Rep. Paul to Fed: Tell Us Everything, or Else

The chairman of the House subcommittee that oversees the Federal Reserve demanded Tuesday that the Fed fully disclose details of billions -- perhaps trillions -- in secret emergency loans it made to almost every major bank in the U.S. and overseas during the financial crisis or face a congressional subpoena for the information.

In an interview with Fox Business, Rep. Ron Paul (R-Texas), chairman of the House Financial Services subcommittee on domestic monetary policy, said he wants to know “how much, when, where and why” from Fed officials when they testify about the loans at a subcommittee hearing Wednesday.

“We’re going to get to the bottom of what the Fed did during the big bailout a couple of years ago,” Paul said. “We have some precise questions. I imagine we won’t get all of them answered tomorrow because they’ll do a little bit of stonewalling, I’m sure.”

“If they don’t answer, they’ll hear from us,” he said. “We can use the subpoena power and say, ‘Look, you have to bring us the records.’ ”

The big loans started in 2007 and were disclosed in April under Freedom of Information Act requests by FOX Business and Bloomberg News after a two-year legal battle with the Fed and banks by the news organizations.

The loans came through the Fed's nearly 100-year-old confidential emergency lending program called the "discount window," in which the central bank provides funds to banks as the financial system's "lender of last resort" when firms can't borrow from each other or elsewhere.

“The most astounding thing we see in these documents is so much of it went to foreign banks—the whole system was bailing out foreign banks,” Paul said. “It’s a bit shocking on how big a deal this is and how much money was involved…The shenanigans are very international.”

Paul, a longtime Fed critic and a 2012 Republican presidential candidate, said he would wait until he knows more about the loans before he considers proposing any new legislation to expand audits of Fed operations or to force greater Fed disclosure about such lending--or even future limits on it.

“It’s ripe for reform, but I think transparency is the first step,” he said. “The (Fed’s responses to) written questions are going to be very important, the follow up’s going to be very important, so this is really just the beginning.”

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