“Shock and awe” is how the Pentagon described the opening stages of the 2003 U.S. invasion of Iraq: overwhelming force designed to demoralize the enemy into surrendering. Having witnessed how spectacularly that war turned out, the Obama administration decided to employ the same tactic, in a metaphorical sense, to the European debt crisis.
Just before noon on Tuesday, May 11, the U.S. Senate agreed to a one-time audit of the Federal Reserve's emergency actions taken in response to the 2008 financial crisis. The approved audit, which Senator Bernie Sanders (I-Vt.) offered in an amendment to the larger financial regulatory reform legislation, is a much watered-down version of the earlier audit proposed by Sanders that mirrored the "Audit the Fed" legislation in the House sponsored by Rep. Ron Paul (R-Texas).
With a congressional battle brewing over what is being touted as the biggest attempt at financial regulatory reform since the Great Depression, most pundits are predicting that, despite token Republican opposition, some version of the bill that originated with Senator Chris Dodd’s Finance Committee will soon pass. Senate Republicans blocked the first attempt to bring the matter to a vote on April 19, but Democrats and the Obama administration vowed to continue to press wavering Republicans to support the bill.
The timing of the sellout by Senator Bernie Sanders (I-Vt.) last Thursday, May 6, on legislation to audit the Federal Reserve could not have been more auspicious — or more suspicious. After pledging for months that he was going to offer an amendment in the Senate identical to "Audit the Fed" legislation in the House (H.R. 1207) authored by Congressman Ron Paul (R-Texas), Sanders caved in to pressures from the Obama administration and the Federal Reserve.
Senate Democrats beat back a Republican alternative amendment to Connecticut Democrat Christopher Dodd's Restoring American Financial Stability Act of 2010 (S. 3217) and will soon consider an amendment to audit the Federal Reserve Bank authored by Louisiana Republican David Vitter. The GOP substitute amendment failed in a 38-61 vote May 6.