Federal Reserve lawyer can't remember talking about gold swaps
11:38p ET Sunday, July 22, 2001
Dear Friend of GATA and Gold:
Our letter-writing campaign to Congress has gotten some
interesting results -- another letter of explanation from
Federal Reserve Chairman Alan Greenspan and, more
interesting still, a memorandum from one of the Fed's
top lawyers asserting that he can't remember anything
about the crucial issue we have been pressing with the
Fed lately, an issue he is documented to have been
Greenspan's latest was sent to Kentucky U.S. Sen.
Jim Bunning and was prompted by an inquiry from GATA
supporters in that state, Mr. and Mrs. Rupert C. Raymond,
to whom we are deeply grateful.
Below are Greenspan's letter, the memorandum that
accompanied it from the Fed's lawyer, and some
comments from GATA Chairman Bill Murphy.
I think this new correspondence suggests that the Fed
is trying to push onto the Treasury Department all
responsibility for the scheme to suppress the gold price
and to cover up the traces of the Fed's own awareness
of the scheme.
We'll continue to press for more complete answers.
But GATA's supporters in the United States can help us
by sending to their U.S. senators and representatives
the questions we recently proposed putting to them. You
can find them here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
Washington, D.C. 20551
June 25, 2001
The Honorable Jim Bunning
United States Senate
Washington, D.C. 20510
Thank you for your recent letter requesting information related to
an inquiry received from two of your constituents, Mr. and Mrs.
Rupert Raymond. The Raymonds' letter principally concerns
remarks made at a January 1995 meeting of the Federal Open
Market Committee (FOMC) by Virgil Mattingly, in his capacity
as general counsel to the FOMC. A memorandum addressed
to me from Mr. Mattingly on this matter is enclosed for your
information. The memorandum responds to the matter raised
by the Raymonds in their letter.
I would like to take this opportunity to confirm the statements
I made last year regarding the Federal Reserve and gold in
a letter to one of your colleagues, Sen. Joseph Lieberman.
In that letter I said:
"The Federal Reserve owns no gold and therefore could not
sell or lease gold to influence its price. Likewise the Federal
Reserve does not engage in financial transactions related to
gold, such as trading in gold options or other derivatives.
Most importantly, the Federal Reserve is in complete
agreement with the proposition that any such transactions
on our part, aimed at manipulating the free price of gold or
otherwise interfering with the free trade of gold, would be
These statements accurately reflect the facts and
longstanding Federal Reserve policy with respect to
I hope this information is helpful. Please let me know if I
can be of further assistance.
* * *
June 8, 2001
TO: Chairman Greenspan
FROM: J. Virgil Mattingly
SUBJECT: Inquiries regarding "gold swaps"
This memorandum responds to your request for information
related to recent inquiries the Federal Reserve has received
regarding remarks I made at a January 1995 meeting of the
Federal Open Market Committee ("FOMC") in my capacity
as general counsel.
These inquiries focus primarily on a statement attributed to
me that appears on Page 69 of the published transcript of the
January 31-February 1, 1995, FOMC meeting to the effect that
the Exchange Stabilization Fund ("ESF") has engaged in
"gold swaps." Given the passage of time, some six years, I
have no clear recollection of exactly what I said that day but
I can confirm that I have no knowledge of any "gold swaps"
by either the Federal Reserve or the ESF. I believe that my
remarks, which were intended as a general description of
the authority possessed by the Secretary of the Treasury to
utilize the ESF, were transcribed inaccurately or otherwise
became garbled. The Federal Reserve's lack of
involvement with gold and gold-related financial instruments
is set forth accurately in your January 19, 2000, letter to
Senator Lieberman, a copy of which is attached. My remarks
should not be interpreted as modifying in any respect what is
set forth in that letter.
With respect to activities of the ESF, I note the Treasury
Department stated in a recent federal court filing that the ESF
has not held any gold since 1978.
* * *
By Bill Murphy, Chairman
Gold Anti-Trust Action Committee Inc.
July 22, 2001
Here's my take on the Alan Greenspan/Virgil Mattingly matter:
* Greenspan most certainly presided over this 1995 FOMC
meeting and does not want to deal with the truth and the facts.
Thus, he turned to Mattingly.
* Greenspan does not want to discuss the gold swaps and
what is really going on with America's gold, so he hid behind
* It appears that Greenspan has not responded to anyone
since his response to Senator Lieberman 18 months ago.
GATA's stepped-up letter writing to members of Congress
has him backpeddling.
* It is clear that Greenspan briefed Mattingly on the response
he should make, as by supplying Mattingly with a copy of his
letter to Lieberman and the Fed's party line.
* Mattingly, an accomplished lawyer, is full of it. His response
does not pass the smell test. GATA has the transcript of the
1995 FOMC meeting. Was it "garbled" or "transcribed
inaccurately"? No way! Here's the quotation attributed to
"It's pretty clear that these ESF operations are authorized.
I don't think there is a legal problem in terms of the authority.
The statute [31 U.S.C. s. 5302] is very broadly worded in
terms of words like 'credit' -- it has covered things like the
gold swaps -- and it confers broad authority."
What do you think?
* There was no letterhead on Mattingly's memo, nor did he
sign it. Did Mattingly even write it in the first place?
* Mattingly has Reg Howe's lawsuit on his mind, as noted in his
memo to Greenspan.
* Once again we see the line from the Treasury Department's
response to the lawsuit: "The ESF has not held any gold since
This represents more disinformation, using Clinton-type
"definition of is" language. Maybe the ESF has not "held" gold
since 1978, but it surely has been dealing in it, based on all the
evidence the GATA camp has uncovered and published.
