“Mr. Chairman, on exhibit two, panel four, ‘deferred asset.’ This is kind of a nice term, ‘deferred asset.’ As far as I know, the committee has never used the deferred asset. It strikes me as a possible political firefight to bring that into play. All of the scenarios here, other than option one, if I’m reading this correctly, would bring the deferred asset into play, with possible repercussions, I think, for the Federal Reserve.”

This was James Bullard, president of the Federal Reserve Bank of St. Louis, speaking at the September 2012 meeting of the Federal Open Market Committee, according to the minutes. Said a staff member in reply, “It has never been the case that we have had, for the Federal Reserve System as a whole, a deferred asset.” But they knew that they might have one going forward. Earlier in the meeting, the staff had reported that all the options considered to reduce the Fed’s bond portfolio would cause the “creation of a deferred asset,” perhaps even a “substantial deferred asset.”

Image credit: Thomas Barrat