Federal Reserve

[HoustonFarrier]

In all this talk about the woes of the economy, no one is talking much about the Federal Reserve (also known as "The Fed" ).

So, lets start by defining exactly what the Fed is, because I am SURE, for a majority here, the Fed was never taught in school:)

The Federal Reserve was created by Congress in 1913. Prior to that, the US had no REAL monetary strategy, it was left to the private sector, and as such, subject to speculation. So, Congress created this independant entity, but provided that it be subject to "congressional oversight". What this did, is allowed the Fed to operate and create policy WITHOUT Presidential ratification. It is headed by a Board of Governers, 7 of them, who are appointed by the President, and serve 14 year terms. There are 12 Regional Banks, that operate under this Board of Governors.

Interestingly enough.....even in this economy, the Fed has NEVER BEEN AUDITED.......does anyone else wonder why????

Texas Representative Ron Paul, has intorduced HR 1207, which calls for a COMPLETE audit of the Fed, and all 12 Regional Banks, with a report due to Congress in 2010.

How much you want to bet it does not happen ???? Then ask yourself WHY those in power now would not want it to happen ?

Steve

[Ragnar Danneskjold]

[...]

Interestingly enough.....even in this economy, the Fed has NEVER BEEN AUDITED.......does anyone else wonder why????

[...]
Steve

Say, Steve... while there are some issues with the FED that I won't argue with, they are in fact audited regularly. As an example, below are the financial statements for 2007 from the NY Fed, and on page 11 you can find the opinion of the independent auditors (in this case Deloitte&Touche). 2008 Financials wouldn't be ready yet.

http://www.newyorkfed.org/aboutthefed/annual/annual07/FRBNY_Financial_Statements_2007.pdf

So... there's that. :)

[HoustonFarrier]

But that is only one of 12 Fed Banks...have all the others been audited by an EXTERNAL company as well???? I cannot find anywhere that they have???

Steve

[Ragnar Danneskjold]

But that is only one of 12 Fed Banks...have all the others been audited by an EXTERNAL company as well???? I cannot find anywhere that they have???

Steve

Yes, they are. The member banks, the Board of Governors... the works:

http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#9


Are the Federal Reserve System and Reserve Banks ever audited?

The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review. Under the Federal Banking Agency Audit Act (enacted in 1978 as Public Law 95-320), which authorizes the Comptroller General of the United States to audit the Federal Reserve System, the Government Accountability Office (GAO) has conducted numerous reviews of Federal Reserve activities. In addition, the Board's Office of Inspector General (OIG) audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. Completed and active GAO reviews and completed OIG audits, reviews, and assessments are listed in the Board’s Annual Report (http://www.federalreserve.gov/boarddocs/rptcongress) (before 2002, the reviews were listed in the Board's Annual Report: Budget Review (http://www.federalreserve.gov/boarddocs/rptcongress)).
The Board's financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the OIG. The financial statements of the Reserve Banks are also audited annually by an independent outside auditor. In addition, the Reserve Banks are subject to annual examination by the Board. The Board's financial statements and the combined financial statements for the Reserve Banks are published in the Board's Annual Report


I mean... hey... I love a good conspiracy just as much as anybody. But this one's a dead end, I think. :)

[WashingtonBay]

<---just going to listen on this one.

[HoustonFarrier]

I mean... hey... I love a good conspiracy just as much as anybody. But this one's a dead end, I think. :)

Then what are Paul and the other 29 co-signers wanting that is not (supposedly) done already ????

HAS the Comptroller General (different than the GAO) been doing audits??? If so, where are they ?


Also.......


The Government Accounting Office does not have complete access to all aspects of the Federal Reserve System. The law excludes the following areas from GAO inspections (31 USCA §714):
(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or (4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to items.

Steve

[Ragnar Danneskjold]

No... the Comptroller General is the GAO, or rather, the head of the GAO.

With regard to your items 1, 2 and 3... I don't know if I can find each specific thing but those activities are much more about day-to-day management than they are oversight and auditing. Congress must keep its distance from actual management of the FED in order for the FED to keep it's independence. It cannot by law be under the direct control of Congress *or* the Executive branch. It is still a separate organization-- and it has to be. Congress can audit, and the President can appoint (and fire) officers, but they cannot direct or interfere with daily activities.

It's admittedly a fine line for a "quasi-governmental" but still "private" bank to walk, but IMHO it is far better that way than it would be with Congress getting their fingers in there. Imagine if Congress could manipulate the Prime rate at their whim? Yeeow. Bad.

Not that the FED's Board always does the right thing, but I think more Congressional meddling would be far worse.

[HoustonFarrier]

...but those activities are much more about day-to-day management than they are oversight and auditing. .

Bernie Madoff did allot of damage on the day-to-day activities.......while he was auditing himself....

Steve