Why do we need to Audit the Fed?

I have previously posted many Ron Paul videos and speeches in regards to his bill “Audit the Fed” because I believe they are the source of our current economic downturn. Recently, we had a special inspector general Neil Barofsky explain to us that the Fed lost taxpayer money by making poor decisions.

Hopefully that Ron Paul’s introduction of the “Audit the Fed” bill and Neil Barofsky’s findings on the AIG dealings will motivate Congress to finally act on the best interest of the American people.

WASHINGTON (AP) — A group of House Democrats are stepping up demands for greater transparency from the Federal Reserve after reports that the Fed mishandled the bailout of insurance giant American International Group Inc.

The group, led by Rep. Elijah Cummings, D-Md., wants a congressional review of the Federal Reserve system. They want to allow congressional audits of the Fed as part of financial rules being debated by the House Financial Services and Senate Banking committees, according to a letter Wednesday to the committees’ chairmen.

“Real financial regulatory reform cannot occur without an examination into the structure” of the Federal Reserve system, the letter says.

Details on which banks benefited from AIG’s bailout never would have become known without demands from Congress, and a recent report shows flaws in the Fed’s structure as a regulator, the lawmakers write.

The letter follows sharp criticism Monday of the Federal Reserve Bank of New York and Federal Reserve in a report from Neil Barofsky, the special inspector general for the $700 billion financial bailout fund. Barofsky said the Fed may have paid billions more than necessary to banks including Goldman Sachs Group Inc. and Merrill Lynch, now part of Bank of America Corp., to cancel AIG’s contracts with them.

Treasury Secretary Timothy Geithner, then president of the New York Fed, signed off on decisions that weakened the government’s bargaining position and made it difficult to pay the banks less than face value for securities AIG had insured, the report says.

The government has committed up to $180 billion to rescue AIG. Few expect all the money to be recovered. The Treasury Department now owns nearly 80 percent of the New York-based company and is trying to wind down its operations.