A YouTube video of a series of questions by Representative Alan Grayson directed at Federal Reserve Board Inspector General Elizabeth Coleman has garnered over 1.5 million viewings to date. The popularity of the video reflects both public frustration with holding the Fed accountable and the power of the Congressional star chamber to create a media sensation.
By Robert Stowe England
June 27, 2009
In a nearly empty House hearing room, Rep. Alan Grayson, the Democrat representing the 8th District of Florida, asks Federal Reserve Board Inspector General Elizabeth Coleman a series of questions, which she is unable to answer to his satisfaction.
Grayson posted the grilling on YouTube May 6 and the video has garnered 816,408 views so far. He reposted the exchange in a higher quality version May 12, which so far has garnered 696,292 viewings.
Here is a link to the May 12 YouTube video: http://www.youtube.com/watch?v=cJqM2tFOxLQ&feature=channel as posted by Congressman Grayson.
The comments on YouTube are overwhelmingly critical of Coleman's responses.
Grayson, a member of the House Financial Services Committee, has taken up the cause of overseeing the expanded lending programs of the Federal Reserve since the collapse of Lehman Brothers in September 2008.
Grayson begins by asking the I.G. if she has investigated the Fed's "role in deciding not to save Lehman Brothers, which led to shock waves that went through the entire financial system."
"We do not currently have an investigation in that particular area," Coleman replies.
Grayson asks if there is an ongoing "investigation" of the Fed's $1 trillion plus expansion of its balance sheet.
Inspector General Coleman replies there is a "high level review" of the expanded lending facilities at the Fed to identify the risks involved, but says she is unable to provide Congressman Grayson with any details on what is being found.
Grayson asks if Coleman has "reached any conclusions" about the Fed's lending programs and Coleman says she has not.
When asked if she knows who has received the $1 trillion plus, Coleman replies: "I do not know. We have not looked at that specific area at this particular point in those reviews."
Grayson asks Coleman about "trillions of dollars of off-balance sheet transactions" and references an article in Bloomberg that can be found at this link: http://www.bloomberg.com/apps/news?pid=20601087&sid=aGq2B3XeGKok
Yet the $8.7 trillion dollars reported by Bloomberg are not all part of Fed programs. As Bloomberg authors Mark Pittman and Bob Ivry state: "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."
Coleman replies that she has not seen the Bloomberg article and is not able to respond to the information it contains.
Grayson again asks Coleman if the Fed has in fact engaged in $8.7 trillion of off-balance sheet transactions. This "works out to $30,000 for every single man, woman and child in the country. I'd like to know if you're not responsible for investigating that, then who is?" he asks.
Coleman replies that the Fed does have responsibility in that area.
Grayson asks: "Have you done any investigation or auditing of off-balance sheet transactions conducted by the Federal Reserve?"
Coleman replies: "At this point we are conducting our lending facility project at a fairly high level and have not gotten to a specific level of detail to be in a position to respond to your question."
In response to a question about whether or not any audits have found losses since the Fed began expanding its programs last September, Coleman says that "until we actually go out and gather the information, I'm not in a position to respond." She further adds that she "is not in a position to say if there are losses."
An exasperated Grayson concludes, "I am shocked that no one at the Federal Reserve, including the Inspector General, is keeping track of this."
The popularity of the YouTube video captures the frustration of the public with the expansion of government programs that appear to be a bailout of financial institutions and to lack sufficient justification, effective oversight and accountability.
Since the posting of the YouTube video, the Fed has provided more information on its expanded facilities, which have pushed assets on its balance sheet to over $2 trillion. The first of monthly reports on the Fed's credit and liquidity programs was released June 10 and can be found at this link: http://www.federalreserve.gov/newsevents/press/monetary/monthlyclbsreport200906.pdf
The public continues to want to know what is being done with all the lending, spending and loan guarantees, whether they are really needed, how they will be reined in, and what losses can be expected. There is also frustration with other federal programs, such as those used to bail out banks and auto companie.
In the end, this popular video suggests that the public remains skeptical and deeply unhappy with Washington bureaucrats and politicians, who are at considerable risk if they do not do more to justify their emergency programs and make them fully accountable.
It also shows that outrage without all the facts can cast anyone in an unfavorable light when, so far, we do not really know what the review will find. At this point, in all fairness, we should not pre-judge the Inspector General.