Wednesday, May 13, 2009

Oversight at the Fed

This is a clip of Rep. Alan Grayson (D-FL) talking to Federal Reserve Inspector General about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligation. To my mind, the financial mess is largely a function of over regulation. That was what I implied in an earlier post. At about 2:10, the Fed IG explains to Rep. Grayson that the scope of her oversight is limited to:
direct oversight over [Federal Reserve] Board programs and operations. And are also able to look at Board delegated functions at reserve banks.... We do not have oversight to directly go out and audit reserve bank activity specifically.
She's arguing that the scope of her authority is limited to the loftier echeleons of the Fed, so she doesn't have any clue about the filthe lucre the Representative inquires about. Rep. Grayson comes right back at her at 3:00 and directly asks who does know about the trillions. She helpful reiterates the scope of her responsiblity which does not extend to trillions of dollars in aggregate lending and spending.

Going back to one of my favorite links, The Practical Rules of Bureaucracy, I've been trying to figure out which rule we're seeing here. My initial thought was #6, Pass the Buck, but she never does identify who is responsible—the buck is never passed. Therefore, I'm going with #9, Jerk People Around. Please, leave your analysis in the comments!

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