A last-minute amendment to the bankruptcy reform bill passed in the Senate Wednesday opens the Federal Reserve to congressional scrutiny.
The amendment was pushed by Sen. Charles Grassley of Iowa, the highest ranking Republican on the finance committee, and quietly breezed through 95 to 1. Grassley said that his measure wasn't aimed at limiting the Fed's independence, but that Congress just wanted to know a little bit about what it's doing. [UPDATE: In response to the justifiably, curious, Sen. Lamar Alexander (R-Tenn.) was the lone no vote.]
The proposal is, said Grassley, "an important reform for holding the entities involved in the massive taxpayer-funded economic bailout accountable to the public."
The oversight power would only apply to Fed involvement with a specific private firm, such as its actions to assist J.P. Morgan Chase's purchase of Bear Stearns, provide financing for Bank of America and Citibank, and its various moves related to American International Group.
No similar measure is in the House version of the bill, so conference negotiators will determine whether it makes the final package headed to Obama's desk.
The Federal Reserve has created three opaque companies called Maiden Lane I, Maiden Lane II and Maiden Lane III. The companies are holding toxic assets purchased by the Fed, though there's no way of knowing how those assets are performing, because Congress has no oversight authority.
On Thursday, a coalition of 61 liberal and libertarian organization called for that to change. Liberal groups OMB Watch and Public Citizen joined FreedomWorks and Campaign for Liberty, among others, in drafting a letter published in the Washington Times, pressing the issue of Fed secrecy.
"The Federal Reserve has created and dispersed trillions of dollars in response to our current ﬁnancial crisis. Americans across the nation, regardless of their opinion on the bailouts, want to know where that money has gone and exactly how much has been spent," it reads.
The movement to bring sunlight into the Fed is splaying in from the political corners, gradually closing in on the center. Sen. Bernie Sanders, a self-described socialist, is pushing the issue, as is Rep. Ron Paul (R-Texas), a libertarian. Paul's bill now has 134 cosponsors in the House, including, on the right, Rep. Tom Price (R-Ga.), head of the conservative Republican Study Committee and on the left, Rep. Lynn Woolsey (D-Calif.), former head of the liberal Progressive Caucus. Rep. Spencer Bachus (R-Ala.), ranking member of the Financial Services Committee and Stephanie Herseth Sandlin (D-S.D.), a leader of the 'centrist' Blue Dog Democrat coalition. The bill, H.R. 1207, has picked up 79 members since Congress returned from its recent recess.