Teapot Dome 2.0?

April 15, 1922 Senate Investigates the "Teapot Dome" Scandal

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…

EU says it’s time for a transaction tax…

Reuters reports:

EU backs global financial transaction tax

By David Brunnstrom and Timothy Heritage

BRUSSELS, Dec 11 (Reuters) – The European Union urged the International Monetary Fund on Friday to pursue a global tax on financial transactions to limit the risk of another economic crisis, despite U.S. opposition.

EU leaders also underlined the need for “sound and effective” financial sector pay at a two-day summit but, with the notable exception of Germany, did not broadly support French and British proposals to tax bankers’ bonuses heavily.

Although the leaders of the 27-nation bloc largely revived existing ideas, they signalled a desire to address voters’ outrage over a return of the big bonus culture in the banking sector so soon after it was bailed out with tax payers’ money.

“The conclusion … is to propose a global financial transaction levy. It wouldn’t be fair that some impose very heavy burdens and others don’t,” Jose Manuel Barroso, president of the executive European Commission, told a news conference.

“I think it makes sense that a sector that created such a problem for our economies, our taxpayers … also makes a contribution to the overall economy,” he said after two days of talks in Brussels.

The IMF is already considering how to limit risk in the financial system after the worst economic crisis in generations, but Washington has opposed calls for a so-called Tobin Tax — named after U.S. economist James Tobin — on financial transactions.

British Prime Minister Gordon Brown called for consideration of such a tax at a summit of the Group of 20 developed and emerging nations last month, saying the proceeds could be used to fund future financial bailouts.

But he faced opposition from U.S. Treasury Secretary Timothy Geithner, who said he was against such a tax as a way to dampen risky bank behaviour [ID:nN07223447]

Without worldwide support, experts say it would be doomed to failure. Brown acknowledged this, telling reporters in Brussels: “Global taxes will not be introduced unless all global financial centres are able to come behind it. But I believe there’s growing support for that.”