Is Bernanke Hiding A Smoking Gun?

A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide "troubling details" of Bernanke's role in the AIG bailout.

Sen. Jim Bunning (R-Ky.), a Bernanke critic, said on CNBC that he has seen documents showing that Bernanke overruled such a recommendation. If that's the case, it raises questions about whether bailing out AIG was actually necessary, and what Bernanke's motives were.

A letter Bunning sent Monday to Banking Committee Chairman Chris Dodd (D-Conn.) also refers to an "[e]mail exchange regarding restructuring of assistance to AIG, initiated by Treasury Secretary Timothy Geithner" in March 2009.

Senators will be voting on Bernanke's confirmation for a second term in the coming days. But only senators on the Banking Committee have had access to documents that illuminate just what decisions he made and how he made them. And that access only came after Bunning publicly complained that Dodd and Sen. Richard Shelby (R-Ala.) were the only members of the committee could see them.

Meanwhile, Rep. Darrell Issa (R-Calif.), who has been investigating the AIG bailout in his role as ranking Republican on the House Oversight and Government Reform Committee, said that a whistleblower has informed him of "troubling details" of Bernanke's role in the bailout.

There may be nothing incriminating in the documents, but without access to them, the Senate will be voting to confirm him in the dark.

Senators from both parties who say they will vote to confirm Bernanke credit him with deft actions that averted a second Great Depression. Those actions, they argue, outweigh what blame he deserves for causing the crisis in the first place.

"He's done a very good job in the last year. And but for his work, we would be in a very different position in this country today," said Dodd Monday. "Now that's hard to prove a negative. But the fact of the matter is, our entire financial system might have collapsed but for his leadership."

On Monday, Bunning sent a letter to Dodd, asking him to subpoena the emails and other documents. Bunning and other committee members have thus far had to view the documents at the Federal Reserve and are bound by confidentiality from revealing their contents. "He thinks that all members of the Senate should have access to the documents he's seen," said Bunning spokesman Mike Reynard.

Issa, in a letter to his committee's chairman, Ed Towns (D-N.Y.), asked for a similar subpoena and even specified exactly which documents he wants: Those tagged electronically as "sb-aig-01000092 to sb-aig-010000125" and "Draft Memo on AIG.pdf."

Towns spokeswoman Jenny Rosenberg said that Towns would decide on a subpoena after Wednesday's hearing on the AIG bailout.

Bunning, in his letter to Dodd, is equally specific, citing nine particular documents that the Senate should review before voting to confirm Bernanke:

1. Agenda and materials for 11/12/2008 meeting of the Board of Directors of AIG (containing minutes of previous board meetings). [AIG_11.12.08_BOD.pdf]

2. Agenda and materials for 1/14/2009 meeting of the Board of Directors of AIG (containing minutes of previous board meetings). [AIG_01.14.09_BOD.pdf]

3. Memo "Issues Related to Possible IPC Lending to American International Group" presented to the Board of Governors for approval of lending to AIG, dated 9/15/2008. [pages sb-aig-01000092 to sb-aig-01000125]

4. Email from Chairman Bernanke including a draft of the memo to be presented to the Board of Governors for approval of lending to AIG, dated 9/15/2008. [Draft Memo on AIG.pdf]

5. Memo "Proposed Securities Lending Facility for American International Group, Inc. ("AIG")" presented to the Board of Governors for approval of the securities lending facility for AIG, dated 10/6/2008. [Board Mtg_10-6-2008_8.35.05_AM.pdf]

6. Memo "Proposed Steps to Stabilize American International Group, Inc." presented to the Board of Governors for approval of restructuring assistance to AIG and creation of Maiden Lane II & III, dated 11/6/2008. [AIG restructuring Board memo Final (Nov. 6, 2008)_11-6-2008_4.55.19_PM.pdf]

7. Spreadsheet describing the assets purchased by Maiden Lane II and Maiden Lane III. [BLK_12.31.08_MLII & III cusip data.xls]

8. Spreadsheet listing derivative transactions and counterparties for Maiden Lane III. [List of Derivative Transactions.pdf]

9. Email exchange regarding restructuring of assistance to AIG, initiated by Treasury Secretary Timothy Geithner, dated 03/01/2009. [AIG Emails, Part3.pdf]

Comments

[Siebenstein]

06:23 PM on 02/22/2010

The smoking gun: A Shadow Housing Inventory from hell, greater than any other in history !

[Ponderosa]

04:04 PM on 01/28/2010

"Senators from both parties who say they will vote to confirm Bernanke credit him with deft actions that averted a second Great Depression. Those actions, they argue, outweigh what blame he deserves for causing the crisis in the first place."

Exactly What actions? Ruining the financial future of millions of Americans? Making millions of others homeless? Leaving millions unemployed. Or making sure the the corrupt bankers and the rest of the crooks on Wall Street still have Rolls and Bentleys in the parking garage? Kind of like having the arsonist help put the garage fire out after he has already burned down your house.

[ReedYoung]

11:06 PM on 01/28/2010

Depending on incompetent and corrupt corporations to promote the general welfare? The federal government should have done that directly in a national EMERGENCY, if that's really what it was. Clearly, it was only an emergency of accountability for incompetence and corruption of the over-privileged.

[ManwithaParachute]

02:39 PM on 01/28/2010

Shine a light.

