This is an official communication from the Office of Senator John Ensign.

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April 28, 2009

Mr. Frank Pelteson Dear Mr. Pelteson:

Thank you for contacting me regarding the Federal Reserve Transparency Act. I value the opinions of every Nevadan and am always grateful for those who take the time to inform me of their views.

You will be happy to know that I voted to increase transparency of the Federal Reserve (Fed) during consideration of the budget for Fiscal Year 2010. I supported an amendment that would require the Fed to disclose specific details about the financial support it has provided over the last year, including the identity of entities receiving assistance, the amount of assistance, and how the assistance is being used. A public website would be created to provide data on financial assistance supplied by the Fed in response to the financial crisis. I also voted in favor of another amendment that would call for more disclosure about certain Fed activities, such as non-emergency lending and assistance to AIG. In this poor economic climate, it is even more important that the public be informed of the Fed's extraordinary new activities. Fortunately, both amendments were adopted.

The Fed is the central bank of the United States. It is responsible for our nation's currency and controls the flow of money and credit in our economy. The Fed has many of the privileges afforded to government agencies, while retaining some characteristics of a private institution. The Fed operates almost completely outside the traditional government system of checks and balances, which is intended to reduce the Fed's susceptibility to political pressure. This independence is crucial for the success of any central bank.

Due to the financial crisis threatening the economy and global markets, the Fed has moved into uncharted waters, aggressively intervening in the financial markets. The Fed has also entered into financial agreements worth hundreds of billions of dollars with foreign central banks and foreign governments. While the

Fed is an independent agency, I believe that Congress must maintain vigorous and effective oversight of the central bank's actions. Congressman Ron Paul (R-TX) has introduced H.R. 1207, the Federal Reserve Transparency Act. This legislation would remove restrictions on Government Accountability Office (GAO) audits of the Fed and open Fed operations to enhanced scrutiny. The bill is intended to create greater transparency of the Fed's monetary policy and its funding facilities. This Federal Reserve Transparency Act would open all Fed operations to a GAO audit and calls for such an audit to be completed by the end of 2010. One concern raised about H.R. 1207 is that it could open the Fed up to undue political interference, thus jeopardizing the independence the Fed requires to be effective. Currently no companion bill to H.R. 1207 has been introduced in the Senate. While I am not a member of the U.S. Senate Committee on Banking, Housing and Urban Affairs that would consider such legislation, please rest assured that I will keep your thoughts and suggestions in mind should this issue come before the full Senate for consideration.

Thank you again for sharing your thoughts with me. Please feel free to contact me in the future on matters of importance to you. Should you have any other questions or comments or would like to sign up for my newsletter, please do not hesitate to either write or e-mail me via my website at


JOHN ENSIGN United States Senator


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