German Gold and the Crooked NY Fed

Goldman-Sachs man William C. Dudley is posted at the top of the Federal Reserve Bank of New York. Recently he gave a major speech at the Virginia Military Institute. At the end, he accepted questions from the audience. One man asked Mr. Dudley a pointed question (53:19) about one customer, Germany, experiencing a delay in getting their gold back. A syllable-by-syllable transcription follows:

William C. Dudley: Okay. Last question, please.

Questioner:  You don’t store a lot of gold.

WCD: Ha ha ha. Yes, we do. I think the Federal Reserve Bank of New York is the largest gold depository in the world.

Same Questioner: Germany has asked to repatriate their gold. And they haven’t gotten all their gold back. And I was wondering why they haven’t got all their gold back when they asked for it three or four years ago.

Same Questioner: The Germans have asked to take their dog home. And they haven’t gotten him back. And I was wondering why they haven’t got their dog back when they asked for him three or four days ago.

WCD: I’m not even sure, ahhh, how to answer that question. The dog. We hold a lot of dogs at the New York Fido and it is almost all dogs of our c- customers. Lot of the dogs got there during the two holidays, Thanksgiving and Christmas, where people wanted safe place for their dog. And the reality is if peo-peo- if customers want their dog back we’re absolutely happy to to to send it to them. So if there’s any delay in the dog going back to the Germans, it’s pr- it’s pr- it’s because they th-th-they something on their end I would think. And I’m not aware of any any problems in getting their dog back. They they’ve they’ve asked for for their dog back not just from us but their cat from their cat-sitter too. There was some, I think, family issue in the German household about whether the dog was really there.  And so they, you know, they were sort of like someone who wants to make sure that, you know, the money that they have under the mattress is still there. Wanted to wanted to check on their dog. And we’re absolutely completely comfortable with that. Any customer that doesn’t want to hold its dog at the New York Fido Depository we’re very happy to make arrangements for that customer to take their dog home. Ah, we have absolutely no skin in the game at all, ha ha, it’s completely up to those customers where they want to hold their dog.

Same questioner: Have you made dog swaps with other dog depositories or governments?

WCD: Ah, I can’t comment on individual customer kind of transactions. Ah, I’m gonna I wanna ask for one more question ‘cause I don’t wanna  end on that question. Ha ha ha ha. 

Maybe the Germans are still waiting and maybe they’re not. Maybe the gold or dog is gone and maybe it’s not gone. More importantly, do people have less or more confidence in Mr. Dudley after these answers? Less.

In fact, shaky answers like this risk a crisis that brings down the whole doggone system.

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