Senate backs probe of Federal Reserve

City A.M. Reporter
THE US Senate yeterday unanimously approved an amendment to a financial reform bill that aims to open the secretive Federal Reserve to outside scrutiny.

The measure introduced by senator Bernie Sanders, an independent on the left, was passed by a vote of 96 to 0.

It directs the Government Accountability Office (GAO), an investigative arm of Congress, to conduct a complete audit of the Fed within a year, reviewing all the loans and other financial aid it has provided since 1 December, 2007 during the worst financial crisis in US history.

The Fed would be required to disclose the names of beneficiaries of more than two billion dollars in aid the bank provided during that period, something Fed Chairman Ben Bernanke has consistently refused to do.

Under the amendment, the GAO also is supposed to review the central bank’s governance, including whether nominations of Fed directors had been free of discrimination.

It also would determine whether there are any conflicts of interest since members of its policy-making Open Markets Committee are elected by member banks.

The measure was approved as an amendment to a sweeping Wall Street reform bill expected to win final Senate approval within weeks. It is a high priority for Barack Obama.