Legislation offered by Sen. Rand Paul (R-Ky.), the “Federal Reserve Transparency Act of 2024,” would conduct an audit of the U.S. Federal Reserve by the Government Accountability Office (GAO) for the first time since the Dodd-Frank legislation of 2010 required an audit of the central bank’s purchases of mortgage-backed securities.
This time around, the GAO would look at the Fed’s entire balance sheet, including the recently enacted Bank Term Funding Program — now $141 billion according to the central bank’s latest H.4.1. release — that has been lending banks money in exchange for U.S. Treasuries after the spike in interest rates caused there to be a reported $620 billion of unreported losses including regional banks that experienced failures in the interest rate crunch.
According to Sen. Paul’s press description of the legislation the GAO will be a full audit and include “Transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization; Deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations; Transactions made under the direction of the Federal Open Market Committee; Discussions or communications among or between members of the Federal Reserve Board and officers and employees of the Federal Reserve System related to the actions listed above.”
In the context of the Bank Term Funding Program, the audit will reveal which banks have been dependent on the Fed to avoid losses due to overexposure to U.S. Treasuries — $26.9 trillion out of the $34 trillion national debt is publicly traded.