The three judge panel from the U.S. Court of Appeals has upheld the lower court ruling that the FED must release the detailed information on how the TARP monies were allocated to the banks. The claim of the FED in response to the Bloomberg LP suit (notice not a Federal action, but a private effort) was that this information did not fall under FOIA. I think we all know distinctively that the FED and their bankster partners know full well that even while taking our money to bailout their buddies they dispersed that money in an illegal fashion as I have previously documented in my blog. But what we know, I feel, is the tip of the iceberg. The FED and the banskters are on a full court press to see that they are not forced to release the information. Why? If everything is “above board” what is the issue? It is a simple accounting exercise or am I missing something? See the below articles appear this week.
April 14 (Bloomberg) — The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.
Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.
The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.
“Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks,” said Paul Saltzman, the group’s general counsel, in an interview yesterday. “We’re not going to let the Second Circuit opinion stand without seeking a review.”
Regardless of whether the Fed appeals, the Clearing House will take the next legal step by asking for a review by the full appellate court, Saltzman, 49, said at his office in New York. If the ruling is unfavorable, the bank group will petition the Supreme Court, he said.
The 157-year-old, New York-based Clearing House Payments Co., which processes transactions among banks, is owned by its 20 members. They include Citigroup Inc., Bank of New York Mellon Corp., Deutsche Bank AG, HSBC Holdings Plc, PNC Financial Services Group Inc., UBS AG, U.S. Bancorp and Wells Fargo & Co.
The Clearing House Association, a lobbying group with the same members, joined the lawsuit in September 2009, after an initial ruling against the central bank in federal court in Manhattan.
The Fed is “reviewing the decision and considering our options,” said Fed spokesman David Skidmore in Washington. He had no comment on Saltzman’s plans. Attorneys face a May 3 deadline to file their appeals.
“We’ll wait to see the motion papers,” said Thomas Golden, attorney for Bloomberg who is a partner at New York- based Willkie Farr & Gallagher LLP. “The judges’ decision was well-reasoned, and we doubt further appeals will yield a different result.”
Bloomberg sued in November 2008 under the U.S. Freedom of Information Act, after the Fed denied access to records of four Fed lending programs and a loan the central bank made in connection with New York-based JPMorgan Chase’s acquisition of Bear Stearns Cos. in March 2008.
The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Fed Board of Governors in Washington, aren’t covered by the FOIA. The statute obliges federal agencies to make government documents available to the press and the public. The suit doesn’t seek money damages. The Fed released lists on March 31 of assets it acquired in the 2008 bailout of Bear Stearns.
The New York Times Co., the Associated Press and Dow Jones & Co., publisher of the Wall Street Journal, are among media companies that have signed up as friends of the court in support of Bloomberg. The Fed Board of Governors’ “refusal to disclose the names of borrowers renders public oversight of its actions impossible — it prevents any assessment of the effectiveness of the Board’s actions and conceals any collusion, corruption, fraud or abuse that might have occurred,” the news organizations said in a letter to the appeals panel.
The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York). To contact the reporter on this story: Bob Ivry in New York at email@example.com.
In related events and during the grilling on the Hill, Robert Rubin’s words, accompanied by the knowing glance of a man who has seen plenty of controversy in his 40 years in finance and politics, set the tone for his appearance before an inquiry into the causes of the financial crisis. Either this is the highest paid group of incompetent boobs or these guys are playing “I know nothing game” to the hilt. This in the Financial Times:
For nearly three hours Mr. Rubin, a former US Treasury secretary and director of Citigroup, and Chuck Prince, the former chief executive of the US financial giant, did manage to work their way through questions from the Financial Crisis Inquiry Commission.
Indeed, even though technicians had to be called in to fix the hearing room’s air-conditioning system halfway through the session, Mr. Rubin and Mr. Prince did not break sweat in answering the commission’s questions.
Until, that is, just before the end of the hearing when Phil Angelides, the FCIC’s chairman, and Bill Thomas, his deputy, showed they had some sting left in their tail. In response to protestations by Mr. Prince and Mr. Rubin that they could not have monitored the company’s catastrophic expansion into complex mortgage securities, Mr. Angelides, a former California state treasurer, fulminated: “The two of you, in charge of this organization, did not seem to have a grip on what was happening.”