[musi]

09:34 AM on 01/28/2010

Geithner, Bernanke, Paulson are all hip deep in a cover-up conspiracy.
Hows about exacting repayment of all the safety-net expenses which are needed because of the credit /housing /financial Crisis caused by the Banksters /FED / et al.

The 7 million additional unemployed...
and the 10,000 small business failings & obscurities are a direct fallout of the financial industry misdeeds...
No Bonuses Or increased Compensation until the economy is made whole....
something near $12 Trillion worth of payback is required

[PhilipTaylor]

06:14 AM on 01/28/2010

Jim Rogers says do NOT approve him and blames him for causing the CRISIS!

http://www.youtube.com/watch?v=lHyQIo6jiHs&feature=player_embedded#

At least he will be around when we crash so everyone will know what he did!

[JPMorganEmp]

08:58 AM on 01/28/2010

Don't listen to Jim Rogers.

[yourmomscalling]

03:40 AM on 01/28/2010

IM SICK OF THIS CORRUPTION DOOM LOOP
ALL WE KEEP DOING IS GETTING THE SHAFT ALL THE TIME BY THESE CORRUPT BASTRDS

[picaman]

11:04 PM on 01/27/2010

people first!

[Lauteur Calme]

08:14 PM on 01/27/2010

Let's be clear! There is nothing "Federal" about the Fed. It is a private bank with private members!

And as a distant observer, the fact that there has been no reform in the U.S. banking system as it relates to the global financial meltdown is the most glaring abdication of duty by U.S. politicians (i.e.,.Paulson, Richard Shelby, Chris Dodd, Barney Frank, Geitner, Bernake, etc..)!

In addition, I find it quite odd that anti-trust laws in the U.S. are not being applied in the context of banks considered "too big to fail". One reason may be due to the fact that the banking industry is one of the major financial contributors of both the Democratic and Republican parties.

How long will the American public tolerate such egregious behavior by Wall St. and the banking industry?

It is undeniable that politicians in Washington D.C. have been bought and sold for years by financial lobbyists in favor of Wall Street's interests!

Finally, the Chinese have absolutely no intentions in allowing corrupt bankers and financiers from Wall Street to control their money, and they are laughing at the so called "Great Democracy of the U.S." while buying up precious resources from all over the world!

The stench of Wall St. and the U.S. banking system permeates from Shanghai to Dubai!

[Tulka2]

06:07 PM on 01/27/2010

Ya'll know the Federal Reserve is just the banks with a go between appointed by the President, right? It's not like Bernanke is actually in charge of anything. He is just the ambassador to Capital.

Several of you would have a leg up if you just read the Wikipedia entry about the Fed.

[Hysterian68]

05:04 PM on 01/27/2010

Bloomberg News reported the head of the chief of insurance commissioners said AIG could have been dismantled in an orderly and largely cost-free manner without disrupting insurance markets, their creditors, or world markets.

A direct contradiction to everything Paulson and Geithner have been testifying to all along.

[stevebest]

09:57 PM on 01/27/2010

Paulson and Geithner have been wrong about everything.

[Siebenstein]

06:26 PM on 02/22/2010

Economics as we know it were wrong about everything. I think, we don't understand diddley when it comes to how to survive a political system and how to live with one another. Despite all the research and talk about 'what we know'

[ReedYoung]

10:20 PM on 01/27/2010

I'm not surprised. If you could find the URL, that would be kewl.

[Hysterian68]

04:58 PM on 01/27/2010

Short of a coup d'etat, I don't see how Bernanke is going to be stopped now. There isn't enough smoke coming out of the smoking gun.

[Hysterian68]

04:53 PM on 01/27/2010

Every Republican and Democrat who votes to confirm Bernanke and is up for re-election in 2010 should be rejected at the polls in November, or should receive primary opposition and be rejected by the voters this summer.

[Eric Lorentzen]

03:37 PM on 01/27/2010

I forgot to throw Henry Paulson into the company of Greenspan, Bernanke, and Sen. Dodd as part of the problem.

[Eric Lorentzen]

03:33 PM on 01/27/2010

The gun is still be fired, with clips to spare "But not" for Greenspan, Bernanke, and Dodd we would not have this mess. They are corrupt insiders with only self interest. Revolving doors, sweet deals, and lobbying are killing the American people financially.

[futate01]

03:17 PM on 01/27/2010

Too many of you don't understand what you are talking about. The fact is that in a modern dynamic economy where value is no longer physical commodities like land, food, and labor, but also "invented constructs" such as all the new technological devices(cars, computers, etc.) and services(software, entertainment, etc) there needs to exist a centralized monetary control system to create "notes" (money) to reflect the new "value" on earth from our creations(inventions).

Gold can no longer be used as a value system because we are no longer relying only on natural products of the earth to drive our economy, in fact our own "created commodities" far out value the natural resources they are made off. So the problem is not having a FED or not, the problem is how we handle the FED.

Even if the Fed was a govt entity, by definition and under our constitution our govt has to be open and transparent to the people "of the people and by the people". I don't care whether the fed is private or public, that's not really the issue. The issue is regulation and transparency. It must be transparent to us "the people" so we can regulate it. What we now have is an oligarchic institution that is above the law. That is absolutely and unequivocally unacceptable and we should be out in the streets shouting until we get full transparency. Wake up Americans!!!

[Hysterian68]

05:01 PM on 01/27/2010

sharpen those guillotines. the line of prospective victims is growing.