The little committee that could

A very unusual event occurred in the U.S. House of Representatives on Thursday, 19 November.

In a David v. Goliath rendering of people power, two so-called “wingnuts” went up against “one of those permanent power centers in this country that exert great power with very little accountability and almost no transparency.”

A House committee passed the Ron Paul/Alan Grayson amendment calling for a (gasp!) full audit of the Fed.

DemWit rarely shares a full article, preferring to hit the highlights and let the reader choose to move beyond this page via the appropriate link. But, this baby – from Salon.com – is just too good to condense.

So, leaning heavily on the “fair use notice” in my sidebar, here, then, is how a tenacious little group of representatives went up against The Washington Establishment and won the first skirmish in a battle for accountability and transparency:

The Washington establishment suffers a serious defeat

Approval of the Paul/Grayson bill to audit the Fed is both rare and important in several ways

By Glenn Greenwald
Salon.com/Nov. 20, 2009

Something quite amazing happened yesterday in Congress: the House Finance Committee - in a truly bipartisan and even trans-ideological vote - defied the banking industry, the Federal Reserve, the Democratic leadership and mainstream Beltway opinion in order to pass an amendment, sponsored by GOP Rep. Ron Paul and Democratic Rep. Alan Grayson, mandating a genuine and probing audit of the Fed.

The Huffington Post's Ryan Grim has the best account of what took place, noting:

“In an unprecedented defeat for the Federal Reserve, an amendment to audit the multi-trillion dollar institution was approved by the House Finance Committee with an overwhelming and bipartisan 43-26 vote on Thursday afternoon despite harried last-minute lobbying from top Fed officials and the surprise opposition of Chairman Barney Frank (D-Mass.), who had previously been a supporter.”

Grim details how key Committee Democrats such as Frank - who spent the year claiming to support an audit of the Fed in the face of rising anger over its secret and bank-subservient policies - suddenly introduced their own amendment (sponsored by Democratic Rep. Melvin Watt) that would have essentially gutted the Paul/Grayson provisions. Banking industry and Fed officials, as well as the Democratic leadership, then got behind that alternative provision as a means of pretending to support transparency while protecting the Fed from any genuine examination. Notwithstanding the pressure exerted on Committee Democrats to support that watered-down "audit" bill, Grayson convinced 15 of his colleagues to join with Republicans to provide overwhelming support for the Paul/Grayson amendment. As Grim notes:

“[Frank] urged a no vote, yet 15 Democrats bucked him, voting with Paul. Key to winning Democratic support was a letter posted early Thursday from labor leaders and progressive economists. The letter, organized by the liberal blog FireDogLake.com, called for a rejection of the Watt substitute and support for Paul.

“Grayson was able to show Democratic colleagues that the liberal base was behind them.

‘Today was Waterloo for Fed secrecy,’ a victorious Grayson said afterwards.”

The bill still faces substantial hurdles in becoming law, of course, but yesterday's vote has made that outcome quite possible, and it's worth noting several important points highlighted by what happened here:

(1) Our leading media outlets are capable of understanding political debates only by stuffing them into melodramatic, trite and often distracting "right v. left" storylines. While some debates fit comfortably into that framework, many do not. Anger over the Wall Street bailouts, the control by the banking industry of Congress, and the impenetrable secrecy with which the Fed conducts itself resonates across the political spectrum, as the truly bipartisan and trans-ideological vote yesterday reflects. Populist anger over elite-favoring economic policies has long been brewing on both the Right and Left (and in between), but neither political party can capitalize on it because they're both dependent upon and subservient to the same elite interests which benefit from those policies.

For that reason, many of the most consequential political conflicts are shaped far more by an "insider v. outsider" dichotomy than by a "GOP v. Democrat" or "Left v. Right" split. The pillaging of America's economic security by financial elites, with the eager assistance of the government officials who they own and who serve them, is the prime example of such a conflict. The political system as a whole - both parties' leadership - is owned and controlled by a handful of key industry interests, and anger over the fact is found across the political spectrum. Yesterday's vote is a very rare example where the true nature of political power was expressed and the petty distractions and artificial fault lines overcome.

(2) As Grim expertly describes, the effort to defeat the Paul/Grayson amendment came from all of the typical Washington power centers using all of the establishment's typical manipulative tools:

“The playbook in Washington often goes like this: When a measure that threatens the establishment builds enough momentum that it must be dealt with, it is labeled as ‘unserious.’ The Washington Post editorial board, true to the script, called Paul's measure ‘an unserious answer to a serious question.’

“And, it particularly rankles the center that a pair of ‘wingnuts’ [Paul and Grayson] are behind a successful effort to challenge the prevailing order.

“Step Two is for a ‘serious’ compromise to be offered. In this case, it was Watt's amendment. But, by the time the vote was called Thursday afternoon, committee members had seen through his measure, recognizing that it was not a compromise effort to bring real transparency to the Fed, but an attempt to further shut the doors.”

