Federal Reserve stonewalls as to where $9 trillion went to.
video Sunday, August 7th, 2011Rep. Alan Grayson asks the 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 obligations. Inspector General Elizabeth Coleman responds that the IG does not know and is not tracking where this money is.
The off-balance sheet is also a common method of describing transactions that are illegal. These transactions take place off the official books for the company. Regardless of its origin, the money that comes in or goes out needs accounting just like any other money. In the past, this led to the practice of using two accounting ledgers, one official and one not, creating an on- and off-book system.
This term came into popular use during the Enron bankruptcy. Many of the energy traders’ problems stemmed from setting up inappropriate off-balance-sheet entities. Enron’s nontransparent financial statements did not clearly depict its operations and finances with shareholders and analysts. In addition, its complex business model and unethical practices required that the company use accounting limitations to misrepresent earnings and modify the balance sheet to portray a favorable depiction of its performance. Enron executives found new ways to hide its debt from its investors and shareholders. Enron executives “…created off-balance-sheet vehicles, complex financing structures, and deals so bewildering that few people can understand them even now.”
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