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Published May 12 2010

Potter advocates audit of the Fed

North Dakota Democratic-NPL Senate candidate Tracy Potter said Tuesday that he supports an audit of the Federal Reserve, which the U.S. Senate has since approved as part of the financial reform legislation being crafted in Congress.

Potter, a Bismarck state senator, stopped in Fargo on Tuesday to discuss financial reform and the policies he would support to rein in Wall Street.

The Federal Reserve System distributed more than $2 trillion in government bailouts, including to large-scale investment banks threatened by collapse.

But the Fed has never been audited since its inception in 1913, Potter said.

“All we want to know is: Where did the money go?” he said. “I believe in transparency in government – that we should have a right to know where our money goes.”

The Senate unanimously approved an amendment Tuesday to the financial reform package that would require an independent audit of the Fed and determine who received how much of the bailout funds.

Potter said he also favors legislation that would restrict how much in government holdings banks can have and he challenges the idea that financial institutions can be “too big to fail.”

The Senate failed to pass an amendment last week on the issue, but Potter said he would have supported it.

“I’m not a fan of regulation, but I do believe that we have to protect ourselves from these people who are getting so big that when they do fail, it crashes the economy and destroys our life savings,” Potter said.

He said law, not government oversight, would be the best approach in setting guidelines for financial regulation.

“It should not be some subjective judgment that’s made about whether or not you are too big to fail,” he said. “It should just be in statute.”

Potter added that he’s wary of “heavy-handed” regulation that reaches too far.

“I don’t want to touch the relationship between the banker and the person coming in for their loans in North Dakota because there’s been no problem here,” he said. “These big investment banks on Wall Street are the problem, and that’s what we have to deal with.”

Readers can reach Forum reporter Kristen Daum at (701) 241-5541