Fed Inspector General Knows Roughly Nothing About The Fed (VIDEO)

The inspector general tasked with overseeing and auditing the Federal Reserve knows pretty much nothing about what the Fed is doing. That's the conclusion that comes from watching the exchange Tuesday between Rep. Alan Grayson (D-Fla.) and inspector general Elizabeth A. Coleman.

Coleman could not tell Grayson what kind of losses the Fed has so far suffered on its $2 trillion portfolio, which has greatly expanded since September.

She appeared unaware that the Fed engages in trillions of dollars in off-balance-sheet exchanges.

She is not investigating the role of the Fed in allowing the collapse of Lehman Brothers.

She did not know where the Fed has invested its $2 trillion on the liability side of the balance sheet. "I do not know. We have not looked at that specific area at this particular point on," she said.

"We do not have jurisdiction to directly go out and audit reserve bank activities specifically," she said, though the IG's Web site proudly declares that her office "conducts independent and objective audits, inspections, evaluations, investigations, and other reviews related to programs and operations of the Board of Governors of the Federal Reserve System."

Contacted by the Huffington Post, Coleman was in a meeting and unavailable for comment.

Watch the exchange:

Story continues below

UPDATE: Coleman responds:

Let me clarify a common misconception about my office's responsibilities. By law, we are the Office of Inspector General for the Board of Governors only. I am not the Inspector General for the 12 Reserve Banks.

The lending programs operated by the Reserve Banks expanded the Federal Reserve's balance sheet.

Reserve Bank audit and oversight is provided by:

•The Board of Governors through its supervisory and oversight functions;

•An independent public accounting firm that conducts the annual financial statement audit,
the results of which appear on the Board's website;

•Reserve Bank General Auditors, who report to the Bank's Audit Committee;

•The Government Accountability Office; and

•The Special Inspector General for TARP (for those lending programs that include TARP
funds).

Consistent with my authority, we cannot conduct a direct audit of Reserve Bank operations.
However, as the Board's IG, my office is reviewing the Board's supervisory and oversight
functions as they relate to the Reserve Bank's lending programs.

UPDATE II: Reader Brenda Lilly sends in background on Coleman and her office, which she pulled from the Fed's website.

The Office of Inspector General (OIG) is also responsible for preventing and detecting waste, fraud, and abuse at the Board, among other duties. The OIG achieves its legislative mandate through audits, evaluations, investigations, legislative reviews, and by keeping the Chairman of the Board and Congress fully informed.

Ms. Coleman joined the Board's OIG in 1989 as a senior auditor. She was promoted to program manager in 1999 and to senior program manager in 2001. She was appointed to the official staff in 2004, as the Assistant Inspector General for Communications and Quality Assurance. Over the last eight years, Ms. Coleman has worked closely with the Executive Council on Integrity and Efficiency, a professional organization of about thirty statutory Inspectors General who are appointed by their agency heads in certain designated federal entities, including the Board.

Prior to joining the Board's staff, she was employed by the Government Accountability Office. Ms. Coleman has a BBA from James Madison University and is a graduate of the Stonier Graduate School of Banking, Georgetown University. She also attended the Federal Reserve System's Trailblazers Leadership Conference. Ms. Coleman is a Certified Information Systems Auditor.

The OIG is tasked with the responsibility to prevent and detect fraud, waste, and abuse, and to promote economy and efficiency in the programs and operations of the Board, keeping the Chairman and Congress fully and currently informed of problems.

An Inspector General may be removed from office by the President, and must communicate the reasons for any such removal to both Houses of Congress, as outlined in Section 3(b) of the Inspector General Act of 1978.

Additional info about the Inspector General Act of 1978:

INSPECTOR GENERAL ACT OF 1978

Section Pertaining to the Appointment of the Inspector General:

(b) An Inspector General may be removed from office by the President. The President shall communicate the reasons for any such removal to both Houses of Congress.

Ryan Grim is the author of the forthcoming book This Is Your Country On Drugs: The Secret History of Getting High in America

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Comments

[Binea]

prt 2 from Introduction to HR 1207

............." the Fed’s negotiations with the European Central Bank, the Bank of International Settlements, and other institutions should face increased scrutiny, most especially because of their significant effect on foreign policy. If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet the Fed avoids both fates.

More importantly, the Fed’s funding facilities and its agreements with the Treasury should be reviewed. The Treasury’s supplementary financing accounts that fund Fed facilities allow the Treasury to funnel money to Wall Street without GAO or Congressional oversight. Additional funding facilities, such as the Primary Dealer Credit Facility and the Term Securities Lending Facility, allow the Fed to keep financial asset prices artificially inflated and subsidize poorly performing financial firms.

The Federal Reserve Transparency Act would eliminate restrictions on GAO audits of the Federal Reserve and open Fed operations to enhanced scrutiny. We hear officials constantly lauding the benefits of transparency and especially bemoaning the opacity of the Fed, its monetary policy, and its funding facilities. By opening all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much-needed transparency of the Federal Reserve. I urge my colleagues to support this bill. "

Why do they allow The Fed this power ?

[pragmaticdallasite]

This is downright scary.

[rich misty]

Republicans scare me too.

