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Alan Grayson (D-KY) Grills Fed Lawyer In Committee

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(Grayson) Has the Federal Reserve ever tried to manipulate US stock market? (Alvarez) No sir, not that I'm aware of. (Grayson) Not that you're aware of, but you're the attorney, right? (Alvarez) That's right. (Grayson) So, you might not even know, right? (Alvarez)I would expect to know if there were something like that being done. I'm not aware of that at all. (Grayson) and if you did know you'd be bound by attorney-client privilege and you wouldn't be able tell us, right? (Alvarez) Uh.....Sir, if there were something the Federal Reserve were doing outside its legal authority I would have an obligation to say something about that. (Grayson) all right, so we agree that any participation by the Federal Reserve in the stock market or the futures market is outside the Federal Reserve's of legal authority, right? (Alvarez) The Federal Reserve has some authority to regulate various aspects of markets and participate in markets in certain ways, so I think your question is too categorical but .... (Grayson) I think not, actually. Why don't you answer it? (Alvarez) I don't know what would.... your question is, uh, Overbroad. I don't know where to begin to answer that. (Grayson) I don't think it's that overbroad. I'd like you to tell me whether it's within the Federal Reserve's legal authority to try to manipulate the stock market or the futures market. (Alvarez) I don't believe the Federal Reserve tries to manipulate the stock market or the futures market. (Grayson) Tries? C'mon. Do they? (Alvarez) The Federal Reserve's obligation and what it does in monetary policy is try to influence interest rates and in that way to maximize employment and to stabilize prices. (Grayson) Now if in fact the Federal Reserve were trying to do that or doing it - isn't that something we would want to know? (Alvarez) And to the extent that the Federal Reserve influences interest rates it does make announcements of that decision immediately. (Grayson) That's not what I said. I said manipulate the stock market or the futures market. Wouldn't we want to know? Yes or no? (Alvarez) Could you define what you mean? (Grayson) I think you know what I mean, Mr. Alvarez. Now wouldn't it be very helpful to have a GAO audit on that subject? Wouldn't it? (Alvarez) I don't know what it is that you are seeking to audit, sir. (Grayson) What I just said. (Alvarez) It would be helpful if you could outline... (Grayson) Let's go on to something else. Does the Federal Reserve actually possess all the gold that's listed on their balance sheet? Do they actually possess it? (Alvarez) Yes. (Grayson) Has that been audited by the GAO? (Alvarez) I believe that's within the GAO's authority to audit. It's certainly something that our independent accountant is able to verify and does. (Grayson) So if I go in and ask for a GAO audit you won't oppose it right? (Alvarez) To auditing the presence of the gold on on the facility? I don't see any reason to object to that. (Grayson) Good. Now there's been all sorts of claims of insider trading and frontrunning by the people who execute trades for the Federal Reserve in the market. By the way, who is that? Who actually executes the trades for the Federal Reserve in the markets? (Alvarez) I haven't heard of any allegations of frontrunning or improper trading. (Grayson) Well that's funny because you're the general counsel So if anybody would know about it you'd think you would know about it. (Alvarez) The Federal Reserve Bank of New York is responsible effecting the transactions implementing monetary policy. (Grayson) Okay, answer the question. (Alvarez) The Federal Bank of New York. (Grayson) That's your answer? (Alvarez) You want to know who implemented... (interrupted) (Grayson) You actually have people sitting at screens at the Federal Reserve Bank executing those trades. You don't delegate that to anyone else? (Alvarez) No, the Federal Reserve Bank of New York has a process where there's several steps The federal Bank of New York executes transactions through primary dealers, (Grayson) AhHa! Who are the primary dealers? (Alvarez) So the list of primary dealers is on our website. (Grayson) Do you know any of them? Can you name a single one? (Alvarez) Uh, Uh, sure. (Grayson) Go ahead, name one. (Alvarez) J. P. Morgan Chase. (Grayson) Okay, do you mind if we have a GAO audit to see whether there's been frontrunning or insider trading by them? Do you mind? Is that okay with you? (Alvarez) I'm not sure I have any decision-making authority. (Grayson) Well you're the general counsel. I want to know if you're going to try to stop it. (Alvarez) GAO audits government agencies and you want an audit of a private entity. I think that Congress would have to change the authority of the GAO to allow it. (Grayson) You are right. That's what we're doing here by the way. Let's say the Federal Reserve gave $1 billion to a very promising fledgling institution. called the Dick Cheney Savings and Loan. whose only asset is an unnumbered Swiss bank account. Don't you think it would be a good idea/N to have the GAO to have the authority look at that? (Alvarez) So under the GAO authority as written a loan by the Federal Reserve to a specific entity Say, a particular bank as you pointed out, would be subject to a GAO audit. We don't oppose that. (Grayson) Okay, the Federal Reserve has given out $1 trillion $1 trillion in the past 12 months. That's how much the increase in the assets and liabilities on the balance sheet has been. Who got the money? By the way, this is a question sent to me by Beatrice Delgado. She just wants to know who got the money. Will you tell me? (Alvarez) Most of the increase in our balance sheet has been the purchase of US government securities and the purchase of agency guaranteed securities in the open market from market participants broadly. (Grayson) And what about the rest of it? (Chairman) The gentleman's time has expired. (Grayson) Thank you Mr. Chairman But I really think we need answers to these questions. The only way to get answers to these/ questions is to have the GAO audit the Federal Reserve. Thank you very much. (Chairman) I just wanted to make the point that there will be an opportunity to submit questions in writing.

Video Details

Duration: 5 minutes and 41 seconds
Country: United States
Language: English
Views: 179
Posted by: angelatc on Sep 26, 2009

9/26/09 - Alan Grayson (and Beatrice Delgado) only want to know - who got the $1 trillion dollars?

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