This is a guest post from Tyler Durden at Zero Hedge.

Rep. Mel Watt

There has been lots of speculation on why Representative Mel Watt has done his best to make sure that the Audit the Fed bill will be gutted, and why the Congressman is willing to promote the same irresponsible and unaccountable bubble-inflating behavior that got us to the current Fed-sponsored, bubble-reflation attempt, which is practically guaranteed to end much worse than just a few Goldman competitor banks imploding here and there.

Here are some attempts at reconstrcuting Representative Watt’s motivations courtesy of Robert Wenzel at EconomicPolicyJournal.com. It should make all questions as to why Fed transparency is not Mr. Watt’s friend, quite clear.

The Tom Woods’ congressional testimony last week Friday in favor of the ‘Audit the Fed’ bill had two very curious turns, he set off extremely hostile questioning from two congressmen, by the hearings Committee Chair Barney Frank and Representative Mel Watt. Every other Congressman that questioned Woods, and Fed General Counsel Alvarez, was seemingly concerned about where the money the Fed is printing is actually going. But not Frank and Watt.

I discussed Frank’s hostility, here. Watt was even more hostile. It looked like he was hit by a lightning bolt every time Woods tried to answer a question that Watt posed. He interrupted Woods everytime, as though Woods was taking food off of his dinner table. But, maybe that’s exactly how Watt’s saw Woods testimony.

Most of the top industries donating to Watt are major beneficiaries of Fed money printing. His top industry donors are at #1 the commercial bankers industry, at #3 the building trade unions (All that Fed money printing benefited the building trade unions probably more so than anyone else), and at #5 the securities and investment industry. The current #1 corporate donor to Watt is Citigroup Inc.

During 2007-08 his top contributors were:

#1 Bank of America

#2 Wachovia Corp

#3 American Express

#4 American Bankers Assn

Overall in 2007-08, he received $187,359 from the Finance/Real Estate sector, more than double the amount of money he received from any other sector. Outside of North Carolina, his home state, Watt received the most contributions from Washington D.C. and New York City. Hmm, NYC donations for a North Carolina boy.

I wonder if the good people of North Carolina know what master their representative is really serving? Representative Watt’s high voltage act during Woods’ testimony suggests that Watt knows all too well where a tiny bit of the money the Fed is printing is ending up, and he is really making sure that tiny money flow doesn’t stop, above anything else.

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Looking for more Insights into the Fed? Try these posts:

Bloomberg Editor-in-Chief Matthew Winkler Says Taxpayers Have Right to See Fed Books

Has the Federal Reserve Failed?

Exclusive Interview: Congressman Alan Grayson Talks Fed Transparency and Missing Money

Economic Policy

Matthew Winkler

Congressmen Grayson and Paul are not the only parties fighting for transparency of the Federal Reserve. Bloomberg is currently engaged in a legal battle to identify companies that got loans from the central bank. (Bloomberg LP v. Board of Governors of the Federal Reserve System)

Although the Fed lost their case to exclude their information from the Freedom of Information Act (FOIA), a judge granted the Fed the right to keep the information confidential until the ruling can be reviewed on appeal.

I recently asked Bloomberg Editor-in-Chief Matthew Winker why his firm has taken strong legal action to break open the Fed’s books:

While the Federal Reserve and the banks that have joined the Fed’s appeal assert that disclosure of tax dollars secretly used to rescue financial institutions will stigmatize banks, Americans have the right to know how they became involuntary investors in an unprecedented bailout in the greatest financial crisis of our time.

Although I agree with Winkler, the Fed is correct that banks on welfare will be stigmatized. Who on welfare is not stigmatized? Further, if we are running a capitalist system around here, then banks that screw up should go belly up. Then, the banks who are superior will succeed to the benefit of consumers.

I do not think we should encourage runs on banks. But if we establish simple, sound rules for how banks must operate, then there should be no panic about a bank having no money. And, in the rare instance one does run dry, the FDIC will have the resources to handle such a small and rare event. The Fed says we need to worry about proper remedies when preplanned prevention is the only solution.

It appears we’ll have to wait until January for the next chapter in this drama. Maybe Santa will bring us some Truth this year …

Economic Policy

Massive amounts of taxpayer $$$ are flying out the door like monkeys from Oz. Americans simply want to know: Who got our money?

Rather than answer our question, personal enrichment schemes by public officials and bankers dominate the news. Until now Washington has continued the same rhetoric: Let the markets judge while the priests of high finance decide in secrecy.

However, Congressmen Ron Paul and Alan Grayson are leading a popular charge to pass a bill which will mandate a third-party audit of the Federal Reserve. The House is set to vote on H.R. 1207 in the near future — so start paying attention.

Call me crazy, but is it unreasonable to ask, “Why can’t (or won’t) the Federal Reserve account for secret loans equivalent to more than $1 Trillion?”  We’re asking for only transparency, not lawmakers dictating interest rates. Isn’t transparent economic activity the hallmark of a democratic society? Let’s hear the experts’ opinions:

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Want to learn more about the Fed? Try these posts:

Bernanke Claims He Will Be First to Tighten in Heat of the Moment

House Hearing on Federal Reserve Transparency Act

Has the Federal Reserve Failed?

This morning the House of Representatives is having a hearing (and probably some whiskey) on The Federal Reserve Transparency Act (H.R. 1207) — or, as it’s affectionately know, the “Audit the Fed” Act.

During my popular interview with Congressman Alan Grayson, he explained exactly why Fed transparency is extremely important. Yesterday my friend Dylan Ratigan discussed the same topic with Congressman Ron Paul:

We are proud to have hand-selected Institutional Risk Analytics (IRA) as a partner to offer our audience products and services to become better investors. IRA offers advanced analytics for risk surveillance and investment research via subscription products such as the IRA Bank Monitor for Professionals covering the US banking industry and the IRA Corporate Monitor covering public companies. For a trial subscription or an on-line demonstration, please click here to register.