[dadw5boys]

The Fed is a Private Bank she is only going to get what they want her to have !

.

[ThunderclapNewman]

The Fed is not private, and it never has been.

it is an independent agency of the Federal Government.

[rich misty]

No, it is private. It is the result of GOP bankers privatizing key aspects of the Treasury. It is chartered by Congress, but it is not a federal agency.

[ljc]

You sure about that?

http://www.factcheck.org/askfactcheck/who_owns_the_federal_reserve_bank.html

Q: Who owns the Federal Reserve Bank?
A: There are actually 12 different Federal Reserve Banks around the country, and they are owned by big private banks. But the banks don't necessarily run the show. Nationally, the Federal Reserve System is led by a Board of Governors whose seven members are appointed by the president and confirmed by the Senate.

[Binea]

Write to yours reps and ask them to support HR 1207 " The Federal Reserve Transparency Act". It really is not this womans fault she knows nothing.The Fed does not have to tell her anything. Here is an excerpt to the Bill
" Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations. While the conventional excuse is that this is intended to reduce the Fed’s susceptibility to political pressures, the reality is that the Fed acts as a foil for the government. Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests.

The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight? Particularly when hundreds of billions of dollars of currency swaps have been announced and implemented,"
prt 1

[toyboat]

& cordyc thanks for lettin' it be know that the FED is run by the FED & no one else, they are a do what they want say what they want rouge establishment, Dentuso needs to get it straight & don't sleep on the conspiracy theories because these days they ALL seem to be less & less conspiracy & more & more truth

[LeLoup]

"Ms. Coleman seemed to suggest that her office has a restricted mandate (the Board of Governors), and that she is not authorized to conduct wide-spread independent investigations of the various Federal Reserves."

What she suggests is in direct contradiction with the mission statement of her agency, as cited in the article above and what is posted on their own website.

So...which is which? Either they can investigate the Fed operations or they can't.

Enough wishy-washy grade-AAA BS spin already!

[02bmw76]

This is a shining example of why the US is now the Titanic.

[toyboat]

The FED needs to be shut down, that is by far THE MOST CRIMINAL GROUP EVER ASSEMBLED!

[knosiswar]

Good Job RYAN.

[knosiswar]

Good Job reporting Ryan, you definitely are a shining star at HuffPo.

[constitutional 1]

ah our big government, wait until they are in charge of healthcare

[pragmaticdallasite]

The Fed isn't the government. The government in the above video is actually trying to do some good. Private insurance companies currently in charge of healthcare have screwed it up badly and it's one of the worst systems in the developed world. The government can only improve it.

In other words, shut up.

[111]

Federal Reserve is not part of our government - it is a group of privately owned banks.

Yes, we should try to catch up to the other nations that provide national health care for their citizens.

[PunKinPai]

They've done a pretty darned good job with MediCare. How's your HMO workin' for ya?

[lightningbolt]

Since the Fed was created in 1913, the dollar has lost more than 90 percent of its value. This effectively means that the Fed has stolen more than 90 percent of the wealth from everyone who owns dollars. The Federal Reserve Act was written by bankers, passed through Congress while most Congressmen were not present, and Woodrow Wilson did not read the act before signing it, he just asked his corrupt advisers if it was a good bill. After finally finding out what the act was about, Wilson regretted having signed it, saying he had destroyed his country. We must abolish the Fed, return the power of money creation to the government, and return our currency to a stable standard.

[UNCLEJOE]

lightningbolt, you are right on the mark. The Fed is a private company whose controlling stock holders are foreigners; Bank of England, The Austrian House of Rothschild and JP Morgan whose family have been representing the Rothschilds since 1901.

[ThunderclapNewman]

You are 100% wrong.

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute.

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

[Joethepauper]

Get rid of all Bush appointees! I thought that was already done, and they were in the process of removing the ones who "dug in". Do something useful! This Bush appointee knows about as much about the Fed as Brownie knew about FEMA.

[Okeif]

The "Board of Governors" at the Federal Reserve appoint the Inspector General of the Federal Reserve. The President elects the "Board of Governors"; heretofor 'BoG'.

There are 7 memebers of the BoG:

Ben Bernanke, Chairman - Nominatted by President Bush (February 1, 2006)
Donald Kohn, Vice-Chairman - Nominatted by President Bush (May 18, 2006)
Kevin Warsh - Nominatted by President Bush (February 24, 2006)
Elizabeth A. Duke - Nominatted by President Bush (June 27, 2008)
Daniel Tarullo - Nominatted by President Obama (January 28th, 2009)

The other two seats remain vaccant.

*Membership is generally limited to one term ( 4 years, nominations done every even-numbered year). However, if someone is appointed to serve the remainder of another member's uncompleted term, he or she may be reappointed to serve an additional 14-year term.

I'd say it's time to fill some seats at the Bog -- at the very least. And maybe elect a new IG.

[AERO]

Heckuva job Brownie.

[lightningbolt]

The Fed, all it's member banks, and every other bank that was bailed out need to be audited immediately!!! They have stolen trillions from taxpayers (through bailouts) and from holders of dollars (through inflation) and they must be stopped. We must return to a stable currency, otherwise our pockets will continue to be picked by the Fed and it's member banks.