# What is this "Audit the Fed" stuff I have been hearing about? **URL:** \ **Category:** Great Debates\ **Created:** [July 24, 2012, 2:11pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235 "2012-07-24T14:11:25Z")\ **Posts on this page:** 12\ **Page:** 4
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [July 25, 2012, 6:00pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/61 "2012-07-25T18:00:21Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Perhaps, but that’s a separate thread. No “perhaps”; statistically, they find fewer criminals when they concentrate on race than when they don’t. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [July 25, 2012, 6:06pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/62 "2012-07-25T18:06:10Z")
> [@newcomer](#): > > On YouTube you can find recent C-SPAN interview with Ron Paul - I think it’s from Monday. They even have video from Bernanke’s last week Congress testimony where he explicitly rejects a specific audit request (Fed’s deliberations & decisions process) that Ron talks about. Why don’t you tell us what you think? I’m not doing your reaearch for you. Furthermore, from what I have heard of Paul’s “audit the Fed” statements, he doesn’t explain what kind of an “audit” he wants either. What he seems to want is for the minutes of Federal Reserve deliberations to be provided to Congress. That isn’t an “audit,” and frankly, it’s utterly pointless and the only possible outcome would be to allow Congress to pressure the Fed to change interest rates for short term political gain, which is a terrible idea. There’s a reason that pretty much every decent, industrlaized country in the world has an independent central bank. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 25, 2012, 8:31pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/63 "2012-07-25T20:31:20Z")
Bill [passed](http://abcnews.go.com/Politics/OTUS/ron-pauls-audit-fed-bill-passes-house/story?id=16855319#.UBBXSrd5mc1) 327-98. ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [July 25, 2012, 8:35pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/64 "2012-07-25T20:35:50Z")
> [@WillFarnaby](#): > > Bill [passed](http://abcnews.go.com/Politics/OTUS/ron-pauls-audit-fed-bill-passes-house/story?id=16855319#.UBBXSrd5mc1) 327-98. It doesn’t matter: > [@](#): > > While Wednesday’s passage in the lower chamber is a victory for Paul and his supporters, the bill is considered dead on arrival in the Senate. Harry Reid, the Senate Majority Leader and Nevada Democrat, has vowed not to put it to a vote. edited to add: I think that Republicans in the House knew this, and voted for it just to look good to the Randians and Teepers. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [July 25, 2012, 10:05pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/65 "2012-07-25T22:05:57Z")
> [@WillFarnaby](#): > > Bill [passed](http://abcnews.go.com/Politics/OTUS/ron-pauls-audit-fed-bill-passes-house/story?id=16855319#.UBBXSrd5mc1) 327-98. Do you think this lopsided vote validates the need and reasonableness of the legislation? ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [July 26, 2012, 2:13am UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/66 "2012-07-26T02:13:39Z")
> [@newcomer](#): > > On a related note, I’d like to reiterate my question that nobody touched - was a decision to create Maiden Lane(s) not only an economic but a political decision too? Or, how up to speed are you on Operation Twist’s negligible results? The Maiden Lane transactions were economic ones - and profitable for taxpayers at that. The Fed has paid the US Treasury over $75 billion a year in profit the last several years. [http://latimesblogs.latimes.com/money\_co/2011/01/federal-reserve-2010-record-profit-financial-crisis-intervention.html](http://latimesblogs.latimes.com/money_co/2011/01/federal-reserve-2010-record-profit-financial-crisis-intervention.html) All of the Fed’s earnings go to taxpayers. The Fed makes a profit on every single loan it extends to member banks. Lehman was not a member bank in 2008 and neither were the Maiden Lane counterparties. That is why Maiden Lane required a separate entry on the Fed’s very public balance sheet. ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [July 26, 2012, 2:23am UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/67 "2012-07-26T02:23:45Z")
