PwC and the Fed's Funky Books, It Ain't Pretty

Did PwC basically help the Fed scrub out a $31 million accounting boo-boo? It certainly appears that way (Going Concern):

The Board’s staff and our accounting function at the New York Fed have worked out an accounting treatment to correct for both the $5 million and the $26.6 million errors. That involves reducing the accrued interest asset account by the entire $31.6 million, with an offsetting reduction in interest income on foreign currency investments. We will make that adjustment before the end of the year and spread it among all the Reserve Banks. Of course, for all of us with responsibilities for SOMA this is an embarrassing, indeed humbling, event. As a technical matter, though, I understand that PricewaterhouseCoopers is comfortable with the conclusion of both our accounting and audit function and the Board staff that this is not a material event for purposes of disclosure for any Reserve Bank.

That quote is directly from the December 21, 1999 FOMC transcript, which may be found online here.

The great part is that the Fed gets to destroy its records every five years, which roughly corresponds with how long they take to release full transcripts of FOMC meetings. How many public companies wish they had that kind of freedom?

FOIA? Suck these cash flows, biatch!

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Bob English said...

Suggest you look at the Aug '01 minutes as they are relevant to another of your recent posts (hint: search for "Argentina").

Had that thought already ;) All I saw was one measly paragraph:

"Turning to the last page, the chart shows monthly growth rates, seasonally adjusted, for currency during 2001. As you can see, we’ve had elevated currency growth in July and also in August. Most of that is attributed to cash shipments overseas, primarily to Argentina. The growth of currency has been running at roughly double the rates observed earlier this year, translating into deepening reserve needs over the past intermeeting period. Those deeper needs were met primarily by an expansion of the permanent SOMA portfolio and by a modest increase in the amount of long-term RPs outstanding."


Bob English said...

There's another:

Third, it has become painfully clear that the financial crisis in
Argentina has already extracted a heavy economic toll there. Output is
contracting, unemployment is rising, and prices are declining.
Meanwhile, risk spreads remain elevated and deposits in the banking
sector are running off rapidly. Indeed, the most obvious vote of “no
confidence” in the current situation is what Dino already related--that
an estimated $4 billion of U.S. currency was shipped to Argentina last
month. Perhaps it evidences our lack of imagination, but we find it
hard to picture how the government of Argentina can extricate itself
from this situation in a manner that stanches output losses anytime
soon. And without economic growth, its poor fiscal position stemming
from its high debt burden will only look more unsustainable than it
does today, and the threat of spillovers to Argentina’s neighbors will be
that much more palpable."

Now we know why Reinhart was the one to respond to the Gov't Accountability Project, and that $4 billion was shipped to Argentina in July.