If the Fed is audited, what might we find that they are doing which would be bad?

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[video=youtube;d0HO5YyIve0]http://www.youtube.com/watch?v=d0HO5YyIve0#t=257[/video]

 

Summary of some of the findings from the recent GAO audit of Fed operations:

The Federal Reserve System and Its Emergency Activities Were Subject to Multiple Audits and Reviews


The Emergency Programs Have All Been Subject to Audits and Reviews

The Federal Reserve Act requires the Federal Reserve Board to order an
annual independent audit of the financial statements of each of the 12
Reserve Banks.57 Each Reserve Bank prepares annual financial
statements that reflect its financial position as of the end of the calendar
year and its related income and expenses for the year. The Federal
Reserve Board also prepares combined financial statements of the
Reserve Banks, which include the accounts and results of operations of
the 12 Reserve Banks. As shown in figure 2, the loans and other financial
assistance provided through the Federal Reserve’s emergency programs
are recorded in the Reserve Banks’ publicly reported financial statements.

The Reserve Banks have voluntarily adopted the internal control reporting
requirements of the Sarbanes-Oxley Act of 200260 and provide an
assessment of the effectiveness of their internal control over financial
reporting annually to their boards of directors.61 Internal control over
financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the entity;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles, and that receipts and expenditures of the
entity are being made only in accordance with authorizations of
management and directors; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the entity’s assets that could have a material effect on
the financial statements.

...

Since 2007, Deloitte has been the independent external auditor for the
Federal Reserve System. Accordingly, Deloitte performs the audits of the
individual and combined financial statements of the Reserve Banks and
those of the consolidated LLCs. Deloitte also provides opinions on the
effectiveness of each Reserve Bank’s internal control over financial
reporting. In 2009, Deloitte began providing opinions on the effectiveness
of each LLC’s internal control over financial reporting. 63 To help ensure
auditor independence, the Federal Reserve Board requires that its
external auditor be independent in all matters relating to the audits.
Specifically, Deloitte may not perform services for the Reserve Banks or
others that would place it in a position of auditing its own work, making
management decisions on behalf of the Reserve Banks, or in any other
way impairing its audit independence.

FRBNY management also engaged external firms to review certain
aspects of the emergency programs. For example, FRBNY engaged the
auditing firm KPMG LLP (KPMG) to assist FRBNY in developing a conflict
of interest inspection and fraud-review program for certain programs
created in response to the financial crisis. In 2009 and 2010, KPMG
executed reviews of vendors and agents supporting the Agency MBS
program, Maiden Lane LLC, Maiden Lane II LLC, Maiden Lane III LLC,
TALF, and CPFF. The scope of this work covered an evaluation of the
vendors’ and agents’ adherence to their own conflict of interest policies
and more program-specific provisions contained within their engagement
agreement with FRBNY. These reviews are discussed in greater detail
later in this report. In 2009, FRBNY contracted with a management
consulting firm, Oliver Wyman, to conduct an independent review of the
governance and management infrastructure surrounding its new market
facilities and emergency programs created throughout 2008. This review
was specifically focused on the three Maiden Lane LLCs, CPFF, and
MMIFF and included an examination of internal reporting and
management updates, business and strategic plans for relevant Reserve
Bank functions, internal risk assessments, Reserve Bank policies and
procedures, committee charters, and organizational summaries.

In addition to external audits and reviews, the Federal Reserve System
has a number of internal entities that conduct audits and reviews of the
Reserve Banks, including the emergency programs. For example, each
Reserve Bank has an internal audit function that conducts audits and
other reviews to evaluate the adequacy of the Reserve Bank’s internal
controls, the extent of compliance with established procedures and
regulations, and the effectiveness of the Reserve Bank’s operations. The
internal audit function conducts audits in accordance with the
International Standards for the Professional Practice of Internal Auditing
and maintains organizational independence from management by
reporting directly to the audit committee of the Reserve Bank’s board of
directors.64 During the period from 2008 through 2010, FRBNY’s internal
audit function conducted audits pertaining to the Agency MBS program,
TSLF, Swap Lines, TAF, CPFF, TALF, and PDCF, as well as the three
Maiden Lane LLCs.

...

The OIG also conducts audits, reviews, and investigations related to the
Federal Reserve Board’s programs and operations, including those
programs and operations that have been delegated to the Reserve Banks
by the Federal Reserve Board. The OIG is required to submit a
semiannual report to the Chairman of the Federal Reserve Board and to
Congress. In November 2010, the OIG reported on its review of six of the
emergency programs: TSLF, PDCF, MMIFF, TALF, CPFF, and AMLF.
The OIG stated that the purpose of its review was to determine the
function and status of these programs and to identify risks in each of the
programs to assist the Federal Reserve Board in its general supervision
and oversight of the Reserve Banks.

