Bill Proposal: “Federal Reserve Accountability and Debt Transparency Act”
Proposed by Jeff J Hunter
Inspired by Ron Paul 
Purpose:
To introduce a comprehensive audit of the Federal Reserve, establish strict limits on its capacity to monetize government debt, and increase transparency to ensure that government debt financing is accountable, limited, and no longer conducted in secrecy.
Section 1: Title
This Act shall be known as the “Federal Reserve Accountability and Debt Transparency Act.”
Section 2: Findings and Declarations
Congress finds the following:
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The Federal Reserve has historically operated with limited transparency, especially in its role of purchasing government debt.
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The ability of the Federal Reserve to monetize debt has led to an artificial suppression of interest rates, encouraging excessive government borrowing and spending.
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This practice undermines the integrity of the financial system, creates moral hazard, and transfers risk to the American public, diminishing their purchasing power through inflation.
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Greater oversight and transparency of the Federal Reserve’s activities are essential to maintain public trust and fiscal responsibility.
Section 3: Comprehensive Audit of the Federal Reserve
(a) Audit Mandate:
The Comptroller General of the United States (Government Accountability Office, GAO) shall conduct a full and comprehensive audit of the Federal Reserve System and its member banks, with a focus on:
Monetary policy decision-making processes.
All transactions involving the purchase and sale of U.S. government securities.
Emergency lending activities, including beneficiaries and collateral pledged.
The balance sheet, including any off-balance-sheet liabilities and exposures.
(b) Audit Timeline:
The audit shall commence no later than 60 days after the enactment of this Act and be completed within one year. A preliminary report shall be submitted to Congress within six months, with a full report made publicly available upon completion.
Section 4: Limitations on Debt Monetization
(a) Monetary Financing Restrictions:
The Federal Reserve shall be prohibited from directly purchasing U.S. Treasury securities during primary issuances, except in cases of a declared national emergency approved by a two-thirds vote of both chambers of Congress.
(b) Debt Purchase Cap:
A strict cap shall be established on the Federal Reserve’s holdings of U.S. Treasury securities, limited to a maximum of 10% of the total outstanding federal debt. Any purchases beyond this cap must be authorized by Congress through a public vote.
(c) Debt Affordability Clause:
Government borrowing shall be limited based on a market-driven interest rate mechanism, ensuring that debt financing is subject to real economic conditions. The Federal Reserve shall be restricted from intervening to artificially lower interest rates on government debt.
Section 5: Transparency and Reporting Requirements
(a) Monthly Disclosures:
The Federal Reserve shall publish detailed monthly reports of its asset holdings, including all purchases of government debt, with full disclosure of the counterparties and terms of each transaction.
(b) Annual Testimony:
The Chair of the Federal Reserve shall testify annually before Congress, providing a detailed account of the Federal Reserve’s activities, including its involvement in government debt markets, and answering questions related to the impact of these activities on inflation and the broader economy.
Section 6: Enforcement and Penalties
(a) Non-Compliance Penalties:
If the Federal Reserve fails to comply with the audit, reporting, or debt monetization restrictions set forth in this Act, the Comptroller General shall have the authority to impose penalties, including a halt on the Federal Reserve’s ability to conduct open market operations until compliance is restored.
(b) Congressional Review:
The results of the audit and the Federal Reserve’s compliance shall be reviewed annually by a joint congressional committee, with a public report issued on the findings.
Section 7: Severability
If any provision of this Act is found to be unconstitutional or otherwise invalid, the remaining provisions shall remain in effect.
Section 8: Effective Date
This Act shall take effect immediately upon its enactment.
Summary:
The “Federal Reserve Accountability and Debt Transparency Act” aims to introduce an independent audit of the Federal Reserve, limit its ability to secretly monetize government debt, and enhance transparency in its operations. By making government debt less affordable and more transparent, this bill intends to curb excessive borrowing and spending, promote fiscal responsibility, and protect the long-term economic stability of the United States.