One can count on one hand the number of times that establishment attacks like this fail, but this time - at least for now - it did. And, it reveals a winning formula: where there is a strong and principled leader in Congress willing to defy the Party's leadership and the Washington establishment (Grayson), combined with leading experts lending their name to the effort (economists Dean Baker and James Galbraith), organizations standing behind it (labor groups), and a shrewd and driven organizer putting it all together (FDL's Jane Hamsher), even the most powerful forces and opinion-enforcers can be defeated, as they were here. Those progressive advocates' refusal to be distracted by trite partisan considerations, and their reliance on substantial GOP support to pass the bill (as hypocritical as the GOP's position might have been), was particularly crucial - and smart.

(3) Beyond the specifics, a genuine audit of the Fed would be a major blow to the way Washington typically works. The Fed is one of those permanent power centers in this country that exert great power with very little accountability and almost no transparency (like much of the intelligence and defense community). The power they exert has exploded within the last year as a result of the financial crisis, yet they continue to operate in a completely opaque manner and with virtually no limits. Its officials have been trained to view their unfettered power as an innate entitlement, and they express contempt for any efforts to limit or even monitor what they do.

In other words, the Fed is a typical Washington institution that operates un-democratically and in virtually total secrecy, and a Congressionally-mandated audit that they (and much of the DC establishment) desperately oppose would be a serious step towards changing the dynamic of how things function. At the very least, it would provide an important template for defeating the interests which, in Washington, almost never lose. At least yesterday, those interests did lose - resoundingly - and the importance of that should not be overlooked - Glenn Greenwald


Frodo, Albert Gallatin Award-winner, said...

Frodo respectfully disagrees. A duel or two has taken place in American History between those who disagreed about the independence of a National Bank. Despite the good intentions, and the very valid criticism, there are very good reasons for separating a National Bank from oversight by the Congress, and it is called the Separation of Powers. The principle is much more important than the practice.

Sue said...

Hmmm. I'm confused by Frodos comment. I was going to give a high five to my fav Sen. Grayson, now what??
Still, I heart Grayson and think he should run... Grayson vs. Palin.. 2016

Jerry Critter said...

I don't see how oversight diminishes separation of power. Oversight powers exist for the congress, executive, and judicial branches so they can keep an eye on each other. Why shouldn't we have oversight of the Fed also?

katherine said...

Ron Paul was the only presidential candidate to bring to public awareness the tremendous need for fundamental change to a harmful dependency on the Federal Reserve bank. Many citizens haven't been aware that The Fed is a private bank from which the entire U.S. government borrows money. This is such an important point that I'm repeating it: The Federal Reserve is not a government bank. It's a private corporation. U.S. government rep's to The Fed (Ben Bernanke, Alan Greenspan, et al) are limited by The Fed to only one or two Board positions which ensures that the U.S. government has only a minority presence on The Fed's full Board. This minority position can be easily outvoted.

Our government's relationship to The Fed and its resulting government debt is being paid for by every citizen. This burdensome, enervating, parasitic system of debt is called 'fractional reserve banking' which charges interest on money loaned to, in this case, the U.S. government. This system is largely responsible for citizens working longer and harder for less and less. Woodrow Wilson's Federal Reserve act of 1914 solidified this U.S. government relationship to the Federal Reserve, a move which Wilson himself said he profoundly regretted. This Federal Reserve Act has continued until this day.

That Ron Paul has co-sponsored this legislation and that it has passed in the House is encouraging, hopeful news for fundamental change and the relief of suffering.

There is some gripping, thought-provoking material about this entire subject at www.themoneymasters.com. Ron Paul had this 'Money Masters' video posted at his website for some time so that citizens could be informed about our government's relationship to the Federal Reserve. Nor is the U.S. the only country in this position; the private Central Banking system has a worldwide presence.

This not-boring video is available for purchase at the site, or might be available for viewing on YouTube. In my experience, it's time well spent. This legislation might begin to bring some fundamental change and economic relief to us. If that's true, it could also be a hot potato that requires active citizenry support.

Thanks so much for this important post, BJ.

Frodo, who thinks Paul is bi-polar, said...

Katherine, I do believe that either Alexander Hamilton or Aaron Burr would have taken a shot at you (Frodo can never remember who had which position, without looking it up). The entire concept of a National Bank troubled the Founding Fathers for the first one hundred and fifty years. Frodo, for one, fails to see any relationship between its' existence and citizens working harder and being paid less. To Frodo, it is a good idea to charge Uncle Sam interest. Imagine how much he could borrow if he did so for free?
Pistols at fifty paces?

B.J. said...

To the exuberant Hobbit: huh???

Thanks, Katherine, for your enlightening comments.

I believe the article made it clear that this audit can’t hurt in light of activities resulting from our recent economic woes.

There is no need to fear an audit if all is on the up and up. Can an audit be constued as “oversight by Congress?”

Obama’s campaign was built on a promise of accountability and transparency, and I see no problem with any institution complying with such standards.

I must say this is the first time in the history of DemWit that a duel has been proposed. Katherine, aim low, hobbits are short, LOL.