This past Tuesday, Federal Reserve Chairman Ben Bernanke wrote a letter to the Government Accountability Office, calling for an audit of "all aspects of our involvement in the extension of credit to AIG." The letter sparked a storm of interest, with pundits saying it was a move by Bernanke towards supporting increased Fed transparency, a hot topic these days as Bernanke waits for the Senate to confirm his new term as Fed chair. There were literally hundreds of articles about the letter, with every major news outlet writing it up, making the letter a major piece of news.

Most of the articles, however, ignored one key fact: the GAO already has the authority to audit the Fed's extension of credit to AIG. It has since May, when Congress passed a bill which authorized the GAO to audit "any action taken by the Board under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343); with respect to a single and specific partnership or corporation." This covers the Fed's actions with Bank of America, JP Morgan Chase, etc., companies which received special, individualized assistance. What aren't covered under the GAO's increased authority are the more opaque emergency lending actions, which potentially affected hundreds of banks across the nation, and the Fed's support of foreign banks, which has drawn the wrath of many populists.

If Bernanke came out in support of auditing all of the Fed's emergency lending actions, that would be news. For now though, this letter is like a taxpayer writing to the Internal Revenue Service, giving it permission to audit their tax return (which it already has). Apparently, the GAO received Bernanke's letter with about as much interest as the IRS would receive such a letter, with Chuck Young, a GAO spokesman, telling Bloomberg News the GAO will review Bernanke's request "in the context of our future work priorities."

Image by Flickr user isriya used under a Creative Commons license.