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:
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