Exemptions to the Scope of GAO Audits
"The Government Accounting Office does not have complete access to all aspects of the Federal Reserve System. The law excludes the following areas from GAO inspections (31 USCA §714):
(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or
(4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to items.
In 1993 Wayne D. Angell, then a member of the Board of Governors, submitted testimony before a House subcommittee on the reasons for the restrictions on GAO access. He commented,
By excluding these areas, the Act attempts to balance the need for public accountability of the Federal Reserve through GAO audits against the need to insulate the central bank's monetary policy functions from short-term political pressures and to ensure that foreign central banks and governmental entities can transact business in the U.S. financial markets through the Federal Reserve on a confidential basis.2"
Audit the Federal Reserve for answers (Ron Paul)
"There is a statute in place that allows audits of the Federal Reserve; however, the most crucial activities of the Fed are specifically exempted. I seek to remove these exemptions to get a clearer picture of what is going on with our monetary system. For instance,
what arrangements does it have with other foreign central banks? What the Fed does on that front could very well affect or undermine foreign policy — even contribute to starting a war. We also
need to know the source and destination of funds provided through the Fed’s emergency funding facilities. This information will provide a more accurate and complete picture of the true cost of these endless bailouts and spending packages and could very likely affect the decisions being made in Congress."
