The Senate on Tuesday approved an amendment to the regulatory-overhaul bill authorizing a one-time audit of the Federal Reserve’s emergency lending programs and defeated a second proposal that would have allowed continuous inquiries.
Lawmakers voted 96-0 for Sen. Bernard Sanders’ proposal to let a congressional watchdog conduct an audit of every Fed emergency action since December 2007. The Senate rejected a measure from Louisiana Republican David Vitter that would have permitted unlimited reviews.
The Sanders amendment is closer to what Federal Reserve Chairman Ben Bernanke told legislators he would support. The Fed chief, during a February hearing, invited an audit of emergency-loan programs while raising concerns that broader audit authority could result in reviews of monetary policy.
“The Sanders amendment gives perfect political cover to senators who are eager to punish the Fed for its secrecy and forays into fiscal policy but are not eager to take any blame for intervening in the Fed’s setting of interest rates,” said Sarah Binder, a senior fellow at the Brookings Institution.
Sanders last week narrowed his amendment in response to concerns raised by Bernanke, the Treasury Department and senators that his call for broader audit could threaten the central bank’s independence.
The change drew support from Senate Banking Committee Chairman Christopher Dodd, the Connecticut Democrat who wrote the main financial-regulation bill.
