The Fifth Estate?

15 04 2009

“What the hell is this Accounting and Auditing Act of 1950, 31 USC 714(b) stuff? I can’t find it anywhere!”

The news media has carried the reputation of the 4th Estate of the U.S. democratic process (1st, 2nd, and 3rd Estates being Congress, the Supreme Court, and the Office of the President – seriously, you should know that.) The idea is that news media kinda keeps the other three honest by reporting on what’s going on – so “they” don’t slip anything past “us” while “we’re” hard at work as doctors, nurses, electricians, sanitation workers, maids, librarians, plumbers, teachers, or “Senior Associates” at XYZ company.

With all the hoopla surrounding the Federal Reserve, Government Accounting Office, and T.A.R.P. (Toxic Asset Relief Program) which resulted from the crash of last October, a lot more light has been shed on how powerful the Federal Reserve is. Specifically, they really aren’t part of the balance of powers that hold accountable the 1st, 2nd, and 3rd Estates to one another – nor are they truth-seekers for publications like (insert favorite newspaper or news television show here). In particular, the Accounting and Auditing Act of 1950 has been cited recently as a major part of why the Federal Reserve is so special. Unfortunately, THOMAS (the public online component of the Library of Congress) only goes back to 1982… so where are we supposed to find the AAA of 1950 that everyone’s talking about???

Well, here it is, straight from the Office of the Law Revision Counsel, U.S. House of Reps (which is why it looks like crap…):

    31 USC Sec. 714                                            
    Sec. 714. Audit of Financial Institutions Examination Council, Federal Reserve Board, Federal reserve banks, Federal Deposit Insurance Corporation, and Office of Comptroller of the Currency
      (a) In this section, “agency” means the Financial Institutions
    Examination Council, the Federal Reserve Board, Federal reserve banks, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.
      (b) Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing. Audits of the Federal Reserve Board and Federal reserve banks may not include – 
        (1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
        (2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;
        (3) transactions made under the direction of the Federal Open Market Committee; or
        (4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection.
      (c)(1) Except as provided in this subsection, an officer or employee of the Government Accountability Office may not disclose information identifying an open bank, an open bank holding company, or a customer of an open or closed bank or bank holding company. The Comptroller General may disclose information related to the affairs of a closed bank or closed bank holding company identifying a customer of the closed bank or closed bank holding company only if the Comptroller General believes the customer had a controlling influence in the management of the closed bank or closed bank holding company or was related to or affiliated with a person or group having a controlling influence.
      (2) An officer or employee of the Office may discuss a customer, bank, or bank holding company with an official of an agency and may report an apparent criminal violation to an appropriate law enforcement authority of the United States Government or a State.
      (3) This subsection does not authorize an officer or employee of an agency to withhold information from a committee of Congress authorized to have the information.
     (d)(1) To carry out this section, all records and property of or used by an agency, including samples of reports of examinations of a bank or bank holding company the Comptroller General considers statistically meaningful and workpapers and correspondence related to the reports shall be made available to the Comptroller General. The Comptroller General shall give an agency a current list of officers and employees to whom, with proper identification, records and property may be made available, and who may make notes or copies necessary to carry out an audit.
      (2) The Comptroller General shall prevent unauthorized  access to records or property of or used by an agency that the Comptroller General obtains during an audit.

So, basically, “fuck off, I do what I want.” Sounds like Cartman legislation. “RESPECT my AuthORitEYE”…

What’s interesting is that section (c)(3) states that the Fed is NOT authorized to withold informaiton from any committee of Congress that is “authorized to have the information.” Not that they have to volunteer to help, just that they can’t withhold information, if asked by the right people.

That has to include the T.A.R.P. Oversight Committee I think, since it is stipulated within the T.A.R.P. document that every 60 days it has to check in with Congress and let them know how they’re doing.

So…what does any of this mean? Well, for starters, it means that the United States is going through a big financial shift. I know, “Shock! I had no idea!”,  but bear with me:

Financial “trouble” is what people with large financial losses are going through. The average Jane is going through something different. And that could be a good thing.

What this means, among other things, is that there is essentially less money to go around right now: less money to create jobs, less money to continue funding already existing jobs, and less money to spend on little things like a new TV or more clothes or weekend trips up the coast. What possible silver lining could there possibly be within this clusterfuck of a situation?

The answer: Boycotting will work better ever before.

Stay with me: boycotting products (for whatever reason you have) largely depends on the size of the impact grabbing the company’s attention. This is complicated by the fact that so many large companies that sell products in the U.S. (not necessarily U.S. owned/run/operated) retain WAY more customers than they lose week to week. But what this recession is forcing everyday people to do is re-prioritize their spending habits, which includes buying less of some of their favorite products, if at all.

In a financial climate where reliably long-term, repeat customers want to buy something but simply can’t, protesters of that product are uniquely positioned to strike at the company’s biggest weakness: their revenue. The recession will necessarily undergo a survival-of-the-fittest period during which giant companies like Coke and McDonald’s would “feel” ANY boycotting more than it has in decades. And that doesn’t mean you have to go without soda – just don’t buy THEIR soda. Giving to a competitor is even worse than not buying anything at all, because while the first company will suffer a loss of revenue, the competing company will gain revenue and thus tip the scales even more.

If you ever wanted to boycott a product for any reason, now is the time to do it. Every penny counts all the time, but right now every penny feels like a dollar to these companies. That is the power that a financial shift gives to those people with hardly a penny to spare.




2 responses

18 04 2009

Glad to find this site and concur with many of your statements if not all. Right now I have a major pissed off migraine going on because I have spent the last few hours researching “The Accounting and Auditing Act of 1950”! !!! Where the heck is it? I have been reading through a lot of these bloody .gov sites…and have still not found a simple copy of the Act and who sponsored it and some historical perspective.

I have however read plenty on the latest -last 20 or so amendments to it. There have been a lot of nasty changes lately…last 10 years. Stuff like where the various Gov agancies used to have to report their budgets ie spending to the Comptroller General (OMB) that it was changed to read the President. Hmmm…Wonder why?

Year after year, they changed the laws to lessen the accountability to Congress. They wrote changes that would allow the Prez to call anything Nat’l Security and to ignore auditing requirements.

Anyhow, I am going to slog on and would appreciate an email if you find any good info and I am Bookmarking this site.

I whole heartedly agree with your BOYCOTTING conclusion. I am an avid boycotter and also encourage others I know to do the same. It just makes me feel better.

Check out H.R. 1207; A bill to require auditing of the Fed. submitted by Ron Paul. Looks OK even if some real far righties are co-sponsoring it.

9 11 2012
Michael D. Long

The information you are looking for can be found in current US Code at See section 3512 on page 227 of the PDF document. The historical and revision notes are included on page 299.

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