Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

President Fisher, I have a tiny bit of information in that regard. Once a year there are surveys taken of U.S. liabilities to foreign holders, and they are done security by security. We went looking for the securities that had been downgraded—by Moody’s I guess it was, or maybe it was both Moody’s and S&P—in CDO packages to see if we could find them. We found a certain fraction of them in the survey, which meant that the others that we didn’t find were not held abroad because the custodians didn’t report them as foreign owned. Of the fraction of the securities that were actually found, 40 percent were owned abroad, which implied about a 10 percent ownership of all the downgraded securities. Not all of the securities, but all of the downgraded securities. A meaningful number—but not a huge number, not 50 percent, not more than half, but a fraction—were in the survey; of those, 40 percent of the total outstanding were what was held abroad. However, not all countries are forthcoming with what they own, and it is certainly possible that the system doesn’t capture all foreign ownership. China, for example, is very unforthcoming. But our liability survey doesn’t depend on their answering the questions; it depends on custodians answering the questions. So I would say it’s significant, but I think I come away from this information thinking that perhaps we are exaggerating a bit how much of it is abroad.

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