–Senate To Vote On One Time Fed Audit In Revised Sanders Amendment
–Senate Will Also Vote On More Expansive Fed Audit By GOP Sen Vitter

By John Shaw

WASHINGTON (MNI) – The Senate is scheduled to vote Tuesday morning
on two amendments related to audits of the Federal Reserve Board.

The amendment most likely to pass is a revised amendment by Sen.
Bernie Sanders, an independent from Vermont, which would charge the
Government Accountability Office to conduct a comprehensive, one time
audit of the Fed.

Sanders’ amendment charges the GAO to conduct an audit of all of
the Fed’s emergency lending activities since December, 2007. Sanders
said it is important to better understand the Fed’s “hugely expanded
role” since 2007 and to examine possible conflicts of interest.

Sanders said his amendment would require the Fed to put on its
website all of the recipients of emergency assistance since December of
2007. The Fed would have to disclose how much money went to borrowers,
the dates the assistance was offered, the terms of repayment and the
“specific rationale” for the creation of the lending programs.

The amendment explicitly bans the GAO from reviewing the Fed’s
monetary policy, as well as its transactions with other central banks.

Senate Banking Committee Chairman Chris Dodd has said he is
supportive of his amendment and he believes the Obama administration is
comfortable with it as well.

The Senate will also vote on the original version of Sanders’
amendment which is now being offered by Republican senator David Vitter.

It would mandate a far more wide-ranging audit of the Fed by the
GAO — and would make such audits regular occurances.

The Vitter amendment is not likely to pass.

The underlying Senate bill, largely drafted by Dodd, establishes a
new independent Consumer Protection Bureau at the Federal Reserve Board,
creates a process to liquidate failed financial firms, sets up a council
of regulators to oversee systemic risk in the economy, establishes a
regulatory structure for over-the-counter derivatives, requires hedge
funds that manage over $100 million to register with the SEC and creates
a new office within Treasury to monitor the insurance industry.

Dodd’s bill has been merged with a package that was approved by the
Senate Agriculture Committee which requires OTC markets to adopt aspects
of the regulated markets such as mandatory clearing through derivatives
clearing organizations and trading on exchanges or exchange-like
facilities.

It has a narrow exemption for commercial “end users” who use
derivatives to hedge against economic contingencies such as fluctuations
in fuel prices, currency and interest rates.

Dodd has said that senators are continuing to “work on” language
related to derivatives, suggesting the current provisions are likely to
be amended.

Key Republican senators, including Sen. Richard Shelby, have
scheduled an early Tuesday afternoon briefing to champion an amendment
to abolish Fannie Mae and Freddie Mac in two years.

** Market News International Washington Bureau: (202) 371-2121 **

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