On 2011-12-12, at 3:33 PM, Jordan Hayes wrote:
> c b asks:
>> Why would the GAO publish at all such a misleading
>> number as $16 trillion ...
> Well, they didn't. Did you read the report?
The GAO did, in fact, publish the sensational 16 trillion dollar number in July. It was seized upon, as I recall, by Bernie Sanders' researchers without the clarifying gloss provided by the agency, and it has been widely cited as authoritative since then.
The number is found in Table 8, page 131 of the report. It shows loans from the various Fed emergency facilities to the major US and foreign banks totalling $16,115,000,000,000 between December, 2007 and July 2010. However, as I suggested yesterday, this is an AGGREGATE total in which the same million dollar overnight loan rolled over for a week would count as separate loans totalling seven million dollars. As the GAO note accompanying the table explains: "The total dollar amounts borrowed represent the sum of all loans and have not been adjusted to reflect differences in terms to maturity for the loans."
Table 9 on pages 132-33 shows total TERM-ADJUSTED borrowing by the big institutions as $1,139,000,000,000 - the basis for the GAO's claim in the report's introduction that "loans outstanding for the emergency programs peaked at more than $1 trillion in late 2008." The table note states that "the dollar amounts borrowed for each loan were term-adjusted by multiplying the loan amount by the term to maturity for the loan and dividing by 365 days." Nowhere in the body of the report did the GAO highlight the $16 trillion in aggregate loans.
The report, which mainly deals with conflict of interest, risk management, and disclosure practices at the Fed, can be downloaded here: