Will the FED Need a Bailout from the World Bank?

Opinion: THE FED'S END GAME: The Federal Reserve will take on so much risk as to require a Bailout from the World Bank/IMF. The idea that Bangsters would repay "loans" to American Tax Payers (soon to be extinct) has been "fools gold" from the start...HWS Rep., Alan Grayson (D), Florida 8th Dist. asked Coleman if her agency had done any research into the decision not to save Lehman Brothers, which “sent shockwaves through the entire financial system,” Coleman said it had not. “What about the $1 trillion plus expansion of the Federal reserve’s balance sheet since last September?” Grayson asked. “We have different connotations,” Coleman replied. “We’re actually conducting a fairly high-level review of the various lending facilities collectively.” Translation: Nobody at the Fed knows where the money went. Do you know who got the $1 trillion or more in the Fed's expansion of its balance, Grayson pressed. "I do not know. We have not looked at this specific area at the particular point on that specific review," Coleman answer. What about the trillions of off-balance transactions since last September, Grayson asked. Coleman demurred again, saying the IG does not have jurisdiction to audit the Federal Reserve. Grayson pointed out that it was the inspector general's job to audit such spending and asked again if the office had done any investigation at all. Coleman's answer: Not enough yet to even respond. "We are in not a position to say if there losses." Grayson concluded, "I am shocked to find out that nobody at the Federal Reserve, including the inspector general, is keeping track of this." Meanwhile, Federal Reserve Chairman Ben Bernanke says the bank is working on ways to rein in the massive balance sheet commitments. "A majority of the members who made these projections just recently took 2 percent as being an appropriate number" for inflation, Bernanke said Monday. "Somewhere between 1-1/2 to 2 percent is basically the number that our committee has individually stated is the appropriate medium-term inflation rate. "To achieve that we need to demonstrate that we will be able to exit from the balance sheet position that we currently have, and have been working on this intensively," Bernanke said in response to questions after a speech to a conference organized by the Federal Reserve Bank of Atlanta, reported by Reuters.

Federal Reserve Cannot Account for $9 Trillion MoneyNews.com SOURCE

Tuesday, May 12, 2009 12:30 PM By: Julie Crawshaw Article Font Size

The Federal Reserve apparently can't account for $9 trillion in off-balance sheet transactions. When Rep. Alan Grayson (D-Orlando) asked Inspector General Elizabeth Coleman of the Federal Reserve some very basic questions about where the trillions of dollars that have come from the Fed's expanded balance sheet, the IG didn't know. Worse, nobody at the Fed seems to have any idea what the losses on its $2 trillion portfolio really are. "I am shocked to find out that nobody at the Federal Reserve is keeping track of anything," Grayson says. Grayson asked Coleman if her agency had done any research into the decision not to save Lehman Brothers, which “sent shockwaves through the entire financial system,” Coleman said it had not. “What about the $1 trillion plus expansion of the Federal reserve’s balance sheet since last September?” Grayson asked. “We have different connotations,” Coleman replied. “We’re actually conducting a fairly high-level review of the various lending facilities collectively.” Translation: Nobody at the Fed knows where the money went. Do you know what who got the $1 trillion or more in the Fed's expansion of its balance, Grayson pressed. "I do not know. We have not looked at this specific area at the particular point on that specific review," Coleman answer. What about the trillions of off-balance transactions since last September, Grayson asked. Coleman demurred again, saying the IG does not have jurisdiction to audit the Federal Reserve. Grayson pointed out that it was the inspector general's job to audit such spending and asked again if the office had done any investigation at all. Coleman's answer: Not enough yet to even respond. "We are in not a position to say if there losses." Grayson concluded, "I am shocked to find out that nobody at the Federal Reserve, including the inspector general, is keeping track of this." Meanwhile, Federal Reserve Chairman Ben Bernanke says the bank is working on ways to rein in the massive balance sheet commitments. "A majority of the members who made these projections just recently took 2 percent as being an appropriate number" for inflation, Bernanke said Monday. "Somewhere between 1-1/2 to 2 percent is basically the number that our committee has individually stated is the appropriate medium-term inflation rate. "To achieve that we need to demonstrate that we will be able to exit from the balance sheet position that we currently have, and have been working on this intensively," Bernanke said in response to questions after a speech to a conference organized by the Federal Reserve Bank of Atlanta, reported by Reuters.

BLOOMBERG ARTICLE U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs (Update1) Feb 9, 2009 By Mark Pittman and Bob Ivry Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages. The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. The Senate is to vote this week on an economic-stimulus measure of at least $780 billion. It would need to be reconciled with an $819 billion plan the House approved last month. Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed and FDIC. Recipients’ names have not been disclosed. “We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?” Financial Rescue The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. Federal Reserve lending to banks peaked at a record $2.3 trillion in December, dropping to $1.83 trillion by last week. The Fed balance sheet is still more than double the $880 billion it was in the week before Sept. 17 when it agreed to accept lower-quality collateral. The worst financial crisis in two generations has erased $14.5 trillion, or 33 percent, of the value of the world’s companies since Sept. 15; brought down Bear Stearns Cos. and Lehman Brothers Holdings Inc.; and led to the takeover of Merrill Lynch & Co. by Bank of America Corp. The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve. ‘All the Stops’ “The Fed, Treasury and FDIC are pulling out all the stops to stop any widespread systemic damage to the economy,” said Dana Johnson, chief economist for Comerica Inc. in Dallas and a former senior economist at the central bank. “The federal government is on the hook for an awful lot of money but I think it’s needed to help the financial system recover.” Bloomberg News tabulated data from the Fed, Treasury and FDIC and interviewed regulators, economists and academic researchers to gauge the full extent of the government’s rescue effort. Commitments may expand again soon. Treasury Secretary Timothy Geithner postponed until tomorrow an announcement that may invite private investment as a way to clear toxic debt from bank balance sheets. Measures that have been settled include a new round of injections of taxpayer funds into banks, targeted at those identified by regulators as most in need of additional capital, people briefed on the matter said. Program Delay The government is already backing $301 billion of Citigroup Inc. securities and another $118 billion from Bank of America. The government hasn’t yet paid out on any of the guarantees. The Fed said Friday that it is delaying the start a $200 billion program called the Term Asset-Backed Securities Loan Facility, or TALF, to revive the market for securities based on consumer loans such as credit-card, auto and student borrowings. Most of the spending programs are run out of the Federal Reserve Bank of New York, where Geithner served as president. He was sworn in as Treasury secretary on Jan. 26. When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return. Collateral is an asset pledged by a borrower in the event a loan payment isn’t made. Fed Sued Bloomberg requested details of Fed lending under the Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral. Arguments in the suit may be heard as soon as this month, according to the court docket. Bloomberg asked the Treasury in an FOIA request Jan. 28 for a detailed list of the securities it planned to guarantee for Citigroup and Bank of America. Bloomberg hasn’t received a response to the request. The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan). For Related News and Information: To contact the reporters on this story: Mark Pittman in New York at mpittman@bloomberg.net ; Bob Ivry in New York at bivry@bloomberg.net . Last Updated: February 9, 2009 12:43 EST SOURCE: