Fed New Accounting Change Means its Impossible for the Fed to go Bankrupt!

This means that any negative asset being held by the Fed is transferred to the US Treasury, (i.e., to the American people) to keep the Fed's balance sheet positive. This includes all the fraudulent mortgage-backed securities which Wall Street was forced to buy back from defrauded investors and which were dumped on the American taxpayer under the name "toxic assets."

Effective January 1, 2011, as a result of the accounting policy change, on a daily basis each Federal Reserve Bank will adjust the balance in its surplus account to equate surplus with capital paid-in and, in addition, will adjust its liability for the distribution of residual earnings to the U.S. Treasury. Previously these adjustments were made only at year-end. Adjusting the surplus account balance and the liability for the distribution of residual earnings to the U.S. Treasury is consistent with the existing requirement for daily accrual of many other items that appear in the Board's H.4.1 statistical release. The liability for the distribution of residual earnings to the U.S. Treasury will be reported as "Interest on Federal Reserve notes due to U.S. Treasury" on table 10.

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