Elizabeth Warren Uncovered What the Govt. Did to 'Rescue' AIG, and It Ain't Pretty

Discussion in 'Wall St. News' started by hippie, Aug 10, 2010.

  1. LEAPup


    Looks like the fed is in the crosshairs.
  2. Congressional Oversight Panel (COP)
    “The AIG rescue demonstrated that Treasury and the Federal Reserve would commit taxpayers to pay any price and bear any burden to prevent the collapse of America’s largest financial institutions,” the COP report said. This could have been avoided, the report argues, if the Fed had listened to disinterested advisers with a less parochial understanding of the public interest.
  3. No wonder Turbo Taxcheat Timmie doesn't want Warren to head up that new consumer agency. She might actually do a good job for consumers.
  4. All well and good.

    What is conspicuously absent in this rosetta stone is international implication, political and financial.

    Considerations our gov't must weigh whereas Warren doesn't.
  5. Sigh and another sigh...

    I sincerely hope that this expose gets somewhere. And all the wrong doings and people who committed them gets punished.
  6. Most Americans are too interested in what Tiger Woods is doing to care.
  7. Blotto


    Some interesting paragraphs from the article....

    The New York Fed president did not need to threaten anyone. This was the gentlemanly way in which the central bank can invoke its informal authority, with numerous precedents in the past.

    JPMorgan and Goldman offered no public explanation for rejecting Geithner’s proposal. The public wasn’t ever told the banks were asked to do their part. Nor did Federal Reserve officials argue with the decision or try to apply persuasive pressures. It did not put the squeeze on to convince the bankers they must accept some kind of sacrifice in the interest of sharing the pain.

    To put it crudely, the Fed could have taken some key players in a back room and discreetly banged their heads together. Central bankers do this on occasion with uncooperative bankers. In extreme circumstances, the Fed can apply formidable powers of persuasion. Most bankers do not wish to provoke the Fed’s disfavor, especially when the system is wobbly and they might need the central bank’s help to survive. This time the Fed did not even try.

    Timothy Geithner told panel members he does not think it is the Federal Reserve’s role to use the tools at its disposal to induce the banks it regulates to do something they do not want to do. That posture implicitly gives the high ground to the regulated banks—their choice, not the government’s.

    Baxter, general counsel at the New York Fed, testified that the Fed did not seek to pressure banks into compromising on their contract rights. “We see that as an abuse of regulatory power,” he said. Scott Alvarez, general counsel for the Federal Reserve Board in Washington, testified, “We had no legal authority to force anyone to take actions they did not want to take and at this time in this economic circumstance, they did not want to provide assistance to a struggling firm. So there was nothing more that we could do.”

    The oversight panel did not accept these claims of regulatory impotence. Neither do many Wall Street veterans familiar with the Fed’s potential power.

    The Fed could not force them to accept, but it could make refusal very awkward. Any holdouts could be “named and shamed” and held up for public scorn—as bankers who accepted public bailouts but refused to do their part. There’s nothing irregular about that.
  8. Blotto


    Very scary language here. The suggestion is that the central bank should exceed its authority and impose on the private sector, but in such a way as to be seen to be working for the "public good" - using pull and threats rather than logic and free consent.

    Some of the language is very similar to that used when the representative of the State Science Institute visited Hank Rearden!