Repost from Jesse’s Cafe…
“I have to think this train is probably going to leave the station soon and we need to focus our efforts on explaining the story as best we can. There were too many people involved in the deals — too many counterparties, too many lawyers and advisors, too many people from AIG — to keep a determined Congress from the information.” James P. Bergin, NY Fed, in an email to his Fed colleagues.
‘Though it is hard to divine much understanding from the unredacted filing, it has become clear that Goldman had more involvement than previously believed: In addition to the credit default swaps it bought from AIG, the filing shows that Goldman Sachs also originated many of the underlying assets that AIG and the New York Fed bought back from Société Générale.
The American people have the right to know how their tax dollars were spent and who benefited most from this back-door bailout,” said Kurt Bardella, spokesman for Issa. “Now that it’s public, let’s see if the sky really does fall as the New York Fed said it would to justify its coverup.”
Other lawmakers believed that the New York Fed was trying to hide its ties to Goldman Sachs.’ AIG Reveals the Story – CNN
“Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.
We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system — apart from the matter of AIG’s bailout — deserves further congressional scrutiny…
By pursuing this line of inquiry, the hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve
This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank…
From the WSJ…
~~~ “Sen. Jeff Merkley (D., Ore.) last month became the first Democrat to oppose Ben Bernanke’s confirmation for a second term as Federal Reserve chairman. (The leading liberal against Bernanke, Sen. Bernie Sanders of Vermont, is an independent.) He’s been joined now by three other Democrats and a growing list of Republicans. We talked with him about how the Bernanke vote is shaping up among Democrats:
From where you stand, how does this nomination for Chairman Bernanke look right now?
A lot of folks have been coming up to me in the hall, saying that they want more information and that they’re seriously considering voting against him, or that they’re leaning towards voting against him.
Are they asking you for more information?
Some have. … The main points I’ve been making are that there are at least four major issues that happened in the course of the last eight years: expansion of proprietary trading, derivatives, the lifting of leverage and the failure to address the dysfunction in the [regulation of] mortgages — that is, the kickbacks, the yield spread premiums and the prepayment penalties. While not all of these were the responsibility of the Fed, very much in his role as chair of the Council of Economic Advisers, as a member of the Fed, as chair of the Fed, he was at the economic policy table and did not raise concerns about these major issues that had systemic impact.
We’re hearing that about 10 to 15 members are opposed from the Democratic side. Is that right?
I have not tried to tally folks, but there’s nothing in that number that I would react to and say that’s off base. But a bunch of folks have said they’re wrestling with it, or they’re leaning. I don’t know that 10 to 15 have in any public way said that they clearly are opposed.
Are the political ramifications of the Massachusetts election affecting the Bernanke vote substantially?
I don’t really think that’s what’s going on here. I think what’s going on is that folks are very aware that many of the policies we worked on this last year were addressing the potential plunge into a Great Depression — unemployment going up, major institutions on the verge of collapse that could have caused others to collapse. We did a lot to those stabilize financial institutions. We’ve got to pivot to fighting for the financial success of our families. … Here we have an economic policy leader, he did a good job with the fire hose this last year. But he certainly also — in his roles over the last eight years — he helped create the circumstances that set the house on fire. Is he really the person you want now to be the carpenter to rebuild the house?
Do you have any worries about how a Senate vote against Bernanke might influence financial markets here and abroad?
This is always raised in regard to nominations. I think one of the reasons folks have been hesitant despite Bernanke’s involvement in burning down our economic house has been not to upset Wall Street. But what is going to have the biggest impact in the long term: Having a person in economic leadership that has missed every significant systemic risk development, putting them in charge, or putting someone in charge who has the ability to see those risks and respond in an appropriate way, to lean into the wind?
Yup… this editorial sums up how America feels… President Obama time to swap that black hat for a white one… rein in the banks… start with insisting on Senate hearings on Glass-Steagall… make John McCain your partner on breaking up the big banks…
WASHINGTON (MarketWatch) — The people of this country have had it up to here with the way our leaders are running our country.
And while the election of Republican Scott Brown to the U.S. Senate seat held by the Kennedy brothers for nearly 60 years is clearly a repudiation of the Democrats’ leadership, Republicans shouldn’t get so smug about this victory. See full story on Brown’s victory in Massachusetts.
We are fed up with the lot of you.
You promised to change the way Washington works, but you didn’t do it. Your answers to our problems are inadequate, or they make things worse. As usual, you’re taking care of everyone but us. Despite the worst economic crisis in generations, nothing has changed.
This country is in trouble, maybe big trouble. Our economy doesn’t work for us any more. Jobs are hard to find, health care is hit or miss, and the idea of a comfortable retirement seems a cruel joke. We legitimately worry that we’re bequeathing our kids and our grandkids a life that’s going to be much tougher than ours.
We did everything we were asked: We worked hard, we invested in Wall Street, we took off our shoes at the airport, we bought a house, and we borrowed and spent until we couldn’t spend or borrow any more.
You don’t get it. We don’t care about your campaign donations. We don’t care about your political fortunes, or those of your party. We don’t care who posed nude, or who’s the better candidate. We don’t care about 60 votes. We don’t care about the big companies or the special interests who fear the future. We don’t care about Senate traditions, or what those idiots on TV say.
We care about results. Fix our problems, or get out of the way. We know our problems aren’t simple. We know the answers won’t come easy. But we also know that you don’t understand. If you did, you’d hide your faces in shame.
To the Democrats: We elected you to accomplish things for us, not to give you lifetime jobs. We gave you an overwhelming majority in Congress: Use it or lose it.
To the Republicans: It might seem smart in the short run to just oppose everything, knowing that the wheel will turn and that eventually the people will give the power and the mandate to you. But it’d be much better for us if you’d actually stand for something other than protecting your own hides, or getting your own cable show.
To the voters: You deserve better. Start demanding it.
— Rex Nutting, Washington bureau chief
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The New York Times
December 20, 2009
By ELIOT SPITZER, FRANK PARTNOY and WILLIAM BLACK
WE end this extraordinary financial year with news that the Treasury is in discussions with American International Group about selling the taxpayers’ 80 percent ownership stake in that company. The government recently permitted several banks to break free of its potential oversight by repaying loans made during the rescue. But with respect to A.I.G., the Treasury should not move so fast. There is one job left to do.
A.I.G. was at the center of the web of bad business judgments, opaque financial derivatives, failed economics and questionable political relationships that set off the economic cataclysm of the past two years. When A.I.G.’s financial products division collapsed — ultimately requiring a federal bailout of $180 billion — those who had been prospering from A.I.G.’s schemes scurried for taxpayer cover. Yet, more than a year after the rescue began, crucial questions remain unanswered. Who knew what, and when? Who benefited, and by exactly how much? Would A.I.G.’s counterparties have failed without taxpayer support?
The three of us, as experienced investigators and prosecutors of financial fraud, cannot answer these questions now. But we know where the answers are. They are in the trove of e-mail messages still backed up on A.I.G. servers, as well as in the key internal accounting documents and financial models generated by A.I.G. during the past decade. Before releasing its regulatory clutches, the government should insist that the company immediately make these materials public. By putting the evidence online, the government could establish a new form of “open source” investigation.
Once the documents are available for everyone to inspect, a thousand journalistic flowers can bloom, as reporters, victims and angry citizens have a chance to piece together the story. In past cases of financial fraud — from the complex swaps that Bankers Trust sold to Procter & Gamble in the early 1990s to the I.P.O. kickback schemes of the late 1990s to the fall of Enron — e-mail messages and internal documents became the central exhibits in our collective understanding of what happened, and why.