpayer’s behalf.
