Question: What is it that would cost the public less than a million dollars a year but is driving multibillion-dollar banks and corporations frantic?
Answer: HR7590, a bill to provide for annual congressional audit of the giant Federal Reserve System.
WITH THE VOTE by the House of Representatives on this legislation expected within the month, Federal Reserve officials, the powerful American Bankers Association, the National Chamber of Commerce and such corporations as Boeing and Crown Zellerbach are developing a coordinated effort to lobby the legislators.
Since other departments of government, including the departments of Defense and Treasury and other agencies that regulate banks, have long been subject to the audit of the General Accounting Office (GAO) — the investigative arm of Congress — why has .the Federal Reserve been excluded?
The answer is found in the secretive mixture of big power and big money of the banking goliaths and their Fed I Reserve servants that for decades has kept such matters away from both public and Congress, in order to retain their unperturbed control.
AS SOME BUT not enough college students know, the Federal Reserve System is composed of a central bank in Washington with branches in major cities around the country. Three of its most important functions are maintaining substantial control over the money supply, shaping interest rates and regulating over 6,000 member banks and bank-holding companies.
However abstract and abstruse these functions have been made to appear by the bankers, they all affect the level of inflation, unemployment, home buying, consumer credit and other prices consumers and workers must bear. It also adds up to how few or how many financial corporations will dominate the economy.
The Federal Reserve System is almost indistinguishable from the bankers and their big-business clients. These executives make up key advisory committees to the”Fed,” as it is called, and are directors or chairmen of the regional Federal Reserve banks. For example, Malcolm T. Stamper, the president of the Boeing Co., also is chairman of the Seattle Federal Reserve Board.
WHEN I TOOK the course on “money and banking” at university my genial professor also was an official of the Federal Reserve Bank of Philadelphia.
The paperback we studied in class on the “Fed” was written and distributed by: Guess who? The Federal Reserve. About the only groups critical of the Federal Reserve Board in those years were scattered right-wing organizations.
Throughout the years the “Fed” has built a network of approving academics, consultants, and advisers who work on narrow premises and myopic conclusions. Most of them avoid asking basic questions about the consumer consequences of the “Fed’s” operations.
They also believe the public is too ignorant to need to know about what is going on and who is deciding what. They think that talk about accountability to the Congress disrupts the independence and necessary confidentiality of the banking system.
A GROWING NUMBER of congressmen and senators disagree. At House Banking Committee hearings this past spring not only consumer and labor groups testified for an annual congressional audit of the Federal Reserve. Robert M. Bartell put the support of the Liberty Lobby strongly: “Even as the Congress itself faces its inevitable day of accountability on election day, so should the Federal Reserve System on accounting day.”
Indeed, there are many savings and loans institutions, credit unions and some small bankers who want this bill to pass, but they are not willing to confront foursquare the big banks and the Federal Reservebureaucracy headed by Arthur Burns.
However, the people can! If they would focus their attention on the “Fed” and their legislators in the next month they could help substantially to reduce interest rates in the coming years.