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On Monday, the Senate voted 96-0 to add to the financial reform bill an amendment requiring the Federal Reserve to undergo a one-time audit. Authored by Vermont Independent Bernie Sanders, the amendment accomplishes a long-time goal of the libertarian, Tea Party wing of the Republican Party, best represented by Texas Rep. Ron Paul, who has frequently called to audit the Fed. How did the audit-the-Fed movement not only go mainstream, but lead the Senate into one its rare unanimous votes?

  • What the Audit Does  The Washington Post's Brady Dennis explains, "the Fed must undergo a one-time examination of its massive emergency lending programs and post details on its Web site by December about the firms that benefited from its lending during the crisis. The new language, however, prevents investigators from peering into the central bank's deliberations on interest rates and other elements of monetary policy." The original measure called for regular audits, but the White House lobbied it down to just one.
  • Why Congress Wants It  Conservative blogger Allahpundit lays it out. "For [Ron] Paul and [Bernie] Sanders, the original point was to shed light on the Fed’s manipulation of monetary policy, not just to examine its books. The audit, or what Paul more accurately calls a disclosure, will give lawmakers its first peek into the machinations conducted by the Fed in the collapse and stabilization of the financial markets over the past two years." But Allahpundit suspects part of the reason it passed was that it had been watered down and will leave its proponents "unsatisfied."
  • Last Week's Near-Crash Paved Way  The Atlantic's Marc Ambinder is awestruck: "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." He cites cross-party lobbying, irritation with the Fed's "heavy-handed lobby" on regulatory reform, and "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."
  • 'The Bipartisanship of the Fringe'  That's how Politico's Ben Smith describes the pro-audit coalition. "The latest push started in last year, with a push from labor leaders Andy Stern and Rich Trumka and a coalition of groups on left and right organized by liberal blogger Jane Hamsher and Michael Ostrolenk of the Liberty Coalition. Its members ranged from progressive fixtures like Robert Borosage and Dean Baker to old-line conservatives like Phyllis Schlafly and Grover Norquist."
  • Support For Audit Just Too Broad, Bipartisan  FireDogLake's Jane Hamsher pats herself on the back. "The transpartisan support for Audit the Fed we’ve built over the year makes it difficult for anyone with re-election worries to play the Joe Lieberman role, even Joe Lieberman." She's referring to Lieberman's frequent position in the middle of debates, which allows him to block key measures.
  • Fed Too Unpopular  Reason's Brian Doherty links back to his 2009 piece explaining the growing popular movement to audit. "These days the Federal Reserve faces challenges to both its power and its mystery, thanks to both hot public opinion and cold academic analysis. Politicians are demanding a peek behind the curtain, and holdovers from Paul’s 2008 presidential campaign have kick-started an 'End the Fed' movement." He quotes Ron Paul, "Now the Federal Reserve is less popular than the IRS!"
  • The Fed Misbehaved During 2007 Crash  Filling in for Rachel Maddow on MSNBC, the Nation's Chris Hayes calls this "the single greatest act of bipartisanship since President Obama took office." He retells the story on the Fed's strange, opaque behavior and how it led Congress to demand it be audited.

But  beginning in 2007 you might recall that the economy went into an apocalyptic death spiral, and the system went haywire.  And suddenly the Fed wasn’t just loaning money to commercial banks, it was loaning money to all sorts of parties it had never before lent money to, and doing it in all kinds of ways it had never done before.

Most troubling of all, the Fed wouldn’t say who those borrowers were, and how much they got.  And if the idea of the Fed just handing out cash and refusing to tell anyone who they were handing it to sounds crazy, that’s because it is crazy.

This article is from the archive of our partner The Wire.

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