Bipartisan Financial Overhaul U.S. Senate Bill: Federal Reserve Board Chairman Bernanke Lobbies Against Reformation

Passage of the banking and financial regulatory bill in the US Senate could mean a major reform of the most powerful private financial regulator you've never known.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) is spearheading a tripartisan Senate move to remove the Federal Reserve's broad domestic regulating power and subject the U.S. central bank to government audits by a new governmental agency that would be called the Consumer Financial Protection Agency. According to financial analysts, the 30 Senate co-sponsors of the proposed 1136 page Senate bill poses the biggest challenge to the Fed's independence since it was codified into law in the 1970s.
A non-governmental entity, the Federal Reserve (Fed) is posed to lose two of the biggest powers it has been given by the U.S. government - its domestic merchant banking power as regulator of U.S. domestic banks and its power to issue consumer protection laws.

U.S. Tripartisan Support of Bank Reform Legislation

Faced with heavy federal lobbying efforts, the financial reform legislation has still gained tripartisan support from Republicans, Democrats, and Independents -- both conservatives and liberals. The financial reform bill cleared the U.S. House of Representatives (H.R. 4173 - house finance bill). Among the U.S. Senators who are seeking to rein in the Fed are Sen. Jim DeMint (Rep.-SC), one of the chambers most conservative members, and Sen. Bernard Sanders (Indep.-VT), one of the chamber's most liberal members.

Senator DeMint said they are prepared to use their filibuster power to force a vote on legislation authorizing a full audit of the Fed by the Government Accountability Office (GAO) as proposed by Rep. Ron Paul (R-TX).

Fed Chairman Bernanke Lobbies to Limit Passage of the Financial Reform Law

Speaking December 7, 2009 to the Economic Club of Washington, Fed Chairman Benjamin Bernanke stressed the importance of the Fed's role as a regulator and stated his opposition to a plan that would subject the central bank's monetary policies and laws over the U.S. domestic financial markets to review by the GAO.

"Our involvement in supervision is critical for ensuring that we have the necessary expertise, information and authorities to carry out our essential functions of promoting financial stability and making monetary policy," said Bernanke in his recent speech to the Economic Club of Washington.

Federal Reserve Power Concerns

Sen. DeMint, however, expressed concern about the Federal Reserve under Bernanke's leadership. "[T]he Fed has lent several trillion dollars to failing financial institutions that should have been held accountable by market forces," said Sen. DeMint. "The total amount of these bailouts exceeds the entire annual budget of the United States. Yet the public has not been given adequate information about these bailouts. In fact, Mr. Bernanke has led the fight against" the bill, said DeMint.

The reining in of Fed power over the U.S. monetary system is a tale of financial market transparency. The tale has been retold by market economies for millennia. It is embedded in the fears of globalization, the illuminati, and the global reach of merchant banker families like the Dutch Bilderbergs. The populist interest of the people to supervise their own financial affairs and to limit control over the dynamics of market finances to accountable governmental entities whom they elect is one of the checks on dominant market actors within a free market economy.

Further Reference: “Deal near on Senate financial reform bill,” Business Digest, The Washington Post (12/24/2009).

General Disclaimer: This article is for informational purposes only and should not be used as a substitute for tax or legal advice.