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Legislation to give Congress greater oversight of the Federal Reserve was severely watered down on the Senate floor Wednesday in private negotiations between two powerful Republican senators.
Thanks to an overlooked document posted on the website of Sen. Charles Grassley of Iowa, the top ranking Republican on the Finance Committee, voters can virtually watch the water being dumped into the brew that Grassley had hoped to force the Fed to drink.
Handwritten into the margins, however, is the amendment that watered it down: "with respect to a single and specific partnership or corporation." With that qualification, the Senate severely limited the scope of the oversight.
On the Senate floor, Grassley named the top Republican on the banking committee, Richard Shelby of Alabama, as the man pouring the water.
"Although I would have preferred to include all of the Fed's emergency actions under 13(3), in consultation with Senator Shelby I agreed to limit my amendment to actions aimed at specific companies," said Grassley.
"This modified version of the amendment does not give GAO authority to look at all of that additional taxpayer risk. It is much narrower than the one I originally filed, but it is a reasonable step in the right direction, and it does not threaten monetary policy independence."
The original version of the amendment also scratches out congressional authority to oversee Fed actions as they relate to the TARP bailout or "similar authority that the Board exercises under urgent and exigent circumstances."