Feb 28, 2012 > [@](#): > > New York Fed Sells Remainder of Maiden Lane II LLC Securities; Approximately $2.8 Billion Net Gain Generated for U.S. Public from the Portfolio > **[New York Fed Sells Remainder of Maiden Lane II LLC Securities; Approximately...](https://www.newyorkfed.org/newsevents/news/markets/2012/an120228.html)** ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 26, 2012, 3:49am UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/68 "2012-07-26T03:49:28Z")
> [@Ravenman](#): > > Do you think this lopsided vote validates the need and reasonableness of the legislation? No. I’m not in the habit of looking to congress for wisdom and reasonableness. ---
**Author:** ![newcomer](https://avatars.discourse-cdn.com/v4/letter/n/e5b9ba/32.png) [@newcomer](https://boards.straightdope.com/u/newcomer)\ **Post date:** [July 27, 2012, 4:11pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/69 "2012-07-27T16:11:55Z")
> [@Linden\_Arden](#): > > The Maiden Lane transactions were economic ones - and profitable for taxpayers at that. The Fed has paid the US Treasury over $75 billion a year in profit the last several years. > > [Federal Reserve posted record profit of $78.4 billion last year](http://latimesblogs.latimes.com/money_co/2011/01/federal-reserve-2010-record-profit-financial-crisis-intervention.html) > > All of the Fed’s earnings go to taxpayers. The Fed makes a profit on every single loan it extends to member banks. Lehman was not a member bank in 2008 and neither were the Maiden Lane counterparties. That is why Maiden Lane required a separate entry on the Fed’s very public balance sheet. Ever looked up details about the “profit paid”. [QUOTE=Feds News release] The Federal Reserve Banks’ 2010 net income was derived primarily from \*\*$76.2 billion \*\*in income on securities acquired through open market operations (federal agency and government-sponsored enterprise (GSE) mortgage-backed securities, U.S. Treasury securities, and GSE debt securities) [/QUOTE] In other words, the earning comes from interest on Government-issued or guaranteed (Treasury and GSE’s) securities. Guess where the funds to pay interest on Government-issued or guaranteed securities come from? Yes, from taxes and/or increase in public debt. So, to put it in simpler terms, Feds “paid” profit to the same Government that paid interest on the securities Feds hold (less, of course, fees and dividends that Fed pays out to God knows who). Not to mention, Government still holds about 70% of AIG shares. But, yeah, sounds good when folks read that “Feds paid US treasury all the profits” and then you offer it as a “proof” of a sound policy. :rolleyes: ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [July 27, 2012, 4:45pm UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/70 "2012-07-27T16:45:20Z")
> [@WillFarnaby](#): > > No. I’m not in the habit of looking to congress for wisdom and reasonableness. Finally, something everyone can agree on. 😃 ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [July 28, 2012, 1:35am UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/71 "2012-07-28T01:35:56Z")
> [@newcomer](#): > > In other words, the earning comes from interest on Government-issued or guaranteed (Treasury and GSE’s) securities. Guess where the funds to pay interest on Government-issued or guaranteed securities come from? Yes, from taxes and/or increase in public debt. Yes, that is exactly right and is no surprise to financial people. The Fed is not only Lender of Last Resort but also Buyer of Last Resort in difficult times. This downturn should have been magnitudes worse than the Great Depression based on wealth lost in 2007-08. But Bernanke and Obama stepped in to juice the system to prevent the GD II. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 28, 2012, 2:15am UTC](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235/72 "2012-07-28T02:15:41Z")
> [@Linden\_Arden](#): > > Yes, that is exactly right and is no surprise to financial people. > > The Fed is not only Lender of Last Resort but also Buyer of Last Resort in difficult times. This downturn should have been magnitudes worse than the Great Depression based on wealth lost in 2007-08. But Bernanke and Obama stepped in to juice the system to prevent the GD II. To delay it you mean. [Previous page](https://boards.straightdope.com/t/what-is-this-audit-the-fed-stuff-i-have-been-hearing-about/629235.md?page=3)