Page 46:

Audits and Reviews Have Not Identified Significant Accounting or Financial
Reporting Internal Control Issues Concerning the Emergency Programs

The Reserve Banks and LLCs Received “Clean” Opinions on their Financial Statements

Deloitte rendered unqualified (clean) opinions on the individual and
combined Reserve Banks’ financial statements for the years 2007, 2008,
2009, and 2010. As described earlier in this report, the Reserve Banks’
financial statements include the activity pertaining to the emergency
programs, including the accounts and operations of the LLCs, which are
consolidated into FRBNY’s financial statements. Deloitte also has
rendered clean opinions on the financial statements of each LLC
beginning with the creation of Maiden Lane LLC in 2008. A clean opinion
indicates that the financial statements prepared by management are free
of material misstatements and are presented fairly in accordance with
U.S. generally accepted accounting principles (GAAP) or, in the case of
the Reserve Banks, accounting principles established by the Federal
Reserve Board, which is a comprehensive basis of accounting other than
GAAP.

The independent external auditor conducted its financial statement audits
of the Reserve Banks and LLCs in accordance with U.S. generally
accepted auditing standards as established by the Auditing Standards
Board and in accordance with the auditing standards of the Public
Company Accounting Oversight Board.67 These standards require that
the auditor plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement
and whether effective internal control over financial reporting was
maintained in all material respects. The audits of the Reserve Banks’ and
LLCs’ financial statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation.

Since the development and implementation of the emergency programs,
the independent external auditor’s internal control opinions related to the
Reserve Banks and LLCs have all been clean, indicating that these
entities have maintained, in all material respects, effective internal control
over financial reporting.

As mentioned in the previous section, in addition to the independent
external auditor, the Reserve Banks’ internal audit function, RBOPS, and
the OIG performed audits and reviews of the emergency programs.
Similar to the external audits, the audits and reviews conducted by these
other groups did not report any significant accounting or financial
reporting internal control issues.

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http://sanders.senate.gov/imo/media/doc/GAO Fed Investigation.pdf

The Fed is probably the most heavily audited entity in the world. Take out the blatant, racist antisemitism we've seen in this thread and there is nothing there.

 

Classic.

Now Obama is a Marxist corporate enricher who is a Muslim Jewish sympathizer.

All things to all people.

 

END THE FED!

 

1) Why?
2) Replace it with what?

 

Nothing wrong with a national bank.

 

Replace it with the free market. It is stupid to believe that Janet Yellen is smart enough to run your life. Wake up children. Money is not run by government or smart people who live in Washington D.C. They are charlatans.

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For the National Bank.

It is stupid to let the National Bank run your life.

 

How do you replace it with "the free market"? Please explain exactly the system you'd propose to replace the Fed for money policy and how it would work.

 

I can not teach you on a forum how the free market works. You are going to have to do your own homework. Here is what you can read if you really want to learn: "Gold, Peace, and Prosperity" by Ron Paul. It will take an hour of your time but it is well worthwhile if you really want to learn.

Free market capitalism is an honest system of economics which provides opportunity for anyone willing to produce. Fiat market socialism is a dishonest system of economics which picks and chooses winners and losers. Socialism favors the 1% who rule over the 99% and that is why they (the Pilgrims) keep the people in the darkness.

 

Thanks for the non-answer. With that, I can safely conclude you have no reasonable alternative.

 

Honest sound money as established by Thomas Jefferson and Alexander Hamilton is the answer. That is free market money. Do you know what that means? If not then read the Coinage Act of 1792. It is very tough to teach people who refuse to do the homework.

 

That is your view of "free markets" for the money supply? A strict gold standard where foreign governments, gold producers and speculators can manipulate our currency? So we can guarantee that a recession turns into a depression?

Read it. So what? It is a law passed per the Constitution that gave Congress the power to set and change the exchange rate for money. Which they wisely delegated to the Fed.

If you think gold is such a great asset to hold, buy gold. No one stops you.

 

I do buy gold. Alan Greenspan tells us why the smart money is in gold. Do you somehow think that the wealthy people and central bankers are not buying gold? The old golden rule. "Whoever owns the gold makes the rules." You can keep your paper money if you like. No one stops you.

