Grayson skewers the Fed

SUBHEAD: Federal Reserve Inspector General Elizabeth Coleman before a House Financial Services Subcommittee is questioned by Florida Rep. Alan Grayson.

By Timothy R. Homan on 12 May 2009 in Bloomberg News - http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXk2cMkmSbQA

A clip on Google Inc.’s YouTube of a congressman scolding the Federal Reserve’s inspector general on her oversight of taxpayer funds has garnered more than 166,000 viewings in six days since a hearing on Capitol Hill.

Representative Alan Grayson, a Florida Democrat, chastised Inspector General Elizabeth Coleman for what he deemed a lack of oversight of the central bank’s off-balance-sheet transactions. The video titled “Is Anyone Minding the Store at the Federal Reserve?” was posted a day after Coleman’s May 5 testimony to a House Financial Services subcommittee.

video above: Questioning of Elizabeth Coleman by Alan Grayson at http://www.youtube.com/watch?v=cJqM2tFOxLQ&e

"Do you know who received that $1 trillion-plus that the Fed extended and put on its balance sheet since last September?” Grayson asked.

Coleman responded by saying she didn’t know. “We have not looked at that specific area,” she said in the nearly five-and- a-half minute clip.

The segment was the 11th-most watched “news and politics” video this week on YouTube, according to the Web site’s statistics.

The Fed has refused to identify the borrowers, loan amounts or specific assets submitted as collateral under 11 of the central bank’s programs. Officials have argued that doing so might set off a run by depositors and unsettle shareholders.

Disclosure Lawsuit

Bloomberg LP, the New York-based company majority-owned by Mayor Michael Bloomberg, sued in November under the Freedom of Information Act on behalf of its Bloomberg News unit to get access to information about the loans.

“What have you done to investigate the off-balance-sheet transactions conducted by the Federal Reserve which, according to Bloomberg, now total $9 trillion in the last 8 months?” Grayson asked Coleman.

Coleman, who was appointed to the position in May 2007, said in the hearing that she hadn’t seen the article.

A Bloomberg News story published Feb. 9 said the Treasury Department, Federal Deposit Insurance Corporation and Fed have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. A March 31 article raised the total amount committed or disbursed to $12.8 trillion.

A statement e-mailed by Coleman’s office yesterday said the Fed board’s inspector general doesn’t have legal authority to investigate the transactions that have swelled the central bank’s balance sheet.

“By law, we are the Office of Inspector General for the Board of Governors only,” the statement said. “Consistent with our authority, we cannot conduct a direct audit of Reserve Bank operations.”

The video, which was linked on the Huffington Post Web site, “makes it perfectly clear that if the inspector general herself doesn’t know what’s happened to that money then we’re going to have to find out ourselves,” Grayson said in an interview yesterday.