Federal Reserve Cannot Account for $9 Trillion
Tuesday, May 12, 2009
By: Julie Crawshaw
The Federal Reserve apparently can’t account for $9 trillion in off-balance sheet transactions.
When Rep. Alan Grayson (D-Orlando) asked Inspector General Elizabeth Coleman of the Federal Reserve some very basic questions about where the trillions of dollars that have come from the Fed’s expanded balance sheet, the IG didn’t know.
Worse, nobody at the Fed seems to have any idea what the losses on its $2 trillion portfolio really are.
“I am shocked to find out that nobody at the Federal Reserve is keeping track of anything,” Grayson says.
Grayson asked Coleman if her agency had done any research into the decision not to save Lehman Brothers, which “sent shockwaves through the entire financial system,” Coleman said it had not.
“What about the $1 trillion plus expansion of the Federal reserve’s balance sheet since last September?” Grayson asked.
“We have different connotations,” Coleman replied. “We’re actually conducting a fairly high-level review of the various lending facilities collectively.”
Translation: Nobody at the Fed knows where the money went.
Do you know what who got the $1 trillion or more in the Fed’s expansion of its balance, Grayson pressed.
“I do not know. We have not looked at this specific area at the particular point on that specific review,” Coleman answer.
What about the trillions of off-balance transactions since last September, Grayson asked.
Coleman demurred again, saying the IG does not have jurisdiction to audit the Federal Reserve.
Grayson pointed out that it was the inspector general’s job to audit such spending and asked again if the office had done any investigation at all.
Coleman’s answer: Not enough yet to even respond. “We are in not a position to say if there losses.”
Grayson concluded, “I am shocked to find out that nobody at the Federal Reserve, including the inspector general, is keeping track of this.”
Meanwhile, Federal Reserve Chairman Ben Bernanke says the bank is working on ways to rein in the massive balance sheet commitments.
“A majority of the members who made these projections just recently took 2 percent as being an appropriate number” for inflation, Bernanke said Monday.
“Somewhere between 1-1/2 to 2 percent is basically the number that our committee has individually stated is the appropriate medium-term inflation rate.
“To achieve that we need to demonstrate that we will be able to exit from the balance sheet position that we currently have, and have been working on this intensively,” Bernanke said in response to questions after a speech to a conference organized by the Federal Reserve Bank of Atlanta, reported by Reuters.
1. The Federal Reserve has “boosted” balance sheets to atone for the economic “crisis” America is suffering, but does not know WHERE the money went?
2. Is ANYONE in the Obama Administration knowledgeable about the “missing money”?
3. Obama wants to monitor banks payment to employees and executives, but does not follow his own “money trail” via Tim Geithner (Geithner used to be part of Federal Reserve)?
4. Geithner is allowed to stress the banks in America, yet does not utter one word about the missing money at the Federal Reserve?
Does anyone besides me see the utter hypocrisy here?