The Federal Reserve currently has a board composed of five people. At $970 million spent on board expenditures in 2021, this equates to an average cost of $194 million per each Governor. Isn’t this completely incomprehensible, and something the mainstream media or Congress should inquire about next time they meet with the Fed?
Normally board expenses are allocated for coffee and donuts, maybe a luncheon; but at America’s central bank, there seems to be much more that has yet to surface. On Friday the Fed mentioned their board expenses in the press release regarding expenses and transfer to treasury for the year.
…$970 million for Board expenditures…
Audited financial statements won’t be complete for a few months. But if 2021 was anything like 2020 or 2019, the actual number will surpass $1 billion. Reason being, Board of Governors operating expenses are included with Currency Costs, as seen on the prior year’s statement. The figure was $1.78 billion.
There is a glaring problem here. Board of Governors operating expenses, like Currency Costs, have absolutely no further disclosure on the financial statements. Other than the auditor, members of the board, and whomever does the accounting, no one knows where the nearly $1 billion has been spent. It wouldn’t take much collusion if funds were allocated to buy a Ferrari or a few Bitcoins for a board member. Not to say this is what has happened, but if this did happen, the public would never know.
It really is the case of trusting the Fed. Yet nothing in the Fed’s history shows it can be trusted, with questionable trading activities being a recent example where their credibility was called into question.
Typically, important items are given notes at the back of the financial statements, where the figures are explained in greater detail. However, this is not the case with Board of Governor expenses. Anyone familiar with the audit process knows that a $970 million expense, for an entity holding assets approaching $9 trillion, likely means the board expenses are not considered a material line item. Meaning, the balance could go completely under the radar or hardly examined by the auditor.
Of course, the $970 million is just one of the various costs required to run the Federal Reserve. Other notable expenses include:
$1.0 billion for the costs related to producing, issuing, and retiring currency… and $628 million to fund the operations of the Consumer Financial Protection Bureau.
And my personal favorite, to the stockholders of the America’s Central Bank:
Statutory dividends totaled $583 million in 2021.
This was only some of the costs. More will be offered upon release of the 2021 statements. Still, given the various opportunities members of Congress, or the media have to engage in public discourse over monetary policy, it would be nice if someone were to inquire just what exactly these board expenses are. Even worse, it would take nothing more than a small change to legislation or request by Congress to force the Fed to hand over their general ledger or other disclosure. There need be no requirement for any new public audit or other rigmarole. The Fed simply needs to provide the same information they give to the auditor (i.e., a general ledger, or a list of all the transactions that comprise the $970 million in expenses), and let the public look into the matter.
If the Fed is supposed to operate for the good of the public, or in the public’s interest, there should be no qualm granting the public access to such information. It is definitely not in the public’s interest to be left in the dark over such matters, especially when the public funds the Fed. For a trillion dollar entity with a currency monopoly of the USD, more should be done to find out what exactly it is they do with all this money, specifically, what exactly has the board bought for $970 million.