It appears that the U.S. Government is engaged in a massive
gold market cover-up for its manipulation of the price of gold.
Fortunately, due to the pressure GATA supporters are putting
on the government, the anti-gold cabal is making more and
more mistakes. As each week passes, they are looking more
like "The Gang That Couldn't Shoot Straight."
They certainly are incapable of giving the "straight scoop" to
members of Congress and other inquirers.
Greenspan's response to Senator Bunning sidesteps some
questions asked by the Raymonds, specifically whether "gold
swaps" were discussed at the FOMC meeting at issue.
Let us review the incriminating FACTS regarding the cover-up.
Please review Reg Howe's latest essay, "Judicial Holding
Pattern: Giving the Defendants Plenty of Rope," at
* The Fed has suddenly stopped reporting gold held by the
ESF. That means that we can no longer monitor:
* Discrepancies between the Fed's gold certificate account,
which by law must include certificates for all gold held by the
Treasury, and the total U.S. gold stock, including gold held
by the Exchange Stabilization Fund, reported in the Federal
Reserve Bulletin. By definition, these discrepancies reflect
positive or negative month-end gold balances at the ESF,
and thus necessarily imply corresponding gold-trading
activities by the ESF.
* Close inspection reveals extensive trading activity in the
summary of financial statements for the ESF, which are included
in the quarterly U.S. Treasury Bulletins. Yet Treasury Secretary
O'Neill said the following to U.S. Rep. Ron Paul at a meeting of
the House Financial Services Committee:
"My memory is that last year there was one transaction. It was
a fairly small transaction involving an agreed intervention
vis-a-vis the yen. It was the only transaction last year, I can
* That does not fly. As Reg Howe comments about O'Neill,
"He says nothing to explain how this 'one...fairly small transaction'
produced significant trading losses at the ESF in the two
quarters preceding it, or why it caused such a large loss in fourth."
* In September 2000, more than 54 million ounces of gold, reportedly
held at the U.S. Mint at West Point, N.Y., were switched from the
"Gold Bullion Reserve" category to "Custodial Gold Bullion" (in the
report of the Financial Management Service / Department of the
Treasury Website) without footnote or explanation. This amounts to
the apparent loss of gold ownership of more than 20 percent of the
total U.S. gold reserves previously thought to be part of our
national asset base. The term "reserves" obviously connotes
ownership, while the connotation "custodial" refers to taking care of
another's property. The 48-million-plus ounces at the U.S. Mint at
Denver, Colo., continued to be reported as "Gold Bullion Reserve."
This reporting was both before and after the September
reclassification of gold at the U.S. Mint at West Point, and no
other "custodial" positions for any other location have ever been
To further confuse the issue, the categories of "reserve" and
"custodial" gold have both been eliminated as of the May 2001
report. Both categories were consolidated and are now
labeled "deep storage gold."
Could the "duck" story ever be more appropriate? That is, if it
looks like a duck, quacks like a duck, and walks like a duck, it
most likely IS a duck. Well, Greenspan and O'Neill are ducking
questions about what the United States is doing to manipulate
the gold price. Gold acts like it is being manipulated, looks like
it, and the "quacking" Abbot-and-Costello "Whose on First?"
type reactions by the U.S. Government to cover up its gold
market activities are evidence that GATA is correct and has
This is a national disgrace. No wonder Senator Bunning, a Baseball
Hall of Fame pitcher, said the following at the hearing on the
nomination of Roger W. Ferguson Jr. on June 13, 2001:
"Mr. Chairman, I would like to thank Dr. Ferguson for testifying
today and I would like to thank you for holding this hearing. Dr.
Ferguson, I appreciate your coming to see me last week. I think we
covered a lot of ground. As you know, I expressed my strong concerns
with the Fed talking about the financial markets. Obviously, every
time the chairman speaks, the markets listen. But I am concerned that
the Fed has tried to influence market levels...."
Senator Bunning is a man for GATA supporters to focus on, as he
is a member of the Senate Committee on Banking, Housing and
Urban Affairs. He is also chairman of both the Subcommittee on
Economic Policy and the Subcommittee on Financial Institutions
and the Subcommittee on Securities, which oversees banking,
insurance, securities, and consumer protection.
Might Senator Bunning finally be the politician who will not stand
for these un-American activities, and seek out the truth and
confront this nonsense?
* Neither former Treasury Secretaries Rubin and Summers, nor
Treasury Secretary O'Neill, have addressed any member of
Congress in writing regarding any questions asked of them
regarding gold. No one at the Treasury has yet answered any
questions regarding what prompted the September
reclassification of the gold at West Point to "custodial" status,
or, more specifically, whether this changed status indicated that
the gold had been committed to one or more swap transactions.
Could it be any more obvious that they are hiding something?
The lessons of Watergate have gone for naught. It seems that
the U.S. Government is proving GATA's case for us. It certainly
is easier now for the average layman to understand that
something is VERY wrong. Why else would the Treasury and
the Fed be jumping through hoops to avoid telling the simple truth?
The cover-up of the Watergate burglary is what did the Nixon
administration in. This cover-up is far more serious as it affects
many governments and the economies of the poor gold-producing
nations, and perverts the integrity of the American financial system.
It also makes a mockery of our justice system and rule of law.
Is this the America you want your children and grandchildren to
inherit? If not, keep the pressure on the Treasury and Greenspan
by contacting and re-contacting your senators and representatives
about the gold cover-up. Our tactics are working. The U.S.
Government is out of control on this one. Fortunately, their "slip
is showing." GATA's "enveloping horn" has them staggered. We
must keep the pressure on them and we will.