(^It’s over an hour and a half long. I can’t admit to watching the entire thing. The hearing was in October. The audit report was released in July.)
I’m copying this post verbatim from Facebook, because I hate not updating but I’m having writers block. The context of this post is that I have a Ron Paul supporter friend who told me we did a Fed Audit and loaned out 16 Trillion to foreign banks:
Our conversation of Ron Paul’s Fed Audit was bothering me. Mostly because I wasn’t aware there was a Fed Audit. The reason I hadn’t had heard about it, is because the Fed Audit that Ron Paul proposed hasn’t happened. Paul’s bill for a Fed Audit, HR 1207, was shot down by Congress in 2009.
What I think you were talking about was a July 2011 Government Accountability Office report, which was a far less comprehensive audit, specifically on Federal Reserve System approved emergency funding over a three year period. That audit was allowed due to parts of the Dodd-Frank bill, which, because of broader reasons, Ron Paul voted against.
News media reports, that, “The U.S. Federal Reserve gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions.”
News Article with the Audit report here: http://www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-trillion-in-emergency-loans/
But this number is bullshit.
The number $16.1 trillion appears only once in the report, on a chart on page 131. This figure is actually irrelevant, because it’s not “term adjusted” and aggregate borrowing math tends to double count a lot of the same money. A term-adjusted chart a couple pages later brings it down to $1.1 trillion, and more accurately reflects “real risk.”
This is turning into something really long and technical, and I don’t really want to talk more about Federal Reserve Credit, so I’ll just end with the note that the important thing to take away is that these loans are highly regulated and backed by collateral, different from the some of the previous bailouts. The Fed has said it had “no credit losses” on any of the emergency programs, and collected $13 billion in interest.
This conclude this episode of “scandalousmuffin reads tedious economic shit so you don’t have to.”