The central bank would be shut down if subjected to a conventional audit, James Grant, editor of value-oriented journal ‘Grant’s Interest Rate Observer’, told CNBC on Wednesday. “If the Fed examiners were set upon the Fed’s own documents…unlabeled documents…to pass judgment on the Fed’s capacity to survive the difficulties it faces in credit, it would shut this institution down,” he said. “The Fed is undercapitalized in a way that Citicorp is undercapitalized.”
Grants thinks that with $45 billion in capital and more than $2 trillion in assets, the Fed wouldn’t withstand the scrutiny it afforded other institutions.
