"Bernanke lied when he said the Fed would not bail out Europe. Yesterday, the Federal Reserve agreed to send billions of dollars to European foreign central banks, including the European Central Bank. Clearly there were contingency plans in place that Bernanke did not disclose to Congress." —ALG President Bill Wilson
May 10th, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today condemned Federal Reserve Chairman Ben Bernanke for "lying about the Fed participating in a bailout of Europe in response to the rapidly escalating sovereign debt crisis," and called for a Congressional investigation into the Fed, including the passage of a complete audit of the central bank.
"Fed Chairman Ben Bernanke assured the Congress that the Fed had no plans to bail out Greece and other European countries," Wilson said, "and now here we are, and the Fed and the ECB are basically printing money to purchase worthless junk bonds from nations that are so bankrupt that nobody will buy their debt anymore."
In February, Congressman Ron Paul (R-TX), who proposed and had passed a House version of a Federal Reserve audit, questioned Fed Chairman Ben Bernanke about whether the central bank was planning to engage in a bailout of Greece.
At the time, Bernanke said, "we have no plans whatsoever to be involved in any foreign bailouts or anything of that sort."
According to the Wall Street Journal, "the U.S. Federal Reserve said Sunday that it would revive an emergency lending program used during the financial crisis. The Fed will ship billions of dollars overseas through foreign central banks, including the ECB, so they can, in turn, lend the money out to banks in their home countries in need of dollar funding."
Wilson said, "Now we know Bernanke lied when he said the Fed would not bail out Europe. Yesterday, the Federal Reserve agreed to send billions of dollars to European foreign central banks, including the European Central Bank. Clearly there were contingency plans in place that Bernanke did not disclose to Congress."
The Fed program comes as the European Central Bank (ECB) announced a program to purchase European government bonds, and the European Union and International Monetary Fund announced a wider €750 billion bailout for the entire continent.
Wilson urged Congress to investigate the Fed Chairman "to find out when the bailout of Europe was planned" and to complete plans to audit the Federal Reserve. He also denounced Senator Bernie Sanders (I-VT) for weakening a plan to conduct a full audit of the Federal Reserve as an amendment to the Dodd financial takeover bill.
"Bernie Sanders is a sellout," Wilson declared, "His weakened amendment will still shield from public oversight the Federal Reserve's transactions with foreign central banks and governments, including yesterday's announced Fed participation in the trillion-dollar European bailout."
Under current law, the Government Accountability Office, according to 31 USCA §714(b), cannot audit and exempts from public oversight the following activities of the Federal Reserve:
(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.
The original Sanders amendment would have lifted these restrictions. "Under the weakened Sanders amendment the European bailout is a transaction that will be protected from any public oversight and accountability," Wilson explained.
"The Fed is bailing out Europe, and the American people have a right to know everything about it. The Senate must adopt the original Sanders amendment to completely audit the Federal Reserve, and Congress as a whole must now investigate how widespread these foreign bailouts by the central bank really are. Now, more than ever, the Fed must be completely audited," Wilson concluded.
Original Sanders Amendment to the Dodd Bill, SA 3738, sponsored by Senator Bernie Sanders, and cosponsored by Senators Russ Feingold, Jim DeMint, Patrick Leahy, John McCain, Ron Wyden, Chuck Grassley, Byron Dorgan, David Vitter, Barbara Boxer, Sam Brownback, James Risch, Roger Wicker, Lindsay Graham, Orrin Hatch, Mike Crapo, Robert Bennett, and Jim Bunning.