Macropolitical Moment, 5/11/2010

Only at this moment in time could a bill that includes a (partial) audit of the Federal Reserve be passed by the U.S. Senate 96 to 0. I recall a time, not three years ago, when Ron Paul was regularly mocked for his call to audit the Fed. Now, Congress's convivial socialist, Bernie Saunders of Vermont, and outspoken Alan Grayson, congressman from Florida, fairly easily found veto-proof majorities.

How could this happen?

1. The Netroots and the Rightroots worked together, as did liberal and conservative interest groups. (As Jane Hamsher of Firedoglake put it, "with FDL, Dean Baker, Jamie Galbraith, Andy Stern and Richard Trumka on one side, and Grover Norquist, John Tate, Freedomworks and Americans For Tax Reform on the other there was no room for anyone to play the Joe Lieberman role. Nobody could pretend to be 'principled' in opposition and take refuge in partisan politics -- it would be clear that they were just covering up for the banks.") True that.

2. The near-collapse of the stock market last week. Political moments are created by exploiting the panicked reactions to the Last Significant Event. Wall Street seems out of control. People equate banks with Wall Street. Hence, the banks are out of control. Hence, the banks' clout is suddenly (temporarily) diminished.

3. Growing irritation with the presence of the Fed's heavy-handed lobbying on the Hill. There's an unseemliness in having a government department lobby directly for its own authority, but the Fed went too far. Where a gossamer's touch was warranted, it used a hammer.

4. Why not? There is no rational reason why the emergency lending facilities of the bank shouldn't be subject to an audit, provided that the core mechanism of the Fed -- its independent monetary policy function -- is untouched. The Fed claims it's able to segregate its oversight of banks from its promotion of the health of the American economy; segregating those functions for the sake of an audit can't be too hard, right? (Well, it is hard, but it's hard to argue.)
Presented by

Marc Ambinder is an Atlantic contributing editor. He is also a senior contributor at Defense One, a contributing editor at GQ, and a regular contributor at The Week.

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