What they said
Chuck Prince: ”I can only say that I am deeply sorry that our management – starting with me – was not more prescient and that we did not foresee what lay before us.” Byron Georgiou, FCIC: ‘Yesterday I likened [Citi’s CDO writedowns] to medieval alchemy. Today I am starting to believe that maybe it was hallucinatory’. Chuck Prince: ‘In hindsight it has been horrible, I accept that’
Robert Rubin: ‘The overriding lesson of the financial crisis was that the financial system is subject to more severe downside risk than almost anyone had foreseen. It is imperative that private institutions and the government act on that lesson’
Phil Angelides, FCIC chairman, to Robert Rubin: ‘You were not a garden-variety board member’
Then to Mr. Rubin, who had explained he never had executive responsibilities at Citi despite commanding a $15m yearly pay package for most of his tenure, he said: “I don’t know that you can have it two ways: you were either pulling the levers or asleep at the switch.”
Comparing Citi’s debacle as a “journey into the garden of good and evil”, Mr. Thomas, the former Republican chair of the House ways and means committee, questioned why neither Mr. Rubin nor Mr. Prince returned any of the bonuses earned while at Citi. “Something happened, something was created, assumptions were made and behaviour has to have consequences,” Mr. Thomas warned.
This was a sign, perhaps, that the FCIC’s final report to Congress in December would have Citi and its management as one of its focuses. Mr. Rubin reminded Mr. Thomas that he gave up his $14m guaranteed bonus in 2007 and 2008, while Mr. Prince had earlier said he had kept all of his Citi shares, and lost a lot of money as the stock collapsed in the crisis.
Until Mr. Angelides’s and Mr. Thomas’s final tirades, though, it had been fairly plain sailing for the two former Citi grandees.
With only a small bottle of water to sustain them, Mr. Prince and Mr. Rubin repeatedly expressed regret over their time at the helm of a company that lost $51bn on complex securities and had to be bailed out by the US government with $45bn of taxpayers’ funds. “Let me start by saying I am sorry,” was the opening gambit of Mr. Prince, who left in 2007 as the mortgage write downs began to mount.
But they also vigorously defended their right not to have known – or have been concerned – about Citi’s exposure to billions of dollars of collateralized debt obligations, mortgage-backed securities, that later turned out to be toxic.
As Mr. Rubin told the commission, the board had no reason to know about positions that, in the heady days before the crisis, had been regarded as super-safe by credit rating agencies.
In a rare sign of annoyance at the questions, Mr. Rubin, a former co-head of Goldman Sachs, said: “I didn’t know [about detailed trading positions] when I was running Goldman Sachs and I did not know sitting on Citi’s board. You are talking about a level of granularity no board will ever have.”
Mr. Prince pointedly reminded the FCIC that, in the run-up to the crisis, Citi’s management team did not have the hindsight available to the panel, especially on allegedly safe securities.
However, the two men’s assertion that the first time they knew Citi had billions of dollars of CDOs on its books was in September 2007 – when they began a series of nightly calls that became known as “defcon calls” – came under scrutiny.
Mr. Angelides pointed to internal documents that appeared to contradict Citi’s assertion – in an analysts’ call in October 2007 – that its exposure to CDOs was $13bn. He said that internal documents indicated the exposure was more like $50bn. Neither Mr. Prince nor Mr. Rubin were able to explain the discrepancy.
Byron Georgiou, a commissioner, confronted Mr. Rubin with the fact that his old employer, Goldman Sachs, had begun to reduce its exposure to the mortgage market in December 2006, well before Citi’s management had noticed the problem. “[The CDO write downs at Citi] … are emblematic of something that went seriously wrong that everybody thought was impossible,” he said.
In closing, I am glad to see the pressure starting to mount to build some criminal cases concerning how we got in this mess. However, somehow we must keep the pressure on so that even the paid cronies on the Hill have no option except to continue to bring the pressure. We can see by Bernanke’s recent comments that one of their ploys is going to be “everything is fine now, no need to look any further.” We cannot and should not allow such a ploy to take place. We have done nothing, either in the way of enforcement or regulation, to fix the problem. In fact, the Fed and the banksters are more blatant in their practices today than they were at the height of the crisis. Let your CONgressman know we want heads!