Is the Fed’s emergency lending audited by the Congress? Is information about the Fed’s emergency lending provided to the public?
The Congress established several mechanisms to enhance transparency and accountability for the Federal Reserve's emergency lending authorized under section 13(3) of the Federal Reserve Act:
- The Government Accountability Office (GAO) conducted an "operational audit" of the emergency lending facilities that the Federal Reserve established during the financial crisis. The GAO issued a report on July 21, 2011. The audit found no conflicts of interest or material weaknesses in internal controls in the emergency facilities.
- The GAO also conducted an audit of Reserve Bank governance and provided a report (including recommendations) to the Congress on October 19, 2011.
- On December 1, 2010, the Board disclosed the identities of borrowers and participants in the Term Auction Facility, the government-sponsored enterprise mortgage-backed securities purchase program, and foreign currency swap lines.
- In the case of broad-based facilities, details provided by the Board included the name of the borrower; the amount borrowed; the date the credit was extended; the interest rate charged; and information about collateral and other relevant credit terms.
- Similar information was provided for the draws of foreign central banks on their dollar liquidity swap lines with the Federal Reserve.
- For agency mortgage-backed securities transactions, details included the name of the counterparty; the security purchased or sold; and the date, amount, and price of the transaction.
- The Congress also established important new reporting requirements for any future use of the Federal Reserve's emergency lending authority under section 13(3) of the Federal Reserve Act.
- Within seven days of establishment of any 13(3) program, the Board must report detailed transaction-level information to the Congress on any lending activity conducted under those programs.
- The GAO may conduct "operational audits" of any future 13(3) facilities for the purpose of assessing the operational integrity of a credit facility and assessing the effectiveness of collateral policies in mitigating risks to the taxpayer.
- Within one year after the termination of a credit facility, the Board must provide detailed transaction-level information to the public, including the names of the borrowers, the amounts borrowed, the rate charged, and information on the types and amounts of collateral pledged.