Tuesday, May 12, 2009

Shock: Fed Oversight?

This is truly shocking. A must see.

My colleague who sent this to me adds:

Per the Fed’s website: "The Office of Inspector General (OIG) 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 (Board). OIG efforts promote integrity, economy, efficiency, and effectiveness; help prevent and detect fraud, waste, and abuse; and strengthen accountability to the Congress and the public. The OIG’s work assists the Board in managing risk and in achieving its overall mission to foster the stability, integrity, and efficiency of the nation’s monetary, financial, and payment systems so as to promote optimal macroeconomic performance."

2 comments:

Galileo Blogs said...

Interesting. Give someone a legal monopoly and you get the postal service, public schools... and the Federal Reserve.

I am not surprised by this. I will add to it a disturbing anecdote I learned in the early 1990s from a fellow business school student who used to work at the Federal Reserve back when Greenspan ran it. Her job was to do regression analyses (i.e., statistical analyses of data). She did them each day, every day, on reams of data. The results of these analyses were sent to nameless people, but including Chairman Greenspan, who loved working with data.

Well, she told me that she made some of them up. The work was such drudgery that she and her colleagues would sometimes concoct phony regressions using phony data and -- this is the kicker -- no one ever called them out on it. Whoever the recipients were, no one noticed that the data was wrong.

The woman in this video has not even bothered to investigate whether the Fed's "loans" are losing money or not, because she does not need to care. She showed the same level of concern for facts and the alleged mission of the Federal Reserve as the people who created and used those regressions (which Greenspan used to help set monetary policy for the entire economy).

Doug Reich said...

GB,

Great story! Wow.

You make a great point. We see everyday the wanton disregard with which politicians esteem OTHER people's money so is it surprising to anyone that a government agency which literally has the power to create money out of thin air would display this level of incompetence when it comes to auditing their own expenditures?

Is it fitting or frightening that virtually no one was in the room during this hearing and that this video has received no attention?