 

Good for you. Problem solved.

 

The gold standard would be better than the oil standard, where foreign governments, oil producers, and speculators manipulate the price of oil and the US dollar since they are tied together.

The federal reserve could not manipulate currency prices for gold, since it is a current asset rather than a fixed asset as oil is.

 

What oil standard?

Which was a big problem in the Great Depression. The Fed had to contract the money supply to maintain the gold standard at the worst possible time, when there were runs on banks and massive deflation.

 

The US dollar an oil always rise or fall in value together because the dollar is backed by the petrodollar.

The great depression was a true correction in the market, that is why the economy prospered shortly after. There are no true corrections when the money supply is not backed by a current asset, so an economic recovery like the one after the great depression isn't possible any longer even with Fed intervention.

 

Nonsense.

Then thank God we don't have a gold standard and your "true corrections" any more. I'll pass on going through another Great Depression.

We had strong recoveries when we had a strong middle class. Then we got "trickled down" and now Tea Party austerity.

 

Are you sure you understand what a petrodollar is? It's a....dollar. Its only significance is one country receives them when they sell their oil to the country that is buying the oil from them. It's just a dollar changing hands over the sale of oil. It backs nothing, and couldn't, because it's only a term to describe a transaction.

What do you use to determine whether something is a "true correction in the market" or "not a true correction"?

 

Oil being bought and sold in the US dollar allows the banks to print money and have it backed by oil, otherwise their paper notes would be worthless.

A true market correction is when employers go out of business due to poor management, when the federal reserve prints money for them to borrow against it creates artificial market forces that are not sustainable.

When the federal reserve stops printing money, there will be an economic collapse and many lives will be ruined.

 

That's illogical. Dollars are absolutely not backed by oil. Period. We're the reserve currency of the world and our dollar is backed by the full faith and credit of the United States of America. Period. Nothing else backs it. Can you provide a valid source that justifies saying that the petrodollar backs the US dollar? Since they're the exact same thing (petrodollar IS a dollar) I find it difficult to separate them into one entity that backs the other.

Employers go out of business due to poor management every day. A market correction like we saw in the depression, and again with the decline in 2008 and the housing bubble, had nothing to do with poor management.

Or if we have a run on banks, or if the world decides to stop investing in our currency (by buying our bonds during open market operations), or if interest rates rise to the point our debt is unaffordable, or any number of other things that could lead to an economic collapse. The Fed will never stop expanding or contracting the money supply based on economic conditions since that is one of its roles. We have monetary sovereignty so there is no limit to money creation, although it must be managed to prevent skyrocketing inflation.

 

They were allowed to set it but not change it. The dollar is a standard not a law. There is a big difference between a law and a standard. A mile is a standard. A gallon is a standard. The length of a mile can't be changed without causing chaos just like changing the volume of the gallon or the changing the value of the dollar causes chaos.

With ratification, the new government was charged with the duty of establishing standards.
U.S. Constitution. Article I. Section 8

And that is what Thomas Jefferson and Secretary of Treasury Alexander Hamilton did with the Coinage Act of 1792. They established a Mint to coin Money. They carefully measured how much silver was in the Spanish milled dollar and determined the American dollar would have the same value as the Spanish milled dollar and would contain 371.25 grains of pure silver. Therefore, the value of the dollar is 371.25 grains of pure silver.

Once a standard is set it is done. Standards can't be changed without causing chaos. That is the source of our problems today. Instead of letting natural laws dictate the money supply we rely on the members of the Federal Reserve Board to determine the currency supply. Unfortunately, they are not smart enough to know how much currency should be in the system, so their insider friends (the bankers and politicians) benefit the most.

The Morgan and Peace silver dollars are real dollars. The pieces of paper that people today call dollars are not dollars. They are paper things with a fluctuating value. An "elastic" standard if you will. Screwy as all get out. Counterfeit dollars. They don't want to vote on Rand Paul's audit the Fed bill because it will expose them as the counterfeiters they are.

Audit and then End The Fed.

 

Congress has the power to issue currency and set its value.

Its in the Constitution.

Congress has given that power to the Fed, which has its operating officers selected by the President and confirmed by the Senate.

 

Where?

It was a conspiracy between international bankers and politicians at Jekyll Island, GA in November 1910 to gain control of America. It is a cabal. The Federal Reserve is unconstitutional.

"What is Constitutional Money?" with Edwin Vieira

[video=youtube;k6gMkKmQSW4]http://www.youtube.com/watch?v=k6gMkKmQSW4[/video]